Einhorn v. Fleming Foods of PA, Inc. , 258 F.3d 192 ( 2001 )

Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
7-17-2001
Einhorn v. Fleming Foods of PA, Inc.
Precedential or Non-Precedential:
Docket 00-2549
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Recommended Citation
"Einhorn v. Fleming Foods of PA, Inc." (2001). 2001 Decisions. Paper 154.
http://digitalcommons.law.villanova.edu/thirdcircuit_2001/154
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Filed July 17, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-2549
WILLIAM J. EINHORN, ADMINISTRATOR OF THE
TEAMSTERS PENSION TRUST FUND OF PHILADELPHIA
& VICINITY and THE TEAMSTERS HEALTH AND
WELFARE FUND OF PHILADELPHIA & VICINITY,
Appellant
v.
FLEMING FOODS OF PENNSYLVANIA, INC.
ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
(Dist. Court No. 99-cv-04328)
District Court Judge: Clarence C. Newcomer
Argued: March 7, 2001
Before: ALITO, McKEE, Circuit Judges , and KRAVITCH,
Senior Circuit Judge1
(Opinion Filed: July 17, 2001)
_________________________________________________________________
1. Honorable Phyllis A. Kravitch, United States Court of Appeals for the
Eleventh Circuit, sitting by designation.
FRANK C. SABATINO (argued)
JAMES D. CRAWFORD
JONATHAN R. NADLER
Schnader, Harrison, Segal &
Lewis, LLP
1600 Market Street, Suite 3600
Philadelphia, PA 19103
Counsel for Appellant
JEANNE L. BAKKER (argued)
HOWARD J. BASHMAN
Montgomery, McCracken, Walker &
Rhoads, LLP
123 South Broad Street
Philadelphia, PA 19109
Counsel for Appellee
OPINION OF THE COURT
ALITO, Circuit Judge:
Appellant William J. Einhorn br ought this action under
Section 515 of the Employee Retirement Income Security
Act (ERISA), 29 U.S.C. S 1145, to collect contributions
allegedly owed by Appellee Fleming Foods of Pennsylvania
("Fleming") to multi-employer pension and welfare funds
that Einhorn administers. The District Court granted
summary judgment for Fleming. Because we conclude that
the relevant language of the collective bar gaining
agreements is ambiguous, we reverse the District Court's
grant of summary judgment and remand.
I.
Until 1997, Fleming employed approximately 163 drivers
and 13 mechanics as part of its food distribution
operations. It entered into separate collective bargaining
agreements ("CBAs") with the drivers ("Drivers' CBA") and
the mechanics ("Mechanics' CBA"). The Drivers' CBA was in
effect from July 1, 1994, to June 30, 1997, and the
Mechanics' CBA was in effect from October 1, 1994, to
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September 30, 1997. Both CBA's required Fleming to make
contributions to the Teamsters Pension Fund of
Philadelphia and Vicinity ("Pension Fund") and the
Teamsters Health & Welfare Fund of Philadelphia and
Vicinity ("HW Fund"). Fleming's contribution obligations,
which were the same for both funds, wer e specified in the
CBA's:
Contributions to the Fund . . . shall be made for each
seniority associate for each day worked, or if not
worked, paid for pursuant to the terms of this
Agreement covering holidays, vacations and paid sick
leave (not worked) to a maximum of eight (8) hours per
day or forty (40) hours per week.
App. 70, 84 (Drivers' CBA, art. 9, 25); App. 124-25
(Mechanics' CBA, art. 32, 33).
In May 1997, Fleming entered into an agr eement with
Transervice Lease Corporation ("Transervice") under which
Fleming agreed to "outsource" its drivers and mechanics to
Transervice. Pursuant to this agreement, Fleming
terminated its drivers and mechanics when their CBA's
expired -- on June 30, 1997, for the drivers and on
September 30, 1997, for the mechanics. Transervice
became obligated to contribute to the Funds on behalf of
the drivers and mechanics once they became T ranservice
employees.
In anticipation of terminating the employees, Fleming
contacted Frank Gillen, the president of the employees'
union, and offered to engage in "ef fects" bargaining. The
parties eventually agreed that Fleming would pay the
drivers for all of the unused vacation benefits, personal
days, and sick leave that they had earned as of the day of
their termination. In addition, Fleming agr eed to pay the
drivers for the July 4th holiday (which occurr ed after the
termination of the Drivers' CBA) and for five additional
unearned sick days. The parties also engaged in "effects"
bargaining in preparation for the ter mination of the
Mechanics' CBA. As with the drivers, Fleming agr eed to pay
the mechanics for all of their earned but unused vacation
benefits, personal days, and sick leave.
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Fleming made the necessary lump sum payments to the
drivers and mechanics on or before their last days of
employment with the company, but Fleming never made
any contributions to the Funds based on these payments.
