Opposition Brief — Kohn Beverage Co. v. Teamsters' Local No. 348

B4a-1356

CASE NO.

IN THE SUPREME COURT

OF THE UNITED STATES

\

October Term, 1985

THE KOHN BEVERAGE COMPANY

Petitioner

Vv.

, TEAMSTERS LOCAL NO. 348, et al

Respondents

RESPONSE TO PETITIONER'S WRIT OF CERTIORARI TO

THE SUPREME COURT OF THE UNITED STATES

William B. Gore

503 Centran Building

Akron, OH 44308

(216) 434-7167

Attorney for Respondent

RESPONSE TO QUESTIONS PRESENTED FOR REVIEW

I. The Court of Appeals correctly

determined that the collective bargaining

agreement between Kohn and Teamsters

Local 348 required payment of contributions

for all employees of the unit, irregardless

of union membership.

II. The Court of Appeals correctly

refused to apply estoppel principles

against the Local 348 Health and Welfare

Fund and the Central States Pension Fund

because Kohn failed to establish the

necessary and essential elements.

PARTIES:

Pursuant to Rule 34.1(b), Rules of

the Supreme Court, the parties to this

action are listed below:

Petitioner,

Respondents,

The Kohn Beverage Company

1065 Jenkins Boulevard

Akron, OH 44306

(216) 724-1233

International Brotherhood of

Teamsters, Chauffeurs, Ware-

housemen and Helpers of

America, Local Union 348

272 West Market Street

Akron, OH 44303

(216) 693-5300

ii

TABLE OF CONTENTS

Response to Questions Presented

for Review . «© «© «© © © © © ee @

POSCAGG. «© © © se ts tee 8 8&6

Table of Contents. . . «+2 2 « «

Table of Authorities ......

Statutes ..« s+ es es ee ee @ fb

Opinions Below ...«.«++s+e«e .

Statement of Case. . ..... >

Reasons for Denying Petitioner's

Writ of Certiorari .......

Certificate of Service .....

Appendices . «+.+«+s+*se#s8#s8e8 © «@ «

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TABLE OF AUTHORITIES

Cases

Audit Services, Inc. v. Rolfson,

641 F.2d 757 (9th Cir. 1981) ...

Central States v. Central Transport

698 F.2d 802 (6th Cir. 1983),

cert. granted, U.S. °

——

104 S.Ct. 3531 (1984)... ...-s.

Continental Baking Co., 99 NLRB 777,

30 LRRM 1119 (1952). . . « « «© «

Crosset Lumber Co. v. United States,

87 F.2d 930 (8th Cir. 1937)... .

Dickerson v. Colgrove, 100 U.S. 578

(1879) . > > > . . > . . > . > > >

Employer-Teamsters Joint Council

No. 84, Health and Welfare Fund

v. Weatherall Concrete, Inc.,

468 F. Supp 1167 (S.D.W.V.

AO7Bde w we eee eeeneee ee

Farmer v. ARA Services, 660 F.2d 1096

(6th Cafe 1981). . . . . os . . . .

Hodgins v. Central States, 624 F.2d 760

(6th Cir. 1980). . . . . . . . . .

Knoll _v. Phoenix Steel Corp., 465 F. 24

1128 (3rd Cir. 1972), cert.

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

iv

Page

19

19

20-21

22-22

2

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wee ea io) o |

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Manning v. Wiscombe, 498 F.2d 1132

CAGGR Cae. 2900) « © © © © © 8 @

Markt v. Ro-Mart, Inc., 471 F. Supp.

1292 (N.D. Cal. 1979). >. >. . . . >.

Moglia v. Geoghegan, 403 F.2d 110

(2nd Cir. 1968), cert. denied,

3964 8.8. BAD CASGOd. « © we we wees

NLRB v. General Motors, 373 U.S. 734

(1963) . . >. >. .* . >. . . . . . . >.

NLRB v. Hershey Foods, 513 F.2d 1083

(9th Cir. 1975). . >. . . . . . . >.

Phillips v. Kennedy, 542 F.2d 52

(8th Cir. 1976). >. >. > . >. . . >. >.

Radio Officers Union v. NLRB, 347 U.S.

1? (1954). . . . . . . . . . . . .

Reiherzer v. Shannon, 581 F.2d 1266

(7th Cir. 1970). . . . . . . . . .

Rosen v. Hotel and Restaurant Employees,

637 F.2d 592 (3rd Cir. 1981)...

Scheuer v. Central States Pension Fund,

394 F. Supp. 193 (£.D. Wis. 1975,

aff‘d. 570 F.2d 347 (7th Cir.

nee 6.4 6 6 & Ss © 6686 6 6 @'8

Scott County v. Advance-Rumley Thresher

Co., 288 F. 739 (8th Cir. 1923). .

Thurber v. Western Conference of

Teamsters Pension Plan, 542 F.2d

2206 (90h Cae. 3976) «© © © © wo 2 @

16-17

11-12

11-12

16

12

15

15

15

20

17-18

STATUTES

Page

Employee Retirement Income Security

Act, as amended, §§502, 515.

29 USC $§$§1132, 1145. .~. . « « «© - 2

Labor Management Relations Act, as

amended, §8(a) (3). 29 USC §158

TS) 43) « we ee ll ee ll lt lh Eee

Labor Management Relations Act,

as amended, §8(b)(3) 29% USC

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Labor Management Relations Act,

as amended, §9(a). 229 USC §159(a)

OV

Labor Management Relations Act,

as amended, §9(b). 29 USC §1_9(b) 6

Labor Management Relations Act,

as amended, §301(a). 29 USC §185

(a). e oe e © e ° e © e e e e ° e 2

Labor Management Relations Act,

as amended, §302(c)(5)(B). 29

USC §186(c)(5)(B). .. .... 17

vi

OPINIONS BELOW

The opinion of the United States

Sixth Circuit Court of Appeals is re-

ported at 749 F.2d 315 and is found in

Appendix "A" at p. | - The judgment of

the United States District Court for the

Northern District of Ohio was unpublished

and is also in Appendix "A" at |

JURISDICTION

The judgment of the United States

Sixth Circuit Court of Appeals was

entered on November 26, 1984. No peti-

tion for rehearing was filed.

vii

STATEMENT OF THE CASE

On February 29, 1981, Kohn Beverage

Company (Petitioner) and Teamsters Local 348

executed a collective bargaining agreement

(Agreement). The Agreement required Peti-

tioner to make contributions for each employee

to the Teamsters Local 348 Health and Welfare

Fund (Respondent) and Central States Southeast

and Southwest Areas Pension Fund (Respondent).

On September 1, 1981, 29 of Petitioner's em-

ployees staged a work stoppage, and on

September 3, 27 employees were terminated and

subsequently replaced by non-union employees.

When the non-union employees attempted

tc join the unicn pursuant to the union shop

clause in the Agreement, they were denied

membership by Local 348 Secretary-Treasurer,

Dan Darrow. Darrow, who was trustee and

administrator of Respondent told the employees

that they would not be eligible for benefits

from the Health and Welfare or Pension Funds.

Petitioner subsequently provided alternate

health and pension benefits to the non-union

employees.

On October 26, 1982, Respondent filed

a complaint pursuant to the Labor Management

Relations Act (LMRA). 29 USC §185(a) and the

Employee Retirement and Income Security Act.

29 USC §§1132(a), 1145. Respondent alleged

violation of the Agreement and failure by

Petitioner to contribute to the employee

benefit plans. Respondent sought to enjoin

violations of the Agreement and benefit plans

and to recover unpaid contributions, interest,

costs and attorney fees.

After trial on March 10, 1983, the

District Court filed findings of fact and

conclusions of law granting judgment for

Petitioner. The District Court held that

Petitioner was not required to contribute

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to the funds for non-union employees and,

alternatively, Respondents were estopped by

Darrow's statements to the new employees

from recovering the delinquent contributions.

Respondent appealed to the Sixth Circuit

Court of Appeals, which on November 26, 1984

issued an opinion reversing the District

Court. The Sixth Circuit held that the Agree-

ment applied to all employees of the bargain-

ing unit, irregardless of union membership.

The Court of Appeals ruled that the District

Court erred in holding that the union shop

clause alone limited Petitioner's obligation

to make contributions on behalf of union

members. In addition, the Sixth Circuit

ruled that the District Court's factual

findings relating to Petitioner's estoppel

defense were clearly erroneous. The Appeals

Court held that it is clear that Petitioner

had not established the elements of estoppel.

It is the Decision of the Court of

Appeals rendered on November 26, 1984 that

Petitioner presently seeks review through

a Writ of Certiorari to the United States

Supreme Court. Respondent maintains that

the Writ must be denied because the Sixth

Circuit's Decision does not present novel

questions or involve issues that are in

conflict among the Circuit Courts.

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REASONS FOR DENYING PETITIONER'S WRIT

OF CERTIORARI

I. THERE ARE NO NOVEL QUESTIONS CONCERNING

COLLECTIVE BARGAINING AGREEMENTS AND

LABOR RELATIONS.

Respondent's original action in District

Court was based on the express provisions of |

an ordinary collective bargaining agreement.

See Appendix “B" at p.l-3. The Agreement in-

cluded a standard recognition clause (Art. I)

and a typical union security provision (Art.

VI). Article XIV required Petitioner to

contribute to the Health and Welfare Fund

“for each employee covered by this Agreement.”

Similarly, Article XVII required employer

contributions to the Pension Fund “for each

regular employee covered by this Agreement.”

Article II defined the Agreement's use of the

term “Employee” to include the various job

classifications within the unit.

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The Sixth Circuit decided that, absent

contrary language, collective bargaining

agreements cover all employees of the bar-

gaining unit. Under the Court's interpreta-

tion of the Agreement, Petiticner was required

to make contributions to the Funds on behalf

of all unit employees, not just union members.

The Sixth Circuit's position embodies funda-

mental principles of labor relations and is

well supported by case law, including Central

States v. Central Transport, 698 F.2d 802

(6th Cir. 1983), cert. granted, U.S. ,

104 s.Ct. 3531 (1984).

A. COLLECTIVE BARGAINING PRINCIPLES

REQUIRE THAT AGREEMENTS COVER ALL

EMPLOYEES OF THE UNIT.

