New England Carpenters Central Collection Agency v. Labonte Drywall Co. ( 2015 )

United States Court of Appeals
For the First Circuit
No. 14-1739
NEW ENGLAND CARPENTERS CENTRAL COLLECTION AGENCY; TRUSTEES OF
NEW ENGLAND CARPENTERS PENSION FUND; TRUSTEES OF NEW ENGLAND
CARPENTERS GUARANTEED ANNUITY FUND; TRUSTEES OF NEW ENGLAND
CARPENTERS HEALTH BENEFITS FUND; TRUSTEES OF NEW ENGLAND
CARPENTERS VACATION SAVINGS FUND; TRUSTEES OF NEW ENGLAND
CARPENTERS TRAINING FUND; BOSTON TRUSTEES OF CARPENTERS
APPRENTICESHIP & TRAINING FUND; TRUSTEES OF MASSACHUSETTS
CARPENTERS APPRENTICESHIP & TRAINING FUND,
Plaintiffs, Appellants,
v.
LABONTE DRYWALL COMPANY, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Barron, Circuit Judge,
Souter,* Associate Justice,
and Lipez, Circuit Judge.
Thomas R. Landry, with whom Krakow & Souris LLC was on brief,
for appellants.
Mark J. Ventola, with whom David L. Hansen and Sheehan Phinney
* Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
Bass + Green were on brief, for appellee.
July 31, 2015
LIPEZ, Circuit Judge. Plaintiffs-Appellants, the
trustees for a group of union-related benefits funds and their
collection agency,1 filed this action against Defendant-Appellee
Labonte Drywall Company ("Labonte Drywall") seeking enforcement of
an agreement that required the company to allow an audit of its
records. After a one-day bench trial, the district court found
that Labonte Drywall had terminated the pertinent agreement, and,
hence, plaintiffs had no legal right to conduct the requested
audit. We affirm.
I.
We set forth the facts based on the record and findings
of the district court. See McDermott v. Marcus, Errico, Emmer &
Brooks, P.C., 775 F.3d 109, 113 (1st Cir. 2014). Labonte Drywall
was a New Hampshire corporation engaged in commercial drywall work
until May 2007, when it converted to a limited liability company.
Clermont Labonte is, and was at all relevant times, the sole member
and owner of Labonte Drywall.
On January 31, 1996, Labonte, on behalf of Labonte
Drywall, signed a statewide agreement with local Massachusetts
unions affiliated with the United Brotherhood of Carpenters and
1 The trustee plaintiffs, identified in the caption of this
case, have designated plaintiff New England Carpenters Central
Collection Agency (the "Agency") to collect all monies owed to the
funds by employers.
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Joiners of America (collectively referred to as the "Union").2 The
agreement allowed Labonte Drywall to hire Union carpenters for its
business. Paragraph 1 of the statewide agreement provided that:
"[Labonte Drywall] accepts and agrees to abide by the collective
bargaining agreements between the various contractor associations
and the [Union] wherever those contracts shall apply. [Labonte
Drywall] agrees that it shall abide by any amendments or successor
agreements negotiated by the contractor associations and the
[Union]."3 The agreement added that its duration "shall be co-
extensive with the terms set out in the collective bargaining
agreements referred to in paragraph 1 unless either party to this
statewide agreement gives notice of termination of this agreement
in accordance with the applicable notice provisions in the
collective bargaining agreement referred to in paragraph 1."
2The local Massachusetts unions are members of the New
England Regional Council of Carpenters, which represents
carpenters unions in Connecticut, Maine, Massachusetts, New
Hampshire, Rhode Island, and Vermont. The New England Regional
Council of Carpenters, in turn, is a part of the national United
Brotherhood of Carpenters and Joiners of America.
3The "various contractor associations" which are parties to
the collective bargaining agreement at issue in this appeal include
the Labor Relations Division of the Associated General Contractors
of Massachusetts, Inc., the Building Trades Employers' Association
of Boston and Eastern Massachusetts, Inc., and the Labor Relations
Division of the Construction Industries of Massachusetts.
