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Central States v. Central Cartage Co.

November 7, 1995

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, ET AL.,

PLAINTIFFS-APPELLEES,

v.

CENTRAL CARTAGE COMPANY AND CENTRAL TRANSPORT, INC.,

DEFENDANTS-APPELLANTS.



Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 91 C 6232--Harry D. Leinenweber, Judge.

Before FLAUM, EASTERBROOK, and DIANE P. WOOD, Circuit Judges.

EASTERBROOK, Circuit Judge.

ARGUED SEPTEMBER 27, 1995

DECIDED NOVEMBER 7, 1995

Central Cartage Company hires both regular and casual truck drivers. Casual drivers are covered by the Teamsters' national collective bargaining agreement and can hold the position for an indefinite duration, but they lack the job security associated with regular employment. Central Cartage made pension and welfare contributions for its casual drivers only if they were union members--which some were at the outset, others became eventually, and some never did. (A union-security clause in the collective bargaining agreement requires membership after 30 days on the job, except in right-to-work states.) The multi-employer pension and welfare funds filed suit demanding contributions on behalf of all drivers in the bargaining unit. The district court ordered Central Cartage to pay up. 1992 U.S. Dist. LEXIS 10768, reconsideration denied, 861 F. Supp. 1402, 1406-09 (1994).

The collective bargaining agreement requires pension and welfare contributions for all over-the-road drivers, a category that includes casual drivers. Just in case this was not clear enough, a supplemental agreement requires a defined payment for "each day or tour of duty worked by each casual employee". The master agreement does not distinguish according to membership status, so the funds were entitled to prevail. Central Cartage weakly protests, pointing to another clause in the contract excepting coverage of "those employees who have not designated a signatory union as their collective bargaining agent." This clause, however, deals with groups of employees who have elected to join unions other than the Teamsters, or who are not represented by a union. Its caption is "non-covered units." Once a union is certified to represent a given group of employees, as the Teamsters represent Central Cartage's casual drivers, the union is the group's "collective bargaining agent" whether or not a given employee becomes a member. This is the most fundamental principle of American labor law. And it cannot be a surprise to firms in the trucking industry, for we have held that employers must contribute to these funds, under these collective bargaining agreements, whether or not particular employees in a bargaining unit belong to the union. See Central States Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148 (7th Cir. 1989) (en banc); Central States Pension Fund v. Joe McClelland, Inc., 23 F.3d 1256 (7th Cir. 1994).

More than two years after the district court granted summary judgment for the funds, Central Cartage filed a motion under Fed. R. Civ. P. 60(b)(2) asking the judge to reopen the subject. (The long delay between the initial decision and this appeal is attributable to an unrelated dispute that we discuss later.) The employer attached an affidavit of Jack Yager, one of the union's negotiators, who offered to testify that the Teamsters and the multi-employer bargaining group intended to cover casual drivers only if they were union members. The funds opposed this motion on several grounds: timeliness, the insufficiency of parol evidence to revise an explicit contract, and the impropriety of the arrangement under sec. 8(a)(3) of the National Labor Relations Act, 29 U.S.C. sec. 158(a)(3), not to mention the union's duty of fair representation, if it has the meaning Yager attributes to it. See Joe McClelland, 23 F.3d at 1258. See also NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 34 (1967).

The district court denied this motion as untimely, which it was. Rule 60(b)(2) permits a court to revise a judgment because of "newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b)". Central Cartage does not contend that Yager's affidavit would have been unavailable to a litigant that exercised due diligence (apparently Yager was not contacted until after the district court's decision); anyway, relief is available under Rule 60(b)(2) only within a year: "The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken."

Central Cartage asks us to disregard the limitations of Rule 60(b)(2). It tells us that Ferrell v. Trailmobile, Inc., 223 F.2d 697 (5th Cir. 1955), made an exception to Rule 60(b)(2) for "conclusive" evidence, an understanding of Ferrell that also appears in United States v. McGaughey, 977 F.2d 1067, 1075-76 (7th Cir. 1992). But Ferrell itself does not say this--at least not explicitly. The question on the table was whether a judgment of foreclosure should be vacated because the underlying debt had been paid; the court explained that conclusive evidence of the debt's payment would defeat foreclosure. Modification of judgments to take account of developments such as payment is the domain of Rule 60(b)(5), not Rule 60(b)(2). Ferrell did not refer to any particular subsection of Rule 60(b). Although it did rely on equitable considerations, that approach is expressly authorized by Rule 60(b)(5). One of its clauses presents the question whether it is "equitable that the judgment should have prospective application". Cases in the fifth circuit since Ferrell have declined to extend its approach to Rule 60(b)(2) and have held that a litigant relying on new evidence as a reason to alter a judgment must demonstrate that the evidence could not have been obtained, in time, by diligent preparation. See Johnson Waste Materials v. Marshall, 611 F.2d 593 (5th Cir. 1980).