The LMRA grants unions the right to be

selected as the exclusive representative of

all employees in an appropriate unit for the

purpose ci collective baregsiaing. 29 USC

§159(a). The exclusive representative has a

duty to negotiate with the employer to reach

an agreement that will benefit all unit em-

ployees. 29 USC §158(b(3). The union then has

=6-

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a duty to administer the agreement ina fair

manner on behalf of all the unit's employees.

See Farmer v. ARA Services, 660 F.2d 1096

(6th Cir. 1981). The right of exclusive

representation is a fundamental tenet of

collective bargaining, the cornerstone of

United States labor policy.

The National Labor Relations Board

(Board) determines the scope of collective

bargaining by designating the "unit approp-

riate for the purposes of collective bargain-

ing." 29 USC §159(b). LMRA §9(b) requires

that the Board determine the appropriate

unit along tie lines of either the employer

unit, craft unit, plant unit or a subdivi-

sion thereunder. In making its determination,

the Board is guided by the basic concept

that only employees having a substantial

mutuality of interest in wages, hours and

working conditions can be appropriately

grouped in a single unit. See Continental

Baking Co., 99 NLRB 777, 30 LRRM 1119 (1952).

The defined unit is an important element in

labor relations. It determines who votes

for the exclusive representative and who

is covered by the coliective bargaining

agreement.

The union's right to exclusively repre-

sent all the employees of a particular unit

is commonly expressed in the agreement's

recognition clause. Recognition clauses are

included at the beginning of virtually all

collective bargaining agreements. They

establish the right and duty of the union to

represent all employees of the unit. Recog-

nition clauses reach all of the employees

who perform work covered by an agreement.

Manning v. Wiscombe, 498 F.2d 1131 (10th

Cir. 1974).

These important collective bargaining

concepts were considered by the Ninth Cir-

cuit in Audit Services, Inc. v. Rolfson,

641 F.2d 757 (9th Cir. 1981). Audit Services

is strikingly similar to the case at bar.

Audit Services was a delinquent contributions

case brought on behalf of certain union trust

funds. Under the terms of a collective bar-

gaining agreement, the employer was required

to contribute for each employee covered by

the agreement.

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In Audit Services the Ninth Circuit

affirmed the District Court, holding that

the agreements unambiguously called for

contributions to be made on behalf of all

employees, both members and non-members of

the union. To support its position the

Circuit Court noted that the agreement in

question contained a recognition clause

where the employer acknowledged that the

union was the exclusive bargaining repre-

sentative for “all employees" covered by

the agreement. The agreement then required

the employer to contribute to the Health and

Welfare Trust and the Pension Fund for “each

compensated hour worked by each employee

covered by this Agreement."

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Certainly the Sixth Circuit was justi-

fied in deciding that the Agreement's cover-

age extended to all employees of the unit.

That decision finds overwhelming support in

the LMRA and in Board and case law. The

agreement that the exclusive representative

negotiates must apply with equal force to

all unit employees, regardless of their

membership in the union.

B. THE COVERAGE OF THE AGREEMENT

AND ITS OBLIGATIONS THEREUNDER

ARE NOT LIMITED BY UNION

SECURITY CLAUSES.

The Exclusive representative always

attempts to include a security clause in

the agreement. Security clauses are impor-

tant because they are a potential source of

the union's financial and organizational

strength. One kind of security device, the

union shop, is specifically authorized by

the LMRA. 29 USC §158(a) (3).

LMRA §8(a)(3) permits the employer to

agree to a provision in a collective

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bargaining agreement that requires employees

to become union members after thirty (30)

duys of employment. Under a union shop

provision the employee does not have to be

a union member in order to be hired. How-

ever, he or she must become a union member

after a probationary period in order to re-

main employed. LMRA §8(a)(3) has been

interpreted to mean that employees cannot

be terminated where union dues have been

tendered, even though the employee otherwise

declines to become affiliated with the union.

NLRB v. Hershey Foods, 513 F.2d 1083 (9th

Cir. 1975).

Hershey Foods springs from several

rulings issued by this Court. The Supreme

Court has recognized §8(a)(3) as a clear

indication of Congress‘ approval of union

security devices as tools to promote sta-

bility in labor relations. NLRB v. General

Motors, 373 U.S. 734 (1963). In General

Motors, the Court held that the burdens of

membership upon which employment may be

conditioned are expressly limited to the pay-

ment of initiation fees and monthly dues.

According to the General Motors Court, employ-

ment may be conditioned on union membership

but in turn union membership may be condi-

tioned only upon payment of fees and dues.

As the Court noted in Radio Officers Union v.

NLRB, 347 U.S. 17, 41 (1954), “membership as

a condicion of employment is whittled down

to its financial core."

A union shop clause is a substantive

provision. It describes the requirement

that the employer is not to retain in its

hire for more than thirty (30) days persons

who do not become and remain members of the

union. A union shop clause can not define

or limit the parties’ obligations to perform

under the collective bargaining agreement.

A union shop clause is present not to assist

in interpreting the subsequent provisions

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of the agreement, but to define the inter-

relationship between the union, the employer,

and the employees. Markt v. Ro-Mart, Inc.,

471 F. Supp. 1292 (N.D. Cal. 1979).

In Markt the defendant employer had

argued that the union shop clause defined

the term “employee" as it was used through-

out the balance of the agreement. According

to the oe ee the union shop provision

effectively limited the term “employee"™ to

include only members of the union. The

District Court found that the union shop

clause neither defines terms, nor limits

the term “employee" to any meaning other

than one who, under the agreement, performs

work for compensation. Markt held that union

shop clauses cannot affect other terms of

a collective bargaining contract...

This principle is implicit in the

Sixth Circuit's Decision where it held that

to construe “employees” to mean union members

would render the language of the union shop

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clause as surplusage. The Circuit Court

reviewed the language of the Agreement's

union shop clause and took issue with how

the District Court concluded that the term

"employees" means "union member employees."

According to the Sixth Circuit at p. 5:

This construction effectively inter-

prets the union shop clause to require

union members to become union members,

and renders the clause meaningless.

The Appeals Court concluded that the class

of employees covered by the Agreement is not

necessarily coincident with the class of

union member employees.

The Sixth Circuit was justified in re-

versing the District Court's holding that

the presence of the union shop clause alone

limited Petitioner's obligation to make

contributions on behalf of union members.

That decision is supported in the case law

and by this Court's interpretation of LMRA

§8(a)(3). The parties’ obligations under

the Agreement are not defined or limited by

the pres2nce of a union security device.

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If. THERE IS NO SPLIT OF AUTHORITY OVER

THE APPLICATION OF ESTOPPEL PRINCIPLES

AGAINST HEALTH AND WELFARE AND PENSION

FUNDS.

Principles of estoppel have been applied

against health and welfare and pension funds.

See Rosen v. Hotel and Restaurant Employees,

637 F.2d 592 (3rd Cir. 1981); Scheuer v.

Central States Pension Fund, 394 F.Supp. 193

(E.D. Wis. 1975) aff'd. 570 F.2d 347 (7th

Cir. 1977); Hodgins v. Central States, 624

F.2d 760 (6th Cir. 1980). However, Petitioner

maintains that the "vast majority of the

Courts" have refused to apply estoppel prin-

ciples against pension plans. To support

this proposition, Petitioner points to a

footnote found in Reiherzer v. Shannon, 581

F.2d 1266 (7th Cir. 1970). None of the

Circuit Court cases that Petitioner refers

to allude to “confusion and ehsertaiatiy

about whether and in what circumstances

estoppel should be applied against health

and welfare and pension funds."

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A. NO CIRCUIT COURT HAS HELD THAT

ESTOPPEL PRINCIPLES CANNOT BE

APPLIED AGAINST FUNDS SEEKING

DELINQUENT CONTRIBUTIONS.

Phillips v. Kennedy, 542 F.2d 52

(8th Cir. 1976) involved a suit contesting

the disqualification of benefits allegedly

due a widow nder a pension plan. Estoppel

principles were not applied in Phillips be-

cause the Court determined that the husband-

participant had effectively fulfilled the

plan's eligibility requirements. The Eighth

Circuit held that the widow was entitled to

benefits on that basis nes In dictum,

the Circuit Court cautioned that the actu-

arial soundness of pension plans may be too

important to obligate the payment of benefits

solely on the basis of misleading conduct.

Phillips is hardly authority for the proposi-

tion that estoppel cannot be applied against

health and welfare and pension funds.

Moglia v. Geoghegan, 403 F.2d 110 (2d

Cir. 1968), cert. denied, 394 U.S. 919 (1969)

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was also an action brought by a widow to

compel payments from a pension fund. The

Trust was funded by employer contributions

but not on the basis of a collective bargain-

ing agreement or any other written agreement.

LMRA §302(c)(5)(B) prohibits payments from a

union-employer trust fund unless there is a

written agreement between the parties speci-

fying the basis upon which the payments are

made. 29 USC §186(c)(5)(B). The Funds invoked

§302 as a defense but the widow argued that

they should be estopped from denying benefits

on that ground. In Moglia the Second Circuit

refused to apply estoppel principles because

estoppel could not provide the written agree-

ment, the essential element. Moglia does not

hold that estoppel cannot be applied against

health and welfare and pension plans.

Thurber v. Western Conference of

Teamsters Pension Plan, 542 F.2d 1106 (9th

Cir. 1976) was a suit brought by an employee

seeking benefits under an Employer-Employee

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pension plan. In Thurber the plaintiff em-

ployee had permitted his union membership

to lapse, thereby creating a break in service.

The Circuit Court found that under the agree-

ment, the employer was not required to make

contributions for the purpose of “curing”

breaks in service. The Ninth Circuit ruled

that the pension fund could not legally re-

quire a retroactive contribution from the

employer. Moreover, it would also be illegal

for the fund to pay benefits to the plaintiff

on the basis of illegal retroactive contri-

butions. The Thurber Court did not hold that

estoppel could not be applied against the

pension fund. It held that the doctrine of

estoppel cannot be invoked to compel an

illegal act.

There is simply no authority supporting

Petitioner's claim that the Courts of Appeal

are split over whether estoppel principles

can be applied against health and welfare

and pension funds. All of Petitioner's

citations involve suits seeking benefit pay-

ments from pension plans. None of the cases

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involve delinquent contributions due under

the express terms of a collective bargaining

agreement. None of the cases involve health

and welfare plans. Estoppel principles are

applied against health and welfare and pen-

sion plans, if the requisite elements are ful-

filled.