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Article 31 of the collective bargaining agreement in
effect from September 1, 2005 through August 31, 2009, provided as
follows:
This agreement will expire on August 31, 2009
except that if neither party to this Agreement
gives notice in writing to the other party on
or before July 1, 2009 that it desires a change
after August 31, 2009, then this Agreement
will continue in effect until August 31, 2010
and so on each year thereafter unless on or
before July 1 of each year thereafter, a
notice is given by either party.
The collective bargaining agreement required employers
to make contributions to various pension, annuity, health
benefits, vacation, and training funds in accordance with its
terms. The funds are "employee pension benefit plans" and
"employee welfare benefit plans" within the meaning of § 3(1) and
(2) of the Employee Retirement Income Security Act ("ERISA"), 29
U.S.C. §§ 1002(1) and (2). The contributions to the funds were to
be made on a weekly basis on behalf of all employees covered by
the collective bargaining agreement. The collective bargaining
agreement also required employers to comply with the terms of the
trust agreements for each fund. The trust agreements permitted
the trustees, or their authorized representatives, to audit the
pertinent payroll records of any employer whenever such audit is
deemed necessary by the trustees.
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Employers are generally audited on a three-year audit
cycle. The audits are overseen by the Agency, which conducts
approximately 150 to 200 audits per year. The purpose of the
audits is to determine, among other things, whether any covered
employees have worked hours for which contributions to the funds
have not been remitted.
In January 2007, the Agency notified Labonte Drywall by
letter that an audit would be conducted for the period from January
1, 2004 through the end of 2006 (the "2007 audit"). Leo Donohue,
a payroll auditor for the Agency, conducted the audit. Dany
Labonte, the son of owner Clermont, was authorized to act as
Labonte Drywall's agent when responding to audit requests. Labonte
Drywall provided materials requested during the audit. However,
in a letter dated April 3, 2007, Dany Labonte informed Donohue
that "Labonte Drywall has not had work or done work in the union
now since December of 2005. The last job we did was Manchester
Place for Moriarty in Manchester, NH. We lost so much money again
on another union job that we are no longer bidding or doing any
more union work." The letter was addressed to Donohue and
contained Dany Labonte's name in type, but without a corresponding
signature. At trial, Donohue did not recall receiving the April
3, 2007 letter.
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At the conclusion of the 2007 audit, Donohue prepared a
report claiming that Labonte Drywall had underreported a total of
24 hours of work by 38 employees in 2004, 4,765 hours of work by
74 employees in 2005, and 40 hours of work by one employee in 2006.
There was no evidence in the record that any steps were taken by
the Agency to enforce the collection of payments on the
underreported hours.
In February 2010, the Agency informed Labonte Drywall
that an audit would be conducted for the period from January 1,
2007 through December 31, 2009 (the "2010 audit"). Two months
later, in April, the Agency's counsel, Christopher Souris, sent
Clermont Labonte a letter demanding that Labonte Drywall cooperate
with the 2010 audit. The same day, Souris, on behalf of the Union,
sent Clermont a second letter, stating that Labonte Drywall "is
operating nonunion companies" in violation of the collective
bargaining agreement. That letter enclosed a questionnaire asking
for 79 categories of information covering a six-year period, from
January 1, 2004 through April 6, 2010. In particular, the Union
expressed concern that Labonte Drywall was performing payroll
services for other drywall companies, including C-D-Bee Drywall,
LLC, and Progress Drywall, LLC.
In an e-mail dated July 1, 2010, Labonte Drywall's
counsel Diana Wieland informed Souris that, while Labonte Drywall
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would provide the information requested in the questionnaire, the
company believed that it had no existing bargaining relationship
with the Union. Wieland followed up with a letter to Souris
responding to the questionnaire. The letter repeated Labonte
Drywall's claim that it had ceased performing drywall installation
work in December 2005 and that the funds were aware that Labonte
Drywall "no longer has a bargaining relationship with the Union."
More than a year later, in a letter dated August 31,
2011, the Agency expanded the 2010 audit request and asked Labonte
Drywall to produce its payroll records through the date of the
letter. Labonte Drywall did not respond to either the 2010 or
2011 audit requests.
Plaintiffs subsequently filed this action in the
district court under ERISA and the Labor Management Relations Act
("LMRA"), 29 U.S.C. §§ 141-87, seeking to enforce Labonte Drywall's
compliance with an audit of its payroll and employment records for
the period January 1, 2007 through August 31, 2011. After holding
a one-day bench trial, the district court found in favor of Labonte
Drywall. See New Eng. Carpenters Cent. Collection Agency v.
