Restaurant Employees, Bartenders & Hotel Service Employees Health & Welfare Pension Trust v. H.E. Ferryman, A/K/A Ferryman Enterprises, and Quality Hotel Tacoma Dome
Docket: 92-36642
Court: Court of Appeals for the Ninth Circuit; February 6, 1994; Federal Appellate Court
Ninth Circuit Rule 36-3 specifies that non-published dispositions lack precedential value and should only be cited in specific legal contexts. In the case of Restaurant Employees, Bartenders, Hotel Service Employees Health, Welfare Pension Trust v. H.E. Ferryman, the court affirmed the district court's summary judgment requiring Ferryman to make payments into the Fund for new employees not yet eligible for health benefits under their collective bargaining agreement (CBA). The court's review of the CBA, particularly sections 19.01 and 19.02, revealed that the terms were ambiguous regarding when contributions to the Fund were required.
Ferryman argued that the term "review period" specified in section 19.01 equated to a 90-day probationary period, thus obligating him to contribute only for employees who completed this period. The court disagreed, noting that even if "review period" was interpreted as the probationary period, it did not definitively restrict contributions to only those employees. Instead, the requirement to "provide insurance" for employees suggests that contributions could be necessary from the start of employment to ensure coverage at the conclusion of the review period.
Further, Ferryman's interpretation of section 19.02, which he claimed mandated payments only for employees who were "covered" (defined as having worked the necessary hours for three months), was also deemed insufficiently clear. The court concluded that the terms of the CBA were ambiguous and could support multiple interpretations, thereby upholding the district court's ruling.
Section 19.02 addresses employees 'covered by the Fund,' distinguishing between coverage under the Fund and the Benefits Plan. The phrase 'covered by the Fund' likely refers to participation in the Fund's insurance program, as supported by testimony from the Union representative suggesting the section’s language was mistakenly copied from a prior agreement with Sheraton Hotel. There are reasonable interpretations of the relevant sections that conflict with Ferryman's views but align with the district court's interpretation.
The court found the contract ambiguous and noted the necessity of considering extrinsic evidence, including past practices, for interpretation, which differs from private contract principles. Ferryman's argument that a 'zipper' clause prevents reliance on extrinsic evidence is rejected, as the Fund seeks to clarify the obligations under the agreement rather than impose new ones. The court emphasized that past practices can reveal the parties' intent when the agreement is ambiguous.
Ferryman's assertion that the ambiguity should be construed against the authors of the contract is also dismissed. The Fund, being a third-party beneficiary, is not the author of the CBA, and the application of this doctrine in labor contracts requires careful consideration of intent and ERISA policies. Ferryman's claim that his past practices were not clear or consistent is found to be irrelevant since a written agreement—the CBA—exists.
Past practice is significant for interpreting the intent of parties in a collective bargaining agreement (CBA) when the terms are ambiguous, not silent. Such practices are given considerable weight, as established in relevant case law. To ascertain intent, it is appropriate to examine the behaviors of both the current and previous parties involved in the contract, as well as similar employers. In this case, the CBA does not clearly specify when payments should start for new employees, justifying the use of extrinsic evidence, which indicates that payments are required from the date of hire. The district court's judgment is affirmed, and the case is remanded for an award of attorneys' fees to the Fund, as mandated by precedent. Additionally, the Trust correctly argues that the terms 'review period,' 'probationary period,' and 'eligibility period' cannot be equated, as the Trust retains the authority to modify the eligibility period independently of the CBA's language. Ferryman's reference to a prior arbitration case does not clarify the issue. The disposition is not for publication and is restricted in citation within the circuit.
The case centers on the interpretation of a collective bargaining agreement (CBA) regarding the timing of payments into a fund for new employees. Unlike a previous case that dealt with ambiguous contracts, this situation involves a clear written agreement, with past practices serving only as context for understanding the parties' intent. The court finds the CBA ambiguous about when payments should begin, allowing the consideration of extrinsic evidence. This evidence indicates that Ferryman is obligated to start making payments from the date of hire for new employees. The district court's judgment is affirmed, and the case is remanded for an award of attorneys' fees incurred during the appeal. Additionally, the Trust highlights a discrepancy between "review period" and "probationary period," suggesting the Trust can adjust the eligibility period independently of the CBA's language. The reference to a previous labor arbitration case is noted as irrelevant since it did not pertain to ambiguous contracts.
