Roofers Local 149 v. Bloom Roofing Sys , 134 F. App'x 39 ( 2005 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 05a0455n.06
Filed: May 31, 2005
No. 04-1519
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
ROOFERS LOCAL 149 JOINT )
APPRENTICESHIP FUND, a Trust )
Fund Established and Administered )
Pursuant to Federal Law, ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
Plaintiff-Appellant, ) COURT FOR THE EASTERN
) DISTRICT OF MICHIGAN
v. )
)
BLOOM ROOFING SYSTEMS, a ) OPINION
Michigan Corporation, )
)
Defendant-Appellee. )
_______________________________________)
Before: KENNEDY and MOORE, Circuit Judges, and RESTANI,* Judge.
KAREN NELSON MOORE, Circuit Judge. In the underlying Employee Retirement
Income Security Act (“ERISA”) § 515 suit, Plaintiff-Appellant Roofers Local 149 Joint
Apprenticeship Fund (“Local 149 JAF”) seeks to recover differential payments from Defendant-
Appellee Bloom Roofing Systems (“Bloom”), a roofing company based in the home area of the
United Union of Roofers, Waterproofers & Allied Workers Local No. 70 (“Local 70”). Specifically,
Local 149 JAF alleges that, when Bloom provided roofing services in the geographic region
represented by United Union of Roofers, Waterproofers & Allied Workers Local No. 149 (“Local
149”), the Local 149 collective bargaining agreement required Bloom to make “differential”
*
The Honorable Jane A. Restani, Chief Judge of the U.S. Court of International Trade, sitting
by designation.
payments to the Local 149 JAF if the fringe benefits Bloom owed under its collective bargaining
agreement with Local 70 were less than the fringe benefits provided for in the Local 149 agreement.
Bloom counters that it does not owe any differential payments to Local 149 JAF because the Local
70 fringe-benefit package exceeds that of Local 149 due to the inclusion of a $2.00 per hour
subsistence payment. Ruling on cross-motions for summary judgment, the district court below
denied Local 149 JAF’s motion and entered judgment in favor of Bloom. For the reasons set forth
below, we AFFIRM the district court’s denial of Local 149 JAF’s motion for summary judgment,
REVERSE the district court’s order granting Bloom’s motion for summary judgment, and
REMAND this case to the district court for further proceedings consistent with this opinion.
I. FACTUAL AND PROCEDURAL HISTORY
A. Factual Background
Two local unions, Local 70 and Local 149, represent Michigan members of the United Union
of Roofers, Waterproofers & Allied Workers (“Roofers Union”). Bloom is based in Ann Arbor,
Michigan, which falls within the scope of Local 70; however, Bloom provides roofing services
throughout the state of Michigan, including regions served by Local 149. Bloom has also adopted
the collective bargaining agreements for both Local 70 and Local 149.1
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As a member of the J.L.W. Roofing Contractors Association, Defendant-Appellee Bloom
Roofing Systems (“Bloom”) entered into two collective bargaining agreements with United Union
of Roofers, Waterproofers & Allied Workers Local No. 70 (“Local 70”), the first covering the period
June 1, 1994 through May 31, 2000, and the second covering the period June 1, 2000 through May
31, 2003.
Bloom also entered into two agreements with United Union of Roofers, Waterproofers &
Allied Workers Local No. 149 (“Local 149”). First, Bloom and Local 149 executed a Reciprocal
Agreement and Release in March 1999, in which Bloom agreed to adopt “with certain
modifications” the collective bargaining agreement between Local 149 and the Southeastern
Michigan Roofing Contractors Association (“SMRCA”). Joint Appendix (“J.A”) at 120 (March
1999 Reciprocal Agreement and Release ¶ 4). Although this collective bargaining agreement
covered the period June 1, 1998 through May 31, 2000, the Reciprocal Agreement and Release
2
The case at bar focuses on provisions of the Local 70 and Local 149 collective bargaining
agreements referred to as “competition-leveling” clauses. Put simply, a competition-leveling clause
requires that, when an employer hires members of one local union to perform services in a
geographic region served by another local union, the employer must pay wages and fringe benefits
according to the higher of the two local unions’ scales. The Constitution of the Roofers Union
requires local unions to include such competition-leveling provisions in their collective bargaining
agreements in order to prevent a “race to the bottom” by local unions seeking to gain a competitive
edge over one another by lowering wages and fringe benefits.2 Thus, Local 149 has included the
following competition-leveling provision (hereinafter referred to as “Article 31”) in its 1998-2000
and 2000-2003 collective bargaining agreements:
stated that Bloom agreed to be bound by the collective bargaining agreement only as of January 1,
1999. On March 27, 2002, Bloom entered into its second agreement with Local 149 by signing a
Memorandum of Adoption, in which Bloom “agree[d] to adopt and be bound by all terms and
conditions set forth” in the collective bargaining agreement between Local 149 and SMRCA
covering the period June 1, 2000 through May 31, 2003. J.A. at 171 (Local 149 2000-2003
Collective Bargaining Agreement Memorandum of Adoption).