Labonte Drywall Co., No. 12-10734-RGS, 2014 WL 2566136, at *5 (D.
Mass. June 5, 2014). The court credited Dany Labonte's testimony
that "the April 3, 2007 letter to Donohue was mailed and was
intended as a written termination of the [agreement] between the
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Union and Labonte [Drywall]." Id. at *4. The court stated that
"Dany Labonte's layman's choice of words [in the letter] was
sufficiently clear to require, at least, some responsive inquiry
from the Union or the [f]unds. However, nothing ensued from either
entity on the subject." Id. Although the letter was directed to
Agency employee Donohue, the district court ruled that the Union
had actual notice of the letter. See id. Because the collective
bargaining relationship had been terminated, the court concluded
that "plaintiffs had no legal right to conduct an audit of Labonte
[Drywall]'s payroll for the period from January 1, 2007, through
August 31, 2011." Id. at *5. Judgment entered for Labonte
Drywall, and plaintiffs timely appealed.
II.
Plaintiffs contend that the district court erred when it
concluded that (1) the April 3, 2007 letter terminated the
collective bargaining relationship between Labonte Drywall and the
Union, and (2) plaintiffs were not entitled to audit Labonte
Drywall's records, at least through August 31, 2009.
We review the district court's findings of fact for clear
error and its conclusions of law de novo. See Walgreen Co. v.
Rullan, 405 F.3d 50, 55 (1st Cir. 2005). A factual finding is
"clearly erroneous" only if, "on the whole of the record, we form
a strong, unyielding belief that a mistake has been made."
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Cumpiano v. Banco Santander Puerto Rico, 902 F.2d 148, 152 (1st
Cir. 1990); see also United States v. 15 Bosworth St., 236 F.3d
50, 53 (1st Cir. 2001) ("[T]he court's factual findings are
entitled to considerable deference.").
Plaintiffs' arguments require us to interpret the terms
of the statewide agreement and the collective bargaining
agreement. Under the LMRA, "[i]nterpretation of labor contracts
. . . is a matter of federal common law." Senior v. NSTAR Elec.
& Gas Corp., 449 F.3d 206, 216 (1st Cir. 2006); see also Sweeney
v. Westvaco Co., 926 F.2d 29, 36 (1st Cir. 1991) (noting that
"federal common law . . . applies to disputes arising out of
collective bargaining agreements"). "[A] court should resort to
traditional principles of contract interpretation to the extent
such principles are consistent with federal labor law." Senior,
449 F.3d at 216; see also Dist. Lodge 26, Int'l Ass'n of Machinists
& Aerospace Workers, AFL-CIO v. United Techs. Corp., 610 F.3d 44,
51 (2d Cir. 2010) ("While it is true that traditional contract
rules do not always rigidly apply to collective bargaining
agreements, courts must look to traditional state contract law,
when it is not inconsistent with federal labor policy, to form the
content of the federal common law governing labor agreements."
(internal quotation marks omitted)).
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A. The April 3, 2007 Letter
Pursuant to the statewide agreement's termination
provision, Labonte Drywall was required to "give[] notice of
termination of this agreement in accordance with the applicable
notice provisions in the collective bargaining agreement." The
notice provision of the collective bargaining agreement in effect
from September 1, 2005 through August 31, 2009 required that
"either party to this Agreement give[] notice in writing to the
other party" to terminate the agreement. Therefore, to terminate
its statewide agreement with the Union, Labonte Drywall was
required to provide a "notice of termination" "in writing to the
other party."
Plaintiffs contend that the April 3, 2007 letter could
not have terminated the statewide agreement because it was not a
"notice of termination" and was not provided to "the other party."
We address each issue in turn.
1. Notice of Termination
A party's "stated intent to withdraw from [a collective
bargaining relationship] is effective only if it is both timely
and unequivocal."4 Haas Elec., Inc. v. NLRB, 299 F.3d 23, 27 (1st
4Relying on cases from the Sixth Circuit, plaintiffs contend
that a notice of termination must be "clear and unambiguous" to be
effective. Pls.' Br. at 25 (citing Office & Prof'l Emp. Int'l
Union, Local 42, AFL-CIO v. United Auto., Aerospace & Agr.
