Central States, Southeast & Southwest Areas Pension Fund v. Gateway Foods of Twin Ports, Inc.

864 F. Supp. 53, 1994 U.S. Dist. LEXIS 6242, 1994 WL 538941
CourtDistrict Court, N.D. Illinois
DecidedMay 11, 1994
DocketNo. 93 C 523
StatusPublished

This text of 864 F. Supp. 53 (Central States, Southeast & Southwest Areas Pension Fund v. Gateway Foods of Twin Ports, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Central States, Southeast & Southwest Areas Pension Fund v. Gateway Foods of Twin Ports, Inc., 864 F. Supp. 53, 1994 U.S. Dist. LEXIS 6242, 1994 WL 538941 (N.D. Ill. 1994).

Opinion

MEMORANDUM AND ORDER

MORAN, Chief Judge.

Plaintiffs Central States, Southeast and Southwest Areas Pension Fund (the Fund) and its trustee, Howard McDougall, bring this action pursuant to § 502 of the Employee Retirement Income Security Act (ERISA). 29 U.S.C. § 1001 et seq. They seek recovery from defendant Gateway Foods of Twin Ports (Gateway Foods) for contributions and interest allegedly owed the Fund for the period February 1, 1989 through December 30, 1989. Plaintiffs and defendant now move for summary judgment and, for reasons stated below, both motions are denied.

FACTS

The Fund provides benefits for employees of various employers that contribute to it pursuant to their collective bargaining agreements. It operates on a self-reporting system in which employers identify and provide work histories of employees for whom they owe contributions. The Fund bills employers based on their reports. However, the Pension Fund Trust Agreement requires employers to give trustees access to their records, thereby allowing trustees to verify their reports.

[54]*54Gateway Foods, an employer participating in the Fund, entered into a collective bargaining agreement (the agreement) with Local 346 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (IBT) that went into effect on February 1, 1989. Under the agreement Gateway Foods contributes to the Fund for covered employees. The agreement contains references to casual, probationary and regular employees. Plaintiffs contend that when they audited Gateway Foods’ reports to the Fund they discovered an improper failure to contribute to the Fund for certain employees between February 1, 1989 and December 30, 1989. Gateway Foods says it was not required to contribute for the employees in question because they were probationary employees.

DISCUSSION

Article 29 of the collective bargaining agreement provides:

Effective February 1, 1989, the Employer shall contribute to [the Fund] ... for each employee covered by this Agreement who has been on the payroll thirty (30) days or more, except as provided in this Agreement.

Article 29 does not cover employees who work “temporarily or in cases of emergency”. Article 15 creates another exception to Gateway Foods’ contribution requirement: it need not make pension contributions on behalf of casual employees. The Fund does not allege that Gateway Foods owes contributions for employees who were temporary, emergency or casual employees during the period in question. Rather, the employees in question were probationary employees, as defined in Article 15 § I.C.:

All employees shall be on probation for the first 480 straighLtime working hours that they work for the employer provided such hours must be completed within ninety calendar days, beginning with the first day worked by the new employee involved.

The section further provides:

Employees on probation shall not receive holiday pay. During this period of probation employees shall acquire no seniority or re-employment rights and may be laid off or discharged at the Employer’s discretion. After said period of probation, employees, if retained by Employer, shall become regular employees and shall be placed on the seniority list ... and shall become a member of the union ...

Unlike casual employees, there is no provision excluding probationary employees from Gateway Foods’ obligation to contribute to the Fund.

Plaintiffs argue that because probationary employees are employees covered in the agreement, Gateway Foods must contribute to the Fund on their behalf once they have been on the payroll for 30 days or more. They point out that while the agreement explicitly excludes casual employees from the contribution obligation, and excludes probationary employees from other benefits, it does not explicitly exclude probationary employees from the contribution obligation.

Gateway Foods responds that the parties did not intend to include probationary employees in the contribution obligation. It argues that “each employee covered by this Agreement” is ambiguous as to whether it includes probationary employees because “employee” is used differently throughout the agreement. According to Gateway Foods, the court should therefore consider extrinsic evidence showing that the parties did not intend to obligate Gateway Foods to contribute to the Fund on behalf of probationary employees.

On “a motion for summary judgment requiring interpretation of a contract, the district court must determine (1) if the contract is ambiguous or unambiguous and (2) if it is ambiguous, whether after consideration of the extrinsic evidence, there are any triable issues of fact.” Hickey v. A.E. Staley Mfg., 995 F.2d 1385, 1389 (7th Cir.1993). “ ‘A term is ambiguous if it is subject to reasonable alternative interpretations.’ ” Id., quoting Taylor v. Continental Group, 933 F.2d 1227, 1232 (3rd Cir.1991). A contract may be either internally ambiguous—“internally inconsistent or unclear”—or externally ambiguous, if inquiry “beyond merely studying the words of the document ... reveals a genuine dispute about the contract’s meaning.” R.T. [55]*55Hepworth Co. v. Dependable Ins. Co., 997 F.2d 315, 319 (7th Cir.1993).

Gateway Foods argues that “employee” is ambiguous because the agreement sometimes uses “employee” in a provision, but elsewhere limits which employees the provision includes. Article 15 § C grants seniority rights to regular employees only, while 15 § H addresses the loss of seniority rights and refers to employees without qualification. Article 11 provides that “[njotwithstanding anything herein contained, it is agreed that in the event any Employer is delinquent ... in ... its payment of premiums on insurance carried for the benefit of employees or contributions to Pension Fund or Funds created under this contract ... the employees” can take action. Under Article 28, Gateway Foods must contribute to the health and welfare premiums “for each week on each regular employee employed during the week,” but not for casual or emergency employees.

In Article 5, on certain conditions, Gateway Foods agrees to grant time off without loss of seniority rights to “any employee,” and to grant a leave of absence without loss of seniority rights to “any employee” who arranges to continue Health and Welfare and Pension payments. However, under Articles 15 § C and 28, employees acquire seniority rights only after they become regular employees, and Gateway Foods must contribute to the health and welfare premiums only for regular employees.

Article 2 requires all employees to be union members and pay dues. Article 15, though, provides that when an employee becomes a regular employee “he shall become a member of the union” and have a duty to pay dues under Article 2. Article 17 precludes Gateway Foods from discharging or suspending “any employee without just cause,” but Article 15 grants Gateway Foods the discretion to lay off or discharge probationary employees.

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864 F. Supp. 53, 1994 U.S. Dist. LEXIS 6242, 1994 WL 538941, Counsel Stack Legal Research, https://law.counselstack.com/opinion/central-states-southeast-southwest-areas-pension-fund-v-gateway-foods-ilnd-1994.