2
Article II, § 2 of the Roofers Union Constitution provides that:
Each Local Union shall require any of its members working in the territory
of another Local Union, whose total wage and fringe benefits are higher, to demand
and receive the higher wage and fringe benefits. Each Local Union shall negotiate
a collective bargaining clause that signatory employers who work in the jurisdiction
of the sister local shall contribute to the fringe benefit programs maintained by the
sister local where the employees are working.
If a contractor has been paying into any of the above mentioned funds in his
territory he shall not be obligated to pay into another fund, unless after paying the
higher wages to his employees and paying all contributions into all of its established
funds, the total package is still below that of the sister Local Union’s territory, in
which case the employer shall be obligated to pay the difference into whatever fringe
benefit funds the sister Local Union has provided for in its collective bargaining
agreement.
J.A. at 645.
3
An Out-of-Town Contractor on a job within the geographical area covered by this
Agreement will pay visiting roofers (i.e., roofers from a Local other than Local 149)
whichever total package of wages (including vacation pay) and fringes are higher —
either their Local Union package or the Local 149 package. Vacation pay is
considered wages for the purposes of this Article. If the Local 149 package is higher
due to wages, visiting roofers will be paid the difference in wages. If the Local 149
package is higher due to fringes, the difference will be paid to the Roofers Local 149
Joint Apprenticeship Fund.
Joint Appendix (“J.A.”) at 113 (Local 149 1998-2000 Collective Bargaining Agreement art. 31,
§ 2(b)); J.A. at 167 (Local 149 2000-2003 Collective Bargaining Agreement art. 31, § 2(b)).
In this case, Local 149 JAF (a fund established by Local 149’s collective bargaining
agreement) claims that the fringe benefits provided under the Local 70 collective bargaining
agreements are less than those set forth in the Local 149 collective bargaining agreements, and that
Article 31 requires Bloom to make payments to Local 149 JAF equal to the difference between the
two local unions’ fringe-benefit packages. Both parties in this action have taken the view that
whether Bloom owes any payments to Local 149 JAF under Article 31 depends on the classification
of a $2.00 per hour “subsistence payment” that the Local 70 collective bargaining agreement
requires employers to pay to their roofing employees. Bloom contends that the $2.00 per hour
subsistence payment constitutes a fringe benefit and, as a result, the Local 70 fringe benefit package
exceeds that of Local 149 and no differential payment is owed to Local 149 JAF. Local 149 JAF,
in contrast, asserts that the $2.00 per hour subsistence payment constitutes travel pay that should not
be considered part of the Local 70 wage-and-fringe-benefit package and hence a differential does
exist between the fringe benefits provided under the Local 70 and Local 149 agreements.