Implement Workers of Am., Westside Local No. 174, UAW, 524 F.2d
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Cir. 2002) (Stahl, J., concurring) (citing Retail Assocs., Inc.,
120 N.L.R.B. 388, 393-95 (1958)). "The decision to withdraw must
contemplate a sincere abandonment, with relative permanency, of
the multiemployer unit." See Retail Assocs., Inc., 120 N.L.R.B.
at 394.
Plaintiffs contend that the April 3, 2007 letter did not
communicate an unequivocal intent to terminate Labonte Drywall's
agreement with the Union because it "makes no mention of
'termination' and does not mention either the [s]tate[w]ide
[a]greement or the collective bargaining agreement." Pls.' Br. at
28.
Plaintiffs' argument implicates two legal questions.
The first question is whether the terms of the statewide agreement
required Labonte Drywall to use any particular language in its
notice of termination. See OfficeMax, Inc. v. Levesque, 658 F.3d
94, 97 (1st Cir. 2011) ("Contract interpretation, when based on
contractual language without resort to extrinsic evidence, is a
1316, 1317 (6th Cir. 1975); Int'l Union of Operating Eng'rs, Local
No. 181 v. Dahlem Constr. Co., 193 F.2d 470, 475 (6th Cir. 1951)).
Yet, plaintiffs never explain how this "clear and unambiguous"
standard is different from the "timely and unequivocal" standard
that the National Labor Relations Board articulated in Retail
Assocs., Inc., 120 N.L.R.B. at 393, which we applied in Haas Elec.,
Inc. See 299 F.3d at 27 (Stahl, J., concurring); id. at 36
(Torruella, J., dissenting). To the extent there is a difference
between the legal standards, we are bound by the "timely and
unequivocal" standard.
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'question of law' that is reviewed de novo."). The second question
is whether Labonte Drywall's letter expressed an unequivocal
intent to withdraw from the collective bargaining relationship so
as to be a legally effective termination.5 See, e.g., Univ.
Emergency Med. Found. v. Rapier Investments, Ltd., 197 F.3d 18, 20
(1st Cir. 1999). We address each in turn.
a. What the Termination Provision Requires
Regarding the first question, we agree with the district
court's conclusion that the statewide agreement's termination
provision "does not require any specific terminology to be
effective." Labonte Drywall Co., 2014 WL 2566136, at *4. Nothing
in the four corners of the statewide agreement requires a party's
notice of termination to explicitly include the words
"termination," "statewide agreement," or "collective bargaining
agreement." The termination provision simply requires a "notice
of termination" in writing. See ITT Corp. v. LTX Corp., 926 F.2d
1258, 1265 (1st Cir. 1991) (rejecting party's attempt to insert
condition into agreement "since no such clause or statement appears
within the contract's four corners").
5 Although a party's stated intent to terminate its
obligations under a collective bargaining agreement must be both
"timely and unequivocal," Haas Elec., Inc., 299 F.3d at 27 (Stahl,
J., concurring), the parties do not dispute that the letter was
timely.
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b. Labonte Drywall's Stated Intent to Withdraw
Regarding the second question, we also agree with the
district court's determination that the April 3, 2007 letter
expressed an unequivocal intent to terminate Labonte Drywall's
collective bargaining relationship with the Union. See Labonte
Drywall Co., 2014 WL 2566136, at *4.
The April 3, 2007 letter clearly states that "Labonte
Drywall has not . . . done work in the union now since December of
2005" and is "no longer bidding or doing any more union work."
The letter, on its face, contained no language suggesting that
Labonte Drywall was equivocal in its desire to no longer work with
the Union. See Haas Elec., Inc., 299 F.3d at 29 (Stahl, J.,
concurring) (finding that employer's letter expressed an
unequivocal intent to terminate collective bargaining relationship
even though it "admittedly did not use precise language in
articulating its intent to withdraw"); cf. Louisiana Bricklayers
& Trowel Trades Pension Fund & Welfare Fund v. Alfred Miller Gen.
