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CENTRAL STATES v. KROGER CO.

March 28, 2003

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, AND HOWARD MCDOUGALL, TRUSTEE, PLAINTIFFS,
v.
THE KROGER CO., AN OHIO CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Ronald A. Guzman, United States Judge

MEMORANDUM OPINION AND ORDER

Pending are the parties' cross motions for summary judgment pursuant to Fed. Civ. Proc. 56. For the reasons set forth below the parties' cross motions for summary judgment are denied.

BACKGROUND FACTS

This case presents the second federal district court complaint filed by Central States, Southeast and Southwest Areas Pension Fund ("Central States") to collect unpaid pension fund contributions from The Kroger Co. ("Kroger") on behalf of certain employees at Kroger's Atlanta warehouse facility. The first complaint, filed in 1993, spawned two Seventh Circuit opinions. Central States, Southeast and Southwest Areas Pension Fund v. Kroger Co., 73 F.3d 727 (7th Cir. 1996) ("Kroger I"); and Central States, Southeast and Southwest Areas Pension Fund v. Kroger Co., 226 F.3d 903 (7th Cir. 2000) ("Kroger II"). An explanation of the facts surrounding those opinions is necessary to understand the present action.

Kroger is a national grocery store chain that operates a distribution and warehouse center in Atlanta. Kroger I, 73 F.3d at 729. Local 528 of the International Brotherhood of Teamsters represents the warehouse employees and truck drivers who work at the Atlanta facility. Id. The employment relationship is governed by a collective bargaining agreement ("CBA"). Id. The CBA consists of the two parts: a Master Agreement negotiated by Kroger and the Teamsters and covers several facilities nation wide including the Atlanta facility; and a Local Supplement negotiated by the Atlanta facility and Local 528 and applies to the Atlanta facility alone. Id.

The Master Agreement of the CBA provided for three types of employees: "regular" employees; "probationary" employees; and "casual" employees. Id. Section 2.2 of the Master Agreement defined "probationary" employees as new employees who work on a trial basis for thirty days not to exceed sixty calendar days, and may be discharged at the discretion of the employer.*fn1 Id. After the trial period the employee "shall be placed on the regular seniority list." Id. The Master Agreement defined "casual" employees as employees "hired on a short-term basis" as may be employed from time to time. Id. Casual employees were permitted only at facilities with a past practice of hiring casuals and the total number hired could not exceed ten percent of the work force. Id. Under the Master Agreement, Kroger was required to make pension contributions on behalf of all employees who had worked for thirty days and had been placed on the regular seniority list. Id. As such, Kroger was obligated to make pension contributions on behalf of probationary employees that had completed the trial period but not on behalf of casual employees. Id.

The Local Supplement used different terms to describe employees at the Atlanta facility. Id. The Local Supplement referred to "full-time" employees and "part-time" employees. Neither term was defined. Id. However, the following characteristics regarding the term "part-time" emerged from the Local Supplement: (1) part-time employees were permitted to accrue seniority "only among other part-time employees"; and (2) there were certain job-bidding procedures pertaining to part-time employees.*fn2 Id.

Prior to 1977, Kroger designated all newly hired employees at the Atlanta facility as probationary employees. Id. Kroger changed the designation of newly hired employees to casual in 1977. Id. Many of those casual employees remained with Kroger for long periods of time and eventually became regular employees. Id. Kroger began making pension contributions on behalf of those employees once they were placed on the regular employee list. Id. However, Kroger did not make pension contributions on behalf of those employees as long as they remained casual, a period that could last several months. Id.

In 1991, Central States conducted an audit of the Atlanta facility's employment records covering the period from December 28, 1986 through December 30, 1989. (Pls.' Rule 56.1 Facts at ¶ 81),*fn3 Central States determined that the employees designated as casuals were, in fact, probationary employees. Kroger I, F.3d at 729. Central States then brought the first action on June 18, 1993 under 29 U.S.C. § § 1132 and 1145 claiming that Kroger owed pension contributions on behalf of those employees from the day following their thirtieth day of work. Id. at 729-30. Kroger defended on the grounds that no obligation to pay pension contributions existed until the employees were placed on the regular seniority list because they remained casuals until that time. Id. at 30. Both parties moved for summary judgment before the district court. Id.

The district court granted summary judgment in favor Kroger. Id. The crux of that decision was the interpretation of the term "part-time" employee in the Local Supplement Id. The district court acknowledged that the Master Agreement required Kroger to contribute on behalf of full-time and part-time regular employees. Id. The district court also acknowledged the fixed meaning of the terms "full-time" and "part-time" as regular employees that work a forty-hour week and regular employees that work less than forty-hours. Id. Nonetheless, the district court interpreted the term "part-time" in the Local Supplement as unambiguously describing the same employees defined as "casual" in the Master Agreement. Id.