B. District Court Proceedings
Based on its belief that Bloom failed to make differential payments as required by Article
31, Local 149 JAF filed suit against Bloom pursuant to § 515 of ERISA, 29 U.S.C. § 1145. Local
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149 JAF and Bloom each filed a motion for summary judgment, directing their arguments primarily
to the proper classification of the $2.00 per hour subsistence payment under the Local 149 collective
bargaining agreement. The district court then issued a show-cause order directing the parties to
address the relevancy of Article VIII of the Local 70 collective bargaining agreements (“Article
VIII”), which provides in relevant part that “any contractor performing work under this
AGREEMENT [i.e., Bloom] and working in a sister local[’]s [i.e., Local 149’s] jurisdiction that has
wages and/or fringes higher than those contained in this collective bargaining agreement such higher
wages and/or fringes shall be paid.” J.A. at 595 (Local 70 1994-2000 Collective Bargaining
Agreement art. 8, § 1); J.A. at 700 (Local 70 2000-2003 Collective Bargaining Agreement art. 8,
§ 1). After receiving briefing from the parties regarding the impact of Article VIII, the district court
denied Local 149 JAF’s motion for summary judgment and entered judgment in favor of Bloom.
Local 149 JAF now appeals the district court’s ruling.
II. ANALYSIS
A. Standard of Review
Under Federal Rule of Civil Procedure 56, summary judgment is appropriate “if the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” FED. R. CIV. P. 56(c). We review de novo a
district court’s order granting summary judgment, and in conducting such a review, we view all the
evidence in the light most favorable to the non-moving party. Satterfield v. Tennessee, 295 F.3d
611, 615 (6th Cir. 2002). In this case, we also review de novo the district court’s order denying on
legal grounds Local 149 JAF’s motion for summary judgment because, “[a]lthough the district
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court’s denial of a motion for summary judgment is usually treated as a nonappealable interlocutory
order, when an appeal from a denial of summary judgment is presented in tandem with a grant of
summary judgment, this court has jurisdiction to review the propriety of the district court’s denial
of summary judgment.” Le-Ax Water Dist. v. City of Athens, 346 F.3d 701, 704 (6th Cir. 2003).
B. ERISA § 515
The present suit arises under § 515 of ERISA, which provides that:
[e]very employer who is obligated to make contributions to a multiemployer plan
under the terms of the plan or under the terms of a collectively bargained agreement
shall, to the extent not inconsistent with law, make such contributions in accordance
with the terms and conditions of such plan or such agreement.
29 U.S.C. § 1145. Section 515 allows multiemployer plans like Local 149 JAF “to rely on the literal
terms of written commitments between the plan, the employer, and the union” by rendering
“immaterial” the “actual intent of and understandings between the contracting parties.” Bakery and
Confectionery Union and Indus. Int’l Health Benefits and Pension Funds v. New Bakery Co. of
Ohio, 133 F.3d 955, 959 (6th Cir. 1998) (“The fund thus stands much like a holder in due course in
commercial law who is entitled to enforce the writing without regard to understandings or defenses
applicable to the original parties.”) (internal quotation marks and citation omitted). Thus, we focus
our attention in this case on the specific provisions of Local 70’s and Local 149’s collective
bargaining agreements to determine whether Local 149 JAF is entitled to recover differential
payments from Bloom.
C. Designation of Fringe-Benefit-Differential Recipient
The district court below entered summary judgment in favor of Bloom on the basis that,
regardless of whether a differential actually exists between the Local 70 and Local 149
compensation packages, Local 149 JAF would not be the proper recipient of any differential
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payments owed by Bloom. The district court’s conclusion rested on the belief that Article VIII of
the Local 70 collective bargaining agreement is unambiguous and requires that Local 70 employees
be the recipients of any increases in wages or fringe benefits paid pursuant to a competition-leveling
provision.
We, however, do not share the district court’s view that Article VIII is unambiguous in
requiring that Local 70 employees and their funds be the recipients of any differential payments
made by Local 70-area employers operating in areas served by other local unions. See Northwestern
Ohio Adm’rs, Inc. v. Walcher & Fox, Inc., 270 F.3d 1018, 1025 (6th Cir. 2001), cert. denied, 535
U.S. 1017 (2002) (“Whether a contract term is ambiguous is a question of law for the court to
determine.”). As the district court acknowledged, “the relevant provision [Article VIII] does not
specify that the higher wages and/or fringes must be paid to Local 70 employees, and simply states
that the ‘higher wages and/or fringes shall be paid.’” J.A. at 22 (D. Ct. Op. at 11) (quoting Local
70 2000-2003 Collective Bargaining Agreement art. VIII). The district court reasoned that, because
it was generally accepted that Local 70 employees would receive any increase in wages resulting
from a competition-leveling provision, any increase in fringe benefits also must be paid to the Local
70 employees, either directly or through the funds established by the Local 70 collective bargaining
agreement.