B. PETITIONER'S ESTOPPEL DEFENSE

FAILED BECAUSE IT DID NOT

ESTABLISH THE NECESSARY ELEMENTS.

The proper function of estoppel is to

prevent fraud and to promote the ends of

justice. Dickerson v. Colgrove, 100 U.S.

$78 (1879). The party claiming an estoppel

must show the conduct giving rise to the

estoppel and its good faith reliance thereon.

The claiming party must prove an ignorance of

the real facts and that its injury was caused

by the conduct of the other party. Crosset

Lumber Co. v. United States, 87 F.2d 930 (8th

Cir. 1937). The application of estoppe!

must depend upon the circumstances of each

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particular case. Scott County v. Advance-

Rumley Thresher Co., 288 F. 739 (8th Cir.

1923). Applying the essential elements of

estoppel to this case, the Sixth Circuit

properly rejected Petitioner's estoppel

defense.

The Court of Appeals held that the

estoppel defense failed because Petitioner

had actual knowledge of the Agreement. Peti-

tioner knew of its obligation to make contri-

butions to the funds. This position is

supported by Employer - Teamsters Joint

Council No. 184 Health and Welfare Fund v.

Weatherall Concrete, Inc., 468 F. Supp. 1167

(S.D.W.V. 1979). In Weatherall the Court

refused to apply estoppel principles because

it could not be said that the claiming party

was without knowledge of the true facts.

Weatherall was an action seeking to

recover deficient contributions to union

trust funds. The Plaintiffs charged that

contributions were being made, but not in

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the amounts required by the collective bar-

gaining agreement. The employer defended by

invoking the doctrine of estoppel. The Dis-

trict Court rejected this defense because

the employer had reason to know the exact

amount due in contributions.

The Weatherall Court found that the

employer had signed and received a copy of

the collective bargaining agreement. The

agreement set forth the rates at which the

employer was to contribute to the fund. On

this basis, the Court held that the employer

had constructive, if not actual, knowledge

that contributions were not being made in

accordance with the agreement. With this

knowledge the employer could not avail it-

self of the estoppel doctrine.

The Sixth Circuit also ruled .that

Petitioner could not maintain an estoppel

defense because its "reliance" on Darrow's

representations was not reasonable. The

Circuit Court ruled that Petitioner had

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means of determining the truth of Darrow's

statements. Because Darrow was acting out-

side his authority, Petitioner could not

reasonably rely on his statements to the

non-union employees. The Court's finding

is reasonable, especially in light of

Knoll v. Phoenix Steel Corp., 465 F.2d 1128

(3rd Cir. 1972), cert. denied, 409 U.S.

1126 (1973).

In Knoll, several former employees of

a closed plant filed suit seeking pension

payments from the terminated Plan. The

collective bargaining agreement contained

a detailed provision outlining the Plan's

termination procedure. The Pension Retire-

ment Board was charged with supervising the

termination. The employees' claim was based

on a representation made to them by a union

agent. The employees argued that the union

was estopped from denying them benefits.

The Third Circuit found that the

employees should have known that the

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Retirement Board was vested with exclusive

control of the Plan's disposition at termina-

tion. The Court ruled that the provision's

fundamental aspect was its removal of the

. Plan's administration from union control.

Board control was critical to the structure

of the Plan as a whole. Knoll held that the

employees could not reasonably rely upon the

union official's statements.

In analyzing Petitioner's estoppel defense

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the Sixth Circuit did not “ignore" the find-

ings of fact made by the District Court. The

Appeals Court considered the findings of fact

relating to Petitioner's estoppel defense.

The Court determined that they were clearly

erroneous.

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CONCLUSION

The Sixth Circuit's reasoning is based on

fundamental principles of labor relations

and is supported by the case law. The Court

of Appeals decision does not raise important

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ee eS

shat r

ae

ee ee eee ee ne ene Ww eres

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atl = ie caitlin

or novel questions. It does not conflict

with any decisions of the other Circuit

Courts. For these reasons Petitioner's

Writ of Certiorari must be denied.

Respectfully submitted,

LAYBOURNE, SMITH, OBERDANK,

GORE & SHAPIRO

William B. Go

Attorney for spondent

503 Centran Building

Akron, OH 44308

(216) 434-7167

=-24@-

CERTIFICATE OF SERVICE

A copy of the foregoing has been

forwarded by regular U.S. Mail this AL

day of March 1985 to Harry A. Tipping,

Attorney for Petitioner, 300 Centran

Building, Akron, Ohio 44308; and Bernard Ss.

Goldfarb and Mark V. Webber, Attorneys for

Respondent, Central States, 1800 55 Public

Square, Cleveland, Ohio 44113.

f

LX B. Gos

Attorney for spondent

=25-

EDITOR'S NOTE

THE FOLLOWING PAGES WERE POOR

HARD COPY AT THE TIME OF FILMING.

IF AND WHEN A BETTER COPY CAN BE

OBTAINED, A NEW FICHE WILL BE

ISSUED.

RECOMMENDED VOR FULL. TEXT PUBLICATIOS

See, Sixth Circuit Rule 24

“4 EAA Avs

Nos. 83-3663 & 83-3672

UNITED STATES COURT GF APPEALS

WeaMsTER's Locat 348 HEALTH AND

AVELFARE Funp, et al.

| Plaintiffs-Appellants, : <

ffs-Ap} United States District

Court for the North-

i

| Ox AprEaAL from the

em District of Ohio.

v.

Kon Bevenace Comrany.

Defendant-Appellec.

| Decided and Filed November 26, 1984

j ----

’ Before: Mantixn and Contig, Circuit Judges; and Peck.

enior Circuit Judge.

Contig, Circuit Judge. Plaintiffs Teamster’s Local 348

ealth and Welfare Fund and Central States Southeast and

outhwest Areas Pension Fund appeal a district court order

sranting judgment for defendant, Kohn Beverage Co., in this

ction brought pursuant to the Employee Retirement Income

security Act, 29 U.S.C. §$ $ 100I- 1381. and 29 U.S.C. $ 185(a).

_ mo. ~

ian. “Ss eS

Ve reverse. --8 8S

ry Appendix nan

-lj-

we de See se SY : ; ae

Health & Welfare Fund v. Kohn, etc. Nos. 83-3663 etc.

I.

'On February 20, 1981, Kohn and Teamster’s Local 348

ecuted a collective bargaining agreement which provided

that Kohn must contribute for each employee to the Team-

fer’s Local 348 Health and Welfare Fund and Central States

Southeast and Southwest Areas Pension Fund. On September

, 1981, twenty-nine Kohn employees staged a work stoppage,

* d, on September 3, twenty-seven employees were termin- .

Sted and subsequently replaced by non-union employees.

ee discharged employees were reinstated after arbitration.

When the non-union employces attempted to join the union

Pursuant to the union shop clause in the collective bargaining

wgreement, they were denied membership by Local 348

Becretary-Treasurer Dan Darrow. Darrow, who was trustee

nd administrator of the Health and Welfare Fund, told the

mployees that they would not be eligible for benefits from

the Health and Welfare or Pension Funds. Kohn subsequently

provided alternative health and pension benefits to the non-

nion employees.

= On October 26, 1982, the Health and Welfare Fund filed.

ja complaint pursuant to 29 U.S.C. §$ 185(a), 1132(a), 1145

jalleging violation of the collective bargaining agreement and

failure by Kohn to contribute to the employee benefit plans."

‘The plaintiffs sought to enjoin violations of the collective

‘bargaining agreement and benefit plans and to recover unpaid

‘contributions, interest, costs and attorney fees. After trial on

)March 10, 1983, the district court filed findings of fact and

4 conclusions of law granting judgment for Kohn. The district

jcourt held that Kohn was not required to contribute to the

}funds for non-union employees and that, even if Kohn were

‘required to contribute, plaintiffs were estopped by Darrow’s

> ‘Central States first learned it had been named a plaintiff in the

case on January 4, 1983. and, after petitioning the court, filed an

amended complaint on March 4. 1983, alleging essentially the same

) allegations as the original complaint.

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Nus. $3-3663 etc. Health & Welfare Fund v. Kohn, etc. 3

statements to the new employees from recovering the delin-

quent contributions. Additionally, the district court held that

Kohn was entitled to a credit for payments made to the

‘ Health and Welfare Fund in late August 1981 for the em-

ployees terminated September 3. Plaintiffs appeal.?

Il.

Plaintiffs contend that the district court erred in construing

the collective bargaining agreement and benefit plans to

require Kohn to contribute to the plans for union members

only. The construction of collective bargaining agreements

and employee benefit plans is a question of law fully review-

able by this court. Central States, Southeast and Southwest

Arcas Pension Fund v. Central Transport, Inc., 698 F.2d 802,

805 (6th Cir. 1983), cert. granted, —— U.S. —, 104 S. Ct.

2The respective trust agreements define, by reference, Kohn’s

obligation ta contribute to the trusts in terms of Kohn’s obligations

’ under the collective bargaining agreemeit. Therefore, the inquiry

> relative to both the LMRA claims and ERISA claims is identical,

and jurisdiction is appropriately premised on 29 U.S.C. § 185(a). Sce

Laborers Health and Welfare Trust Fund v. Kaufman & Broad of

Northern California, 707 F.2d 412, 416 n4 (9.4 Cir. 1983). The district

court apparently made no determination as io whether plaintiffs prop-

erly brought this action “on behalf of their members,” nor whether

plaintiffs were “participants.” “beneficiaries,” or “fiduciaries” within

+ the purview of 29 U.S.C. §§ 1002(7), (8), (21), 1132(a), (e). Whether

plaintiffs properly state claims cognizable undcr ERISA was not

raised by the parties and has no effect on our determination of issues

raised in this appeal; therefore, we express no opinion as to whether

plaintiffs properly state a claim pursuant to 29 U.S.C. $1132(a). See

Pressroom Unions-Printers League Income Security Fund v. Con-

tinental Assurance Co., 700 F.2d 889 (2d Cir.), cert. denied, —— U.S.

