Opposition Brief — Local Freight Drivers, Local 208, International Brotherhood of Teamsters v. Rozay's Transfer

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OCT ZA 1988

3: JOSEPH E. SPANIOL, JR.

¥ CLERK

In The Supreme Court

Of The

United States

OCTOBER TERM 1988

LOCAL FREIGHT DRIVERS, LOCAL 208,

INTERNATIONAL BROTHERHOOD OF

TEAMSTERS, CHAUFFEURS, WARE-

HOUSEMEN AND HELPERS OF AMERICA,

Petitioner,

vs.

ROZAY’S TRANSFER,

Respondent.

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

STEPHEN P. PEPE

(Counsel of Record)

CLIFF FONSTEIN

O’MELVENY & MYERS

400 South Hope Street

Fifteenth Floor

Los Angeles, California

90071-2895

(213) 699-6000

Counsel for Respondent

Rozay’s Transfer

QUESTIONS PRESENTED

Does ee ti 301 of the Labor

Management Relations Act, 29 U.S.C.

§ 185 ("Section 301") provide federal

courts with jurisdiction to decide

claims based on a union’s' fraudulent

contractual misrepresentations which

induce an employer to sign a collective.

bargaining agreement making the employ-

er liable to a trust fund under the

Employee Retirement Income Security Act

of 1974 ("ERISA"), 29 U.S.C. § 1001 et

seq.?

ae Does Section 301 # £4provide

federal courts with concurrent juris-

diction to decide claims based on a

union’s fraudulent contractual misrep-

resentations even though those claims

may also arguably be unfair labor prac-

tices within the jurisdiction of the

National Labor Relations Board (the

"N.L.R.B.")?

3. Is an employer’s reliance on

a union leader’s fraudulent contractual

mispresentations unreasonable simply

because the misrepresentations involved

the purposeful concealment of a trust

fund vote?

ii :

LIST OF PARTIES AND RULE 28.1 LIST*

The parties to the proceeding

below were petitioner Local Freight

Drivers, Local 208, International

Brotherhood of Teamsters, Chauffeurs,

Warehousemen and Helpers of America

("Teamsters Local 208"), respondent

Rozay’s Transfer ("Rozay’s") and amici

curiae Southern California District

Council of Laborers, International

Union of Operating Engineers, Local

Union No. 12, Merchants and Manufac-

turers Association, and the California

Trucking Association.

a: Respondent Rozay’s has no parent

companies, subsidiaries, or affiliates

to list pursuant to Rule 28.1.

iii

TA OF CONTENTS

= Page

QUESTIONS PRESENTED .........2ec0e0. i

LIST OF PARTIES AND RULE

yr) PS Sr . Perr ere. Se eee eee ECE Te iii

ye \ '? Se SP is. ¢ 840% PP vii

OPINIONS BEIM sc cccccccccccsccecees 2

UMMMMEEERRR EAM SoS cece cccrecescsdionns 9

STAT me OF ZH CASE wc cccccscscccs 9

REASONS FOR DENYING THE PETITION ... ~24

Is THE DISTR COURT HAD SUBJECT

MATTER JURISDICTION UNDER

SECTION 301 TO DECIDE ROZAY’S

FRAUD CLA ON STERS

LOCAL 208’S CONTRACTUAL MIS-

REPRESENTATIONS ......2.22e202. 24

A. Even If There Is A Con-

: Contracts, It Is Irrevel-

ant To This Case Since

The Ninth Circuit In

Southwest Administrators

Found A Valid Collective

Bargaining Agreement ..... 28

Il.

ee The Ninth Circuit’s

Interpretation Of

Section 301 Is Con-

sistent With The

tatuto tent _

And This Court’s

REE ncccescscece

2. There Is No Genuine

Conflict Among The ~

Circuits With Respect

° ’ is-

diction Under Sec-

tion 301 To Decide

A_Labor Contract’s

WRSSMOED cescccsacess

THERE IS NO CONFLICT AMONG THE

CIRCUITS THAT SECTION 301 GIVES

FEDERAL COURTS CONCURRENT

‘JURISDICTION EVEN OVER MATTERS

WHICH MAY ARGUABLY BE UNFAIR

LABOR PRACTICES ...cccccccccses

Appendix A.

Appendix B.

Reporter’s Transcript

of District Court’s

Status Conference,

dated May 24, 1985.

Pre-Trial Conference

Order, filed January

14, 1986.

TABLE OF AUTHORITIES

CASES PAGE(S)

Adams _v. Budd Co., 349 F.2d 368

(3d Cir. 1965) ...... pire wae ae

471 U.S. 202 (1985) ........ 35,36

Amalgamated Ass’n of Street,

Electric Railway &

Vv , 403

- << ». |. \ 52

803 F.2d 953 (8th Cir.

1986), cert. denied,

me yee Oe a

3242, 97 L. Ed. 2d 747 .

Th. Fre See 54

tional Union, 476 F.2d 1388

(ms Gee Be BOTS) cc ccccce 39

A.T. Massey Coal Co. v. Interna-

Uni United Mi

Workers, 799 F.2d 142 (4th

Cir. 1986), cert. denied,

U.S. , 107 S. Ct.

1964, 95 L. Ed. 2d 536

(SGNE riot coon ce chad cuenes 45

vii

CASES | PAGE(S)

Black-Clawson Co. v. Interna-

. r yey

313 F.2d 179 (2d Cir.

19GZ) sesnecece baeeare esuaeee 328

Board o Vv. iv

Enterprises, Inc., 751 F.2d

L277 (i3GR Gals 1968) «222-2 39,47

Chambless v. Masters, Mates &

Pilots Pension Plan,

571 F. Supp. 1430

yo eS re 57

Charles Dowd Box Co. v. Courtney,

368 UsS. SOB (1962) csccscsecs 40

Food Ha a etc.

v._Valmac Industries, Inc.,

528 F.2d 217 (8th Cir.

EPID) caccocesedetsessccecece 31

Galvez v. Local 804 Welfare

Trust Fund, 543 F. Supp.

316 (E.D.N.¥. 1982) ........ 57,60

Vv j ing,

Co., 455 F.2d 1252

(ISS Gale BOVa) Se dcecccesec 45,49

International Brotherhood of

Electrical Workers, Local

532 v. Brink Construction

Co., 825 F.2d 207 (9th

Cais BOIS. 6c cesieseessecres 49

viii

CASES PAGE(S

Vv. = Om]

851 F.2d 910 (7th Cir.

1988) eeee*eeeee#7#*e#esseeeee##e#e#eese##e##*# 44,46

° j j °.

v. United Brotherhood of

Carpenters & Joiners, 785

F.2d 706 (9th Cir. 1986) ... 49

- Knoll _v. Phoenix Steel Corp.,

465 F.2d 1128 (3d Cir.

1972), cert. denied, 409

U.8. 1226 (1973) caccccccces 56

Laborers Health & Welfare .

Vv Vv d

Lightweight Concrete Co.,

__ U.8. ., 1608 8. Ct.

830, 98 L. Ed. 936

(1988) wccceecesseseeeeeeees 30

Leskiw v. 47 na-

tional Brotherhood of

Elec. Workers, 464 F.2d

721 (3d Cir.), cert.

denied, 409 U.S. 1041

Co a 48

Lexington Cartaye Co. v. Inter-

national Brotherhood of

Teamsters, etc., 713 F.2d

cee Cee Gabe SPOS) ceeeseore 53

CASES

Mack Trucks, Inc. v. Interna-

tional Union, UAW, No.

87-1650 (3d Cir. Sept.

hay ROGED caneenndcas revere eT

Martin v. Hamil, 608 F.2d 725

tS RS eee

national Ass’n of Bridge,

Structu & Ornamental

Iron Workers, 812 F.2d 615

(LOGE Gabe Bee Aare awn ces

Mengel Co. v. Nashville Paper

Products & Specialty Workers

Union, 221 F.2d 644 (6th

RE PN ar ae i a

Mo-Kan Teamsters Pension Fund v.

Creason, 716 F.2d 772 (10th

Cir. 1983), cert. denied,

464 U.S. 1045 (1984) .......

NDK Corp. v. 150, United

Food & Commercial Workers,

709 F.2d 491 (7th Cir.

2 ae ey

Oates v. Teamsters Affiliates

Pension Plan, 482 F. Supp.

4Gi (B.D.C. BOTS) secccccces

Ridens v. Voluntary Separation

Program, 610 F. Supp. 770

(is eee SOT Bee ke oe enue

PAGE(S)

53,54

CASES PAGE(S)

Ro . s Vv. ight

Drivers ca 8 nter-

nationa rothe od of

Teamsters, Chauffeurs,

Warehousemen and Helpers

of America, 850 F.2d 1321

(SUM Cae. BOOB): ckcccsecccee 6,

passim

San Diego Building Trades

Council v. Garmon,

359 U.S. 236 (19359) .cccece $0,591,

52,54

Smith v. Evening News Ass’n,

37h UcBi SOR LBPOS) we ccopnes 38, 9k4 om

Southwest Administrators,

Inc. v. Rozay’s Transfer,

791 F.2d 769 (9th Cir.

1986), cert. denied,

ene - 4 Ber Os CB.

