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BEVERAGE INDUSTRY LOCAL NO. 744 v. QUALITY BEERS

July 28, 1999

BEVERAGE INDUSTRY LOCAL NO. 744 HEALTH AND WELFARE FUND, AND BEER INDUSTRY LOCAL NO. 744 PENSION FUND, PLAINTIFFS,
v.
QUALITY BEERS LIMITED PARTNERSHIP, DEFENDANT.



The opinion of the court was delivered by: Castillo, District Judge.

MEMORANDUM OPINION AND ORDER

In this action, Plaintiffs, Beverage Industry Local No. 744 Health & Welfare Fund and Beer Industry Local No. 744 Pension Fund ("the Funds"), allege that Defendant, Quality Beers Limited Partnership ("Quality Beers"), violated § 515 of the Employee Retirement Insurance Security Act ("ERISA") by failing to make certain contributions to the Funds in accordance with the governing collective bargaining agreement ("CBA"). Specifically, the Funds assert that Quality Beers improperly classified nine of its "permanent" employees, for whom contributions were required under the CBA, as "casual" employees, for whom contributions to the Funds were not required.*fn1 According to the Funds, Quality Beers owes $15,366.85 to the Health & Welfare Fund and $7,356.16 to the Pension Fund for these nine allegedly misclassified employees. Quality Beers responds that the nine contested employees were properly classified as "casual," and therefore, no violation of the CBA and ERISA occurred. Cross-motions for summary judgment are currently pending before this Court.

FACTS*fn2

The Chicago Beer Wholesalers Association, ("the Association"), and Local 744 of the Teamsters, (the "Union"), entered into a CBA that governed Quality Beers' contributions to the Funds during the disputed dates of January 1, 1995 through December 31, 1997.*fn3 (Def.'s App. A, The CBA between Local 744 and the Association, effective May 1, 1994 — January 31, 1998 ("1994 CBA").) According to the integration clause of Article 20, § 18, the 1994 CBA "constitute[d] the full and complete agreement between the parties."

CBA Articles 18 and 19 govern contributions to the Funds. Articles 18, § 2 and 19, § 2 require Quality Beers to make contributions to the Funds on behalf of "permanent employees that worked eleven or more workdays in a given calendar month." Additionally, Articles 18 and 19 provide that contributions to the Funds are not required for "casual and summer employees." (1994 CBA Article 18, § 9; Article 19, § 8.)

The dispute currently before the Court arises from the classification scheme utilized in Articles 18 and 19: the Funds claim that the nine contested employees were permanent employees, while Quality Beers argues that they were casual. Although several sections of the CBA refer to permanent and/or casual employees, the CBA does not contain a definition section that governs the entire agreement. Article 6 (Seniority) and Article 12 (Wages) discuss the disputed terms in the most detail.

Section 1 (Definitions) of Article 6 (Seniority) states that permanent employees are workers "who have a permanent job assignment and who are part of the total complement of classified personnel within a distribution center. . . . All other employees, including summer or casual employees, shall be considered temporary employees." Article 6, § 6 provides that "casual employees may be employed on a day-to-day basis . . . [and] may be assigned as Helpers on package or draft routes or to any hourly rated job." Article 12 (Wages) states that "casual employees hired on a day-to-day basis" will be paid at a flat daily rate.

Quality Beers told the nine contested employees when they interviewed for positions that if they were selected, the company planned to hire them on a day-to-day basis, use them "as needed," give them assignments when they reported to work, pay them a flat daily rate, and would consider them for permanent employment if they received a valid commercial driver's license. Quality Beers also informed the contested employees that they would neither have a regular job classification nor be eligible for any contractual benefits.

The actual employment experiences of the contested employees mirror the representations made by Quality Beers during the application process: Quality Beers paid them a flat daily rate; a supervisor gave them daily assignments, typically as a helper on delivery routes or assisting with other tasks in the warehouse or at the customer's facility; and Quality Beers did not add them to the seniority list until they were officially hired as permanent employees. Like Quality Beers' other casual employees, the contested employees were not given contractual overtime, vacation time, holiday pay, or a guaranteed forty-hour work week. Furthermore, none of the contested employees "received designated permanent job assignments" or "were classified by [Quality Beers] as being part of its total complement in the designated categories" during the disputed timeframe. (Def.'s App. C, Pls.' Resp. to Def.'s First Req. for Admis., ¶¶ 6, 7.) Quality Beers eventually hired each of the nine disputed employees as permanent employees and began contributing to the Funds on their behalf.

The parties have given this Court a significant amount of parol evidence concerning the meaning of the disputed terms. The CBA in effect prior to 1990 differed substantially from the current CBA. Most significantly, the prior CBA required employers to make contributions for "each employee" who worked eleven or more days during a calendar month. (Pls.' 12(N) Statement, ¶ 11.) In 1989, there was a protracted strike by the Union, resulting in certain changes to the 1990 CBA. Specifically, "casual" employees were incorporated into the "Seniority" definition of temporary employees and the contribution plans were modified from requiring contributions for "each employee" who worked eleven or more days during a calendar month to requiring contributions for "each permanent employee" who did so. These 1990 changes to the CBA carried over into the 1994 CBA.

The 1990 CBA was effective between August 17, 1990 and January 31, 1994, prior to the dispute at hand. During the governance of the 1990 CBA, confusion arose among the parties surrounding the meaning of the term "permanent employee" in the agreement. In 1992, the Union and the Association met to discuss this confusion and agreed to clarify the term:

  Any employee who is scheduled and expected to report
  for work daily on a continuous basis will be
  considered as a permanent employee upon completion of
  his probationary period {sixty (60) workdays
  following the first day on which he was scheduled and
  expected to report for work on a continuous basis.
  This would be a minimum of twelve (12) weeks in each
  of which there were five (5) scheduled workdays}. The
  employer will be obligated to make contributions on
  behalf of any such employee even though such employee
  does not have a permanent job assignment or job
  classification, provided such employee works on at
  least eleven (11) workdays during a calendar month.

(Def.'s App. M, Letter from Taylor to Sullivan of 6/16/92 ("Taylor letter").) On June 16, 1992, James W. Taylor, who served as both a Co-Chairman of the Funds and Vice-President of the Association, wrote a letter to the Funds' auditor, informing it of the new definition.

The "permanent" versus "casual" employee distinction became an issue again during the 1994 CBA negotiations. The Union essentially proposed a reversion to the pre-1990 status by eliminating all references to "casual employees" in the CBA and adding a requirement that contributions be made to the Funds for "each employee." (Def.'s App. D, 1994 Contract Proposals: Contract Proposals taken from Members of Teamster's Local Union 744 Employed in the ...


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