Trustees of the Screen Actors v. Nyca, Inc., a California Corporation ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
TRUSTEES OF THE SCREEN ACTORS 
GUILD-PRODUCERS PENSION AND
HEALTH PLANS,
Plaintiff-Appellant, No. 08-55409
v.
 D.C. No.
CV-01912-GPS-JC
NYCA, INC., a California
corporation; TAYLORMADE-ADIDAS OPINION
GOLF COMPANY INC., a Delaware
corporation,
Defendants-Appellees.

Appeal from the United States District Court
for the Central District of California
George P. Schiavelli, District Judge, Presiding
Argued and Submitted
May 5, 2009—Pasadena, California
Filed July 15, 2009
Before: Alfred T. Goodwin, Diarmuid F. O’Scannlain, and
Susan P. Graber, Circuit Judges.
Opinion by Judge O’Scannlain
8929
8932 TRUSTEES v. NYCA, INC.
COUNSEL
Peter S. Dickinson, Bush Gottlieb Singer Lopez Kohanski
Adelstein & Dickinson, Glendale, California, argued the
cause for the plaintiffs-appellants and filed the briefs. Robert
A. Bush and Ira L. Gottlieb, Glendale, California, were on the
briefs.
Robert S. Gerber, Sheppard, Mullin, Richter & Hampton
LLP, San Diego, California, argued the cause for the
defendants-appellees and filed the brief. Matthew W. Holder,
San Diego, California, was on the brief.
TRUSTEES v. NYCA, INC. 8933
OPINION
O’SCANNLAIN, Circuit Judge:
We consider whether the Employee Retirement Income
Security Act of 1974 allows employee benefit plans to
recover unpaid contributions from an employer who is not a
party to the applicable collective bargaining agreement.
I
NYCA, Inc., is an advertising agency based in southern
California. Along with other advertising agencies, NYCA is
party to a collective bargaining agreement (the “Commercials
Contract”) with the Screen Actors Guild, a union that repre-
sents actors. The Commercials Contract requires signatory
advertising agencies, referred to as “producers,” to contribute
to employee health and pension plans. The producers must
pay an amount equal to 14.30 percent of the “gross compensa-
tion” paid to “principal performers” for acting in commer-
cials. That is to say, when a performer performs, the
agreement requires producers to contribute to the plans.
TaylorMade-Adidas Golf Company, Inc. (“TaylorMade”),
manufacturers golf-related products. In 2003, TaylorMade
recruited Fred Couples, a famous professional golfer, to
endorse its products. Under this lucrative deal, Couples
receives a hefty sum for promoting TaylorMade’s golf prod-
ucts in television commercials and during personal appear-
ances.1 The endorsement agreement ensures that, in the event
payments under a collective bargaining agreement are neces-
sary, TaylorMade will make the required contributions. Sig-
nificantly, TaylorMade is not a signatory to the Commercials
Contract.
1
Dunlop Slazenger Group Americas originally signed the endorsement
with Couples in 2001. In 2003, TaylorMade acquired Dunlop’s golf-
related assets and liabilities and assumed the agreement. Dunlop is not a
party to this appeal.
8934 TRUSTEES v. NYCA, INC.
NYCA and TaylorMade also have their own contractual
relationship, which began before TaylorMade signed the
endorsement deal with Couples. Under this arrangement,
NYCA acts as TaylorMade’s exclusive advertising agent for
golf-related products and equipment. Under one provision of
this agreement, “[TaylorMade] recognize[s] that [NYCA is]
signatory to collective bargaining agreements with the Screen
Actors Guild and other talent-related union agreements, and
that the hiring and use of talent by [NYCA] on [Taylor-
Made’s] behalf will be subject to the terms of such agree-
ments.”
As TaylorMade’s advertising agent, NYCA works with
Couples to produce golf advertisements. Both TaylorMade
and NYCA, however, split the considerable bill for Couples’
services. NYCA paid Couples $102,181.50, while Taylor-
Made paid Couples significantly more. NYCA, however, cal-
culated its contribution obligations under the Commercials
Contract with reference only to its own payments to Couples,
instead of the combined payments made by NYCA and Tay-
lorMade. This resulted in a significantly lower obligation than
NYCA would otherwise have owed.
