Welfare Fund, New England Health Care Employees v. Bidwell Care Center, LLC

10-1859-cv
Welfare Fund v. Bidwell Care Ctr., LLC
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY
PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New
York, on the 6th day of April, two thousand eleven.
PRESENT: PIERRE N. LEVAL,
REENA RAGGI,
PETER W. HALL,
Circuit Judges.
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WELFARE FUND, NEW ENGLAND HEALTH CARE EMPLOYEES,
PENSION FUND, NEW ENGLAND HEALTHCARE EMPLOYEES,
Plaintiffs - Counter-Defendants - Appellees,
v. No. 10-1859-cv
BIDWELL CARE CENTER, LLC, iCARE MANAGEMENT, LLC,
CHELSEA PLACE CARE CENTER, LLC, TRINITY HILL CARE
CENTER, LLC, WINTONBURY CARE CENTER, LLC,
FARMINGTON CARE CENTER, LLC, MERIDEN CARE CENTER,
LLC, a.k.a. SILVER SPRINGS CARE CENTER, WESTSIDE CARE
CENTER, LLC, KETTLE BROOK CARE CENTER, LLC,
Defendants - Counter-Claimants - Appellants.*
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APPEARING FOR APPELLANTS: JONATHAN M. STARBLE, Starble & Harris,
LLC, Avon, Connecticut.
APPEARING FOR APPELLEES: JOHN M. CREANE (Michael E. Passero, on the
*
The Clerk of the Court is directed to amend the caption to read as shown above.
brief), Law Firm of John M. Creane, Milford,
Connecticut.
Appeal from the United States District Court for the District of Connecticut (Joan
Glazer Margolis, Magistrate Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the magistrate judge entered on January 19, 2010, is
AFFIRMED.
Defendants appeal from a judgment entered after a bench trial in favor of plaintiffs
New England Health Care Employees Welfare Fund (“Welfare Fund”) and New England
Health Care Employees Pension Fund (“Pension Fund”) awarding damages for delinquent
Employee Retirement Income Security Act (“ERISA”) contributions and denying
defendants’ related counter-claim for alleged overpayments. See 29 U.S.C. § 1145.
Defendants also appeal the magistrate judge’s failure to apply judicial estoppel against
plaintiffs based on positions taken in previous litigations.1 We assume the parties’ familiarity
with the facts and record of prior proceedings, which we reference only as necessary to
explain our decision to affirm.
1
Plaintiffs do not appeal that portion of the judgment granting defendants a refund for
separate Family Medical Leave Act overpayments. Nor do defendants appeal the judgment
in favor of plaintiffs on defendants’ defamation counterclaim. As a result, we do not
consider those claims.
2
1. ERISA
The Collective Bargaining Agreements (“CBAs”) require defendants to contribute to
the Pension and Welfare Funds a certain percentage “of the gross payroll for [e]mployees in
the bargaining unit who regularly work an average of twenty (20) or more hours per week
. . . . Said contributions shall be calculated in accordance with the Fund’s contribution
policies.” Chelsea Place/Trinity Hill/Wintonbury (“i-3”) CBA at 40; i-3 Side Letter at 2;
Farmington/Meriden/Westside/Bidwell (“i-4”) CBA at 31-34; Kettle Brook CBA at 37.
Defendants submit that the magistrate judge erred in failing to recognize the plain meaning
of “work . . . hours” as hours in which the employee was present at the worksite, instead
deeming the term ambiguous and construing it, on the total record, to reach all hours for
which an employee was paid, including vacation leave and sick time. We review de novo
the magistrate judge’s legal conclusions, including whether a contract term is ambiguous, but
we defer to her factual findings, such as the interpretation of an ambiguous provision, unless
clearly erroneous. See District Lodge 26, Int’l Ass’n of Machinists & Aerospace Workers
v. United Techs. Corp., 610 F.3d 44, 54 (2d Cir. 2010); Arch Ins. Co. v. Precision Stone,
Inc., 584 F.3d 33, 38-39 (2d Cir. 2009).
As an initial matter, defendants fault the magistrate judge for relying on extrinsic
evidence of defendants’ and other employers’ past practices as the basis for her identification
of ambiguity. See Aeronautical Indus. Dist. Lodge 91 v. United Techs. Corp., 230 F.3d 569,
576 (2d Cir. 2000) (holding that courts may “look to extrinsic factors” only “when provisions
are ambiguous”). We do not agree with defendants’ reading of the magistrate judge’s
3
opinion, which also pointed to various contract provisions in identifying ambiguity. See
Gibbs v. CIGNA Corp., 440 F.3d 571, 578-79 (2d Cir. 2006) (recognizing that contract
provisions must be construed in “context of the entire integrated agreement” as objectively
viewed by a “reasonably intelligent person”). In any event, we may “affirm the district
court’s judgment on any ground appearing in the record.” ACEquip Ltd. v. Am. Eng’g
Corp., 315 F.3d 151, 155 (2d Cir. 2003).
