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Home > Blog > Sixth Circuit Reverses Judgment for Employer in Plan Contributions Dispute Due to Ambiguity of “Outside Telephone Work” In Supplement to CBA

Sixth Circuit Reverses Judgment for Employer in Plan Contributions Dispute Due to Ambiguity of “Outside Telephone Work” In Supplement to CBA

In National Electrical Annuity Plan v. Henkels & McCoy, Inc., No. 20-1024, __F.App’x__, 2021 WL 567868 (6th Cir. Feb. 16, 2021), Plaintiff National Electrical Annuity Plan (“NEAP”) seeks over $350,000 in contributions from Defendant Henkels & McCoy, Inc. (“H & M”) for work H&M did, mostly for Verizon, in installing a 5G network, MCI small-cell equipment, and over 1,500 miles of overhead and underground fiber-optic cable. The parties dispute whether this work constitutes “outside telephone work” exempt from the contribution requirement based on the second 2011 memorandum signed by IBEW Local Unions 17 and 876 and H&M. The district court granted H&M summary judgment, which the Sixth Circuit reversed.

IBEW and H & M entered into a national collective-bargaining agreement in 1995. In 2011, H & M and the locals signed two supplementary appendices to the 1995 national agreement. They also signed several memoranda of understanding to supplement the agreement: two in 2011, one in 2014, and one in 2015. In 2017, they signed a new set of appendices which amended the agreement once more. The second 2011 memorandum changed H & M’s obligations for “outside telephone work.”

First, the court determined that ERISA permits H & M to rely on the second 2011 memorandum even though it is not referred to in the “current agreement.” LMRA § 302(c)(5) requires that employers make contributions to trust funds if the detailed basis on which such payments are to be made are specified in a written agreement with the employer. NEAP cannot rely on LMRA § 302(c)(5) to support its argument that if there is not a detailed basis for an exclusion from payment, then the employer must contribute.

ERISA § 515 requires an employer who is obligated to make contributions to a multiemployer plan under the terms of a CBA to make those contributions to the extent consistent with law. The court declined to adopt “a rule that, if a multiemployer fund that is a third-party beneficiary to a collective-bargaining agreement has no knowledge of a side agreement between the employer and union, then the fund may enforce the collective-bargaining agreement without regard to that side agreement.” This is because NEAP does not allege it had no notice of the second 2011 memorandum and there is no genuine dispute over actual notice. Thus, there is no need adopt a rule that would bar enforcement of an undisclosed side agreement.

The court determined that “outside telephone work” is reasonably susceptible to multiple meanings. Here, it could reasonably be interpreted to either exclude fiber-optics work, include all the local unions’ work, or exclude any work for which H & M in fact contributed. Because two of those reasonable meanings entitle NEAP to judgment, the district court erred by granting H & M judgment. Because one reasonable interpretation would entitle H & M to judgment, NEAP failed to show that it was entitled to judgment and the district court properly denied NEAP’s motion for summary judgment. The court vacated the judgment in favor of H & M and remanded to the district court to conduct additional proceedings.

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