—, 104 S. Ct. 148 (1983); Local 807 Labor-Management Pension

Fund v. Qwens Trucking, Inc., 585 F. Supp. 616 (E.D. N.Y. 1984);

) Sirty-Five Security Plan v. Blue Cross and Blue Shield of Greater

New York. 583 F. Supp. 380, 383 (S.D. N.Y. 1984); Margaret Hall

Foundation, Inc. v. Atlantic Financial Management, Inc., 572 F. Supp.

> 1475, 1485 (D. Mass. 1983); Employees Savings Plan of Mobil Oil

Corporation v. Vickery, 99 F.R.D. 138. 140-41 ($.D. N.Y. 1983); Rosen-

thal v. Ann Service Corp., 571 F. Supp. 1229, 1230 n.1 (S.D. N.Y. 1983);

Amalgamated Tidustrial Union Local 44-4 Health and Welfare Fund

"Vv. Webb, 562 F. Supp. 185 (N.D. Ill. 1983). However, sce Fentron

JIndustries, Inc. v. National Siiopmen Pension Fund, 674 F.2d 1300,

1395 (9th Cir. 1982).

= 3a

4. Health & Welfare Fund \. Kolin, ete. Nos. $3-3663 ete.

3531 (1984); Muckey v. National Football Leaguc, 543 F.2d

606, 612 (Sth Cir. 1976), cert. dismissed, 434 U.S. 801 (1977).

The collective bargaining agreement requiredt Kohn to con-

_ tribute to the Health and Welfare Fund “for each employee

_ covered by this Agreement,” Article XIV, and to the Pension

| Fund “for each regular employee covered by this Agreement,”

’ Article XVII. Article II of the agreement provided that

“[t]he term ‘Employees’, as used in this Agreement shall in-

_ elude Driver-Salesmen, Special Drivers, Swing Drivers, Over-

_ the-Road Drivers, Helpers and Warehousemen, Garage Me-

chanics and Garage Maintenance employees.” The agree-

ment included a recognition clause and a union shop clause.*

Several factors guide a determination of the scope of

coverage of a collective bargaining agreement. This court

has construed a definition of emplovees by job classification

to require coverage by the collective bargaining agreement

of all employees within those classifications, regardless of

union membership. Central States v. Central Transport, 698

F.2d at 804-05. The presence in the agreement of a recogni-

tion clause designating the union as the exclusive bargaining

ey ee aE

YO le Re nt alee ag rca te.

3 Article I provided:

The employer recognizes the Union as the sole and exclusive

bargaining agent on behalf of all employees of the Employers, as

hereinafter defined in Article II, with respect to wages, hours,

and all other terms or conditions of employment.

Article VI provided:

: It shall be a condition of employment that all employees of the

Employers covered by this Agreement, who are members of

the Union in good standing on the effective date of this Agree-

ment, shall remain members in good standing by the pay-

ment of membership dues and those who are not members on

the effective date of this Agreement shall, on the thirty-first

(31) day following the effec :ve date of this Agreement, become

and remain members in good standing in the Union by payment

of membership dues. It shall also be a condition of employ-

ment that all employees covered by this Agreement and hired

on or after its effective date shall on the thirty-first (31) day

following the beginning of such employment, become and re-

main members in good standing in the Union by payment of

membership dues.

-4-

5

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iat dh ee ee atin,

Ot se AY nes Was ON Gt gcc i shat ie Sat

Se ber Vd OO: D+ set Dg lane ite gee hate tie e

;

Nos. 83-3663 ete. Health & Welfare Fund vy. Kohn, etc. 5

agent for all employees indicates that fringe benefit contri-

butions are required for both univn and non-union members.

Audit Services, Inc. v. Rolfson, 641 F.2d 737, 761 (9th Cir.

1981); Manning v. Wiscombe, 498 F.2d 1311, 1313 (10th

Cir. 1974). The absence of language distinguishing union

and non-union employees indicates that the agreement covers

all employees. Carpenters and Millwrights Health Benefit

Trust Fund v. Gardineer Dry Walling Co., 573 F.2d 1172,

1177 (10th Cir. 1978). See Cincinnati Bengals, Inc. v.

Thompson, 553 F. Supp. 1011, 1014 (S.D. Ohio 1983).

The district court based its interpretation of the agreement

on the presence of the union shop clause. However, union

shop clauses have been construed to require only payment

of union dues and not union membership. NLRB v. Hershey

Foods Corp., 513 F.2d 1083, 1085-86 (9th Cir. 1975); Markt

v. Ro-Mart, Inc., 471 F. Supp. 1292, 1296 (N.D. Cal. 1979).

See NLRB v. Gold Standard Enterprises, Inc., 679 F.2d 673,

677 (7th Cir. 1982). See also Woelke & Romero Framing,

Inc. v. NLRB, 456 U.S. 645, 665 (1982). Further. to con-

true the term “employees” to mean union members would

render the language of the union shop clause surplusage.

The union shop clause required “that all emplovees covered

by this agreement . . . become and remain members in good

standing in the Union. . . .” This language suggests that

“employees covered by this agreement” may exist prior to

and apart from union-member employees. The district court

interpreted the term “employees” to mean “union-member

employees.” This construction effectively interprets the union

shop clause to require union members to become union mem-

bers, and renders the clause meaningless. “A contract will

not be construed so as to reject any words as surplusage if

they reasonably can be given meaning.” Union Investment

Company v. Fidelity & Deposit Company of Maryland, 549

F.2d 1107, 1110 (6th Cir. 1977).

The district court erred in interpreting the agreement as

applying only to union members. The agreement recognized

=5<

6 = Health & Welfare Fund v. Kohn, etc. — Nos. 83-3663 ete.

the union as the bargaining agent for all employees and

defined the term “employees” by job classification and not

union membership.4 The agreement required contributions

“for each employee covered by this agreement.” The union

shop clause indicates that the class of employees “covered by

this agreement” is not necessarily coincident with the class

of union-member employees. Further, the district court

found that union and non-union members were treated

identically in regard to wages, hours and conditions of em-

ployment. Accordingly, the district court erred in holding that

the presence of the union shop clause alone limited Kohn’s

obligation to make contributions on behalf of union members.

The district court held, alternatively, that plaintiffs were

estopped from seeking payment of the delinquent contri-

butions by Dan Darrow’s refusal to allow the newly hired

Kohn employees to join the union. Whether facts proven are

Jegally sufficient to constitute an estoppel is a question of

law fully reviewable by this court. Prize Steak Products,

Inc. v. Bally’s Tom Foolery, Inc.. 717 F.2d 367, 370 (7th

Cir. 1983). However, because determinations concerning

the specific elements of estoppel are questions ot fact, Sham-

rock Development Co. v. City of Concord, 656 F.2d 1380,

1386 (9th Cir. 1981), the district court's factual findings must

be upheld unless clearly erroneous.

Without deciding that estoppel is an available defense

against employee benefit funds, it is clear that Kohn did

not establish the elements of estoppel.§ Estoppel requires

“ERISA, consistent with our decision, provides that “{t]he term

‘employee’ means any individual employed by an employer.” 29

U.S.C. § 1002(6).

$ In actions arising under federal statutes, federal common law,

rather than state law. controls with respect te the availability of

sti»

1 hte atte ile

Nos. 85-3663 ete. Health & Welfare Bund v. Kolin, ete. 7

a representation, to a party without knowledge of the facts

and without the means to ascertain them, upon which the

party asserting the estoppel justiiably relics in gued faith to

his detriment. See Johnson v. \Willijord, G2 F.2d 868, 872

(9th Cir. 1982); Junker v. Crory, GO F.2d 13.9, 1357 (Sth

Cir. 1981); NLAB vy. J. D. Industrial lusulation Company, Inc.,

615 F.2d 1289, 1294 (10th Cir. 1980); Gibson v. International

Harvester Co., 557 F. Supp. 1000, 1003 (W.D. Tenn. 1983);

Minnesota Mining and Manufacturing Company v. Blame, 533

F. Supp. 493, 517 (S.D. Ohio 1978), afd, 684 F.2d 1166

(6th Cir. 1982), cert. denied, —— U.S. —, 103 S. Ct. 1449

(1983).

The estoppel defense fails because Kohn had knowledge

about the plans and its obligations thereunder, and did not rea-

sonably rely on Darrow’s representations. The reliance of a

party seeking to assert estoppel must be reasonable. Chamb-

less v. Masters, Mates & Pilots Pension Plan, 571 F. Supp.

1430, 1452 (S.D. N.Y. 1983). While it may be reasonable for

an employee and union member to believe that a union repre-

sentative has authority to act on behalf of the fund, Scheuer

v. Central States Pension Fund, 394 F. Swpp. 193, 196 ( E.D.

Wis. 1975), affd, 570 F.2d 347 (7th Cir. 1977), reliance by

an employer, with knowledge of the plan, on the statements of

a union representative is unreasonable. Audit Services, Inc. v.

Rolfson, 641 F.2d at 762 (funds not estopped from seeking

delinquent contributions where employer was not ignorant of

his responsibilities under the collective bargaining agreement) ;

Martin v. Hamil, 608 F.2d 725. 730 n.8 (7th Cir. 1979) (em-

ployer, fully aware of provisions of coilective barguining agree-

the estoppel defense. Audit Serviccs. Inc. v. Rolfson, 641 F.2d at 762:

Aitken v. IP & GCU-Employer Ret:rement Fund, 604 F.2d 1261, 1264

(9th Cir. 1979). We have previeusly declined to devide whether

estoppel may be asserted egairet a trustee where the estoppel argu-

ment was menitiess. Van Guntew v. Central States, Southeast and

Southwest Arcas Pension Fund. 67° F 2d 586, 588 (6th Cir. 1982)

We decline to express an opinion »» © icsue not necessary to disposi-

tion of the case before us.

Sai he

Cee

Drill ala aN dS ant Giincldh sie eb

they

§ Health & Welfare Fund v. Kohn, etc. Nos. 83-3663 etc.

ment, could not reasonably rely on contrary advice from union

business agent); Employer-Teamsiers Joint Council No. 84,

Health and Welfare Fund v. Weatherall Concrete, Inc., 468 F.

Supp. 1167, 1170 (S.D. W. Va. 1979) (employer with posses-

sion of collective bargaining agreement and constructive

knowledge of its terms is precluded from asserting estoppel

as a defense to an action by the trustee).