Not everyone was happy with NYCA’s arithmetic. The
trustees of employee benefit plans covered by the Commer-
cials Contract sued both NYCA and TaylorMade. They
claimed that the Employee Retirement Income Security Act of
1974 (“ERISA”) entitles them to contributions based upon
Couples’ total compensation, not merely the portion paid by
NYCA. The district court dismissed the case for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6).
The trustees timely appealed.
II
The trustees contend that TaylorMade, which has not
signed the Commercials Contract, is nonetheless liable for
unpaid contributions as a “joint employer” of Couples.
TRUSTEES v. NYCA, INC. 8935
According to the trustees, “NYCA and TaylorMade jointly
exercised sufficient control over Fred Couples’ employment
such that NYCA and TaylorMade are ‘joint employers’ for
purposes of federal labor law.” In support of this theory, the
trustees identify analogous cases holding companies liable as
“joint employers” under the Fair Labor Standards Act of 1938
(“FLSA”).
This argument presents us with a straightforward issue of
statutory interpretation. We begin, as we must, with the text
of the statute. ERISA requires employers to contribute to
employee benefit plans in accordance with the terms of col-
lectively bargained agreements. 29 U.S.C. § 1145. Specifi-
cally:
Every employer who is obligated to make contri-
butions to a multiemployer plan under the terms of
the plan or under the terms of a collectively bar-
gained agreement shall, to the extent not inconsistent
with law, make such contributions in accordance
with the terms and conditions of such plan or such
agreement.
Id. (emphasis added).2 Thus, we must decide whether an
alleged “joint employer” who is not a signatory to a collective
bargaining agreement may nevertheless qualify as an “em-
ployer who is obligated to make contributions” within the
meaning of § 1145.
A
Before reaching that question, however, we pause to satisfy
ourselves that we have subject-matter jurisdiction over this
2
An “employer” is defined as “any person acting directly as an
employer, or indirectly in the interest of an employer, in relation to an
employee benefit plan; and includes a group or association of employers
acting for an employer in such capacity.” 29 U.S.C. § 1002(5).
8936 TRUSTEES v. NYCA, INC.
appeal. At the outset, TaylorMade challenges our jurisdiction,
asserting that we may not hear this case because TaylorMade
is not an “employer who is obligated to make contributions”
with the meaning of § 1145. According to TaylorMade, the
district court should have dismissed the trustees’ action for
lack of subject-matter jurisdiction under Federal Rule of Civil
Procedure 12(b)(1) rather than for failure to state a claim
under Rule 12(b)(6). The two concepts, of course, are distinct:
“the former determines whether the plaintiff has a right to be
in the particular court and the latter is an adjudication as to
whether a cognizable legal claim has been stated.” 5B Wright
& Miller, Federal Practice and Procedure § 1350 (3d ed.
2004).
[1] We disagree with TaylorMade, and take this opportu-
nity to clear up a persistent procedural confusion that has
bedeviled the courts of appeals.3 It is a cardinal principle of
federal “arising under” jurisdiction that “[a]ny non-frivolous
assertion of a federal claim suffices to establish federal ques-
tion jurisdiction, even if that claim is later dismissed on the
merits.” Cement Masons Health & Welfare Trust Fund for N.
Cal. v. Stone, 197 F.3d 1003, 1008 (9th Cir. 1999); see also
Bell v. Hood, 327 U.S. 678, 682 (1946) (“If the court . . . exer-
cise[s] its jurisdiction to determine that the allegations in the
complaint do not state a ground for relief, then dismissal of
3
See Bleiler v. Cristwood Constr., Inc., 72 F.3d 13, 15 n.1 (2d Cir.
1995); Xaros v. U.S. Fid. & Guar. Co., 820 F.2d 1176, 1180 (11th Cir.
