policies focused on preventing an employer from attaining participation in a multiemployer pension or health welfare fund on terms the employer could not have received had the agreement altering the fund's terms been disclosed.
The seminal case law applying § 515 line of cases clearly outlines the many reasons why Congress in enacting § 515 and the courts in applying § 515 have developed this strict rule allowing funds, like the plaintiffs, to rely on the documents that they receive from employers, to the exclusion of any other, undisclosed agreements. The Funds are defined-benefit plans, such that the Funds are obligated to pay out benefits to employees based on the terms of the participation agreement, regardless of whether their employer paid the requisite contributions. Gerber Truck Service, 870 F.2d at 1153. Where an employer fails to make the requisite contributions, the Funds are put at risk of having to pay benefits without receiving corresponding contributions, which ultimately would lead "lower benefits or higher contributions from other employers." Robbins, 836 F.2d at 333. This is exacerbated by two facts. First, the amount of the contributions required by the funds are determined by actuarial computations, which are premised on the assumption that all of the employer's employees in a given job classification are participating in the Funds. Id. Thus, where the Funds, in making their determinations, do not know that a number of employees are not participating, the actuarial computations, and the contribution requirements based on those computations, will be incorrect. Id. Second, acerbating this actuarial problem, is the fact that the Funds are insurance vehicles which "depend on receiving contributions from persons who collect far in the future or not at all." Gerber Truck Service, 870 F.2d at 1154. Thus, where an employer, like Transport, seeks to exclude low-risk employees from the Funds, it upsets the fundamental principles on which the Funds make its determinations: namely, that the contributions of low-risk employees can be used to offset the expensive benefits given to other, often higher-risk, employees.
Other effects that would occur if courts allowed undisclosed agreements between unions and employers to reduce employers' obligations to funds include higher investigatory costs for funds, higher litigation costs for funds, and "manifold opportunities for manipulation by crafty operators." Gerber Truck Service, 870 F.2d at 1154.
Every single one of these policies is present in the case of an undisclosed written agreement, even an undisclosed written agreement that was allegedly part of the "integrated" CBA. Transport would have this court hold that the Funds must be held to the terms of the entire agreement, even parts that the Funds never saw. Citing Central States, Southeast and Southwest Areas Pension Fund v. Kroger Co., it argues that all parts of the agreement must be given effect. 73 F.3d 727, 731 (7th Cir. 1996). But Kroger says nothing about undisclosed agreements. Rather, the CBA at issue in Kroger involved a combined document, which expressly incorporated the supplement and which included only one signature block. Id. at 732. There were no facts in Kroger that indicated that the parties had failed to disclose the supplement to the Funds. Id. If the Funds had received the Rider and the Extra Drivers Agreement together, this court would have to consider both documents. But see Bakery and Confectionery Union and Industry Intl. Pension Fund v. Ralph's Grocery Co., 118 F.3d 1018, 1024 (4th Cir. 1997) (stating that a clause included in the disclosed CBA agreement will have no effect if it conflicts with the standard clause, by which the funds require "every employer to agree to make contributions at the specified rate, to be bound by the trust's terms and conditions, and not to enter into any additional agreements with the union regarding pensions"). As Kroger itself notes, citing Gerber Truck Service, "Section 515 gives pension funds, such as Central States, the right to 'enforce the writings according to its terms.'" 73 F.3d at 731. Thus, "Gerber Truck Service precludes the use of extrinsic evidence that was unknown to a pension or welfare fund." Central Cartage, 69 F.3d at 1315. The employer cannot attain a windfall by the fact of the union's
failure to send the Extra Drivers Agreement to the Funds, for the Funds would not have agreed to Transport's participation on the terms of the Extra Drivers Agreement if disclosed, and this court should not permit Transport "to do in secrecy what [it] could not do openly." Gerber Truck Service, 870 F.2d at 1155. The Funds are entitled to rely on the CBA that they receive; an employer should not rely on an agreement to reduce the employer's contributions unless the employer has insured that the Funds have received the agreement as part of or an amendment to the CBA. See Tank Transport, 1993 WL 369331 at *6-*7 (stating that where an agreement covering by its terms al I employees within a certain job classification is disclosed to the Funds in requesting participation but an additional written agreement exempting some of those employees is not disclosed, the undisclosed agreement is not given effect). This is eminently reasonable and puts the burden precisely where both Congress and the Trust agreements in this case intend for the burden to be: on the employer who is seeking distinctive terms.
Finally, Transport is not relieved of its responsibility to pay contributions on all of its employees either by the fact that it paid money on some of the employees to alternate plans or because it has offered to waive benefits for those employees. See Ex. J, (1992-95 Rider) Art. 28, 29 (stating that payment into alternative funds does not relieve employer of responsibility to pay contributions to the Funds); Central States, Southeast and Southwest Areas Pension Fund v. Schill Trucking Service, Inc., 1994 U.S. Dist. LEXIS 3102, 1994 WL 87370, *4 (N.D. Ill. 1994).
For the foregoing reasons, the Funds' motion for summary judgment is GRANTED. Transport is hereby ordered to pay the Funds all delinquent contributions that are owed from December 29, 1991 through April 17, 1995, plus the greater of either double interest or single interest plus liquidated damages, and all attorneys' fees, audit expenses and costs incurred by the Funds in connection with this action. The Funds shall submit by January 20, 1998, a Bill of Costs detailing the amount of delinquent contributions, the amount of interest owed on those contributions, the amount of liquidated damages owed on those contributions, and the amount of all attorneys' fees, audit expenses and costs incurred by the Funds in connection with this action. Transport may submit a response to that Bill of Costs by January 30, 1998. The only other pending motion, Transport's motion for summary judgment, has been WITHDRAWN.
David H. Coar
United States District Judge
Dated: January 8, 1998