This dispute followed. On cross-motions for summary
judgment, the District Court awarded summary judgment
in favor of Fleming, and Einhorn appealed.
II.
As noted, Einhorn's action is based on Section 515 of
ERISA, 29 U.S.C. S 1145, which provides that an employer
"obligated to make contributions to a multiemployer plan
. . . under the terms of a collectively bar gained agreement
shall, to the extent not inconsistent with law, make such
contributions in accordance with the ter ms and conditions
of . . . such agreement." Einhorn contends that the CBA's
involved in this case unambiguously requir e Fleming to
make contributions based on the lump sum payments
given to the drivers and mechanics prior to the ter mination
of their employment with that company. Fleming, by
contrast, maintains that the CBA's unambiguously
establish that it is not obligated to make such
contributions.
Although federal law governs the construction of
collective bargaining agreements, traditional contract
principles apply when not inconsistent with federal labor
law. See Teamsters Indus. Employees W elfare Fund v. Rolls-
Royce Motor Cars, Inc., 989 F.2d 132, 135 (3d Cir. 1993);
Sheet Metal Workers, Local 19 v. 2300 Gr oup, Inc., 949 F.2d
1274, 1284 (3d Cir. 1991). Under these principles, whether
a contract term is clear or ambiguous is a question of law
for the court and is thus subject to plenary r eview on
appeal. See Teamsters Indus. Employees W elfare Fund, 989
F.2d at 135. "A [contract] ter m is ambiguous if it is
susceptible to reasonable alternative interpretations."
Sanford Inv. Co. v. Ahlstrom Mach. Holding, Inc., 198 F.3d
415, 421 (3d Cir. 1999); Arnold M. Diamond, Inc. v. Gulf
Coast Trailing Co., 180 F.3d 518, 521 (3d Cir. 1999). In
determining whether a term is ambiguous, we must
consider the contract language, the meanings suggested by
counsel, and the extrinsic evidence offer ed in support of
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each interpretation. See Rolls-Royce, 989 F.2d at 135.
Extrinsic evidence may include the structure of the
contract, the bargaining history, and conduct of the parties
that reflects their understanding of the contract's meaning.
See id. Under our precedents, "[i]f the court determines that
a given term in a contract is ambiguous, then the
interpretation of that term is a question of fact for the trier
of fact to resolve in light of the extrinsic evidence offered by
the parties in support of their respective interpretations."
Sanford Inv. Co., 198 F.3d at 421. See also, e.g., Newport
Associates Dev. Co. v. Travelers Indem. Co. , 162 F.3d 789,
792 (3d Cir. 1998); Hullett v. Towers, Perrin, Forrester &
Crosby, Inc., 38 F.3d 107, 111 (3d Cir. 1994).
III.
With these principles in mind, we consider the parties'
sharply different interpretations of the relevant provisions
of the CBA's. As previously noted, the CBA's pr ovide that
contributions had to be made for each employee "for each
day worked, or if not worked, paid for pursuant to the
terms of [the CBA's] covering holidays, vacations and paid
sick leave (not worked) to a maximum of eight (8) hours per
day or forty (40) hours per week." The dispute here
concerns the obligation to make a contribution"for each
day . . . not worked [but] paid for [as holiday, vacation, or
sick pay]."
Fleming interprets the phrase "day . . . not worked [but]
paid for [as holiday, vacation, or sick pay]" in a concrete
sense. In its view, the phrase refers to a calendar day
during which a Fleming employee did not work but was
paid. Fleming therefore concludes that the lump sum
payments that it made to the drivers and mechanics at the
end of their employment as compensation for their unused
vacation benefits and sick leave did not trigger an
obligation to make contributions to the funds because, once
these employees ceased working for Fleming, no calendar
days occurred during which they were on paid vacation or
sick leave. Moreover, according to Fleming, the lump sum
payments may not be allocated to the period prior to the
expiration of the CBA's because that period has been used
up, i.e., for all of those days, Fleming has alr eady made
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contributions based on the maximum of eight hours per
day and 40 hours per week. Fleming acknowledges that
provisions in the CBA's required it to pay the drivers and
the mechanics for their unused vacation benefits when they
were permanently laid off,2 but Fleming contends that these
provisions do not address Fleming's separate obligation to
make contributions to the funds. This obligation, Fleming
asserts, is controlled entirely by the pr eviously noted
provisions that tie the contribution obligation to calendar
days during which the employee either worked or was out
on paid vacation or sick leave.3 Finally, Fleming takes the
position that its "effects" agreement with the union was
itself a collective bargaining agreement and that this
agreement confirmed that Fleming's contributions would be
subject to the limitations expressed in the main CBA's.