1987). Our own court also has not been immune from this confusion. We
have sometimes implied, though never expressly held, that § 1145 is a
jurisdictional provision. See Crotty v. Cook, 121 F.3d 541, 544 (9th Cir.
1997); Carpenters S. Cal. Admin. Corp. v. Majestic Hous., 743 F.2d 1341,
1345-46 (9th Cir. 1984). But we have also, on occasion, seemed to treat
§ 1145 as substantive; see, e.g., Local 159, 342, 343 & 344 v. Nor-Cal
Plumbing, Inc., 185 F.3d 978, 983 n.4 (9th Cir. 1999) (“Section [1145],
however, merely creates a cause of action under ERISA for proceeding
against an employer who is delinquent in making contributions to a plan.
It does not create a separate basis for jurisdiction . . . .”); Pension Trust
Fund for Operating Eng’rs v. Triple A Mach. Shop, 942 F.2d 1457 (9th
Cir. 1991).
TRUSTEES v. NYCA, INC. 8937
the case would be on the merits, not for want of jurisdic-
tion.”).
[2] Guided by this principle, we clarify today that whether
a defendant is an “employer who is obligated to make contri-
butions” within the meaning of 29 U.S.C. § 1145 is a question
on the merits of the claim, not an issue of subject-matter juris-
diction. No one suggests that the trustees are attempting to
sneak through the courthouse doors on the back of a frivolous
federal claim. To the contrary: we are satisfied that the trust-
ees have made out a colorable federal claim that properly
belongs in federal court. Whether the trustees will ultimately
prevail, of course, remains to be seen. At this stage, however,
the district court correctly analyzed this case under Rule
12(b)(6) rather than under Rule 12(b)(1).
B
[3] Persuaded that we may decide this case, we return to the
merits of the trustees’ claims against TaylorMade. We need
look no further than the plain language of § 1145 to reach our
conclusion. In our view, § 1145 imposes no independent obli-
gation upon employers; it merely provides a federal cause of
action to enforce pre-existing obligations created by collective
bargaining agreements. Indeed, § 1145, though clumsily
phrased in the passive voice, nonetheless expressly locates the
source of the duties imposed on employers in “the terms of a
collectively bargained agreement,” not in any independent
provision of federal law. Because TaylorMade has not signed
the Commercials Contract, it follows that it has not incurred
any such pre-existing obligations under § 1145. The trustees’
“joint employer” theory, by seeking to impose obligations
above and beyond those required by collective bargaining
agreements, directly conflicts with the plain language of the
statute. Therefore, we decline the invitation to extend the
“joint employer” theory to the context now before us.
8938 TRUSTEES v. NYCA, INC.
[4] That several other circuits have adopted the same read-
ing of the statutory language supports our conclusion. See
Cement & Concrete Workers Dist. Council Welfare Fund v.
Lollo, 35 F.3d 29, 36-37 (2d Cir. 1994) (“[Section] 1145 does
not impose a duty to make pension contributions, even on one
who qualifies as an ‘employer’ under the general definition
provided in 29 U.S.C. § 1002(5), if the duty to contribute did
not previously exist.”); Mass. Laborers’ Health & Welfare
Fund v. Starrett Paving Corp., 845 F.2d 23, 25 (1st Cir.
1988); Int’l Bhd. of Painters & Allied Trades Union v. George
A. Kracher, Inc., 856 F.2d 1546, 1549 (D.C. Cir. 1988)
(“ERISA does not require employers to provide pension
plans; the obligation to do so, and to contribute to them,
springs from a privately-made contract embodied in a plan or
a collective bargaining agreement.”).4 Thus, we are satisfied
that the trustees cannot hold TaylorMade liable under the
“joint employer” theory.
We hasten to point out that an employer may not avoid lia-
bility merely by showing that it has not signed the applicable
collective bargaining agreement. Shareholders and officers of
a corporation may be liable for the company’s contribution
obligations in situations in which justice requires piercing the
corporate veil. Alman v. Danin, 801 F.2d 1, 4 (1st Cir. 1986).