951, 93 L. Ed. 2d 999

‘es by ter eres 2;

passim

Teamster’s a 4 ealth &

Welfare Fund v. Kohn

Beverage Co., 749 F.2d

315 (6th Cir. 1984),

cert. denied, 471 U.S.

LOL? (1965S) cece vswrccesssce 57

CASES

Textile Workers Union v. Lincoln

Mills of Alabama, 353 U.S.

G68 C20) cethsnsicdeank cas

United Steelworkers of America v.

Rome Ind., Inc., 437 F.2d

GGi (SE CA. 2970) os ccaves

STATUTES

Employee Retirement Income

Security Act ("ERISA")

29 U.S.C. §§ 1001 et seg ....

§ 515 (29 U.S.C. § 11345) ....

Labor Management Relations Act

6-304 (20 G.8.0c 6 SOR) bccss

SECONDARY AUTHORITIES

12 S. Williston, A Treatise

On The Law Of Contracts

§ 1523 (3d ed. 1970) ...

wis

PAGE(S)

34,35

passim

No. 88-535

In The Supreme Court

Of The

United States

OCTOBER TERM 1988

LOCAL FREIGHT DRIVERS, LOCAL 208,

INTERNATIONAL BROTHERHOOD OF

TEAMSTERS, CHAUFFEURS, WARE-

HOUSEMEN AND HELPERS OF AMERICA,

Petitioner,

vs.

ROZAY’S TRANSFER,

' Respondent.

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

The Respondent, Rozay’s Transfer,

respectfully submits the following

Opposition to Petitioner’s Request for

a Writ of Certiorari.

OPINIONS BELOW

This is the second time a Petition

for Writ of Certiorari has been filed

in this Court involving the- same

underlying dispute. The first case,

Southwest Administrators, Inc. Vv.

Rozay’s Transfer, 791 F.2d 769 (9th

Cir. 1986), sere. eee, .. 0.8. 3

107 §. Ct. $51, 33 i. Bee 26 999 (1967)

was a pension collection action brought

by the Western Conference of Teamsters

Pension Trust Fund (the wT rue)

against Rozay’s in which the Ninth

Circuit Court of Appeals ("Ninth

Circuit") affirmed a judgment against

Rozay’s for $122,789.03 in retroactive

pension contributions, liquidated

damages, attorneys’ fees, plus

interest. Southwest Administrators,

791 .24 at 772. The Ninth Circuit

reached this result even though it also

acknowledged that Teamsters Local 208

fraudulently induced Rozay’s into

signing the collective bargaining

agreement (the "“Agreement") which gave

rise to its liability to the Trust.

id. at 77i=72. The present case is

Rozay’s suit against Teamsters Local

208 for fraudulently inducing it to

sign the Agreement.

At the core of both cases is

Teamsters Local 208’s fraud. Teamsters

Local 208’s President, Archie

Murrietta, fraudulently induced Rozay’s

President, William S. Rozay, to sign

the 1981-1984 Agreement by purposefully

deceiving him as to the Trust’s vote to

require retroactive pension contribu-

tions, an act of fraid which led to

Rozay’s liability in Southwest Adminis-

trators. ig. a6 Ties At a status

conference called to announce the

Southwest Administrators decision, the

district court described Murrietta’s

conduct in the harshest terms:

"Now if I have ever in my

‘life seen a case of pure fraud it

is this case.

"Mr. Murrietta deliberately,

willfully, and knowingly defrauded

Mr. Rozay. There isn’t the

slightest doubt about it.

"I have never in my life seen a

situation which was clearer in

terms of fraudulent conduct than

this situation with respect to

Mr. Murrietta.

Wome

"(Ijt is a disgusting set of facts,

and I am using the word ‘’disgust-

ing’ deliberately with very calm

reflection.

"I do not regard it as proper

conduct on the part of a union to

defraud an individual who is

negotiating with them, and then

have the trust fund take the

benefit of it, and that is exactly

what happened here.

" a

"tt is the most unfair

conduct I have ever seen.

"(T]he result I have reached is

totally inequitable.

"I feel this is one of the very few

times when I feel really that I

have done the wrong thing." (App.

A at A-2 -- A-11.)

. "App. A at A-2 -- A-11" refers the

Court to pages 2 through 11 of Appendix

-A attached hereto. The reporter’s

transcript of a special status confer-

(Footnote Continued)

Despite the magnitude of Murrie-

tta’s fraud, the district court ruled

that it was no defense to the Trust’s

collection action. The Ninth Circuit

affirmed the district court’s decision,

holding that Teamsters Local 208’s

fraud in the inducement rendered the

Agreement "voidable" rather than "void"

and, thus, not a defense to a trust

fund’s collection action.* Southwest

(Footnote Continued)

ence to announce the Southwest Admin-

istrators decision is reproduced as

Appendix A, infra, A-1 -- A-12.

. The Ninth Circuit also invited

Rozay’s to file an action for

indemnification against Teamsters Local

208. Southwest Administrators, 791

F.2d at 777 n.4; Rozay’s Transfer v.

Local Freight Drivers, Local 208,

International Brotherhood of Teamsters,

Chauffeurs, Warehousemen and Helpers of

America, 850 F.2d 1321, 1331.

Administrators, 791 F.2d at 774-75.

This Court denied certiorari on January

a7, i987.

On October 26, 1984, Rozay’s filed

the present complaint against Teamsters

Local 208. By judgment entered on July

2, 1986, the district court again found

Teamsters Local 208’s conduct fraudu-

lent. It rescinded the fraudulently

induced Agreement and required Team-

sters Local 208 to indemnify Rozay’s

the monies it owed the Trust as a

result of Southwest Administrators and

the legal fees which it incurred in

defending that case.

Teamsters Local 208 appealed this

decision to the Ninth. Circuit on

October 22, 1986, and on June 24, 1988,

the Ninth Circuit affirmed the district

court’s decision. Rozay’s Transfer v.

Local _ Freight Drivers, Local __208,

International Brotherhood of Teamsters,

Chauffeurs, Warehousemen and Helpers of

America, 850 F.2d 1321 (9th Cir. 1988).

On the issue of Teamsters Local 208’s

fraud, the Ninth Circuit noted: "The

district court obviously found the

testimony presented by Rozay’s Transfer

more credible than Murrietta’s, and

with good reason." Id. at 1327.

Rozay’s adopts the statement of

Teamsters Local 208.*

STATUTES INVOLVED

Rozay’s adopts the statement of

Teamsters Local 208.

STATEMENT OF THE CASE

Rozay’s, a small trucking company,

and Teamsters Local 208 were parties to

a collective bargaining agreement which

° Teamsters Local 208 -did not

petition the Ninth Circuit for

rehearing.

expired on September 30, 1981. South-

west Administrators, 791 F.2d at 771.

Pursuant to this agreement Rozay’s made

monthly pension contributions on behalf

of its employees to the Trust. Id.

After the agreement expired and while

negotiations were continuing over a

successor agreement, Rozay’s continued

to make the required contributions.

id.

In approximately November 1981,

Rozay’s and Teamsters Local 208 agreed

to a tentative successor agreement

which Teamsters Local 208 was’ to

prepare. Rozay’s Transfer, 850 F.2d at

1331. Rozay’s, however, did not re-

ceive a draft agreement~“until April 18,

1982. Id. Because the draft contained

several errors, Rozay’s, on May 6,

1982, returned the document to Team-

sters Local 208 with corrections. Id.

Rozay’s never received a corrected

draft of this document. Id.

During this six month period,

Rozay’s experienced severe financial

difficulties. Rozay’s Transfer, 850

F.2d at 1327, 1331. Indeed, an accoun-

tant on behalf of Teamsters Local 208

predicted a net loss of $17,508 for

Rozay’s in 1982. Thus, on June 11,

1982, Rozay’s, after first discussing

the matter with officials of Teamsters

Local 208, mailed the union a certified

letter, proposing various economic

concessions including cessation of

pension contributions. 74. @#& 2331.

Although Teamsters Local 208 received

the letter, it never replied. Id.

Rozay’s also made several telephone

calls to Teamsters Local 208, which

were never returned, in an attempt to

get a response to the proposed conces-

sions.

