Central States, Southeast & Southwest Areas Pension Fund v. Kroger Co.

Citations: 73 F.3d 727; 1996 U.S. App. LEXIS 316; 1996 WL 8099Docket: No. 95-1936

Court: Court of Appeals for the Seventh Circuit; January 9, 1996; Federal Appellate Court

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Central States, Southeast and Southwest Areas Pension Fund initiated a lawsuit against Kroger Company under § 515 of ERISA, asserting that Kroger failed to fulfill its pension contribution obligations for certain employees. These obligations are specified in a Collective Bargaining Agreement (CBA) between Kroger and the International Brotherhood of Teamsters Local 528. The district court reviewed the CBA and concluded that Kroger was not required to make the claimed pension contributions, resulting in a summary judgment in favor of Kroger. Central States appealed this decision.

The CBA consists of a Master Agreement applicable nationwide and a Local Supplement specific to the Atlanta facility. The Master Agreement distinguishes between regular, probationary, and casual employees, mandating pension contributions for employees who have worked for thirty days or more and are on the regular seniority list. In contrast, casual employees, who are hired on a short-term basis, do not receive fringe benefits or accrue seniority.

The Local Supplement refers to employees as "full-time" and "part-time" without clear definitions. Part-time employees can accrue limited seniority among themselves and must follow job-bidding procedures for permanent positions. In 1977, Kroger reclassified all newly hired warehouse employees as casuals, despite many remaining long-term and eventually becoming regular employees, at which point Kroger made pension contributions on their behalf. The appellate court reversed the district court's judgment and remanded the case for further proceedings.

Kroger designated certain warehouse employees at its Atlanta facility as "casual," resulting in no pension contributions for several months. In 1991, Central States conducted an audit and determined these employees were, in fact, probationary and should have received contributions after 30 days of employment. Central States initiated legal action against Kroger under 29 U.S.C. §§ 1132 and 1145, claiming over $200,000 was owed for contributions from December 28, 1986, to December 30, 1989. 

The district court faced the issue of whether Kroger's "casual" designation aligned with the contractual definitions in the Master Agreement and Local Supplement. Kroger argued it was not required to make contributions for casual employees, equating "part-time" with "casual." The court examined the Master Agreement, which required contributions for regular employees, including part-time, and specified that only probationary employees could transition to regular status after 30 days. The court noted that while "full-time" and "part-time" have standard meanings, it would not apply those definitions rigidly, concluding that "part-time" in the Local Supplement referred to the same employees as "casual" in the Master Agreement.

Despite recognizing a potential conflict in terminology, the court justified this as consistent within the context of the two agreements, thus finding no ambiguity. Consequently, the court ruled that the casual employees were indeed treated as true casual employees per the CBA and granted summary judgment in favor of Kroger. The case was then brought for review, with Central States asserting its claim under § 515 of ERISA, which mandates employers to make contributions per the terms of a multiemployer plan or collectively bargained agreement.

The collective bargaining agreement (CBA) is pivotal in a § 515 claim, establishing the employer's obligation to the pension fund. Pension funds are entitled to enforce the agreements as written, and any reliance on oral agreements or defenses that could undermine the CBA's enforcement is impermissible. The analysis begins with the structure of the CBA, which consists of a Master Agreement and a Local Supplement. The district court viewed these as distinct agreements, leading to potential ambiguities. However, it is asserted that they should be regarded as a single, unitary contract. Article Thirty-Two of the Master Agreement explicitly states that all oral understandings must be documented within six months to be considered valid, indicating a clear intent to incorporate the Local Supplement into the Master Agreement. The claim that the CBA consists of two separate agreements is unsupported by its text, which the pension fund is entitled to rely upon. Furthermore, even absent an incorporation clause, related documents should be interpreted together as a matter of legal principle.

The Master Agreement and Local Supplement were executed simultaneously by the same parties, with the Local Supplement physically attached to the Master Agreement during execution. The CBA contains a single signature block, indicating the intention of both the Union and Kroger to treat the Master Agreement and Local Supplement as one cohesive contract. The Master Agreement explicitly incorporates the Local Supplement by reference, necessitating a unified interpretation of the CBA. 

The determination of whether the CBA is ambiguous is a legal question reviewed de novo. A contract is deemed ambiguous if it allows for multiple reasonable interpretations. In this case, neither the Fund nor Central States contends that the CBA is ambiguous, but they disagree on its interpretation. The differing reasonable interpretations attributed to the term "vested" indicate ambiguity; similarly, the term "part-time" is also deemed ambiguous, as it could refer to either casual employment or a regular employee working fewer hours. 

Support for equating "part-time" with "casual" employment is found in the CBA provisions limiting both categories to ten percent of the workforce. However, the common understanding of "part-time" typically refers to employees working fewer hours than full-time, suggesting that the term should not be conflated with casual employment.

Several provisions of the Master Agreement indicate that part-time employees should not be classified as casual employees. Casual employees are explicitly denied fringe benefits, seniority accrual, and pension contributions, while regular part-time employees are entitled to pension contributions as outlined in section 31.4, which mandates that contributions must be made for each regular or extra employee, regardless of their part-time status. This distinction suggests that the definition of part-time cannot include casual employees, leading to the conclusion that the Collective Bargaining Agreement (CBA) is ambiguous.

Due to this ambiguity, the district court erred in declaring the CBA's meaning as unambiguous during summary judgment. The issue requires a factual determination regarding the definition of part-time. The Fund has a right to rely on the CBA's terms for benefit eligibility, and any unilateral employer actions that contradict the CBA cannot undermine the Fund's rights. The CBA and the employee welfare benefits plan must be interpreted together, as they were negotiated simultaneously by the same parties, establishing the employer's obligations.

The distinction between casual and probationary employees is crucial; Kroger's reclassification of employees hinges on whether they are genuinely casual. The judgment of the district court is reversed and remanded for further consideration. Additionally, conflicts arise between the Master Agreement and the Local Supplement regarding seniority accrual for part-time employees, which must be reconciled.