Article IV, Section 4.2 of the Amended Agreement and De-

claration of Trust of Teamster’s Local 348 Health and Welfare

Fund provided that “[t]he trustees shall have full authority to

determine the requirements with which an individual must

comply in order to be eligible for benefits and to determine

all of the terms and conditions of eligibility of Employees for

the purpose of this Trust. . . .” Likewise the Revised and

Amended Trust Agreement for the Central States Pension

Fund, Article II, Section 10 provided:

No individual or person may act as agent for the Fund

unless specifically authorized in writing by the Trustees.

No Employee or Union nor any representative of any

Employer or Union, in such capacity, is authorized to

interpret the Plan, nor can any such person act as agent

of the Trustees. Only the Board of Trustees, the Pension

Payment Committee or the Pension Payment Appeals

Committee are authorized to interpret the Plan within the

scope of their respective .authorities.

Kohn, as a party to these plans, knew or had a means of de-

termining the truth of Darrow’s statements. Further, because

both plans indicate that Darrow was acting outside his authori-

ty, Kohn could not reasonably rely on Darrow’s statements.

Knoll v. Phoenix Steel Corp., 465 F.2d 1128, 1132 (3d Cir.

1972), cert. denied, 409 U.S. 1126 (1973) (employees un-

reasonably relied on union official’s statements about pension

payments where authority to determine the use of pension

fund rested solely with retirement board and where pension

fund agreement provided that decision of the board would be

- 2.

VY

mY

ngs

os)

an Be tay Bi SN Wont MAM ah Eel lH

Lt 8h SOMMER ABBA SOS PNAS

EMG uh

Nos. 83-3663 etc. Health & Welfare Fund v. Kohn, etc. 9

conclusive and binding); Chan:bless v. Musters, Mates & Pilots

Pension Plan, 571 F. Supp. 1430 (where agreement and de-

claration of trust made clear that only trustees could obligate

plan, reliance by worker on statement by union representative

was unreasonable). See Galvez v. Local 804 Welfare Trust

Fund, 343 F. Supp. 316, 317 (E.D. N.Y. 1982) (union business

agent has no authority to act for fund since ERISA mandates

separation between union and pension funds); Oates v. Team-

ster Affiliates Pension Plan, 482 F. Supp. 481, 487-88 (D.D.C.

1979) (estoppel applicable where reliance on representations

by union president was justified by fact that plan was financed

and controlled by union).

The district court erred in comparing the level of knowledge

of plaintiffs with that of the Kohn employees who were re-

fused membership in the union. Our inquiry focuses on Kohn’s

knowledge since Kohn claims to have relied to its detriment by

establishing alternative health and pension benefits for its em-

ployees. In the absence of reasonable reliance, the district

court’s determination that plaintiffs are estopped from seeking

the delinquent contributions is clearly erroneous.

IV.

Plaintiffs also contest the district court’s determination that

Kohn was entitled to a credit for the contributions made to the

Health and Welfare Fund in August for the employees termin-

ated September 3. After terminating the employees, Kohn

sought to apply the contributions to future obligations on be-

half of its remaining union employees. The,fund, through ad-

ministrator Darrow, refused to provide a credit on the ground

that the contributions were due since the employees remained

on the Kohn payroll until September 3. The district court

found that Kohn was entitled to a credit because “[n]o where

in the [collective bargaining] agreement is it found that the

employer is required to make contributions on behalf of em-

ployees who fail to work anv day of the month.”

~

%

> |

:

WU Health & Welfare Fund v Kohn, etc. Nos. 83-3668 ete.

Paragraph (1) of 29 U.S.C. § 1103(c) provides that:

Kxcept as provided in paragraph (2), (3), or (4) or

subsection (d) oi this section, or under sections 1342 and

1344 of this title (relating to termination of insured

plans ), the assets of a plan shall never inure to the benefit

of any employer and shall be held for the exclusive pur-

poses of providing benciits to participants in the plan and

their beneficiaries and defraying reasonable expenses of

administering the plan.

Paragraph (2)(A)(ii) provides an exception to the general

prohibition expressed in paragraph (1).

In the case of a contribution . . . made by an employer to

a multiemployer plan by a mistake of fact or law (other

than a mistake relating to whether the plan is described

in section 401(a) of Title 26 or the trust which is part of

such plan is exempt from taxation under section 501(a)

of Title 26), paragraph (1) shall not prohibit the return

of such contribution or payment to the employer within

6 months after the plan administrator determines that the

contribution was made by such a mistake.

The statute places the dctermination as to whether a

mistaken contribution was made in the hands of the benefit

plan administrator. Peckham vy. Board of Trustees of Inter-

national Brotherhood of Painters and Allied Trades Union and

Industry National Pension Fund, 719 F.2d 1063, 1066, modi-

éEmployers who pay mistaken contributions have no right of

action or entitiement to a refund. Kann v. Keystone Resources, Inc.,

575 F. Supp. 1084, 1091 (W.D. Penn. 1983): R. V. Cloud Co., Inc. v.

*Western Conference of Teamsters Pension Trust Fund, 566 F. Supp.

1426, 1431 (N.D. Cal. 1983); Hardy v. National Kinney of California,

Inc., 565 F. Supp. 1027, 1050 n.1 (N.D. Cal. 1983); Crown Cork and

Seal Company, Inc. v. Teamsters Pension Furd of Philadelphia and

Vicinity, 549 F. Supp. 307, 311-12 (E.D. Penn. 1982), aff’d, 720 F.2d 661

(3d Cir. 1983); Martir v. Kelclorn, Inc., 546 F. Supp. 889, 894 (N.D.

Ill. 1982). Contra Ethridge y. Masonry Contractors, Inc., 536 F. Supp.

365, 368 (N.D. Ga. 1982); E. M. Trucks, Inc. v. Central States, 517

F. Supp. 1122, 1124 (D. Minn. 1981). :

-19-

Nos. $3-3663 etc. IJealth & Welfare Fund v. Kohn, etc. 11

fied, 724 F.2d 100 (10th Cir. 1983); Hardy v. National Kinney

of California, Inc., 571 F. Supp. 1214, 1215 (N.D. Cal. 1983).

“The trustees’ action is conclusive unless arbitrary or capri-

+ . cious, not supported by substantial evidence, or erroneous on a

question of law.” Peckham, 719 F.2d at 1066. See also Van

Gunten, 672 F.2d at 587. The district court does not appear to

have followed this standard, but instead reviewed the admini-

strator’s decision de novo. However, under our deferential

standard of review, the trustee’s decision cannot be deemed

arbitrary or without support.

The collective bargaining agreement provides only that con-

tributions be made “for each employee covered by this Agree-

ment.” The Health and Welfare Fund Plan provides that

“[t]he insurance of a covered person shall automatically ter-

minate . . . [a]s of the last day of the insurance month in

which the covered person ceases to be engaged in full-time

active employment. . . .” The Health and Welfare Fund as-

serts that as long as the employees were on the payroll through

September 3, they were covered by the plan, and, therefore,

Kohn was obligated to contribute to the Fund for those em-

ployees. In the absence of a clear rule to the contrary, the

trustee’s decision that no mistaken contributions were made is

not arbitrary or contrary to law. Therefore, Kohn was required

to contribute for the employees terminated September 3 as

well as those hired to replace them.

Finally, plaintiffs claim that the district court erred in re-

fusing to enter judgment against Kohn for contributions owed

as a result of the reinstatement in arbitration of three termin-

ated employees. The district court declined to enter judgment

until the appeals process was complete. The effect of the arbi-

tration proceedings may be addressed by the district court in

calculation of plaintiffs’ damages.

Therefore, the judgment of the district court is REVERSED

and Remanpep for further proceedings consistent with this

opinion.

-lji-

let ee a a a

—_ yy = Oe a oe

0

ce

ea -

DOWD, J. Filed: 2/25/83

UNT'TED STATES DISTRICT COURT

NORTHERN DISTRICT Or OdIO

EASTERN DIVISION

Teamsters Local

348 Health and

Welfare Fund,

CASE NO. C82-2938A

et al.

Plaintiffs

: FINDINGS OF FACT

vs. AND CONCLUSIONS

: OF LAW

The Kohn Beverage

Company :

Defendant :

This case was tried to the Court

on March 10, 1983. Based upon the trial

testimony and the exhibits introduced

into evidence, the Court finds the

following facts:

l. Jurisdiction of this Court is

founded upon §30l(a) of the Labor

Management Relations Act of 1947, as

amened 29 U.S.C. §185(a}, §502 of the

Emoloyee Retirenent Incone Security Act

=} 2«

of 1974 (29 U.S.C. $1132, hersainafter

referreai to as ERISA) and $306 of the

Multi Enployer Pension Plan Amendments

Act of 1980 (§515 ERISA) and 28 U.S.C.

§1332.

2. The plaintiff, Teamsters Local

348 Health and Welfare Fund is a multi

employer employee benefit plan within

the meaning of §3(1), (2), (3), and

(37), §502 and $515 of ERISA as amended

by the Multi Employer Pension Plan

Amendments Act of 1980 (29 U.S.C. §1002

(lL), (2), (3) and (37), §1132 and §306,

PL 96-364) and brings this action on

behalf of the trustees, participants,

and beneficiaries of said plan.

3. Plaintiff Central States

Southeast and Southwest Areas Pension

Fund is a Multi Employer Benefit Plan

within the meaning of §3(1),(2),(3) ana

(37), 5392 ani $315 of FRISA as arrnds4

=} 3-<

by the Multi Euployer Pension Plan

Anendments Act of 1989 (29 U.S.C. §1002

(L), (2), @), and (37), §1132 and $305,

PL 96-364) and brings this action on

behalf of the trustees, participants,

and beneficiaries of said plan.

4. The Central States Southeast

and Southwest Areas Pension Fund

maintains offices and its principal

Place of business in a state other than

the state of Ohio, to wit: 8550 West

Bryn Mawr Avenue, in the City of

Chicago, County of Cook, State of

Illinois, and is a citizen of the state

of Illinois.

5S. Defendant, the Kohn Beverage

Company (hereinafter Kohn) is a

corporation organized and existing under

the laws of the state of 10.

6. Defendant Kohn maintains

offices ini a place of bDusirtess within

olga

BG einer ides. ‘ead Se ds EO Ln ot RE

the stike of Ohio, in the City of Akron,

and is a citizen of the state of Ohio.

7. Defendant is engaged in the

business of the transportation of goods

in interstate commerce.