On June 28, 1982, Rozay’s sent a

second certified letter to Teamsters

Local 208 which stated that because

Rozay’s had not received a response to

the June 11, 1982 letter, it assumed

Teamsters Local 208 had no objection to

the proposed changes and would, there-

fore, implement the changes on July 6,

1982. When Teamsters Local 208 did not

respond to the second letter, Rozay’s

implemented the proposed changes. See

Southwest Administrators, 791 F.2d at

771; Rozay’s Transfer, 850 F.2d at

133i.

In September and November 1982,

several months after Rozay’s' imple-

mented the changes, Teamsters Local 208

filed an unfair labor practice charge

with the N.L.R.B. and a_e grievance

alleging, in part, that the cessation

of pension contributions was an unfair

labor practice and violated the collec-

tive bargaining agreement. Southwest

Administrators, 791 F.2d at 771.

On January 17, 1983, while the

N.L.R.B. charge and the grievance were

pending, Mr. Rozay, Murrietta, and

Maurice L. Anderson, then Director of

the Western Conference of Teamsters and

an International Vice President of the

Teamsters, met and negotiated a eetthe>

ment of the charge and grievance. See

Southwest Administrators, 791 F.2d at

771. Under the terms of the settle-

ment, Rozay’s and Teamsters Local 208

would execute a collective bargaining

agreement under which Rozay’s would

resume making the 98 cents per hour

pension contributions prospectively.

,c Fe | ae > 2 In exchange, Teamsters

Local 208 agreed to accept lower wages

of $1.00 per hour. Id. It was also

agreed that Rozay’s would not be

obligated to pay the unpaid pension

contributions for the previous months.

Id. By this agreement, Rozay’s would

not exacerbate its already precarious

—

financial situation because the pro-

spective resumption of pension contri-

butions would be offset by the wage

reduction. Rozay’s Transfer, 850 F.2d

at 1327.

The subject of the unpaid pension

contributions was specifically dis-

cussed by the parties. As the Ninth

Circuit stated in Southwest Administra-

tors:

"In light of the company’s preca-

rious financial position, Rozay

expressed serious concerns about

being required to make retroactive

pension fund contributions for the

period between May, 1982 and Feb-

Buery, i963. ... Murrietta and

Anderson assured Rozay that the

delinquent payments would be

forgiven noting that the trust

fund had waived the unpaid pension

contributions of other employers

under similar circumstances." 791

F.2d at 771-72.

Following the January 17, 1983

meeting, Mr. Rozay sent a letter dated

January 21, 1983 to Murrietta with a

copy to Anderson, confirming the terms

of the January 17, 1983 agreement that

there would be no retroactive pension

contributions. See Rozay’s Transfer,

850 F.2d at 1327. In his reply letter,

Murrietta did not deny Mr. Rozay’s

characterization of the settlement

agreement as it related to pension

contributions. Id.

Pursuant to the January 17, 1983

agreement, Murrietta, on January 26,

1983, wrote the Trust on behalf of

Rozay’s, requesting relief from payment

of the retroactive pension contribu-

tions. Rozay’s Transfer, 850 F.2d at

1327.

On February 16, 1983, the trustees

of the Trust voted to deny the request

to forgive Rozay’s unpaid pension

contributions. Rozay’s Transfer, 850

P.2@ e¢ i330. The Trust’s decision

meant that Rozay’s would owe the Trust

$76,133.29 in addition to liquidated

damages and interest if Mr. Rozay

Signed the Agreement. This development

transformed the January 17, 1983 agree-

ment from an agreement tailored to help

Rozay’s survive its mounting economic

difficulties by keeping its costs

stable into something completely

different -- the assumption of an over

$76,133.29 debt. Id.

On March 4, 1983 at a Teamster’s

social function, a Trust representative

told Murrietta of the Trust’s decision.

Rozay’s Transfer, 850 F.2d at 1327-28.

Rozay’s was not informed of the Trust’s

decision until late March 1983. Id. at

1335.

On March 8, 1983, Murrietta and

Mr. Rozay met to execute the documents

which confirmed the January 17, 1983

agreement. Southwest Administrators,

791 F.2G@ @6 veea These documents

included the Agreement, the side

agreement resolving the grievance and

N.L.R.B. unfair labor practice charge,

and the Employer-Union Pension Certifi-

cation. Id.

When Murrietta and Mr. Rozay met

on March 8, 1983 to sign these docu- :

ments, Murrietta knew of Rozay’s severe

financial problems. Teamsters’ Local

208’s own accountant had confirmed the

adverse economic news, and Mr. Rozay

had explained his company’s financial

problems to Murrietta. See Rozay’s

Transfer, 850 F.2d at 1327, 1331. ze

is also undisputed that Murrietta knew,

having read Mr. Rozay’s letter dated

January Bis 1983, that Mr. Rozay

believed that the January 17, 1983

agreement included only prospective

pension payments and not retroactive

pension contributions.

Yet despite these facts and al-

though Murrietta knew the retroactive

pension contributions was the key to

the entire Agreement, he did not tell

Mr. Rozay what he had learned four days

earlier -- that the nature of the

Agreement had been completely changed

by the Trust’s decision not to waive

the unpaid contributions. Rozay’s

Transfer, 850 F.2d at 1328. Murrietta

intentionally failed to advise

Mr. Rozay of : the Trust’s decision

because he knew that if Mr. Rozay were

told that the unpaid contributions of

$76,133.29 would not be forgiven,

Mr. Rozay would not have signed the

three documents. Id. As the district

court stated in Finding of Fact No. 24:

"At the time that Murrietta and

Mr. Rozay signed the March 8, 1983

collective bargaining agreement,

Murrietta knew that the Trustees

had voted not to forgive Rozay’s

unpaid contributions, but he did

not disclose this fact to

Mr. Rozay. The existence of an

obligation to pay the $76,133.29

in unpaid contributions was a

material fact. Murrietta did not

disclose this fact to Mr. Rozay

because he knew that if Mr. Rozay

was told that the past contribu-

tions would not be forgiven,

Mr. Rozay would not execute the

collective bargaining agreement."*

ad As the district court said in

Southwest Administrators:

"At the very moment [Mr. Rozayj

Signed [the Agreement], Murrietta

knew very well indeed that the

motivating reason for Mr. Rozay to

go into this transaction had been

negated, and he didn’t tell him

about it. Now if that is not

fraud, then I have never seen it."

(App. A at A-8.)

See also Southwest Administrators, 791

P.2a at 774 ("{t]he fraudulent

misrepresentation .. . went directly

to the employer’s central motivation

for entering into the agreement.")

- Mr. Rozay, assuming that unpaid

contributions world be forgiven, signed

the Agreement, side agreement, and the

pension agreement. Rozay’s Transfer,

850 F.2d at 1328. Teamsters Local 208

thereafter withdrew the N.L.R.B. unfair

labor practice charge and the griev-

ance. Southwest Administrators, 791

F.2d at 772.

Subsequently, the Trust filed the

Southwest Administrators suit against

Rozay’s to collect the retroactive

pension contributions, and Rozay’s,

thereafter, filed the present case

against Teamsters Local 208 pursuant to

Section 301.*

° Teamsters Local 208’s_ Petition

suggests that Rozay’s delayed filing

the present lawsuit or failed to

request - that the Agreement be

renegotiated and that this somehow

indicates that Rozay’s was satisfied

with the extra $76,133.29 unbargained

for debt. Petition at 5. There,

however, was no delay in filing the

present lawsuit and no opportunity to

renegotiate the Agreement. As the

Ninth Circuit explained:

"It was not until the deposition of

Uranga [a Trust official] on April

30, 1984 .. . when the contract

had nearly expired, that Rozay’s

Transfer first learned of

Murrietta’s fraud, and it was not

until March 12, 1985 during the

Southwest Administrators trial and

after the contract had expired,

that Murrietta finally confessed

to his concealment." Rozay’s

Transfer, 850 F.2d at 1328.

REASONS FOR DENYING THE PETITION

Teamsters Local 208 did not

contest the district court’s Section

391 jurisdiction below and in fact

stipulated in the Pre-Trial Conference

Order, without any objection, that the

district court’s subject matter juris-

diction was invoked "upon grounds that

this is an action pursuant to [Section

301]." (App. B at B-3.)* After losing

at the district court, Teamsters Local

208, for the first time, contended

before the Ninth Circuit that the

district court did not have jurisdic-

tion to award damages because this case

was preempted by ERISA. Having lost

before the Ninth Circuit, Teamsters

Local 208 now contends, for the first

time, to this Court that the district

court did not have proper’ subject

matter jurisdiction to hear the present

dispute because Section 301’s grant of

jurisdiction over "suits for violations

of [labor] contracts" does not give

. The Pre-Trial Conference Order is

reproduced as Appendix B, infra, pages

B-1 -- B-26.

courts jurisdiction to determine a

labor contract’s validity. Teamsters

Local 208 did not give the Ninth

Circuit an opportunity to consider this

contention either during the appeal or

subsequently by requesting recon-

sideration of the decision.*

Teamsters Local 208’s latest and

limited analysis of Section 301 is, in

any event, wrong for several reasons.