Masonry Contracting Co., 157 F.3d 404, 409 n.12 (5th Cir. 1998)
(finding termination letter ineffective when it "equivocated by
agreeing to abide by the terms of the [collective bargaining
agreement] 'for the immediate future.'"). Moreover, the
collective bargaining agreement in effect from 2005 to 2009
provided that all workers hired by an employer, who worked more
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than seven days, had to become (or seek to become) members of the
Union, as long as the employer was engaged in the kind of work
covered by this agreement. Since the collective bargaining
agreement, by its terms, does not allow an employer to perform
drywall work without hiring Union workers, the letter's statement
that Labonte Drywall was "no longer bidding or doing any more union
work" clearly indicated its intent to terminate the ongoing
relationship with the Union.
The parties' conduct after Dany Labonte sent the April
3, 2007 letter confirms that they understood that the letter had
terminated the collective bargaining relationship between Labonte
Drywall and the Union. Cf. Haas Elec., 299 F.3d at 29 (Stahl, J.,
concurring) (finding that employer's letter to union terminated
collective bargaining relationship where the union did not
"question[] the meaning of the letter" at the time and the
employer's subsequent conduct was consistent with its "stated
intent to withdraw"). Labonte Drywall last employed Union workers
in December 2005, and there is no evidence in the record that the
company solicited Union work or performed any other Union-related
activity after that time. Importantly, between the end of 2007
and the beginning of 2010, Union representatives visited Labonte
Drywall multiple times to request that the company rejoin the
Union. Besides these visits, Labonte Drywall received no
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communication from the Union or the Agency until the February 2010
letter requesting an audit of Labonte Drywall's records. Labonte
Drywall was no longer receiving copies of the collective bargaining
agreements from the Union. Labonte Drywall also had stopped
receiving copies of the Union's wage and benefit packages. The
Union's director of contractor relations testified that the Agency
"stop[s] sending these wage and benefit packages to signatory
employers if they are no longer members of the Union" and "had
terminated" their collective bargaining relationship with the
Union. In short, the parties' actions demonstrate that both
understood that the April 3, 2007 letter had ended their agreement.
2. Notice to the Other Party
Plaintiffs also argue that the April 3, 2007 letter was
not a valid termination because Labonte Drywall did not send the
letter to the Union, which is "the other party" to the statewide
agreement. Dany Labonte sent the letter to Donohue, an employee
of the Agency, not the Union. Plaintiffs contend that the Union
and the Agency are separate legal entities, and that Donohue was
not a de facto agent of the Union. Thus, they insist that Labonte
Drywall did not provide notice of termination to the Union.
Labonte Drywall does not contest that the Union and the
Agency are separate entities as a matter of law. Nor does it argue
that Donohue was an agent for the Union. Instead, Labonte Drywall
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contends, and the district court found, that the Union received
actual notice of Labonte Drywall's termination of the collective
bargaining relationship. See Labonte Drywall Co., 2014 WL 2566136,
at *4.
The district court's finding implicates both legal and
factual questions. The legal question, which we review de novo,
is whether actual notice is sufficient to terminate the collective
bargaining relationship under the terms of the statewide
agreement. The factual question, which we review for clear error,
is whether the Union received actual notice of the April 3, 2007
letter. We address each in turn.
a. Whether Actual Notice Is Sufficient
Although the statewide agreement's termination provision
states that written notice should be given "to the other party,"
the agreement must be read "in a reasonable and practical way,
consistent with its language, background, and purpose." Bukuras
v. Mueller Grp., LLC, 592 F.3d 255, 262 (1st Cir. 2010) (internal
quotation marks omitted). The primary purpose of the termination
provision is to ensure that "the other party" to the agreement
receives the notice of termination in a timely fashion. Actual
notice that is timely achieves that purpose. See In re Redondo
Constr. Corp., 678 F.3d 115, 123 (1st Cir. 2012) ("[S]trict
conformity with a contract's written notice provision is not
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required as long as the counterparty receives substantially the
same information through timely actual notice and suffers no
prejudice from the non-conformity." (emphasis added)); Univ.
Emergency Med. Found. v. Rapier Investments, Ltd., No. CIV.A. 97-
549-T, 1998 WL 34100601, at *2 (D.R.I. Oct. 16, 1998) aff'd, 197
F.3d 18 (1st Cir. 1999) ("Even where a contract requires a
particular method of giving notice, notice given by a different
method is effective if it is actually received unless the method
by which notice is given is an essential element of the
transaction." (citing 1 Maurice H. Merrill, Merrill on Notice
§ 603, at 662–63 (1952)) (emphasis added)); see also Univ.