We believe, however, that although a common-sense reading of Article VIII is that any
increase in wages should be paid to Local 70 employees, it is not so obvious that an increase in
fringe benefits must also be paid to Local 70 employees or Local 70 funds. While the district court’s
interpretation of Article VIII as requiring payment to the Local 70 employees and their funds is an
entirely reasonable one, we also believe that it is plausible to read Article VIII as allowing other
local unions’ funds to receive the increase in fringe-benefit payments when employers operate in
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their areas. That Article VIII is susceptible to two plausible interpretations is further reinforced by
the fact that the Roofers Union Constitution appears to suggest that increases in fringe benefits
should be paid according to the rules set forth by the local union where the work was performed and
not the employees’ own local union. J.A. at 645 (Roofers Union Const. art. II, § 2) (“If a contractor
has been paying into any of the above mentioned funds in his territory he shall not be obligated to
pay into another fund, unless after paying the higher wages to his employees and paying all
contributions into all of its established funds, the total package is still below that of the sister Local
Union’s territory, in which case the employer shall be obligated to pay the difference into whatever
fringe benefit funds the sister Local Union has provided for in its collective bargaining agreement.”)
(emphasis added); see also Int’l Union, United Mine Workers of Am. v. Apogee Coal Co., 330 F.3d
740, 747 (6th Cir. 2003) (“‘Extrinsic evidence can become a consideration before an ambiguity has
been identified from the face of the contract as a matter of law, in the limited sense that such
evidence can assist the court in determining whether, as a matter of law, two plausible
interpretations exist in the manner necessary to give rise to the existence of an ambiguity.’”)
(quoting Lincoln Elec. Co. v. St. Paul Fire & Marine Ins. Co., 210 F.3d 672, 684 n.12 (6th Cir.
2000)). Because we do not believe that Article VIII of the Local 70 collective bargaining agreement
unambiguously restricts funds like Local 149 JAF from recovering fringe-benefit payments from
employers like Bloom who operate outside of Local 70’s jurisdiction, we cannot affirm the district
court’s entry of summary judgment in favor of Bloom on such a basis.
D. Calculation of Differential
In light of our determination that the Local 70 collective bargaining agreement does not
unambiguously prevent Local 149 JAF from recovering in this case, we must turn to the question
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left unanswered by the district court, i.e., whether a differential existed between the fringe benefits
owed under the Local 70 and Local 149 collective bargaining agreements.
1. Formula for Calculating Differential
We note at the outset that Article 31 of the Local 149 collective bargaining agreement and
Article VIII of the Local 70 collective bargaining agreement utilize somewhat different formulas for
determining whether or not a differential exists. Under the terms of Article 31, Bloom only owes
a differential payment to the Local 149 JAF if: (1) the Local 149 collective bargaining agreement’s
“total package of wages (including vacation pay) and fringes are higher” than the Local 70 package,
and (2) “the Local 149 package is higher due to fringes.” J.A. at 167 (Local 149 2000-2003
Collective Bargaining Agreement art. 31, § 2(b)) (emphasis added). In contrast, Article VIII of the
Local 70 collective bargaining agreement suggests that wages and fringe benefits should be
compared separately, such that an employer might be required to pay wages according to one local
union’s scale but provide the other local union’s fringe-benefit package. J.A. at 700 (Local 70 2000-
2003 Collective Bargaining Agreement art. 8, § 1) (“[A]ny contractor performing work under this
AGREEMENT [i.e., Bloom] and working in a sister locals [sic] jurisdiction that has wages and/or
fringes higher than those contained in this collective bargaining agreement such higher wages and/or
fringes shall be paid.”) (emphasis added). Because Local 149 JAF has asserted that its entitlement
to differential payments arises from the Local 149 collective bargaining agreement, and because an
employer’s obligations to make differential payments are less onerous under the Local 149
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agreement than the Local 70 agreement,3 we base our analysis here on the method of calculation set
forth in Article 31 of the Local 149 agreement.