. Significantly, in their briefs to

the Ninth Circuit, Local 208 and the

amici curiae Southern California

District Council of Laborers’ and

International Union of Operating

Engineers, Local Union No. 12 only

challenged the propriety of the

district court’s remedies under Section

301 and repeatedly conceded that the

district court had jurisdiction under

Section 301 to rule on the Agreement’s

validity.

First, it is not even necessary to

reach the jurisdictional controversy

which Teamsters Local 208 attempts to

manufacture because its contractual

misrepresentations fall squarely within

Section 301’s ambit even if that

provision is read narrowly to preclude

consideration of a labor contract’s

validity. Second, the conflict among

the circuits which Teansters Local 208

perceives is illusory. The decision

below is consistent with the Congres-

sional intent, this Court’s own rulings

that Section 301 be read broadly, and

with the emerging consensus of circuit

opinions.

Even if there were a genuine

conflict of authority concerning

Section 301 jurisdiction over cases

involving a labor contract’s validity,

such a conflict has no bearing on the

outcome of the present case. The same

result would have been reached irre-

spective of the Agreement’s validity.

Indeed, in Southwest Administrators,

the Ninth Circuit held that the Agree-

ment was valid, a "voidable" but not

"void" agreement. Southwest Adminis-

trators, 791 F.2d at 774. Because a

valid underlying labor contract is a

condition precedent for a trust fund’s

collection action against an employer

for delinquent contributions, Rozay’s

could not have been adjudged liable in

Southwest Administrators had the Agree-

ment been invalid. As the Ninth

Circuit explained, "Without [the

Agreement], the trust fund would not

have been able to pursue its prior

action under Section 515 of ERISA, 29

U.S.C. § 1145, to collect these contri-

butions, for an action under Section

515 is available only to collect.

‘promised contributions. ’" Rozay’s

Transfer, 850 F.2d at 1334 quoting

Laborers Health & Welfare Trust Fund v.

Advanced Lightweight Concrete Co.,

U.S. , 106 S&S. Ct. 830, S32, 96 kL.

Ed. 936, 942 (1988). Thus, Teamsters

Local 208’s assumption that the dis-

trict court’s jurisdiction was depen-

dent upon its power to declare a labor

contract invalid is incorrect. There

was a valid Agreement. The Trust’s

suit against Rozay’s was based on that

Agreement, and both Rozay’s and Local

208 abided by the Agreement throughout

its term. See Rozay’s Transfer, 850

F.2G at 1328.

Indeed, by emphasizing the Agree-

ment’s rescission, Teamsters Local 208

loses sight of what this case is really

about -- Teamsters Local 208’s fraudu-

lent contractual misrepresentations and

what remedies flow from that wrongdoing

and not the Agreement’s validity.* The

district court’s decision to rescind

the Agreement is only one of many

appropriate contract remedies. See,

e.g., 12 S. Williston, A Treatise On

The Law Of Contracts § 1523 (3d ed.

1970); Food Handlers Local 425, etc. v.

Valmac Industries, Inc., 528 F.2d 217,

219 (8th Cir. 1975) (union’s reforma-

tion suit against employer for fraud in

the course of executing a labor

sg The district court’s rescission of

the Agreement is a nice gesture but

nothing more. Whether rescinded or

not, Rozay’s is liable to the Trust for

over $122,789.03 solely because of the

Agreement.

agreement). Thus, because this case

involves a contractual violation --

Teamsters Local 208’s contractual mis-

representations -- the question of

Section 301’s scope need not be ad-

dressed.

The Ninth Circuit’s Decision

Is Consistent With The

Congressional Intent Underly-

ing Section 301, This Court’s

Decisions Interpreting That

Provision, And The Evolving

Consensus Of Circuit Opin-

ions.

oe The Ninth Circuit’s

Interpretation Of Sec-

tion 301 Is Consistent

With The Statutory

Intent And This Court’s

Decisions.-

The Ninth Circuit’s interpretation

of Section 301 is consistent with the

statutory

intent and this Court’s

repeated rulings that Section 301

should be read broadly. In enacting

Section 301, Congress determined that

labor peace would be fostered if the

courts rather than the N.L.R.B. were

given jurisdiction to decide disputes

of a contractual nature. Textile

Workers Union v. Lincoln Mills of

Alabama, 353 U.S. 448, 454-55 (1957).*

In granting the judiciary such authori-

ty, Congress expected the federal

courts to develop a uniform common law

of labor contracts. As this Court

explained, Section 301 is "a congres-

” Congress specifically rejected

language which would have allowed

disputes involving "violations of

contract" to be heard by the N.L.R.B.

as well as by the courts. Lincoln

Biiis, 353 0.8. at 452-53 n.3.

sional mandate to the federal courts to

fashion a body of federal common law to

be used to address disputes arising out

of labor contracts." Allis-Chalmers

Corp. Vv. Iaeck, 471 U.S. 202, 209

(1985) (emphasis added). Indeed, Con-

gress made it clear that it did not

seek to frustrate this goal by unduly

limiting the type of actions within

Section 301’s ambit:

"(Section 301] contemplates not

only the ordinary lawsuits for

damages but also such other reme-

dial proceedings, both legal and

equitable, as might be appropriate

in the circumstances; in other

words, proceedings could, for

example, be brought by the

employers et to secure

declarations from the Court of

legal rights under the contract."

93 Cong. Rec. 3656 (1947) (statement of

Rep. Barden), quoted in Lincoln Mills,

353. U.S. at 455-56. To accomplish

these goals of labor peace and the

creation of a uniform federal law of

labor contracts, this Court has consis-

tently read Section 301 broadly. See,

e.g., Smith v. Evening News Ass’n, 371

U.S. 195, 199 (1962) ("§ 301 is not to

be given a narrow reading"); McNally

b NG..Vs ‘n

of Bridge, Structural & Ornamental Iron

Workers, 812 F.2d 615, 619 (10th Cir.

1987) (“The dual purposes of § 301, to

promote industrial peace and develop

uniform law, demand that the statute be

construed broadly") .*

bd In is- Ss Vv

471 U.S. 202 (1985), the Court,

considering Section 301 preemption of

(Footnote Continued)

Consistent with this Court’s broad

approach, the Second, Third, Fifth,

Tenth, and Eleventh as well as the

Ninth Circuit courts have all recog-

nized that Section 301 encompasses

questions of contact validity.

(Footnote Continued)

state tort actions, reemphasized the

expansive scope of -Section 301, no

matter the label -- contract or tort --

placed on the action:

"(Q]uestions relating to what the

parties to a labor agreement

agreed, and what legal

consequences were intended to flow

from breaches of that agreement,

must be resolved by reference to

uniform federal law, whether such

questions arise in the context of

a suit for breach of contract or

in a suit alleging liability in

tort. Any other result would

elevate form over substance and

allow parties to evade the

requirements of § 301 by

re-labeling their contract claims

as claims for tortious breach of

contract." Id. at 211.

Black-Clawson Co. Vv. International

Ass’n of Machinists, 313 F.2d 179,

181-82 (2d Cir. 1962) ("We find nothing

in the history of Section 301(a) which

indicates an intention to restrict that

section to suits for damages or specif-

ic enforcements"); Mack Trucks, Inc.,

-. International Union, UAW, No.

87-1650, slip op. at 15-22 (3d Cir.

Sept. 12, 1988) (district court has

jurisdiction under Section 301 to

decide the existence of a labor con-

tract) ; Ww s | ica

Vv. e . , 437 F.2d 881,

882-83 (5th Cir. 1970) (it is unneces-

sary to allege contract breach because

"the court was empowered to decide the

issue of existence of a contract");

McNaliy Pittsburg, Inc. v. Interna-

—

ti ss’n of Bridge, Structural &

Ornamental Iron Workers, 812 F.2d 615,

617-19 (10th Cir. 1987) (trial court

had jurisdiction under Section 301 to

consider a complaint which addresses

only the validity and not a violation

of a labor contract); Boa of Trustees

v. Universal Enterprises, Inc., 751

F.2d 1177,: 1184 (llth Cir. 1985) ("a

district court has jurisdiction under

Section 301 to make a determination as

to whether a collective bargaining

agreement in fact exists"); Associated

nt tiona Union, 476 F.2d 1388,

1402 n.25 (Em. Ct. App. 1973) ("the

question of whether a collective

bargaining agreement has been validly

entered intc in the first instance

have been held to be so related to the

subject of ‘suits for violation of’

labor contracts as to permit their

resolution by district courts by virtue

of [Section 301]").