Emergency Med. Found., 197 F.3d at 22 (finding termination notice
valid although party failed to strictly comply with notice
provision because that provision did not "itself, confer any
benefit upon either party" and was "merely a collateral term
intended to enhance the probability that mailed notice will arrive
promptly in the proper hands").6
Courts have consistently found termination notices valid
6
when the other party actually received the notice in a timely
fashion. See, e.g., Univ. Emergency Med. Found., 197 F.3d at 22;
(noting that a "mailed termination notice is valid so long as it
is actually received by the noticee, even where it is mailed to an
incorrect address" (emphasis added)); Mason Tenders Dist. Council
Welfare Fund v. All Union, Inc., No. 01 CIV. 0152(AGS), 2002 WL
31115181, at *4 (S.D.N.Y. Sept. 23, 2002) (finding termination
letter valid because evidence "shows that the Union actually
received the [letter]" even though it may not have been sent by
certified mail in accordance with the terms of the collective
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In this case, plaintiffs make no argument that actual
notice, if received by the Union, would be untimely, prejudicial,
or somehow undermine an essential element of Labonte Drywall's
collective bargaining relationship with the Union. We, therefore,
hold that if the Union received actual notice of the April 3, 2007
letter, Labonte Drywall's termination of the collective bargaining
relationship would be valid.
b. Whether the Union Received Actual Notice
At trial, plaintiffs argued that the Agency and the Union
"operated as wholly separate entities," and, therefore, a notice
sent to Donohue would not be received by the Union. Labonte
Drywall Co., 2014 WL 2566136, at *4. However, the district court
did not find this blanket assertion credible as a description of
their communications regarding Labonte Drywall, in part because
"the same attorney (Souris) represented both entities and pursued
their interests" together in their dealings with Labonte Drywall.
Id. For example, the record demonstrates that, on the same day in
April 2010, Attorney Souris sent Labonte Drywall two letters: one
on behalf of the Agency requesting compliance with the 2010 audit,
bargaining agreement (emphasis added)); U.S. Broad. Co. v.
National Broad. Co., 439 F. Supp. 8, 10 (D. Mass. 1977) (finding
termination notices valid because "it would be hypertechnical in
the extreme to hold that notice actually received was ineffective"
where "it is clear that plaintiff and plaintiff's counsel timely
received both notices" (internal quotation marks omitted)
(emphasis added)).
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and another on behalf of the Union requesting compliance with the
collective bargaining agreement. These seemingly concerted
actions, through the same attorney, indicate that there was actual
communication between the Union and Agency about Labonte Drywall.
As the district court reasonably concluded, the plaintiffs'
rebuttal -- that the Agency and Union were operating as wholly
separate entities -- was not credible in light of their cooperation
on matters involving Labonte Drywall.
Moreover, the court credited plaintiffs' testimony that
"the Union is in regular communication with the Agency regarding
the status of employers who are no longer active in the Union or
who request to terminate the collective bargaining relationship."
Id. at *4 n.6. The record demonstrates that the Union and the
Agency regularly communicate when "an employer is removed from the
list" of signatory employers and is "no longer active" with the
Union, which supports the district court's reasonable inference
that the two entities communicated regarding Labonte Drywall's
notice of termination.
The Union's actions after the April 3, 2007 letter was
sent also demonstrate that the Union received Labonte Drywall's
notice of termination. As explained above, besides visits from
Union representatives asking Labonte Drywall to rejoin the Union,
Labonte Drywall received no communication from the Union or the
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Agency. The company no longer received copies of the collective
bargaining agreements or the Union's wage and benefit packages.
We, therefore, find no clear error with the district
court's finding that the Union -- "the other party" to the
statewide agreement -- had actual notice of Labonte Drywall's April
3, 2007 termination letter.7
B. Labonte Drywall's Audit Obligations
Plaintiffs argue that even if the April 3, 2007 letter
did terminate Labonte Drywall's obligations under the collective
bargaining agreement, they are still entitled to audit Labonte
Drywall's records through August 31, 2009. This argument is
premised on plaintiffs' belief that, under the collective
bargaining agreement, Labonte Drywall's notice of termination was
not effective until that date.