2. Classification of $2.00 Per Hour Subsistence Payment
The central question at issue in this case is how the $2.00 per hour subsistence payment
provided under the Local 70 collective bargaining agreement should be characterized for purposes
of calculating the differential between the Local 70 and Local 149 wage-and-fringe-benefit
packages. Local 149 JAF asserts that the $2.00 per hour subsistence payment provided in the Local
70 agreement constitutes travel pay, which Article 31 specifically excludes from the differential
calculation. Bloom, on the other hand, contends that the $2.00 per hour subsistence pay qualifies
as a fringe benefit that should be included as part of Local 70’s wage-and-fringe-benefit package.
As an initial matter, we agree with Local 149 JAF that travel pay should not be included
when calculating the differential under Article 31 because the Local 149 collective bargaining
agreement consistently treats travel pay as an amount separate and distinct from wages and fringe
benefits. J.A. at 166 (Local 149 2000-2003 Collective Bargaining Agreement art. 30 § 2(f)) (“Local
149 Employers will pay travel pay according to the provisions of each roofer’s home area
Agreement. Travel pay is not wages or a fringe benefit.”); J.A. at 167 (Local 149 2000-2003
Collective Bargaining Agreement art. 31 § 2(a)) (“An Out-Of-Town Contractor who is signatory to
3
Take, for instance, the following example. Under the Local 70 collective bargaining
agreement, the baseline wage rate is $15 per hour, and fringe benefits also amount to $15 per hour.
The Local 149 collective bargaining agreement, however, establishes a baseline wage rate of $20
per hour and fringe benefits of $10 per hour. Using the Local 149 differential-calculation method,
an employer like Bloom would owe no differential payment because the total packages under both
agreements are equal (i.e., $30 per hour). Under one plausible view of the Local 70 formula,
however, the employer would owe wages of $20 per hour and fringe benefits of $15 per hour,
resulting in a $5 per hour differential payment owed.
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this Agreement shall pay all travel pay, wages, fringes and other benefits of this Agreement to all
Local 149 roofers working on any jobs within the geographical area covered by this Agreement.”).
We disagree with Local 149 JAF, however, with respect to its assertion that the $2.00 per
hour subsistence payment constitutes travel pay. The $2.00 per hour subsistence payment provision
is set forth in Article XIV of Local 70’s 2000-2003 collective bargaining agreement, which reads
in relevant part:
ARTICLE XIV
TRAVEL EXPENSES AND SUBSISTENCE PAY
SECTION ONE All employees shall receive an hourly subsistence of TWO
DOLLARS ($2.00) FOR EACH HOUR OR PARTIAL
HOUR WORKED. IN ADDITION, TRAVEL PAY SHALL
BE PAID AS FOLLOWS: The free zone shall have a radius
of FIFTY-FIVE (55) miles from the intersection of I-96 and
U.S. 23 located at Brighton, Michigan. Zone one – a
maximum of SIXTY-FIVE (65) miles with travel expenses of
TWENTY-FOUR DOLLARS AND NINETY-SEVEN
CENTS ($24.97). If employees are told to report to a job
located between FIFTY-FIVE (55) and SIXTY-FIVE (65)
miles and they do not work, they will be paid TWENTY-
FIVE DOLLARS ($25.00) show up time. If adverse weather
prohibits the start of work on jobs located in zone one travel
expenses will not be paid, unless the employee is instructed
to go to the job, by the employer or his representative.
J.A. at 177 (Local 70 2000-2003 Collective Bargaining Agreement art. XIV, § 1). Although the
$2.00 per hour subsistence payment provision is included in the same article and section as the travel
pay provision, this alone does not render the $2.00 per hour subsistence payment part of Local 70
employees’ travel pay. Indeed, § 1 defines travel pay as a separate amount to be paid “in addition”
to the $2.00 per hour subsistence payment. Moreover, the total subsistence payment received by an
employee wholly depends on the number of hours the employee works and bears no correlation to
the time an employee spends traveling, the distance the employee travels, or the expenses the
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employee incurs as a result of travel. See Williams v. Great Lakes Dredge and Dock Co., 726 F.2d
278, 281 (6th Cir. 1984). Hence, we conclude that the $2.00 per hour subsistence payment does not
qualify as travel pay and thus should not be excluded from Local 70’s total wage-and-fringe-benefit
package for purposes of determining whether a differential exists between the Local 70 and Local
149 packages.