Indeed, this Court has suggested

the very same result in Charles Dowd

Box Co. v. Courtney, 368 U.S. 502

(1962). Charles Dowd held that a state

court could assert jurisdiction over a

Section 301 suit seeking a declaration

that a contract existed so long as the

state court applied federal law. Id.

at 507. In so rviling, this Court

implicitly recognized that a court may

do exactly what the district court did

below -- rule on a labor contract’s

validity.

Se COS tiie

i There Is No Genuine

Conflict Among The Cir-

cuits With Respect To A

Court’s i j ion

Unde ecti 30 fe)

Decide A Labor Con-

tract’s Validity.

As is evident from the opinions of

the Second, Third, Fifth, Ninth, Tenth,

and Eleventh Circuits, the evolving

consensus is that a court may decide a

labor contract’s validity under Section

301. Recently, for example, the Third

Circuit distinguished several of its

earlier opinions which are relied upon

by Teamsters Local 208 and concluded

that Section 301 grants courts’ the

jurisdiction to determine a _ labor

contract’s validity. Mack Trucks, Inc.

Vv. Internationa) Union, UAW, No.

87-1650 slip op. at 20-22 (3d Cir.

Sept. 12, 1988) (jurisdiction over

declaratory -judgment action that a

contract existed). The Third Circuit

rejected the same limited interpreta-

tion of Section 301 which Teamsters

Local 208 now posits in its Petition:

"This view [that courts cannot rule

on a labor contract’s validity)

. ignores Congress’ broader

concern that the courts -- as

opposed to the NLRB -- be granted

authority to decide disputes of a

contractual nature." Mack Trucks,

No. 87-1650, slip op. at 17.

Only the Seventh Circuit decision

in NDK Corp. v. Local 1550, United Food

& Commercial Workers, 709 F.2d 491 (7th

Cir. 1983) seems to conflict with the

decision below. In NDK the Seventh

Circuit, without reference to any

contrary decisions by this Court, chose

to adopt a limited reading of Section

301, holding that it "provides juris-

diction for suits for violation of

contracts but not for determinations of

the validity of contracts where validi-

ty is the ultimate issue." Id. at 493.

Recently, however, the Seventh

Circuit has indicated that it may

retreat from NDK’s narrow reading of

Section 301. It acknowledged that NDK

conflicts with the decisions of other

circuits and warned:

"“NDK may not be our Court’s final

word on the several complex juris-

dictional issues raised by union

and employer efforts to invoke the

§ 301 LMRA jurisdiction of the

federal courts in cases involving,

inter alia, the question of

whether a particular employer is

bound by the terms of an existing,

valid collective bargaining

agreement." International Broth-

erhood of Electrical Workers,

Local 481 v. Sign-Craft, Inc. 851

F.2d 910, 914 (7th Cir. 1988).

The remaining cases which Team-

sters Local 208 cites do not in any way

conflict with the decision below.

While these cases stress Section 301’s

literal language that the provision

encompasses suits for "violations" of

labor contracts, they do not neces-

sarily reject the broad approach which

recognizes that this jurisdictional

grant allows courts to decide a con-

tract’s validity. Indeed, each of

these cases is distinguishable from the

present case because they concern

matters which have nothing to do with a

labor contract as a contract, the focus

of Section 301. Because these cases,

instead, were non-contractual, involv-

ing pure labor questions such as

representational issues which are

traditionally decided by the N.L.R.B.,

the courts properly found no Section

301 jurisdiction. See Hernandez _v.

National Packing Co., 455 F.2d 1252,

1253 (lst Cir. 1972) (issue described

as one of contract "validity" is really

a representational issue based on the

employer’s "supposition that the

[union] no longer reflects the wishes

of the majority of the bargaining

unit"); A.,T. Massey Coal Co. v. Inter-

national Union, United Mine Workers,

499 F.4a@ 142, 3144. (408 Cir. 1966),

cert. denied, u.s. ; £07 -F.. CS;

1964, 95 L. Ed. 2d 536 (1987) (declara-

tory judgment action that employer and

its affiliates are not bound by con-

tract negotiated by one of its affili-

ates); Mengel Co. v. Nashville Paper

Products & Specialty Workers Union, 221

F.2d 644, 645 (6th Cir. 1955) (employ-

er’s declaratory judgment action

seeking to declare invalid an arbi-

tration award based on employer’s

contention that the collective bargain-

ing agreement did not limit the employ-

er’s ability to discharge at-will);

International Brotherhood of Electrical

Workers, Local 481 v. Sign-Craft Inc.,

851 F.2d 910 (7th Cir. 1988) (represen-

tational issue of whether an employer

properly repudiated a multi-employer

agreement).

The present case, by contrast,

involves straightforward contract

issues: when does a_-— contracting

party’s fraudulent concealment of a

material fact result in actionable

damages. This is a fundamental issue

of contract formation and just the sort

of contractual question Congress

preferred the courts rather than the

N.L.R.B. resolve. ee Board of Trust-

ees v. Universal Enterprises, Inc., 751

F.2d 1177, 1184 (11th Cir. 1985)

(Section 301 jurisdiction is proper

because "the question whether a

contract was in existence is purely a

matter of contract law") .*

. Teamsters Local 208’s Petition

also relies upon two Third Circuit

decisions decided before Mack Trucks,

Adams _v. Budd Co., 349 F.2d 368 (3d

Cir. 1965) and Leskiw _v. Local 1470,

International Brotherhood of Elec.

Workers, 464 F.2d 721 (3d Cir.), cert.

denied, 409 U.S. 1041 (1972). In both

cases, employees sued their union and

employer for disregarding their

interests during the course of

negotiations. Adams, 349 F.2d at

369-70; Leskiw, 464 F.2d at 722-23.

The recent Mack Trucks decision

distinguished these two cases because,

just like the First, Fourth, and Sixth

Circuit cases discussed above which

Local 208 cites, they involve claims

which are independent of the labor

contract and, therefore, are not proper

Section 301 claims. Mack Trucks, No.

87-1650, slip op. at- 20-21. Mack

Trucks also distinguished the First

(Footnote Continued)

Circuit’s Hernandez decision and the

Seventh Circuit’s NDK decision, noting

that these cases "merely concluded that

the plain language of § 301 £xbars

jurisdiction to consider a suit

concerning the existence of a

collective bargaining agreement." Id.

at 2i n.1i0.

The inconsistency which Teamsters

Local 208 sees in previous Ninth

Circuit decisions (Petition at 9 n.3)

Only reflects an evolving consensus.

Recent Ninth Circuit cases have

uniformly adopted a= broad inter-

pretation of Section 301 which com-

ports with this Court’s analysis.

International Brotherhood of Electrical

Workers, Local 532 Vv. Brink

Construction Co., 825 F.2d 207, 212

(9th Cir. 1987); John 6. Griteie,

Construction Co. v. United Brotherhood

of Carpenters & Joiners, 785 F.2d 706,

712 (9th Cir. 1986). In any event,

Teamsters Local 208 should have calied

its perceived "inconsistency" to the

Ninth Circuit’s attention in its appeal

or by a motion for hearing en banc.

Having failed to give the Ninth Circuit

this opportunity to "correct" any

(Footnote Continued)

II. THERE Is NO CONFLICT AMONG

Teamsters Local 208 argues that

the decision below conflicts with San

Diego uildi des nci Vv.

Garmon, 359 U.S. 236 (1959) and its

progeny. These cases hold that the

N.L.R.B. possesses primary jurisdiction

over activities which are arguably

(Footnote Continued)

claimed “inconsistency," it is now too

late to raise this issue with this

Court.

unfair labor practices. There is,

however, no such conflict between the

present case and Garmon.

This case falls squarely within

the broad exception to Garmon preemp-

tion which Congress carved out when it

enacted Section 301. As noted above,

this provision gives the judiciary

rather than the N.L.R.B. subject matter

jurisdiction over disputes arising out

of labor contracts. This Court has

repeatedly affirmed the broad scope of

Section 301 jurisdiction even over

matters which may arguably be unfair

labor practices. In Smith v. Evening

News Ass‘’n, the Court stated:

"The authority of the Board to deal

with an unfair labor’. practice

—_-. |

which also violates a collective

bargaining contract is not

displaced by § 301, but it is not

exclusive and does not destroy the

jurisdiction of the Courts in

suits under § 301."* 371 U.S. at

197.

a See also Amalgamated Ass’n_ of

Street ctric Railw Mo oach

Employees v. Lockridge, 403 U.S. 274,

300 (1971) ("We have exempted § 301

suits from the Garmon principle because

of the evident congressional determina-

tion that courts should be free to

interpret and enforce collective-

bargaining agreements even where that

process may involve condemning or

permitting conduct arguably subject to

the protection or prohibition of the

National Labor Relations Act").

