Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 C 8300--John W. Darrah, Judge.
Before Coffey, Ripple and Diane P. Wood, Circuit Judges.
The opinion of the court was delivered by: Ripple, Circuit Judge
The Laborers' Pension Fund and the Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity and the Funds' administrator, James Jorgensen, (collectively, "the Funds") brought this action under ERISA section 515, 29 U.S.C. § 1145, and section 301 of the Labor-Management Relations Act ("LMRA"), 29 U.S.C. § 185, to recover delinquent contributions and union dues allegedly owed to them by A & C Environmental, Inc. ("A & C"). A jury returned a verdict in favor of A & C. The district court denied the Funds' post-trial motion for judgment as a matter of law and entered judgment on the verdict. For the reasons set forth in the following opinion, we reverse the judgment of the district court and remand the case for further proceedings consistent with this opinion.
A & C is a corporation specializing in the transportation and disposal of hazardous and non-hazardous waste. In April 1999, Kopper's Industries asked A & C to bid on a job involving the operation of a coal centrifuge in Gary, Indiana. A & C is not a union company, and Kopper's expressed some concern that, if the job were performed by non-union employees, union workers from U.S. Steel might picket and interrupt service. Bryon Clark, director of field services for A & C, *fn1 then contacted James Frattini, the President of the Construction and General Laborers' District Council of Chicago and Vicinity ("the Union") Local 75, to determine whether the Union could represent only the five A & C employees who would staff the Gary centrifuge job. Mr. Clark had no previous interaction with Local 75 or Mr. Frattini; he located them by looking in a phone book.
Mr. Frattini assured Mr. Clark that Local 75 could cover his Gary employees and would not have to cover A & C's other employees. Mr. Clark testified that he "had quite a bit of concern" because he knew "if someone goes union, you know, it covers all their company operations." Tr.V at 187. He also testified that Mr. Frattini responded to his concerns: "Well, the union doesn't operate like that anymore. We're here to make money just like you." Id. Mr. Frattini subsequently met with Mr. Clark, Carl Grad (President of A & C) and Tom Grad (A & C's director of transportation) and made the same assurances. Mr. Frattini also met with Mr. Clark at A & C's offices to register the Gary employees with the Union. At the meeting, Mr. Frattini and Mr. Clark answered the questions of the Gary employees. While they were answering the questions, Mr. Frattini gave Mr. Clark a one page document and showed him where to sign. *fn2 The document featured the heading "Collective Bargaining Agreement," centered and in capital letters, and Mr. Clark filled in "A & C Environmental Inc." on a line directly below the heading. App. of Appellants at 129. Nevertheless, Mr. Clark testified that he did not know he was signing a collective bargaining agreement ("CBA"). Mr. Clark believed the document reflected Mr. Frattini's assurances that the Union would only represent the Gary employees. Mr. Clark further testified that he did not have an opportunity to read the document because Mr. Frattini took it from him as soon as he had finished signing. Although his offices had a copy machine, Mr. Clark did not make a copy of the document because he was busy answering his employees' questions, and he "trusted Mr. Frattini's word." Tr.V at 201.
The CBA that Mr. Clark signed states that A & C "affirms and adopts the Collective Bargaining Agreements between the UNION and . . . the Illinois Environmental Contractors Association," and that A & C "agrees to pay the amounts that it is bound to pay under said Collective Bargaining Agreements to the HEALTH AND WELFARE DEPARTMENT OF THE CONSTRUCTION AND GENERAL LABORERS' DISTRICT COUNCIL OF CHICAGO AND VICINITY [and] the LABORERS' PENSION FUND . . . ." App. of Appellants at 129. The Union has a CBA, the "Asbestos Agreement," with the Illinois Environmental Contractors Association. See App. of Appellants at 132. That agreement, as well as the one page CBA that Mr. Clark signed, require the employer--A & C, once it signed on--to make to the Welfare and Pension Funds contributions of a certain amount for each hour worked by all employees performing work covered by the agreements, not just those who would work on the Gary, Indiana, job. The Asbestos Agreement provides, "The branches of work covered by this Agreement are: asbestos, abatement laborer duties including . . . the handling, removal, abatement, or encapsulation of asbestos and/or toxic or hazardous waste or materials." App. of Appellants at 152. Mr. Clark acknowledged at trial that A & C's employees performed tasks involving the cleanup of hazardous materials. The CBAs also require the employer to deduct a certain amount from the pay of each employee covered by the CBA and to remit those dues to the Union. The Union has authorized the Funds to serve as collection agents for the Union with respect to unpaid dues. A & C failed to contribute to the Funds or to remit all of the dues that the Union claimed were due.