8. Defendant is an employer anda

party in interest in an industry

affecting commerce within the meaning of

§3 (5), (11), (12), and (14) of ERISA,

(29 U.S.C. §1002(5), (11), (12), and

(14), §3 of the Multi Employer Pension

Plan Amendment Acts of 1980 (PL-364) and

the Labor Management Relations Acts of

1947 as amended (29 U.S.C. §151 et.

seq.).

9. On February 20, 1981, Kohn

Beverage and Teamsters Local 343

executed a collective bargaining

agreement for the period June l, 1980

until May 31, 1983, providing in

pertirsat oart as Follows:

Le

® ee

_

= -

=

—-

es

ep ee ee Pens ane

“ARTICLE TI: EMPLOYEES DEFINED-

EXTENT OF BARGAINING

UNIT

The term 'Emoloyees', as used in

this Agreement, shall include

Driver-Salesmen, Special Drivers,

Swing Drivers, Over-the-Road

Drivers, Helpers and Warehousemen,

Garage Mechanics and Garage

Maintenance employees."

"ARTICLE VI: UNION SHOP CLAUSE

It shall be a condition of employ-

ment that all employees of the

Employers covered by this Agree-

ment, who are members of the Union

in good standing by the payment of

membership dues and those who are

not members on the effective date

of this Agreement, shall, on the

thirty-first (31) day following

the effective date of this Agree-

ment, become and reinain members

in good standing in the Union by

payment of membership dues. It

shall also be a condition of

employment that all employees

covered by this agreement and

hired on or after its effective

date shall on the thirty-first

(31) day following the beginning

of such enployment, become and

remain members in good standing

in the Union by payment of member-

ship dues.

"ARTICLE XVII: PENSION

oe]

ee ee -1 er Se

amover shall conkr:i*:it? os

-‘BffFactive June 1, 1929, the

ot

=i6=

> ‘nv

tia os

¢ oy

the Central States, Sontheast anl

Southwest Areas Pension Funi the

sun of Forty-six Dollars (3545.00)

per weex for each regular employee

covered by this Agreement.

Fftfective June 1, 1981, the

Employer shall increase said

contribution to Fifty-one Dollars

($51.00) per week For each regular

employee covered by this Agree-

ment.

Effective June l, 1982, the

Employer shall continue to pay the

sum of Fifty-one Dollars ($51.00)

per week as contribution to said

fund for each regular employee

covered by this Agreement plus any

increase in contributions as same

are negotiated in the National

Master Freight Agreement."

"ARTICLE XIV: HEALTH AND WELFARE

The Employers agree to contribute

to the Teamsters Local No. 348

Health and Welfare Fund the

following amounts for each

employee covered by this

Agreement:

Effective January 1, 1981, and

January 1, 1982, and January

1, 1983, a sum not to exceed a

maximum of ten percent (103%)

increase in monthly contributions;

it being understood that effective

January 1, 1980, the sum of One

Hunired Eighty-Five Dollars

($135.09) nar month is the

eanttibutioa fisurr whish i:

=) 7<

presently being m2aie by the

Enployer to the Teamsters Local

No. 343 Health and Welfare Fun?

For each individual affected

employee.

The Employer shall continue to

pay contributions for employees

for a period of three (3) months

if the employee is absent because

of illness or off-the-job injury

or layoff. The Employer shall

continue to pay contributions for

a period of six (6) months if the

employee is absent because of an

on-the-job injury.

The Employer shall remit all

contributions by the 10th day

ef each month for that month.

Late contributions shall be

subject to a 10% late charge.

Benefits shall be covered ina

booklet attached and shall be

amended and updated from tine to

time subject to the provisions ot

the Trust Agreement and avplicable

law.

Retirees shall be covered by tie

Health ani Welfare Progran Fron

age 57 to age 65.

The Employer further aqrees to

deduct, at the option of the

employee, Ten Dollars ($19.90)

per month for each employee for

a suoplenental policy to cover

an additional Fifty Dollars

(359.900) »sanafit per wark for

N , = tenes % eo . ew A fo

siskneas3 ar accident (aoa

=29—

occupational) volus Tan Thousinl

Dollars ($10,990.00) ailditional

life insurance,

Regular part time ennvloyees

shall be covered by Health ani

Welfare if they are not covered by

another plan."

10. Article 106(a) of the Central

States Southeast and Southwest Areas

Pension Fund Plan, in effect July l,

1980 to date, defines "employee" as

follows:

"(a) A person (other than a

person employed in a super-

visory capacity) who has been on

the payroll of an Employer for

at least 30 days who is employed

under the terms and conditions

of a Collective Bargaining Agree-

ment, as herinafter defined,

entered into between an Employer,

as herein defined, and a Union,

as herein defined, and on whose

dvehalf contributions are made or

are presently required to be

made to the Pension Funi by the

Employer. .. "

ll. Section 1.04 defines

"employer" as follows:

"Section 1.94: SEmolover, as us21

hereia, shatl raaa ace Tanloyer

. . -

V7lAd AS AoW, Mf Bhatt ts the &-.. m-

—— ee

be, bound by a Collective

Bargainiag Ayreement, as herein-

after defined, with the Union,

agrees to be bound by the Trust

Agreement, satisfies the requirce-

ments for participation

established by the Trustees, and

is formally accepted for such

participation by the Trustees.

An Employer shall cease such

participation upon determination

by the Trustees that said

Employer has failed to comply

with any of these conditions or

any such other conditions or

requirements as may be set

forth in the Trust Agreement or

promulgated pursuant thereto."

12. Section 1.05 defines “union"

as follows:

"Section 1.05: Union, as used

herein, shall mean the Central

Conference of Teamsters, the

Southern Conference of Teamsters,

and their affected affiliated

local unions, and such other

unions as the Trustees may

agree upon."

* 13. Section 1.09 defines

“collective bargaining agreement" as

follows:

"Section 1.93: Collective

Bargaining Agreement, as used

: ~% .Y ™ > ~ - : -

haceaia, LL mara aa age: seat

.

‘ — r > -_> ; : :

FQ Wain + a), ore s Tat. 929

-20-

herein, is a party wit aa

Fanloyec, as define’ here2ira.”

Article I, Section 1 of the Trust

Agreement defines “emplover"” as follows:

"Employer - The term ‘Employer’

as used herein shall mean any

employer who is bound by a

collective bargaining agreement

with the Union, or any employer

not presently a party to such

collective bargaining agreement

who satisfies the requirements

for participation as established

by the Trustees and agrees to

be bound by this Agreement."

Article I, Section 3(a) defines

"employee" as follows:

"(a) A person who is employed

under the terms and conditions

of a collective bargaining agree-

ment entered into between an

Employer as herein defined and a

Union as herein defined, and on

whose behalf payments are required

by such collective bargaining

agreement or apolicable law to be

made to the Fund by the Enployer

14. Section 3.92(a) of the Plan

defines “covered employnent"” as follows:

“(a) Any enployment of an Envloves

for which contributions to the

Pansion 7 911 are Baits or area

-2i-

requiced to be made on his be2nalf

shall be considered Covered

Employment if such contributions

are in accordance witn tne rules

and regulations of this Plan and

Trust Agreement."

15. Article I, Section l, of the

Amended and Restated Agreement and

Declaration of Trust of the Teamsters

Local No. 348 Health and Welfare Fund

defines "Employer" as follows:

"SECTION 1 - EMPLOYER

The term "Employer" as used

herein shall mean:

(a) Any individual, firm,

association, partnership,

or corporation who has duly

executed and/or is bound by

the Collective Bargaining

Agreement with the Union and

in accordance therewith agrees

to participate in ani contribute

to the Trust Fund herein created

and provided for. Any Employer

who contributes to the Trust

Fund created hereunder shall,

by the act of contribduting,

become a party to this Agreement

whether or not any such

contributing Employer has signed

this Agreement or a counterpart

thereof,

(+) Tae 7AiL39" tS tea @s*

x >

solaly to the extant, that its

acts in the canacity of ana

Enployer of its Employess on

whose behalf it makes

contributions to the Trust Fund

in accordance with the Collective

Bargaining Agreement.

(c) The Trustees to the extent

that they act in the capacity

of an Employer of their Employees

on whose behalf they make

contributions to the Trust Fund

in accordance with the Collective

Bargaining Agreement.

(ad) The Employers as defined

herein shall, by the making of

payments to the Trust Fund

pursuant to the Collective

Bargaining Agreement, be

conclusively deemed to have

accepted and be bound by this

Agreement and Declaration of

Trust."

16. Article I, Section 2, defines

"Employees" as follows:

"SECTION 2 - EMPLOYEES

The term "Employees" as used

herein shall mean ani incluie

members of a Collective

Bargaining Unit represented by

the Union who are eligible to

particinate in and receive the

' penefits of the Health anj

Welface Plan and Trust in

ancoridance with this Agcreeneank,

Tn agaition, “ia ter. TEanl sass

shall mean ant iaclade Full-time,

regular enoloyees of Euoloyers

who are not menabers of said

Collective Baragaing Unit of the

Union, of the Union and of the

Trustees. Self-enployed

individuals, pursuant to Section

401(c)(1) of the Internal

Revenue Code, shall be considered

employees. However, not to exceed

10% of the participants."

17. Article I, Section 3, defines

"Union" as follows:

"SECTION 3 - UNION

The term "Union" as used herein

shall mean Teamsters Local No.

348 and its successor."

18. Article I, Section 8, defines

"Emoloyer Contributions" as follows:

"SECTION 8 - EMPLOYER

CONTRIBUTIONS

The term "Employer Contributions"

as used herein shall mean payments

made to the Trust Fund by an

Employer."

19. Article I, Section 15,

defines "Beneficiary" as follows:

"SECTION 16 - BENEFICIARY

a ‘. ~~, . ™ & > ° . oe 8 6s" i sie x

1nm2 cer: wus ae ar mts é . %

* »37308 7:34 743.2 So ca “soierr

—-24-

or by the terms of the Health and

Welfare Plan created pursuant to

this Agreement, who is or may

become entitled to receive a

benefit."