A non-signatory company may also be liable if the non-
signatory is the “alter ego” of the signing company, Leddy v.
Standard Drywall, Inc., 875 F.2d 383, 387 (2d Cir. 1989), if
4
We acknowledge that the “joint employer” theory is recognized under
the FLSA. See Torres-Lopez v. May, 111 F.3d 633, 638 (9th Cir. 1997).
Unlike ERISA, however, the FLSA imposes independent obligations on
employers. See Leddy v. Standard Drywall, Inc., 875 F.2d 383, 387 (2d
Cir. 1989) (stating that the “FLSA commands employers to pay specified
wages, whereas ERISA does not require employers to provide pension
plans.”). In addition, although the FLSA defines the term “employer” in
almost the same way as ERISA does, see 29 U.S.C. § 203(d), the key lan-
guage — “who is obligated to” — is missing from the FLSA. Thus, even
if TaylorMade is an employer within the meaning of § 1145, it is not obli-
gated to contribute under any plan or collective bargaining agreement.
TRUSTEES v. NYCA, INC. 8939
the two entities are a “single employer,” Carpenters Local
Union No. 1846 v. Pratt-Farnsworth, Inc., 690 F.2d 489, 526
(5th Cir. 1982), or if “the interests of the nonsignatory and
signatory parties are materially inseparable,” Hotel Employees
& Rest. Employees Int’l Union Welfare Fund v. Gentner, 50
F.3d 719, 722 (9th Cir. 1995).
[5] These theories, however, attempt to determine whether
the two entities are, in reality, one and the same. If the non-
signatory company is really the same as the signatory com-
pany, then it is fair to say that the purported non-signatory is
actually a signatory, and therefore an “employer who is obli-
gated to make contributions” within the meaning of § 1145.
The trustees’ “joint employer” theory is completely different.
The trustees do not contend that NYCA and TaylorMade have
interrelated operations, common management, centralized
control of labor relations, or common ownership, as required
by the single employer or alter ego theories. Nor do they seek
to pierce the corporate veil. Rather, the trustees merely allege
that “NYCA and TaylorMade jointly exercised sufficient con-
trol over Fred Couples’ employment such that NYCA and
TaylorMade are ‘joint employers’ for purposes of federal
labor law.” This is not enough to show that TaylorMade is
“obligated to” contribute within the meaning of § 1145.
[6] Accordingly, the district court properly dismissed this
cause of action.5
III
The trustees also contend that the Commercials Contract
itself obligates NYCA to contribute based upon Couples’ total
compensation. The trustees assert that the phrase “gross com-
5
The district court held that the allegations in the complaint “do not
allege fraud with the specificity required by Rule 9(b)” of the Federal
Rules of Civil Procedure. The trustees do not challenge that conclusion on
appeal.
8940 TRUSTEES v. NYCA, INC.
pensation,” as used in the Commercials Contract, includes all
sums paid to Couples under the endorsement agreement. At
the very least, the trustees argue, the meaning of the term
“gross compensation” is ambiguous and not appropriately
determined on a motion to dismiss.
[7] With this argument, the trustees find more solid footing.
The key section of the Commercials Contract, section 46.A,
obligates “Producers” to “contribute an amount equal to
14.30% of all gross compensation for services paid to princi-
pal performers as herein defined with respect to television
commercials.” (emphasis added). It is clear that NYCA, a sig-
natory to the contract, is a producer, and that TaylorMade, a
non-signatory, is not a producer. Section 46.A, however, does
not expressly limit a producer’s contribution obligation to a
percentage of the gross compensation paid by the Producer.
Indeed, Section 46.A does not identify who pays the gross
compensation. The plain language of Section 46.A is there-
fore susceptible to the reading that the trustees urge: that the
Commercials Contract measures a producer’s contribution
obligation by a percentage of the gross compensation paid to
principal performers even by entities other than the producer.
NYCA does not dispute that Section 46.A is ambiguous.