Thus, because the present case

falls within the jurisdictional ambit

of Section 301, the district court had

jurisdiction over this case even if

Teamsters Local 208’s contractual

misrepresentations may also constitute

an unfair labor practice subject to the

N.L.R.B.’s concurrent jurisdiction.*

* None of the cases which Teamsters

Local 208 cites attempts to repeal

Section 301 nor say what Teamsters

Local 208 desperately wants them to

say -- that a union’s fraudulent

conduct in the procurement of a labor

contract is exclusively a N.L.R.B.

matter and not within the Section 301

jurisdiction of the federal courts.

Both Lexington Cartage Co. Vv.

International Brotherhood of Teamsters,-

etc., 713 F.2d 194 (6th Cir. 1983) and

Mo-Kan Teamsters Pension Fund Y,

Creason, 716 F.2d 772 (10th Cir. 1983),

cert. denied, 464 U.S. 1045 (1984), for

example, involved representational

issues -- the employers’ contention

(Footnote Continued)

WwW

(Footnote Continued)

that the unions lacked majority status.

These cases did not implicate Section

301’s contract concerns nor did they

hold that contract formation issues

such as fraud are not within Section

301’s jurisdiction. Indeed, Mo-Kan

contrasted the question of majority

status with the contract formation

defense of illegality which it conceded

may be asserted under Section 301. 716

F.2G Q© 773.

Anderson v. Ford Motor Co., 803

F.2d 953 (8th Cir. 1986), cert. denied,

Pas 5 20% Be. CO. 2042, 37 i.

Ed. 2qd 747 (1987), does not even

discuss the Garmon principle of primary

jurisdiction. In Anderson, the Eighth

Circuit concluded there was no Section

301 jurisdiction because the plain-

Citta’ claims of permanent-status

employment were neither based on nor

referred to the collective bargaining

agreement. id. at 958. By contrast,

not only did the source of Rozay’s

obligation to make the disputed trust

fund contributions arise because of

Teamsters Local 208’s contractual

misrepresentations and because the

fraudulently induced Agreement was

(Footnote Continued)

——

be nt ha a tee

eee ee

SON RO a See A Pm oe

| See set na Wad aes Donato

Iii. THE NINTH CIRCUIT’S DECISION THAT

A_UNION MAY BE LIABLE FOR INTEN-

TIONALLY MISREPRESENTING MATERIAL ,

FACTS DURING THE COLLECTIVE

BARGAINING PROCESS NEITHER CON-

FLICTS WITH RELATED DECISIONS

RENDERED IN OTHER CIRCUITS NOR

RAISES IMPORTANT QUESTIONS OF

FEDERAL LABOR LAW.

As the Ninth Circuit acknowledged,

other than in the present case, no

other court has ruled on the narrow

issue presented by Teamsters’ Local

208’s fraud defense: whether a union

may, with impunity, engage in the most A

(Footnote Continued)

Signed, but also the factual finding of

fraud is based on a lengthy analysis of

the Agreement and the negotiations

leading up to it.

"disgusting" fraud so long as_ the

deceit involves factual misrepresenta-

tions concerning trust fund actions.

Rozay’s Transfer, 850 F.2d at 1330.

None of the cases cited by Team-

sters Local 208 supports its asserted

and novel right to deceive an employer.

Indeed, the cases Teamsters Local 208

cites stand for the proposition that it

is unreasonable for an employer to rely

on a union’s advice with respect to

trust fund policy or ERISA obligations.

See Knoll v. Phoenix Steel Corp.,

465 F.2@ 1128, 1132 (3€. Cir. i972),

cert. denied, 409 U.S. 1126 (1973)

(misrepresentation concerning an issue

of trust policy -- whether lump sum

pension payments could be made); Martin

v. Hamil, 608 F.2d 725, 729 (7th Cir.

1979) (misrepresentation concerning

employers’ ability to make _ pension

contributions on their own behalf);

Teamster’s Local 348 Health & Welfare

Fund v. Kohn Beverage Co., 749 F.2d

315, 317 (6th Cir. 1984), cert. denied,

471 U.S. 1017 (1985) (misrepresentation

concerning employer’s obligation to

make pension contributions for

non-union employees); Galvez v. Local

804 Welfare Rust Fund, 543 F. Supp

316, aay (E.D.N.Y. 1982) (misrep-

resentation concerning employee’s

entitlement to retirement benefits);

Chambless v. Masters, Mates & Pilots

Pension Plan, 571 F. Supp. 1430, 1451

($.D.8.%. 1983) (misrepresentation

concerning conduct constituting forfei-

ture of pension benefits); Ridens v.

Voluntary Separation Program, 610 F.

Supp. 770, 772, 774 (D. Minn. 1985)

(misrepresentation concerning employ-

ee’s ability to collect severance

benefits).

These cases, however, are irrele-

vant. Teamsters Local 208’s_ fraud

concerns the concealment of material

facts and not mistaken advice regarding

legal obligations to the Trust. As the

Ninth Circuit emphasized below in

distinguishing similar cases, the

present matter has_ nothing to do with

Mr. Rozay’s perception of Murrietta’s

status, i.e., Mr. Rozay did not rely on

Murrietta’s explication of Trust policy

or his analysis of ERISA obligations.

Rozay’s Transfer, 850 F.2d at 1329.

"In the present’ case, Rozay’s

Transfer alleges that the union

intentionally misrepresented a

material fact by failing to

disclose that its obligation to

the trust fund would not _ be

forgiven. Rozay’s Transfer did

not miscomprehend its legal

obligations to the fund, rather,

it misunderstood the state of

facts, known to the union, exist-

ing at the time it entered into a

separate agreement with the

union." Id. (emphasis in origi-

nal).

Thus the rationale underlying the

cases cited by Teamsters Local

208 -- that an employer cannot justifi-

ably rely on a union’s advice concern-

ing trust policy -- is simply not

relevant here. Indeed, as the Ninth

Circuit concluded: "the union has

cited no authority or sound legal

principle nor can we discern any,

explaining why rules’ pertaining to

fraudulent inducement should not apply

to the formation of labor contracts."*

Rozay’s Transfer, 850 F.2d at 1330.

The cases which Teamsters Local

208 relies upon are distinguishable for

other reasons as well. Only Galvez

concerns a fraudulent misrepresentation

made by a union representative. Galvez

rejected the fraud claim, not because

the plaintiff/employee’s reliance on

the union’s misrepresentation regarding

trust policy was unreasonable, but

rather because the plaintiff failed in

other respects to establish the

elements of fraud. Galvez, 543 F.

Supp. at 318.

One case cited by Local 208

actually held that an employee’s

reliance on ae eunion’s advice with

respect to pension policy was justified

given the close relationship between

the trust fund and the union official.

Oates v. Teamsters Affiliates Pension

(Footnote Continued)

CONCLUSION

For all the reasons stated, the

decision below is not in conflict with

the decisions of other courts of appeal

or of this Court. Respondent Rozay’s

(Footnote Continued)

Plan, 482 F. Supp. 481, 488 (D.D.c.

1979). As an alternative analysis of

Teamsters Local 208’s fraud, the Ninth

Circuit similarly stated that because

the decision to forgive retroactive

pension contributions was discretionary

and because there was a commonality of

interests between Teamsters Local 208

and the Trust, it was not unreasonable

as a matter of law for Rozay’s to

believe that Teamsters Local 208 could

favorably influence the Trust. Rozay’s

Transfer, 850 F.2d at 1328-29.

Transfer respectfully submits that the

Petition for a Writ of Certiorari

should be denied.

DATED: October 20, 1988.

Respectfully submitted,

STEPHEN P. PEPE

(Counsel of Record)

CLIFF FONSTEIN

O’MELVENY & MYERS

400 South Hope Street

Fifteenth Floor

Los Angeles, California

90071-2899

Counsel for Respondent

Rozay’s Transfer

- >

tad Mili rapa

et eae -

Appendix A

In the United States

District Court

For The Central District

Of California

Before the

Honorable Mariana R. Pfaelzer, Judge

No. CV-83-4194 MRP

SOUTHWEST ADMINISTRATORS, INC.,

Plaintiff,

vs.

ROZAY’S TRANSFER,

Defendant.

Los Angeles, California

Friday, May 24, 1985

1:30 p.m.

- REPORTER’S TRANSCRIPT OF

PROCEEDINGS

THE CLERK: Item No. 4, Civil

83-4194, Southwest Administrators, Inc.

versus Rozay’s Transfer.

Counsel, please make your appear-

ances.

MR. PEPE: Good afternoon, your

Honor. Stephen Pepe and Cliff Fonstein

on behalf of defendant Rozay’s Trans-

fer.

MS. WALDECK: Patricia Waldeck of

Pappy, Kaplon, Vogel & Phillips for

plaintiff.