20. Article II, Section 2,

provides in part:

"SECTION 2 -—- EMPLOYER

CONTRIBUTIONS

TO FUND

Each Employer shall contribute

and pay into the Fund the

amount specified in accordance

with the applicable Collective

Bargaining Agreement entered

into with the Union. . .Upon

payment of contributions to the

Trustees, all responsibilities

of the Employer for each

contribution shall cease, and

the Employer shall have no

responsibilities for the acts

of the Trustees, nor shall an

Employer be obligated to see to

the application of any funds

or property of the Trust or to

see that the terms of the

Trust have been complied with."

21. On September 1, 1981,

approximately 29 employees of Kohn

Beverage engaged in an unauthorized work

stoppage. Subsequently, Kohn Beverage,

after advising the subject employees

-25-

that if they did not return to work they

would be fired, on September 2 and 3

proceeded with the termination of the

aformentioned employees.

22. As a result of the strike,

all but two of those employees were

terminated on September 3, 1981.

23. Between September 3, 1981,

and October 1, 1981, the defendant, Kohn

Beverage Company hired a number of

employees to replace the terminated

employees. These new employees were

hired as drivers, salesmen,

warehousemen, and helpers, and in terms

of wages, conditions, and hours of

employment, were treated identically to

their predecessors. .

24. The defendant Kohn Beverage

Company, has not not made any

contributions to the Teamsters Local 348

Health and Welfare fund or the Central

-26<

States Southeast and Southwest Areas

Pension Fund on behalf of any of the

non-union replacements hired after

September 1, 1981, to replace the

discharged employees as described above.

25. The Defendant Kohn Beverage

Company has continued to make payments

to the Central States Pension Fund and

the Teamsters Local Health and Welfare

Program for the two employees who did

not participate in the illegal work

stoppage and were not terminated.

26. At the end of September,

pursuant to the collective bargaining

agreement, the new employees of Kohn

attempted to join the local union.

However, the employees were informed by

Dan Darrow, Secretary Treasurer of Local

348, that the new employees would not be

allowed to join the Local Union.

-27-

27. On October 15, 19£1, several

of the new employees of Kohn Beverage

personally went to the Local 348

headquarters and met with Dan Darrow.

At the meeting, the new employees were

told by Dan Darrow that they would not

be permitted to join the Union, that

they would not be permitted to

participate in the local Union's health

and welfare program, nor in any of the

benefits provided by Teamsters Local

348, including the Pension Program

provided by the Central States Pension

Fund.

28. In addition to being the

Secretary Treasurer of the Teamsters

Local 348, Dan Darrow is also a trustee

and administrator of the Local 348

Health and Welfare Fund. Darrow has

held the position of trustee with the

Local Health and Welfare fund for a

-28-

period of twenty years. Additionally,

Darrow held the position of

administrator of the Local 348 health

and welfare fund for approximately

fifteen years.

29. As administrator of the fund,

Darrow had the duty to supervise the

running of the fund, the negotiating of

the contribution rates within the

contracts, collecting the funds, and

. supervising the payment of claims.

30. Dan Darrow is not an employee

of Central States Southeast and

Southwest Pension Funds. However, Mr.

Darrow negotiated the Pension Plan into

the collective bargaining agreement with

Kohn Beverage, collected funds for the

pensior plan and assisted employees in

their application for membership in the

plan and provided information about the

plan to local members. Additionally,

=%Gu

Dan Darrow, initiated suit on behalf of

the Central States Southeast and

Southwest Areas Pension Fund in the

present action and is the only

individual who ever dealt with Kohn

Beverage on behalf of Central States.

31. After Mr. Darrow informed the

employees on October 15, 1981, that they

would not be permitted to participate in

the Local Health and Welfare program nor

the pension program provided by Central

States, the employees returned to Kohn

Beverage Company, and subsequently, Kohn

Beverage provided for its new employees,

a hospitalization and medical coverage

plan with the Aetna Insurance Company,

and also amended the Kohn Beverage

Company Money Purchase Pension Plan and

Trust to permit the participation in

said Pension Plan by all employees of

the Kohn Beverage Company.

-30<

32. The non-union replacement

employees hired during the period

September 3, 1981, to October 1, 1981

were not covered employees under the

collective bargaining agreement, the

participation agreement, the Central

States Revised and Amended Trust

Agreement, the Central States Plan, or

the health and welfare declaration of

trust.

33. Dan Darrow acted with

apparent authority on behalf of both the

Local 348 Health and Welfare Fund and

Central States Southeast and Southwest

Pension Fund.

34. The defendant, Kohn Beverge

Conia. took a credit for the payments

it made to the Local Health and Welfare

Fund for the month of September, for the

employees it terminated on Septmber 3,

1981.

aS}«

35. Three of the discharged

employees were reinstated to their

employment by an arbitrator's decision.

The defendant, Kohn Beverage Company,

filed suit to vacate those awards. At

this time a court has confirmed the

awards of the arbitrators, however, an

appeal has been taken from the court's

decision.

36. The plaintiffs have failed to

exhaust administrative remedies as

provided by the collective bargaining

agreement.

CONCLUSIONS OF LAW

1. The collective bargaining

agreement between the parties does not

require the payment of funds to the

Local Health and Welfare Fund or the.

Central States Pension Fund for

employees who are not union members.

-32-

2. The plaintiffs, Teamsters

Local 348 Health and Welfare Fund and

the Central States Southeast Southwest

Pension Fund are estopped from asserting

an action to recover for the non payment

of funds by the employer, Kohn Beverage.

3. The plaintiffs, Teamsters

Local 348 Health and Welfare Fund and

Central States Southeast and Southwest

Areas Pension Fund are not entitled to

recover payments allegedly due by the

defendant Kohn Beverage Company for

non-union employees hired subsequent to

September 3, 1981.

4. The plaintiff Trustees of the

Central States Southeast and Southwest

Areas Pension Fuad and the Local 348

Health and Welfare Fund are not required

to exhaust administrative remedies set

forth in the collective bargaining

agreement. See Robbins v. Prosser's

=33<

Moving & Storage Co., 700 F. 2d 433 (8th

Cir. 1983).

5. The defendant, Kohn Beverage

Company, was entitled to take credit for

the September payments made to the Local

Health and Welfare Fund, on behalf of

the employees who were terminated on

September 3, 1981. No where in the

agreement is it found that the employer

is required to make contributions on

behalf of employees who fail to work any

day of the month. Although the

employees had not yet been terminated,

they were terminated on September 3, and

failed to work any day in September.

6. As for the terminated

employees whose arbitration proceedings

are pending on appeal, the Court

refrains from making any ruling as the

state court proceedings have not yet

been terminated and the Court does not

-34-

find it proper to enter a decision in

regard to the pending state court

actions.

MEMORANDUM OF OPINION

The plaintiff argues that the

defendant, Kohn Beverage, is required to

make payments to both the Local 348

Health and Welfare Fund and to the

Central States Southeast and Southwest

Areas Pension Fund for the non-union

replacement employees hired subsequent

to September 3, 1981. The plaintiffs

argue that the definition of employee

contained in the collective bargaining

agreement, applicable to the parties,

requires that payments be made on behalf

of employees who are both union and

non-union members, as job function

rather than union membership is the test

to determine whether or not an employee

-35-

is covered under the Pension and Health

and Welfare Plans.

The defendant, Kohn Beverage,

argues that the collective bargaining

agreement applicable to the parties only

requires that payments be made on behalf

of employees who are also union members,

and in that the replacement employees

hired subsequent to September 3, 1981,

were denied union membership payments

are not required to the Local Health and

Welfare Fund or the Central States

Pension Fund'on behalf of the non-union

employees.

Article II of the collective

bargaining agreement defines "employees"

as driver salesmen, special drivers,

swing drivers, over the road drivers,

helpers, and warehousemen, garage

mechanics and garage maintenance

employees." There is no question that

=36=

the replacement employees hired

subsequent to September 3, 1981 worked

as driver salesmen, helpers and

warehousemen as described in Article II

of the collective bargaining agreement.

The defendant, however, argues that

Article VI of the Collective Bargaining

Agreement, setting forth the union shop

clause, requiring as a condition of

employment that all employees of the

employer covered by the agreement become

members of the union within 30 days of

being hired, further defines the term

"employees" as requiring union

membership.

The plaintiffs cite a number of

cases in support of the proposition that

an employer is required to make payments

to health and welfare funds and pension

funds for employees who are non-union

members. See Audit Services, Inc. v.

a3 Fe

Rolfson, 641 F. 2d 757 (9th Cir. 1981);

Markt v. Ro-Mart, Inc., 471 F. Suop.

1292 (N.D. Cal. 1979); Manning v.

Wiscombe, 498 F. 2d 1311 (10th Cir.

1974); Central States Southeast &

Southwest Areas Pension Fund vs. Central

Transport, Inc., 698 F. 2d 802 (6th Cir.

1983).

The Court notes that the above

cases, cited by the plaintiff, were

decided on the basis of the language

contained in the collective bargaining

agreements and trust agreements

applicable to the parties. Accordingly,

each case and the applicable agreements

must be reviewed individually to

determine the proper definition of

"employee" as contemplated by the

parties. Thus the Court must review the

collective bargaining agreement and

other relevant documents to determine

-38-

whether contributions are required to be

made to the Local Health and Welfare

Fund and the Central States Pension Plan

on behalf of the non-union employees by

Kohn Beverage.

Upon review of the cases cited by

the plaintiff, the Court finds that the

present case is distinguishable from the

cases cited by the Plaintiff. In Audit

Services, Inc., the trust agreement of

the pension fund specifically stated

that contributions were required whether

an employee is "union, non-union,

permanent or temporary." Thus, the

trust agreement specifically included

non-union members. In Markt v. Ro-Mart,

the collective bargaining agreement

required that payments be made on behalf

of each and every employee.

Furthermore, the trust agreement defined

the term "employees" as "members of said

-39-

union and/or, employees who are eligible

under Union rules and regulations for

insurance or employees who perform, or

any employer who is a party to the

collective bargaining agreement with the

union work which is under the

jurisdiction of the union." In Manning,

the Court found that the collective

bargaining agreement recognized the

union as the bargaining representative

of all employees employed by the

employer in a situation in which the

employer employed large numbers of union

and non-union employees.

In the present case, the

collective bargaining agreement requires

that all individuals become members of

the union within 30 days after being

hired. Additionally, the agreement does

not require the employer to make

contributions on behalf of employees to

-40-

the health and welfare and pension funds

until after 30 days after hire. The

contract requires as a condition of

employment that all employees become

members of the union. There is no

clause either in the collective

bargaining agreement or in the trust

agreements which specifically identifies

employees as including both union and

non-union members.