Instead, NYCA identifies other provisions in the Commercials
Contract that it insists “make clear that ‘gross compensation’
is limited to sums paid to the principal performer by the ‘Pro-
ducer.’ ” NYCA points first to Section 5.A.1, which provides:
“The terms and conditions of this Contract apply to commer-
cials produced by Producer in the United States . . . and to
commercials for which Producer engages principal perform-
ers.” (emphasis added). NYCA also emphasizes Section 1.A,
which provides: “Compensation to principal performers in
commercials is based both on the services which the principal
performer renders in the production of such commercials and
on the use which is made of the finished commercial in which
the principal performer has rendered services.” (emphasis
added). According to NYCA, the Commercials Contract
TRUSTEES v. NYCA, INC. 8941
plainly contemplates that “Producers like NYCA (a) engage
principal performers to work on commercials, (b) compensate
the performers for that work, and (c) make pension and health
contributions to the Plans based on that compensation.”
We disagree. The contractual passages cited by NYCA
establish unambiguously only that the Commercials Contract
requires contributions in situations in which the Producer and
the principal performer have an employment relationship, i.e.,
when the “Producer engages principal performers.” The pro-
visions do not rule out contributions made by the producer
based upon total compensation when a non-signatory is a co-
employer of a principal performer. In other words, if NYCA
had no relationship whatsoever with Couples, the Commer-
cials Contract would not obligate NYCA to contribute any-
thing.
But that is not the case here. We emphasize that this case
involves commercials in which NYCA played a significant
part. Indeed, TaylorMade and NYCA worked together to pro-
duce the ads that form the basis of this action. The trustees
allege that NYCA “paid employee Fred Couples [$102,187.50]
. . . for the performance of Covered Services on a TaylorMade
commercial.” If accepted as true, this allegation establishes
that the Producer — NYCA — “engage[d]” a “principal per-
former[ ]” — Couples — in the production of commercials
within the meaning of the Commercials Contract. The ques-
tion whether Couples’ “gross compensation” includes sums
paid by TaylorMade is not clearly answered.
Nor do the instructions accompanying the contribution
form at the end of the Commercials Contract, also emphasized
by NYCA, compel a contrary conclusion. Paragraph 6 of
those instructions provides: “Only Producers who are signa-
tory to an applicable collective bargaining contract of the
Screen Actors Guild are eligible to make contributions to the
[plans] on behalf of the eligible Performers employed by such
Producers.” (emphasis added). That paragraph further requires
8942 TRUSTEES v. NYCA, INC.
producers to certify that “all compensation subject to contri-
butions earned by Performers in our employ during the period
covered has been reported herein.” (emphasis added). Accord-
ing to NYCA, those provisions show that “only compensation
‘earned . . . in [the] employ’ of the signatory Producer is
included in the contribution calculation.”
Once again, we are unable to say that the contract is unam-
biguous. The contribution form establishes only that Produc-
ers, i.e., signatories to the Commercials Contract, are
obligated to make contributions. It does not conclusively
resolve the issue whether compensation paid to principal per-
formers may include payments made by non-signatories. Like
Section 46.A, the contribution form appears to leave that key
question unanswered. Paragraph 6 merely refers to “all com-
pensation subject to contributions earned by Performers in our
employ.” It does not define compensation to mean amounts
paid by a producer to a principal performer.
[8] When a collective bargaining agreement is ambiguous,
“it is well established that the parties’ ‘practice, usage and
custom’ is of significance in interpreting their agreement.”
Consol. Rail Corp. v. Ry. Labor Executives Ass’n, 491 U.S.
299, 311 (1989). Indeed, the interpretation of a collective bar-
gaining agreement “calls into being a new common law—the
common law of a particular industry or of a particular plant.”
Id. at 312 (internal citation and quotation marks omitted).
Because the district court did not consider such evidence in
ruling on NYCA’s motion to dismiss, it must, on remand,
determine whether the parties’ practice, usage and custom—
as well as other appropriate aids to interpreting an ambiguous
contract—sheds light on the meaning of “gross compensa-
tion.” Whether the trustees will ultimately prevail, of course,
will depend on the extrinsic evidence produced during discov-
ery.