We cannot sustain entry of summary judgment in favor of Bloom, however, because we
cannot say, based on the record before us, that the $2.00 per hour subsistence payment constitutes
a fringe benefit rather than wages. The Local 149 audit spreadsheets, which compare the wages and
fringe benefits for journeymen under the Local 70 and Local 149 agreements, indicate that, even if
the $2.00 per hour subsistence payment is included as part of Local 70’s total package of wages and
fringe benefits, the Local 149 package still exceeds the Local 70 package, requiring Local 70
employers to make differential payments. J.A. at 303-04 (when $2.00 per hour subsistence payment
is included in Local 70 package, indicating existence of a differential in the total of wages and fringe
benefits of $4.93 for period June 1, 2000 to May 31, 2001; a $3.53 differential for period June 1,
2001 to May 31, 2002; and a $4.18 differential for period June 1, 2002 to May 31, 2003). Thus,
categorization of the $2.00 per hour subsistence payment as either wages or a fringe benefit is
necessary in order to determine to what extent the Local 149 package is “higher due to fringes,” and
thus what portion of the differential should be paid to Local 149 JAF. J.A. at 167 (Local 149 2000-
2003 Collective Bargaining Agreement art. 31, § 2(b)).
The proper categorization of the $2.00 per hour subsistence payment is made rather difficult
by the fact that the Local 149 collective bargaining agreement does not specifically define “wages”
or “fringe benefits.” The ordinary definitions of these terms would seem to suggest that the $2.00
per hour subsistence payment constitutes wages because it is represents direct compensation to the
12
employee based on the amount of time worked. Compare MICH. COMP. LAWS § 408.471(e)
(“‘Fringe benefits’ means compensation due an employee pursuant to a written contract or written
policy for holiday, time off for sickness or injury, time off for personal reasons or vacation, bonuses,
authorized expenses incurred during the course of employment, and contributions made on behalf
of an employee.”), and, BLACK’S LAW DICTIONARY (8th ed. 2004) (defining “fringe benefit” as “[a]
benefit (other than direct salary or compensation) received by an employee from an employer, such
as insurance, a company car, or a tuition allowance”), with J.A. at 374 (Ltr. from Internal Revenue
Service Technical Assistance Section Chief) (“The subsistence payments of $2.00 per hour for
Roofers Union Local 70 workers are taxable as wages. . . . The extra money is considered a raise in
wages, and the wages are taxable.”), and MICH. COMP. LAWS § 408.471(f) (“‘Wages’ means all
earnings of an employee whether determined on the basis of time, task, piece, commission, or other
method of calculation for labor or services except those defined as fringe benefits under subdivision
(e) above.”), and Williams, 726 F.2d at 281, and BLACK’S LAW DICTIONARY (8th ed. 2004) (defining
“wage” as “[p]ayment for labor or services, usu. based on time worked or quantity produced; specif.,
compensation of an employee based on time worked or output of production”).
However, we decline to grant summary judgment to Local 149 JAF on the basis that the
$2.00 per hour subsistence payment constitutes wages because Local 149 JAF has not raised such
an argument on appeal. Indeed, Local 149 JAF has argued that the $2.00 per hour subsistence
payment is not a wage but rather travel pay. See Pl.-Appellant’s Reply Br. at 8 (“The hourly $2.00
subsistence pay quoted above bears no characteristics of a wage. . . .”); id. at 9 (“Subsistence pay,
by its very definition and nature, is not a wage; it is instead a form of reimbursement for basic,
minimal costs associated with travel.”). As a result, entry of summary judgment in favor of either
party would be premature at this time.
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III. CONCLUSION
For the reasons set forth above, we AFFIRM the district court’s denial of Local 149 JAF’s
motion for summary judgment, we REVERSE the district court’s order of summary judgment in
favor of Bloom, and we REMAND for further proceedings consistent with this opinion.
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