The termination provision of the collective bargaining
agreement in effect from September 1, 2005 through August 31, 2009,
7 Plaintiffs' reliance on Construction Industry Laborers
Pension Fund v. Augers Unlimited, Inc., No. 05-4058-CV-C-NKL, 2006
WL 1236063 (W.D. Mo. May 4, 2006), is inapposite. In Augers
Unlimited, the court held that an employer's letter to terminate
its collective bargaining relationship with the union was not
effective because the employer had sent the letter to trustees of
various employee benefit funds and not the union itself. Id. at
*6. In so ruling, the court found that "there is no evidence that
[the trustees] notified the [u]nion of the termination letter" or
"that the [u]nion did in fact know of the termination letter."
Id. at *1 n.2, *6. As explained above, there is ample evidence in
this case that the Union knew of Labonte Drywall's letter to
terminate its agreement.
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states: "This agreement will expire on August 31, 2009 except
that if neither party to this Agreement gives notice in writing to
the other party on or before July 1, 2009 that it desires a change
after August 31, 2009, then this Agreement will continue in effect
until August 31, 2010 . . . ." Because this provision does not
permit a party to terminate the agreement before August 31, 2009,
plaintiffs contend that Labonte Drywall should be bound by its
audit obligations through that date.
Labonte Drywall counters that this termination provision
does not apply because Labonte Drywall was not a signatory to the
collective bargaining agreement. The company only signed its
statewide agreement with the Union, and, Labonte Drywall contends,
its termination of the statewide agreement was effective on April
3, 2007. Reviewing this issue of contract interpretation de novo,
see OfficeMax, Inc., 658 F.3d at 97, we agree with Labonte
Drywall's understanding of the statewide agreement.
The termination provision of the statewide agreement
states: "The duration of this statewide agreement shall be co-
extensive with the terms set out in the collective bargaining
agreements . . . unless either party to this statewide agreement
gives notice of termination of this agreement . . . ." (emphasis
added). Therefore, the statewide agreement would terminate on
August 31, 2009 (coextensive with the terms of the collective
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bargaining agreement) unless either party had given notice of
termination. Labonte Drywall gave notice of termination on April
3, 2007, and, therefore, it terminated the statewide agreement on
that date. Plaintiffs' contention that both the statewide
agreement and the collective bargaining agreement did not expire
until August 31, 2009 would render the "unless" clause of the
statewide agreement superfluous and contravene the well-recognized
"canon of construction that every word and phrase of an instrument
is if possible to be given meaning, and none is to be rejected as
surplusage if any other course is rationally possible."8 FDIC v.
Plaintiffs' reliance on Orrand v. Scassa Asphalt, Inc. is
8
misplaced. See No. 14-3954, 2015 WL 4430447 (6th Cir. July 21,
2015). In that case, the applicable termination provision stated
that the parties' agreement "shall remain in full force and effect
. . . until expressly terminated by notice in writing from one
party to the other party at least sixty (60) days prior to its
anniversary date." Id. at *1. The employer argued that it had
received a notice letter from the union terminating the agreement.
Id. at *6. However, the Sixth Circuit upheld the district court's
determination construing the letter as "a notice of contract
modification, not a notice of termination, because the Union
expressly stated its 'desire to modify, amend, and/or negotiate a
new agreement' and 'to open negotiations for a new agreement
covering wages, hours and conditions of employment.' The language
of the Union's letter also indicated a desire on the part of the
Union to continue the relationship between the parties, not to
terminate it." Id. at *7 (internal citation omitted). For this
reason, the court found that the parties' collective bargaining
relationship "remained in force because neither the Union nor [the
employer] gave timely written notice to the other party of an
intent to terminate." Id. at *8. As demonstrated above, Labonte
Drywall gave timely written notice of termination to the Union
through the April 3, 2007 letter.
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Singh, 977 F.2d 18, 22 (1st Cir. 1992) (internal quotation marks
omitted).