B. District Court Proceedings
The Funds brought suit against A & C and Mr. Clark to recover the delinquent contributions and hired an auditing firm to determine how much A & C owed. Count I of the Funds' complaint sought recovery of the contributions that A & C owed the Funds. In Count II, the Funds--as the designated collection agents of the Union--sought to recover the dues that A & C owed the Union.
The following details of the proceedings before the district court are relevant to the determination of whether the Funds' claims on appeal are procedurally barred. The Funds timely filed a motion for summary judgment. In that motion, it submitted that ERISA entitles the Funds to accept a contract between employers and unions without regard to any oral understandings between employers and unions that conflict with the contract's terms. The court, for reasons undisclosed by the record, declined to rule on the motion. The Funds thereafter filed a motion to convert the summary judgment motion into a motion in limine to exclude evidence relating to any contract formation defense or defenses based on oral side agreements between A & C and the Union. The court denied the motion. The Funds then filed a motion in limine, accompanied by a supporting brief, in which they again requested exclusion of any evidence relating to side agreements. They submitted that our opinion in Central States, Southeast & Southwest Areas Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148 (7th Cir. 1989) (en banc), rendered irrelevant any evidence relating to the existence of oral understandings between A & C and the Union that modified the terms of the CBA. In their reply brief to A & C's response to their motion in limine, the Funds specifically contended that Gerber Truck foreclosed the defenses of fraud in the inducement and fraud in the execution and that, even if fraud in the execution remained a viable defense to a pension fund's efforts to collect delinquent contributions, A & C had not made out the defense. The district court ultimately granted the motion in limine to exclude evidence relating to the defense of fraud in the inducement, *fn3 but not evidence relating to the defense of fraud in the execution. At trial, A & C presented its defense of fraud in the execution, seeking to prove that Mr. Clark had not known that the contract he signed with the Union obligated A & C to make contributions to the Funds and that his ignorance was excusable.
After A & C closed its case, the court heard motions by counsel. The attorney for the Funds announced that they had two motions to make and proceeded to explain the first, a motion for leave to amend the complaint to conform to the evidence. After hearing arguments from counsel, the district court denied it and then added: "The motion for a directed finding or a directed verdict is also denied." Tr.VI at 328. Counsel for the Funds asked if he could "make a record with respect to that second motion," id., and the court invited the Funds to file something if they wanted. The court made clear, however, that it was going to submit the case to the jury whether or not the Funds filed additional material. After this colloquy, the Funds put on rebuttal evidence, which consisted exclusively of a very brief examination of Mr. Clark. At the end of the examination, the Funds voluntarily dismissed Mr. Clark from the suit.
The jury found for A & C on both counts, and the district court entered judgment on the verdict. *fn4 The court denied the Funds' post-trial motion for judgment as a matter of law ("JMOL") and motion for a new trial in which the Funds argued that fraud in the execution was not a viable defense to the Funds' claim for delinquent contributions and that, even if it was, the evidence did not support the defense. The court held that the defense was valid and that A & C had proven it because a reasonable juror could have believed that Mr. Clark did not know he was signing a collective bargaining agreement and that he did not have a reasonable opportunity to review the document. *fn5
The Funds submit on appeal, as they did before the district court, that fraud in the execution is not a viable defense to a pension fund's efforts to collect delinquent contributions. They further submit that, even if fraud in the execution is a permissible defense, A & C did not establish that defense at trial. In their view, the district court should have granted their post-trial motion for judgment as a matter of law. Before we can reach the merits of this argument, however, we must address whether this ...