On January 10, 1996 the Seventh Circuit reversed the district court in Kroger I. Id. at 733. The Seventh Circuit found that, in order to avoid ambiguity in the term "part-time", the district court read the CBA as a combination of two agreements that did not require harmonization of terms. Id. at 731. The Seventh Circuit declined to accept the district court's conclusion and held that the two agreements formed a single, unitary contract. Id. The Seventh Circuit held that the term "part-time" was ambiguous because the parties to the agreement suggested different yet reasonable interpretations. Id. at 732. The Court explained that the term could refer to regular employees who worked less than a regular work week or to casual employees. Id. As such, it was for the trier of fact to resolve the question of interpretation. Id. at 733. Finally, the Court stated that "only if the employees in question were truly casual, and not probationary, [as defined by the CBA], was Kroger's reclassification of the Atlanta employees permissible." Id. After a bench trial the district court found that the term "part-time" employee referred to probationary or regular part-time employees and not casual employees. Specifically, the district court found: (1) that "the employees in question were not hired on a short-term basis," nor were they employed from time to time, . . ." as defined by the Master Agreement; (2) that the term "part-time" in the Local Supplement did not mean "casual" as defined in the Master Agreement; (3) that the local union representatives accepted the treatment of all new hires as "part-timers" not entitled to pension and welfare contributions from "at least 1977 to the end of the audit period and beyond"; and (4) that the term "part-time" in the Local Supplement was interpreted by Kroger and Local 528 as referring to these employees. Kroger II, 226 F.3d at 908-09. Despite the last two findings, the district court concluded that the employees in question were "part-time" regular or "probationary" employees but not "casual" employees. Id. at 910. In so doing the district court observed that the employees in question were not hired on a "short-term basis" because Kroger hired them with the hope and expectation that they would become full-time regular employees when an opening occurred. Id. at 909. This was so even though Kroger may have known that there was nothing inevitable about its employees becoming full-time regular employees. Id. at 909. The district court also concluded that the employees in question were not "employed from time to time," because that referred to "people who come and go, people whose employment is interrupted, people who might be absent for long periods of time," and not to "people who are on hand continuously to work part-time as needed." Id. (internal quotation omitted). The district court found that the employees in question were available, and considered to be available by Kroger, "on a continuous basis to work part-time as needed . . ." Id. It was expected that the employees in question would work for long periods of time both as part-timers and eventually regular employees on the seniority list. Id. Finally, the district court concluded that its third and fourth findings amounted to "local understandings" that could not "prevail against the definition of probationary employees contained in the Master Agreement." As a result, Kroger was found liable for the unpaid pension contributions on behalf of the employees in question. Id. at 910.

Kroger's appeal resulted in the Seventh Circuit's Kroger II opinion. On September 15, 2000, the Seventh Circuit affirmed the findings and ruling of the district court. Id. at 915. The Court of Appeals agreed that the term "casual" referred to those employees Kroger intended, when it hired them, to work for a short period of time and not those employees expected, "in the normal course," to work for long periods of time. Id. at 912. The Court then reviewed the application of that definition to the facts before the district court, specifically, the interpretation of the term "part-time." Id. The Court explained that when interpreting an ambiguous term, a district court must determine "what the contracting parties . . . intended the clause to mean." Id. at 910. The Court agreed with Kroger that, in general, the practical interpretation of a contract applied by the parties is strong evidence of their intended meaning of an ambiguous term. Id. at 913. The Court stated, however, that Kroger could not rely on the practical interpretation if it contravened an express and unambiguous term of the CBA, Id. at 914, as it did in that case. The Court also explained that a district court is permitted to examine extrinsic evidence to determine the meaning the parties attached to an ambiguous term. Id. at 911. The Court then stated that there was sufficient evidence to support the district court's finding that the employees in question were not casual employees and thus, the finding was not clear error. Id. at 913. In particular, the Court agreed that "[t]he ability to bid on permanent jobs [was] entirely at odds with the concept of casual employment . . ." Id. at 913 (internal quotation omitted). Because the Court of Appeals had previously held that Kroger's reclassification of it employees would be permissible only if the employees in question were truly casual, Kroger II, 226 F.3d at 912 (citing Kroger I, 73 F.3d at 733, the Court of Appeals affirmed the district court's ruling on liability. Kroger II, 226 F.3d at 912.

Central States then filed this action against Kroger under 29 U.S.C. § § 1132 & 1145 for unpaid pension contributions on behalf of all newly hired Atlanta facility employees from 1977 through May 24, 1993, excluding the previously litigated time period of December 28, 1986 through December 30, 1989. (¶ 30 of Compl.). On August 2, 2002, both parties filed for summary judgment pursuant to Fed.R.Civ.Proc. 56.

Central States argues that the doctrine of collateral estoppel warrants summary judgment in its favor. (Pls.' Mem. at 6-9). Specifically, Central States argues that the factual issue before this Court, the status of Kroger's "casual" employees after 1977, was the subject of the previous litigation (Pls.' Rule 56.1 Facts at ¶ 65); that the district court's four findings resolved the status issue of all employees' hired after 1977 (Pls.' Rule 56.1 Facts at ¶ 68); and that the resolution of the status of all employees' hired after 1977 was necessary to the result in the prior litigation.*fn4 (Pls. Mem. at 7).

On the other hand, Kroger contends that collateral estoppel is inappropriate because the district court resolved the status of Kroger's new employees hired between the dates of December 28, 1986 through December 30, 1989 only. (Defs.' Resp. to Pls.' Rule 56.1 Facts at ¶ ¶ 65, 66, 68 & 75). Central States also argues that summary judgment is proper under the doctrine of stare decisis.*fn5

Kroger further argues that Central States' claims, at least in part, are barred by the applicable statute of limitations (Def's. Mem. at 5-12) and/or laches (Def's. Mem. at 12-15). Kroger claims that the appropriate statute of limitations to be applied in this case is the five-year statute of limitations applicable to the Illinois Wage and Benefit Payment Actions (Def's. Mem. at 5-7) or the limitations period contained in 29 U.S.C. § 1451(f), concerning ERISA debt collection suits (Def's. Mem. at 7-9), despite the fact that the Trust Agreement provides for Illinois' ten-year written contract limitations period. (Pls.' Rule 56.1 Facts at ¶ 108). Central States responds that the ten-year ...


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