McGaughey reserved judgment on the question whether we would adopt what we (then) understood to be the holding of Ferrell. Now that the limitations of that case are clear, we follow the fifth circuit, see Johnson Waste Materials, 611 F.2d at 597-99, in insisting that Rule 60(b)(2) be applied according to its text. The rulemaking process under the Rules Enabling Act is quite elaborate, with rounds of publication and cascades of committees preceding approval by the Judicial Conference, promulgation by the Supreme Court, and an extended delay while Congress considers whether to step in. See 28 U.S.C. secs. 2071-77. A power to create equitable exceptions to the rules would set these procedures at naught. In recent years the Supreme Court has repeatedly instructed judges to apply the rules as written, without imposing their own ideas of sound procedure on the results of this extended process. See, e.g., Leatherman v. Tarrant County, 113 S. Ct. 1160 (1993); Torres v. Oakland Scavenger Co., 487 U.S. 312 (1988); Schiavone v. Fortune, 477 U.S. 21 (1986). Some rules are open-ended--Rule 60(b)(5) being a prime example--creating substantial discretion. But the need to consider the objectives in Fed. R. Civ. P. 1 when construing all of the rules does not justify disregarding limitations explicitly built into them, including the diligence requirement of Rule 60(b)(2). We therefore hold that there is no exception to Rule 60(b)(2) for "conclusive" evidence.

Rule 60(b)(6) affords a catch-all power to re-examine judgments. Its availability here is doubtful in light of the holding in Wesco Products Co. v. Alloy Automotive Co., 880 F.2d 981, 983 (7th Cir. 1989), that Rule 60(b)(6) cannot be used to abrogate the limitations in Rule 60(b)(1) to (3). Even if we were to consider this question under Rule 60(b)(6), however, Central Cartage could not prevail. Appellate review is deferential, Metlyn Realty Corp. v. Esmark, Inc., 763 F.2d 826 (7th Cir. 1985), and the district court was entitled to conclude that this is not an appropriate case for relief from judgment. Yager's affidavit does not come close to the "dispositive" or "conclusive" evidence for which McGaughey calls. To the contrary, it is not even relevant. Yager does not purport to explain an ambiguous term in the contract. He submits, rather, that the drafters had an objective or understanding at variance with the text. Gerber Truck Service precludes the use of extrinsic evidence that was unknown to a pension or welfare fund. Central Cartage tells us that Yager's knowledge should be imputed to the funds. Maybe so, although the funds point out that nothing in the record suggests that a majority of their boards was aware of the supposed understanding. But the fact remains that the affidavit does not purport to decode ambiguous language; it expresses an understanding inconsistent with the language. As we emphasized in Gerber Truck Service and Joe McClelland, a multi-employer pension agreement is not a normal twoparty contract for which evidence of idiosyncratic meaning may be used to depart from the objective meaning of the words. Yager's affidavit therefore could not justify resort to Rule 60(b)(6).

The parties' remaining dispute concerns the effect of a settlement agreement between the funds and Central Transport, Inc., a member of Central Cartage's corporate family. General Highway Express (GHE) entered bankruptcy some years back without paying all of its obligations to the fund. Part of the plan of reorganization approved by the bankruptcy court called for GHE to pay the funds (a little more than $233,000) over the next decade. GHE paid as required between 1983 and 1988, when the payments ceased. Central Transport, which merged with GHE in 1987, contends that they were made unnecessary by a settlement agreement in November 1988. In exchange for $3.4 million in cash, the funds released "[a]ll contribution obligations . . . through the last date audited by the Funds for each company" in a list, including Central Transport. As the funds point out, however, the last audit date was in December 1986. Doubtless GHE owed the funds the money in December 1986, and doubtless Central Transport now "is" GHE (in corporate law the merged firm is a continuation of its predecessors), but, because the merger between GHE and Central Transport occurred after December 1986, these liabilities were not reflected in the audit to which the settlement refers. The settlement was designed to resolve all outstanding obligations, and the reference to the December 1986 audit defines which were knowable (and therefore covered) and which were not. We therefore agree with the district court that the settlement did not extinguish GHE's obligation (now Central Transport's) under the plan of reorganization in bankruptcy. We need not decide whether the funds would be entitled to prevail on the further ground that the bankruptcy converted the debt from a "contribution obligation" into some other variety. Cf. In re West, 22 F.3d 775 (7th Cir. 1994).

AFFIRMED

FLAUM, Circuit Judge, concurring in ...


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