THE COURT: All right. Now sit

down for just a minute. I want to talk

to you.

Now we are going up against a body

of established law, in my opinion, that

makes these defenses that can be raised

against a trust fund very difficult to

deal with.

Now if I have ever in my life seen

a case of pure fraud it is this case.

Mr. Murrietta deliberately, will-

fully, and knowingly defrauded Mr.

Rozay. There isn’t the slightest doubt

about it. The reason I had you come

here is that I wanted to say that on

the record. I have said that in the

findings. I did not believe the tes-

timony of Mr. Murrietta.

I do not believe that Mr. Anderson

from the evidence before me did any-

thing wrong, but I have never in my

life seen a situation which was clearer

in terms of fraudulent conduct than

this situation with respect to Mr.

Murrietta.

Now that being the case, I made a

finding that there was fraud and then

I on one more occasion have gone

through all of the cases and I cannot

find that under the law of the Ninth

Circuit that gives a defense to Mr.

Rozay against the trust fund. Now I do

believe that what must be done immedi-

ately is that there has to be some

consideration given to an action

brought against Mr. Murrietta and the

union and if you believe that there is

any other finding that should be made

to make more clear what I am now say-

ing, I am perfectly prepared to have

you come back and make an application

for it.

I would have found for Mr. Rozay

if there was any way for me to do it.

I am totally and absolutely disgusted

with the behavior in this case, but I

believe that my hands are tied.

Now what did I do besides reading

all the cases myself? Well, I had my

clerk read all of the cases without

telling my clerk what conclusion to

reach. I just told the clerk what I

had found and said, "Now what do you

see from looking at. all of the cases?"

And the result was the same. Then I

reread all the cases again. Now I

don’t think that the contract ls

ambiguous. If there has ever been a

Situation where it doesn’t appear that

there was any meeting of the minds,

this is it. There is no question about

it. There is no doubt about the fact

that Mr. Rozay knew he was signing a

collective bargaining agreement, and

under the cases that I had in front of

me, it doesn’t seem to me I have any

choice but to follow the cases that are

in the Ninth Circuit.

If I were the trust fund knowing

that that was the feeling of the Court

I would come to an accommodation about

this because it is a disgusting set of

facts, and I am using the word "dis-

gusting" deliberately with very calm

reflection.

I do not regard it as proper con-

duct on the part of a union to defraud

an individual who is negotiating with

them, and then have the trust fund take

the benefit of it, and that is exactly

what happened here.

Now if I have made myself clear

that is all I have to say.

MR. PEPE: Thank you, your Honor.

We appreciate your comments.

THE COURT: It is the most unfair

conduct I have ever seen.

MR. PEPE: We agree with you, your

Honor.

THE COURT: You just can’t con-

ceive of a situation where a trust fund

should get the benefit of that kind of

conduct, but under the Ninth Circuit

case law, I think the trust fund does

not -- or you can’t assert against the

trust fund a defense such as this. He

knew that it was a collective bargain-

ing agreement. He went into it not

knowing what he was doing; that is to

say, he was assuming that the facts

were other than what they actually

were. At the very moment he signed it,

Murrietta knew very well indeed that

the motivating reason for Mr. Rozay to

go into this transaction had been ne-

gated, and he didn’t tell him aut ph ae

Now if that is not fraud, then I have

never seen it.

All right. So now you have the

findings and the judgment. The reason

I am having you in here is that if

there is anything that you think that I

should do to add to the findings, I am

prepared to do that if I reasonably can

because the result I have reached is

totally inequitable. It is the wrong

result on this set of facts, but I

think I am bound by this case.

MR. PEPE: I appreciate your com-

ments, your Honor. We will take a look

at the findings over the weekend and we

will see if we want anything addition-

Si.

THE COURT: I don’t believe Ander-

son did anything wrong at all. I

think he did everything he was supposed

to, even though he wasn’t here to tes-

tify. I thought about that a great

deal, and I don’t know what would have

happened if he had been the one who had

gone over there or if he had _ been

present at the time. I doubt that he

would have let that happen.

MR. PEPE: I think that is cor-

rect, your Honor.

THE COURT: Thank you.

MR. PEPE: Thank you, your Honor.

THE COURT: Incidentally, Ms.

Waldeck, this is no reflection on you

as a lawyer or on the trust fund. Do

you understand that?

MS. WALDECK: Yes.

THE COURT: I have to make this

clear on the record because I feel this

is one of the very few times when I

feel really that I have done the wrong

thing. Thank you.

MR. PEPE: Thank you, your Honor.

MR. ROZAY: Thank you.

(Proceedings concluded)

CREBAZALAS SSE

I HEREBY CERTIFY THAT THE FOREGO-

ING IS A TRUE AND CORRECT TRAN-

SCRIPT FROM THE STENOGRAPHIC

RECORD OF PROCEEDINGS IN THE FORE-

GOING MATTER.

/S Beth E. Culberston . July 19, 1985

BETH E. CULBERTSON, CSR DATE

Appendix B

United States District Court

Central District of California

Case No. CV-84-8313 MRP (Bx)

ROZAY’S TRANSFER,

Plaintiff,

Vs.

LOCAL FREIGHT DRIVERS, LOCAL 208,

INTERNATIONAL BROTHERHOOD OF

TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN

AND HELPERS OF AMERICA,

Defendant.

PRE-TRIAL CONFERENCE ORDER

[Filed January 14, 1986]

Pursuant to Rule 16 F.R.Civ.P.,

Local Rule 9, IT IS ORDERED:

F This is an action for rescis-

sion or, in the alternative, for

indemnification and for fraud. The

parties are Rozay’s Transfer

("Rozay’s"), a California corporation,

plaintiff, and Local Freight Drivers

Union, Local 208, International Broth-

erhood of Teamsters, | Chauffeurs,

ssieainaaaielaiie & Helpers of America

("Local 208"), defendant. The plead-

ings which raise the issues are as

follows:

a. Complaint for rescission

oF, in the alternative, for

indemnification and for fraud.

b. Answer to complaint.

2. Federal jurisdiction and

venue are invoked upon the grounds that

this is an action pursuant to Section

301(a), Labor-Management Relations Act,

29 U.S.C. §185(a).

3. The parties are essentially

in agreement as to the facts and,

therefore, it is estimated the trial

will not take more than (1) day.

4. The trial is to be to the

court.

_- The following facts are

admitted and require no proof:

a. Plaintiff Rozay’s is a

California corporation engaged in

the trucking industry in Southern

California.

b. The truck drivers and

dock workers employed by Rozay’s

are now and for several years have

been represented for purposes of

collective bargaining by defendant

Locai 208.

CS. Rozay’s and Local 208

were parties to a_ ccllective

bargaining agreement ("Agreement")

and an Employer-Union Pension

Certification ("Certification")

which expired on September 30,

1981.

d. The Agreement and

Certification which expired on

September 30, 1981 required

Rozay’s to make contributions to

the Western Conference of Team-

sters Pension Trust Fund ("Trust

Fund") on behalf of employees

represented by Local 208.

e. Rozay’s made regular

contributions to the Trust Fund

during the life of the Agreement

and Certification and continued to

make contributions after the

expiration and through April,

1982, while Local 208 and Rozay’s

attempted to negotiate a renewal

Agreement and Certification.

fi On or about April 18,

1982, Local 208 presented a rough

draft of a new collective bargain-

ing agreement to Rozay’s. After

reviewing the draft, on May 6,

1982, Rozay’s returned it unsigned

to Local 208 with several correc-

tions.

g. Also on May 6, 1982,

Rozay’s Vice President, Richard

Fletcher ("Fletcher"), raised with

Local 208 Business Agent, Eddie

McKiernan ("McKiernan"), Rozay’s

severe economic problems and

explained that in order to stay in

business, Rozay’s would need a

reduction in labor costs. Rozay’s

specifically proposed cessation of

pension contributions, and reduced

holiday, vacation, and sick leave

benefits.

h. On April 26, 1982, the

Trust Fund wrote and informed

Rozay’s that it could not accept

pension contributions unless there

was a current agreement between

Rozay’s and Local 208. On June

30, 1982, the Fund wrote a sub--

stantially Similar letter to

Rozay’s.

F On June 8, 1982,

Fletcher again raised the need for

concessions with McKiernan = and

with Local 208’s Secretary-Trea-

surer, Alex Maheras ("Maheras").

Maheras requested that Rozay’s

make the proposal in the form of a

letter.

: = On June 11, 1982,

Fletcher on behalf of Rozay’s

wrote to Maheras to propose labor

concessions. Specifically, Flet-

cher proposed the following:

cessation of pension’ contribu-

tions; elimination of one week’s

vacation; elimination of two per-

sonal holidays; and elimination of

five days’ sick leave. This

letter was sent _via certified

mail.

xi Local 208 received the

letter of June 11, 1982, but made

no reply.

se On June 28, 1982, on

behalf of Rozay’s, Fletcher sent a

second letter to Local 208.