Article 1.06(a) of the Central

States Pens‘on Plan indicates that

contributions need not be made until at

least 30 days have passed since the

employee has been on the employer's

payroll. Accordingly, the pension plan

defines an employee as a person who has

been on the payroll for at least 30 days.

This is consistent with the fact that an

employee may not become a member of the

union until 30 days after he has been on

-4)]-

the payroll. In Markt, supra, at 1296,

the Court noted that contributions were

required to be made on behalf of

employees at the time they were hired,

indicating that both union and non-union

employees were covered by the collective

bargaining agreement

While the Court is aware of the

decision in Markt, holding that the

Union Shop Clause contained in the

Collective Bargaining Agreement in that

case did not add to the definition of

the term "employee", the Court, upon

reviewing the present agreement, finds

that the Union Shop Clause further

defines the term "employee" as

contemplated by the parties and only

reguires that contributions be made to

the Local Health and Welfare Fund and

the Pension Plan on behalf of Union

members.

-42-

Although the agreement defines

"employees" in the terms of job

description, the agreement further

requires that all individuals become and

remain union members. Obviously, this

was also the view adopted by Dan Darrow,

the individual who negotiated the

clauses into the collective bargaining

agreement, when he informed the new Kohn

employees that they would not be

entitled to any benefits pursuant to the

collective bargaining agreement.

Accordingly, the Court finds that

the collective bargaining agreement

requires that the employer only need

contribute for employees who are also

union members.

The @atendent ad4itionally

requests that this court find that the

plaintiffs be estopped from asserting

their claim to the unpaid contributions.

~~

Upon review of the record, the Court

finds that the plaintiffs" actions

require that they be estopped from

asserting a claim to the unpaid

contributions.

At the time Dan Darrow tatoceed

the new employees of the Kohn Beverage

Company that they would not be entitled

to participate in either the Local

Health and Welfare Fund or the Central

States Pension Fund, he was acting with

apparent authority on behalf of both the

Local Health and Welfare Fund and the

Central States Pension Fund.

Dan Darrow had been a trustee of

the Local Health and Welfare Fund for a

period of 20 years. Additionally,

Darrow had been the administrator of the

Local Health and Welfare Fund for

approximately 15 years. Darrow had the

duty to supervise the running of the

-44-

fund, the negotiating of the

contribution rates with the contracts,

collecting the funds, and supervising

the payment of claims. See Rosen v.

Hotel and Restaurant Emp., 637 F. 2d

592, 595 N.7 (3rd Cir. 1981).

As for the Central States Pension

Fund, although Darrow was not a trustee

or employee of the Pension Plan, he was

the only person with whom Kohn Beverage

had dealt with respect to the Plan. Mr.

Darrow negotiated the pension plan into

the collective bargaining agreement,

collected funds for the pension plan and

assisted employees in their application

for membership in the plan and vrovided

information about the plan to local

members. Mr. Darrow identified himself

as a liason between the employees and

Central States (Tp. at 104).

Additionally, Mr. Darrow also attempted

o45~.

wu

to initiate suit on behalf of the

Central States Pension Plan in the

present case, indicating his belief that

he was acting as an agent of Central

States.

The Court finds that Central

States enabled and authorized Darrow to

act on behalf of Central States to the

extent that Kohn Beverage could

reasonably interpret that Darrow was

acting on behalf of Central States.

Thus, although Darrow was not a trustee

or employee of Central States, the

defendant Central States clothed Darrow

with sufficient authority to bind

Central States on the basis of apparent

authority. °

Accordingly, the Court finds that

Dan Darrow acted with apparent authority

to bind both the Local Health and

Welfare Fund and the Central States

é46<

Pension Fund, when he informed the new

Kohn employees that they would not be

eligible for venefits either under the

Local Health and Welfare Fund or the

Central States Pension Fund.

Four elements must be present in

order to assert the doctrine of estoppel.

These include:

(1) The party to be estopped

must be apprised of the facts;

(2) the party to be estopped must

have intended to impart a

reasonable belief that reliance

was expected; (3) the victim

of the misrepresentation must

be ignorant of the true facts;

and (4) the victim must have

relied to his detriment.

Thurber v. Western Conference of

Teamsters Pension Plan, 542 F. 2d 1106,

1108 (9th Cir. 1976).

While the Court notes that a

number of courts are hesitant to apply

estoppel principles to cases involving

benefit eligibility in certain

circumstances, the Court finds that the

o47J=-

use of estoppel in the present case is

justified. See Scheuer v. Central

States Pension Fund, 358 F. Suop. 1332

(E.D. Wis. 1973).

In Rosen, supra, at 598, the court

held:

The sui generis nature of the

pension agreement. . . should

not immunize it from the

equitable principles that govern

similar agreements. The rising

ethical standards in business

relations which the estoppel

doctrine is designed to enforce

are no less needed in the

administration of pension

CuRGS. « «

As Darrow was acting with apparent

authority on behalf of both the Local

Health and Welfare Fund and the Central

States Rension Plan, knowledge of the

particular facts in regards to the

present action can be imparted to both.

Dan Darrow denied the new Kohn

employees request to join the union and

also informed them that they would not

-48-

b. eligible for benefits pursuant to the

Local Health and Welfare Fund or the

Central States Pension Plan. Dan Darrow

intended that his conduct be acted upon

or at least coulée reasonably forsee

action would be taken in reliance upon

his refusal to allow the new Kohn

employees to join the union or to join

the Local Health and Welfare Fund or the

Pension Plan. Upon the new Kohn

Beverage employees return to the

defendant Kohn Beverage Company, the

defendant, faced with a rather unique

and difficult situation, in reliance

upon Dan Darrow's conduct, formed a new

Health and Welfare Plan for the new Kohn

employees and also a new Pension Plan.

Kohn Beverage in reliance upon Darrow's

assertions that the new employers would

not be covered, and without knowledge

otherwise, relied upon Darrow's

-49-

statements by creating and contributing

to a new health welfare pension plans.

In light of the Court's earlier

determination that the contract does not

require the payment of funds on behalf

of non-union employees to the Local

Health and Welfare Fund or the Central

States Pension Plan, the employer, —

Dan Darrow's refusal to admit the new

Kohn employees to either the Union, the

Local Health and Welfare Fund or the

Central States Pension Plan could not be

held to know that the defendants were

eligible to participate in such plans.

Accordingly, in light of the

foregoing, the Court finds that the

plaintiffs are estopped from asserting

a claim to recover unpaid contributions.

The plaintiffs assert that the

defendant, Kohn Beverage Company, was

not entitled to a credit for the

-50-

September payments made to the funds on

behalf of the employees who were

subsequently terminated. Upon review of

the evidence, the Court finds no clause

requiring that payment is necessary for

employees who are merely on the payroll

on the first day of the month. The

terminated employees in the present case

failed to show up at work any day in

September and were terminated on

September 2, and 3, 1931.

Accordingly, the Court finds that

the defendant is entitled to take a

credit for the payments made on behalf

of those individuals to the Local Health

and Welfare fund and Pension Fund.

IT IS SO ORDERED.

David D. Dowd, Jr.

U.S. District Judge

-5l-

-

ie :

a o- =.) he ine

APPENDIX "B"

The Agreement executed February 20,

1981 provided, in part, as fcilows:

ARTICLE I: RECOGNITION

The employer recognizes the Union as the

sole and exclusive bargaining agent on be-

half of all employees of the employers, as

hereinafter defined in Article II, with re-

pect to wages, hours, and all other terms

or conditions of employment.

ARTICLE ITI: EMPLOYEES DEFINED-EXTENT

OF BARGAINING UNIT

The term “employees", as used in this

Agreement, shall include Driver-Salesmen,

Special Drivers, Swing Drivers, Over-the-

Road Drivers, Helpers and Warehousemen,

Garage Mechanics and Garage Maintenance

employees.

ARTICLE VI: UNION SHOP CLAUSE

It shall be a condition of employment that

all employees of the employers covered by

this Agreement, who are members of the Union

in good standing on the effective date of

this Agreement, shall remain members in good

standing by the payment of membership dues

and those who are not members on the effec-

tive date of this Agreement shall, on the

thirty-first (31st) day following the

effective date of this Agreement, become

and remain members in good standing in the

Union by payment of membership dues. It

@j<-

shall also be a condition of employment

that all employees covered by this Agree-

ment and hired on or after its effective

date shall on the thirty-first (3lst) day

following the beginning of such employment,

become and remain members in good standing

in the Union by payment of membership dues.

ARTICLE XIV: HEALTH AND WELFARE

The employers agree to contribute to the

Teamsters Local No. 348 Health and Welfare

Fund the following amounts for each employee

covered by this Agreement:

Effective January 1, 1981 and January 1,

1982 and January 1, 1983, a sum not to

exceed a maximum of ten percent (10%) in-

crease in monthly contributions; it being

understood that effective January 1, 1980,

the sum of One Hundred Eighty-Five Dollars

($185.00) per month is the contribution

figure which is presently being made by

the employer to tine Teamsters Local No. 348

Health and Welfare Fund for each individual

affected employee.

The employer shall continue to pay contri-

butions for employees for a period of three

(3) months if the employee is absent because

of illness or off-the-job injury or layoff.

The employer shall continue to pay contri-

butions for a period of six (6) months if

the employee is absent because of: an on-the-

job injury.

The employer shall remit all contributions

by the 10th Gay of each month for that month.

Late contributions shall be subject to a ten

percent (10%) late charge ...

o20

+

ARTICLE XVII: PENSION

Effective June 1, 1980, the employer shall

contribute to the Central States, Southeast

and Southwest Areas Pension Fund the sum of

Forty-Six Dollars ($46.00) per week for

each regular employee covered by this Agree-

ment.

Effective June 1, 1981, the employer shall

increase said contribution to Fifty-One

Dollars ($51.00) per week for each regular

employee covered by this Agreement.

Effective June 1, 1982, the employer shall

continue to pay the sum of Fifty-One Dollars

($51.00) per week as contribution to said

fund for each regular employee covered by

this Agreement plus any increase in contri-

butions as same are negotiated in the

National Freight Agreement.