Einhorn offers an alternative interpretation of the CBAs'
contribution provisions. Einhorn str enuously argues that
the CBA's never say that the term "day" means calendar
day. Under Einhorn's interpretation of that term, as we
understand it, a "day . . . not worked [but] paid for [as
holiday, vacation, or sick pay]" is essentially a unit of
money, not time -- in other words, a day's pay. According
to Einhorn, the eight-hour per-day and forty-hour-per week
caps simply limit Fleming's contribution obligation if a
day's pay was for more than eight hours or a week's pay
was for more than 40 hours.4
Relying on the CBA provisions stating that Fleming was
required to make contributions to the funds by the 28th
day of the month "following the month in which those
monies were accrued,"5 Einhorn contends that the
obligation to make contributions "accrued at the same
_________________________________________________________________
2. App. 80 (Drivers' CBA, art., 22, sec. 4(b); App. 116 (Mechanics' CBA,
art. 19.14).
3. App. 70, 84 (Drivers' CBA, art. 9, 25); App. 124-25 (Mechanics' CBA,
art. 32, 33).
4. Einhorn provides this example. If an employee was on vacation for a
week, the employee would be paid for 45 hours. Fleming, however, was
required to make contributions based only 40 hours.
5. App. 69, 84 (Drivers' CBA art. 9, sec. 5; art. 25, sec. 6); App. 123,
126
(Mechanics' CBA para. 32.5, 33.5).
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instant that the employee either worked or became entitled
to vacation pay." Appellant's Br. at 7-9 (emphasis in
original). Einhorn further notes (a) that under the CBA's an
employee became "entitled to vacation pay""[u]pon
permanent layoff "6 and (b) that the lump sum payments at
issue here were made before the CBA's expired and the
employees were terminated. Thus, as Einhorn interprets
the CBA's, Fleming became obligated to pay the employees
for unused vacation and sick "days" and in fact made such
payments before the CBA's ended, and Fleming was
consequently obligated to make the corresponding
contributions to the funds. Finally, Einhorn contends that
Fleming's prior practice was to make contributions when an
employee was given a lump sum payment.
We conclude that the critical provisions of the CBA's are
"susceptible of differing meanings." Teamsters Indus. Emp.
Welfare Fund, 989 F.2d at 135. Turning first to Fleming's
position, with which the District Court agreed, we believe
that it is reasonable to interpret the phrase "day . . . not
worked [but] paid for" to mean an actual day during which
a Fleming employee did not work but was paid because he
or she was on vacation or sick leave. Indeed, this is the
most literal interpretation, and if it is accepted, Fleming is
not obligated to make the disputed contributions. Although
Einhorn relies on several other pr ovisions of the CBA's,
none dictates a contrary result. Einhor n points to the
provisions stating Fleming was requir ed to make
contributions by the 28th day of the month following the
month in which "the monies accrued."7 However, the phrase
"monies accrued" may be read as r eferring to the payments
"for day[s] worked, or if not worked, paid for," and if
Fleming's interpretation of the latter phrase is accepted, the
lump sum payments made at the end of the CBA's wer e not
payments for "day[s] . . . not worked." Einhorn also relies
on the provisions providing that employees became entitled
to vacation "upon permanent layoff,"8 but this provision
_________________________________________________________________
6. App.80 (Drivers' CBA, art., 22, sec. 4(b); App. 116 (Mechanics' CBA,
art. 19.14).
7. App. 69, 84 (Drivers' CBA art. 9, sec. 5; art. 25, sec. 6); App. 123,
126
(Mechanics' CBA para. 32.5, 33.5).
8. App.80 (Drivers' CBA, art., 22, sec. 4(b); App. 116 (Mechanics' CBA,
art. 19.14).
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expressly refers only to Fleming's obligations to the
employees, not to the funds.
Einhorn's interpretation of the phrase"day . . . not
worked [but] paid for," although less concrete than
Fleming's, is also consistent with accepted usage. Suppose
that a person said, "After I was laid off by employer X, I
began working for employer Y the next day, but X paid me
for my unused vacation days." The meaning of the
statement would be obvious -- the person did not actually
take a vacation but was given the money that would have
been paid if he or she had he taken a vacation -- and no
one would think that the statement was linguistically
peculiar. And if Einhorn's interpr etation of this phrase is
accepted, it appears that Fleming was obligated to make
the disputed contributions. Applying Einhorn's
interpretation, when the lump sum payments wer e made
(while the CBA's were still in force), the employees were
paid for a certain number of days not worked, and Fleming
incurred an obligation to make corresponding
contributions, an obligation that survived the ter mination
of the CBA's. See Litton Fin. Printing Div. v. NLRB, 501 U.S.
190, 207 (1991).
We have considered all of the other evidence upon which
the parties have relied, and we believe that the CBA's
remain ambiguous and that there is a genuine issue of
material fact that precludes the entry of summary judgment
for either side. Accordingly, the decision of the District
Court must be reversed, and the case must be r emanded to
the District Court for trial.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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