Fletcher stated that having

received no response to its

June 11, 1982 letter, Rozay’s

assumed that the union had 09no

objections to its proposed chang-

es, and the changes would be

implemented on July 6, 1982. This

second letter was also sent by

certified mail.

m. Local 208 received

Rozay’s letter of June 28, 1982,

but made no response.

n. Rozay’s implemented the

proposals outlined in its June 11,

1982 letter to Local 208 effective

July 6, 1982.

O. Rozay’s did not make

pension contributions to the Trust

Fund for the period of May, 1982

through February, 1983.

p. Several months after

Rozay’s ceased making pension

contributions to the Trust Fund,

Local 208 filed an unfair labor

practice charge with the National

Labor Relations Board ("Board").

The charge was filed on September

20, 1982 and amended on Noven-

ber 1, 1982, under Board Case No.

21-CA-21591. Local 208 also filed

a grievance pursuant’ to the

grievance and arbitration provi-

sions of the expired Agreement.

The Board charge alleged that the

cessation of the payment of

pension contributions constituted

an unfair labor practice, and the

grievance alleged that it was a

breach of the collective bargain-

ing agreement.

q. On January 17, 19s3,

William S. Rozay ("Mr. Rozay"),

President of Rozay’s met with

Maurice E. Anderson ("Anderson") ,

International Vice President of

the International Brotherhood of

Teamsters, and Archie Murrietta

("Murrietta"), President of Local

208. The purpose of this meeting

was to resolve the disputes then

pending between Rozay’s and Local

208. This meeting took place in

Anderson’s office.

er: At this January 17, 1983

meeting, Anderson represented to

Mr. Rozay that the Trust Fund had

forgiven unpaid. pension contribu-

tions of other employers in the

past and would see to it that

Rozay’s would not have to make

retroactive contributions for the

period of May, 1982 through

February, 1983. Although Anderson

did not articulate how he was

going to accomplish this, he

informed Mr. Rozay during’ the

meeting that he was going to speak

with certain people.

Ss. During this January 17,

1983 meeting, Murrietta represent-

ed to Mr. Rozay that he would

write a letter to the Trust Fund

on behalf of Rozay’s requesting

that the Trust Fund not require

Rozay’s to make pension contri-

butions tor the period of May,

1982 through February, 1983.

t. A couple of weeks later,

Mr. Rozay, anxious to know what

was going on, called Anderson

concerning this subject and,

during that conversation, Anderson

told Mr. Rozay that he was doing

everything that was necessary and

was on the right track to ensure

that Rozay’s would not have to

make pension contributions to the

Trust Fund for the period of time

in question.

u. Mr. Rozay had no further

conversations with Anderson con-

cerning this subject subsequently

thereafter.

Vv. Following the January

17, 1983 meeting, on January 21,

1983, Mr. Rozay wrote a letter to

Murrietta, with a carbon copy to

Anderson. In this letter

Mr. Rozay confirmed his’ under-

standing of the terms of the

egxechent reached on January 17,

1983. Specifically, the letter

stated, "No pension contributions

will be required for the period

April, 1982 through January,

1983."

Ww. On January 26, 1983,

Murrietta sent a reply to Mr.

Rozay’s letter of January 21,

1983, and sent a carbon copy to

Anderson. On the same date,

Murrietta wrote a letter to the

Trust Fund requesting that Rozay’s

be relieved from paying pension

contributions for the months of

July, 1982 through January, 1983

as he earlier indicated he would

do during the January 17, 1983

meeting with Anderson and

Mr. Rozay.

x. On February 16, 1983 the

Trustees of the Trust Fund met to

consider, among other agenda

items, whether to forgive Rozay’s

unpaid pension contributions for

the months of May, 1982 through

February, 1983. The Trustees

voted not to forgive the payment

of these contributions.

B-16

y. On or about March 4,

1983, Michael Uranga, an employee

of Southwest Administrators, the

entity who administers the Trust

fund in Southern California, told

Murrietta at a social gathering

that the Trust Fund had decided

not to forgive the payment of the

unpaid contributions.

Zz. On March 8, 1983,

Murrietta and Mr. Rozay met for

the purpose of executing a collec-

tive bargaining agreement, an

Employer-Union Pension Certifi-

cation, and a settlement agreement

which modified in writing certain

provisions of the collective

bargaining agreement and resolved

all pending disputes between

Rozay’s and Local 208 including

the Board charge and the griev-

ance.

aa. During this March 8,

1983 meeting, Murrietta did not

tell Mr. Rozay that the trustees

of the Trust fund had voted not to

forgive the payment of the unpaid

contributions.

bb. By letter dated March

24, 1983, the Trust Fund notified

Murrietta and Mr. Rozay of its

decision not to forgive the pay-

ment of the unpaid contributions.

cc. After its receipt of

this letter, Mr. Rozay did not

contact the Trust Fund to deter-

mine when the Trust Fund had made

its decision not to forgive the

payment of the unpaid contribu-

tions.

dd. After its receipt of

this letter, Rozay’s’ did not

contact Local 208 for the purpose

of seeking to reopen negotiations

and/or rescind, reform and/or

amend the collective bargaining

agreement Mr. Rozay executed on

March 8, 1983.

ee. After its receipt of

this letter, Rozay’s did not

contact Local 208 for the purpose

of seeking any economic relief

from Local 208 in light of the

Trust Fund’s decision not to

forgive the payment of the unpaid

contributions.

ft. on or about June 20,

1983, the Trust Fund filed an

action in this Court captioned,

Southwest Administrators, Inc. v.

Rozay’s Transfer, Case No.

83-4194-MRP ("Southwest") seeking

recovery of the unpaid pension

contributions, along with inter-

est, liquidated damages, and

attorney’s fees. In that action,

plaintiff Southwest Administra-

B-20

tors, Inc., was the assignee and

representative of the Trust Fund.

gg. In June 1985, after

approximately 4-5 bargaining

sessions which took place in

approximately November 1984, Local

208 and Rozay’s executed a new

collective bargaining agreement.

During those negotiations, the

subject of the Southwest litiga-

tion was not discussed and Rozay’s

did not seek to obtain any econom-

ic relief from Local 208 in light

of the Trust Fund’s decision not

to forgive the payment of the

unpaid contributions.

B-21

hh. On July 6, 1984, Rozay’s

filed a motion in Southwest for_

leave to file a third party

complaint against Local 208. That

conduct represented the first

occasion that Rozay’s had an-

nounced that it wished to reform

and/or rescind the collective

bargaining agreement Murrietta and

Mr. Rozay had executed on March 8,

1983 and/or was seeking monetary

relief from Local 208 arising out

of Murrietta’s conduct culminating

in the execution of the collective

bargaining agreement or March 8,

1983. At that time, Mr. Rozay was

not aware that Murrietta knew that

the Trust Fund had already decided

not to forgive the payment of the

unpaid contributions on the date

that the collective bargaining

agreement was executed.

ii. Subsequently thereafter,

in Southwest Administrators, this

Court held that Rozay’s was liable

to the Trust Fund for the unpaid

pension contributions and entered

judgment in favor of Southwest

Administrators in the amount of

$122,789.03. Added to the amount

of back pension contributions

($76,133.92) waS $15,226.65 in

liquidated damages, $25,039.09 in

interest, and $6,390.00 in attor-

ney’s fees. The interest Rozay’s

oweS 1S continuing to - accrue

pending appeal of Southwest

Administrators.

6. Discovery has been completed.

7; Fhe parties will file a joint

exhibit list. Copies of all exhibits

previously admitted in Southwest

Administrators may be admitted without

objection.

8. The parties have exchanged

witness lists and agree to make

Murrietta and Mr. Rozay available to

testify at trial. Except for use as

possible rebuttal evidence, neither

party intends to present evidence by

way of deposition testimony.

9. No law and motion matters are

pending or contemplated.

10. Bifurcation of the following

issues for trial is ordered:

a. None.

11. The foregoing admissions

having been made by the parties, this

pre-trial conference order shall

supersede the pleadings and govern the

court of the trial of this case, unless

modified to prevent manifest injustice.

DATED: January 14, 1986

By _/s/Mariana R. Pfaelzer

MARIANA R. PFAELZER

United States District Court Judge

O’MELVENY & MYERS

STEPHEN P. PEPE

CLIFF FONSTEIN

By _/s/Cliff Fonstein

CLIFF FONSTEIN

Attorneys for the Plaintiff

WOHLNER, KAPLON, PHILLIPS,

VOGEL, SHELLEY & YOUNG

By _/s/Robert D. Vogel

ROBERT D. VOGEL

Attorneys for the Defendant

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.