Plaintiffs argue that interpreting the statewide
agreement in this way would permit Labonte Drywall "to
spontaneously cancel the collective bargaining agreement" in
violation of federal labor law. Pls.' Br. at 31. Pursuant to the
National Labor Relations Board's decision in John Deklewa & Sons,
Inc., plaintiffs contend that Labonte Drywall was not free to
"unilaterally repudiate" its agreement with the Union before the
August 31, 2009 expiration of the collective bargaining agreement.
See 282 N.L.R.B. 1375, 1385 (1987); see also C.E.K. Indus. Mech.
Contractors, Inc. v. NLRB, 921 F.2d 350, 357 (1st Cir. 1990)
(adopting Deklewa "as the law in this circuit").
Assuming that Deklewa applies to the agreement between
Labonte Drywall and the Union,9 plaintiffs' argument fails because
9 The rule in Deklewa that employers cannot unilaterally
repudiate their agreements with unions applies only to agreements
made pursuant to § 8(f) of the National Labor Relations Act. See
Deklewa, 282 N.L.R.B. at 1385 (1987) ("Neither employers nor unions
who are party to [§] 8(f) agreements will be free unilaterally to
repudiate such agreements."). Although "[a] union must usually
demonstrate majority support among an employer's employees in
order to enter a collective bargaining agreement with an employer,"
NLRB v. Goodless Bros. Elec. Co., Inc., 285 F.3d 102, 104 (1st
Cir. 2002), § 8(f) agreements permit "unions and employers in the
construction industry [to] enter into collective bargaining
agreements in the absence of a demonstration of majority
representation by the union." Haas Elec., 299 F.3d at 27 n.3
(Stahl, J., concurring) (citing Goodless Bros. Elec. Co., 285 F.3d
at 104-05). The parties do not dispute that Labonte Drywall
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Labonte Drywall did not "unilaterally repudiate" its obligations
under the collective bargaining agreement. Instead, Labonte
Drywall terminated its collective bargaining relationship with the
Union pursuant to the agreed-upon termination provision of the
statewide agreement. The Union was a signatory to the statewide
agreement and subject to its terms and conditions, which provided
Labonte Drywall authority to terminate the agreement before the
collective bargaining agreement's August 31, 2009 expiration date.
Therefore, Labonte Drywall's termination cannot be considered
"unilateral."
Because Labonte Drywall's agreement to abide by the
terms and obligations of the collective bargaining agreement was
only incorporated by reference in the statewide agreement, and
Labonte Drywall's termination of the statewide agreement was
effective on April 3, 2007, the company had no duty to submit to
plaintiffs' audit requests through August 31, 2009.10 Plaintiffs
entered into a § 8(f) agreement with the Union, and we therefore
assume that the statute covers Labonte Drywall's agreement with
the Union.
Plaintiffs make no argument in their brief that Labonte
10
Drywall must still submit to an audit request for the period
between January 1, 2007 to April 3, 2007. We, therefore, consider
any such argument waived. See Rodríguez v. Municipality of San
Juan, 659 F.3d 168, 175 (1st Cir. 2011) ("[W]e deem waived claims
not made or claims adverted to in a cursory fashion, unaccompanied
by developed argument.").
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"'are not entitled to enforce a nonexistent contractual
obligation.'"11 DeVito v. Hempstead China Shop, Inc., 38 F.3d 651,
654 (2d Cir. 1994) (quoting Teamsters Indus. Emps. Welfare Fund v.
Rolls-Royce Motor Cars, Inc., 989 F.2d 132, 138 (3d Cir. 1993)).12
Affirmed.
11 As they did in the district court, plaintiffs devote much
of their briefing to explain the important obligation that benefit
funds have in collecting contributions from employers under ERISA.
However, as the district court stated, "[n]one of this . . . is a
matter of dispute." Labonte Drywall Co., 2014 WL 2566136, at *4
n.4. Plaintiffs are not asserting an ERISA contribution claim
against Labonte Drywall. Instead, plaintiffs contend that they
have a right to conduct an audit of Labonte Drywall's records, a
contractual obligation that is derived from Labonte Drywall's
statewide agreement to abide by the terms of the collective
bargaining agreement.
12Because we conclude that Labonte Drywall had no obligation
to submit to plaintiffs' audit requests, we do not need to reach
the issue of whether the defense of laches is available to Labonte
Drywall in this action.
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