IV
We turn, lastly, to the trustees’ remaining state law causes
of action. The trustees attempt to enforce both the endorse-
TRUSTEES v. NYCA, INC. 8943
ment agreement and the NYCA-TaylorMade agreement as
purported third-party beneficiaries. They rely on the following
language in the NYCA-TaylorMade agreement:
For all talent engaged or used by [NYCA] on [Tay-
lorMade’s] behalf, [TaylorMade] agree[s] to pay
[NYCA] the engagement rate approved by [Taylor-
Made], together with any taxes, pension and welfare
fund contributions and other similar payments appli-
cable thereto. [TaylorMade] recognize[s] that
[NYCA] [is] signatory to collective bargaining
agreements with the Screen Actors Guild and other
talent-related union agreements, and that the hiring
and use of talent by [NYCA] on [TaylorMade’s]
behalf will be subject to the terms of such agree-
ments.
The trustees highlight similar language in the endorsement
agreement. Notably, the endorsement agreement also specifies
that no party is a third-party beneficiary of the agreement.
[9] The trustees have not stated a cause of action under Cal-
ifornia contract law. Under California law, a purported third-
party beneficiary must show that the contract was “made
expressly for the benefit of a third person.” Cal. Civ. Code
§ 1559. California courts interpret the word “expressly” as the
negative of “incidentally.” Spinks v. Equity Residential Briar-
wood Apts., 90 Cal. Rptr. 3d 453, 468 (Ct. App. 2009). Thus:
“it is not enough that the third party would incidentally have
benefited from performance . . . . The contracting parties must
have intended to confer a benefit on the third party.” Id. (cita-
tion and internal quotation marks omitted).
[10] The NYCA-TaylorMade agreement plainly protects
NYCA, it does not ensure that the plans receive their contri-
butions. Under the agreement’s plain language, TaylorMade
must indemnify NYCA for required contributions, but is
under no affirmative obligation to contribute in the first
8944 TRUSTEES v. NYCA, INC.
instance. The plans “would incidentally have benefited from
performance,” id., of course, because receiving payments
from TaylorMade would make NYCA more likely to fulfill its
own obligations. Nevertheless, it is plain that the agreement’s
reimbursement provisions are expressly for the benefit of
NYCA, even though they may incidentally benefit the plans.
Similarly, the endorsement agreement is not for the express
benefit of the plans, because the agreement is clear that no
party is a third-party beneficiary of the agreement.
[11] Even if the NYCA-TaylorMade and endorsement
agreements were for the plans’ benefit, we are persuaded that
nothing in either agreement imposes an affirmative obligation
on either NYCA or on TaylorMade to contribute. As dis-
cussed above, the NYCA-TaylorMade agreement recognizes
NYCA’s pre-existing obligation to the plans by requiring
TaylorMade to reimburse NYCA for its pension and health
plan contribution obligations when NYCA hires performers
on TaylorMade’s behalf. Cf. Transpersonnel, Inc. v. Roadway
Express, Inc., 422 F.3d 456, 461 (7th Cir. 2005) (“stating that
the obligation to reimburse for contributions made by another
is not the equivalent of an obligation to contribute in the first
instance.”). Similarly, the endorsement agreement, while
requiring TaylorMade to contribute directly to the plans in
some situations, mandates such contributions only if payment
is otherwise required. That qualifier demonstrates that the
endorsement agreement, like the TaylorMade-NYCA agree-
ment, recognizes only a pre-existing obligation to contribute
and does not impose an affirmative duty.
[12] Accordingly, the district court properly dismissed the
trustees’ state law causes of action.
IV
We AFFIRM the district court’s grant of summary judg-
ment to NYCA and to TaylorMade on the trustees’ second,
third and fourth causes of action. We REVERSE the district
TRUSTEES v. NYCA, INC. 8945
court’s grant of summary judgment to NYCA on the trustees’
first cause of action, and REMAND for further proceedings.
Each party shall bear its own costs on appeal.
AFFIRMED REVERSED and REMANDED