The CBAs do not explain how employers should determine who “regularly work[s]
an average of twenty” hours or more per week.2 Instead, they explicitly instruct that the
calculations “shall be . . . in accordance with the Fund’s contribution policies.” i-3 CBA at
40; i-3 Side Letter at 2; i-4 CBA at 32, 34; Kettle Brook CBA at 37. These policies provide
that “[i]f the CBA excludes employees working less than a specified number of hours per
week,” employers must contribute for employees who meet the “minimum number of hours,”
2
After reviewing the parties’ requested supplemental briefs, we are not persuaded by
defendants’ assertion that side letters signed as part of a settlement of prior litigation
involving some of the parties in the instant matter clarify the minimum-hour calculation. The
settlement agreement and side letters provide that for the 2005 i-3 CBA, “the Employers shall
not be responsible for” contributing “for employees who work less than an average of 20
hours per week.” Settlement Agreement at 2 (emphasis added); Side Letter Agreement at 1.
Although this language was incorporated into the 2005 CBA, it does not expressly modify
the operative minimum-hour provision, which appeared in an earlier side letter dated July 11,
2005, using language identical to the other CBAs at issue: employers shall contribute for
employees “who regularly work an average of twenty (20) or more hours per week.” i-3 Side
Letter at 2 (emphasis added). Despite removing the word “regularly” from the minimum-
hour requirement, the letters and settlement agreement do not explain whether employers
should calculate contributions based on actual or paid hours. Indeed, defendants admit that
the work versus paid hour dispute was never at issue during the settlement and that they
continued to contribute based on paid hours for several years after the settlement.
4
or average that number in the reporting period, or meet that number in the majority of weeks
in a payroll period. Welfare Fund Contribution Policy at 4 (emphasis added); Pension Fund
Contribution Policy at 3 (emphasis added). As an example of how to identify who meets the
minimum hours requirement, the contribution policies explain that for a four-week reporting
period “all employees that had at least eighty (80) paid hours for that period or twenty (20)
or more hours in three (3) of the four (4) weeks must be included.” Welfare Fund
Contribution Policy at 4 (emphasis added); Pension Fund Contribution Policy at 3 (emphasis
added). Thus, the plain language of the contribution policies, specifically referenced in the
CBAs, includes all paid hours in calculating the twenty-hour minimum. Even assuming that
defendants’ interpretation is also reasonable, the work-hour provision would be ambiguous
because it is “susceptible to more than one reasonable interpretation.” District Lodge 26,
Int’l Ass’n of Machinists & Aerospace Workers v. United Techs. Corp., 610 F.3d at 54(internal quotation marks omitted).3
Relying on La Barbera v. J.D. Collyer Equipment Co., 337 F.3d 132 (2d Cir. 2003),
and New York State Teamsters Conference Pension & Retirement Fund v. United Parcel
3
Brown v. Health Care & Retirement Corp. of America, 25 F.3d 90 (2d Cir. 1994),
on which defendants rely, does not require a different result. In that case, some of the
defendant-employers in the current matter asserted that the twenty-hour requirement was
based on employees “regularly scheduled to work twenty or more hours per week.” Id. at
92 (emphasis in original). In rejecting that argument, we stated that the CBA required
employers to contribute “for those employees who actually work twenty hours a week.” Id.
at 93. Although we used the term “actually work,” we did so only to differentiate work from
scheduled work, without ever considering whether the twenty-hour minimum should be
calculated based on physical work hours or paid work hours. Id. Accordingly, our use of the
phrase “actually work” in that case is not dispositive of the issue presented here.
5
Service, Inc., 382 F.3d 272 (2d Cir. 2004), defendants urge us to ignore the contribution
policies’ explicit reference to “paid hours” because the Welfare and Pension Funds’ creation
documents do not provide authority to bind defendants with rules superseding the CBAs.
Those cases, however, are easily distinguishable. In La Barbera, we held that trustees could
not “substitute an automatic and draconian levy” in place of rules “set out in the collective
bargaining agreements” because their powers are “derived from, and limited by” ERISA, the
CBAs, and the trust agreements, none of which provided authority to abandon CBA
standards. 337 F.3d at 136-38 (concluding that trustees’ power to enforce work-hour
eligibility requirements did not permit rule abandoning link between eligibility and hours).
Similarly, we noted in New York Teamsters Conference Pension & Retirement Fund that
trust agreements conferring authority on trustees to “adopt rules and regulations” did not
provide power to “supersede the written terms of CBAs.” 382 F.3d at 279-81. Unlike in
those two cases, where trust documents contained a general rule-making provision, the fund
creation documents here state that employers shall contribute according to the CBAs, and the
CBAs, in turn, explicitly instruct that payments must be calculated in accordance with the
contribution policies. Moreover, contrary to defendants’ assertions, the contribution policies’
explanation of how to determine who regularly works an average of twenty hours per week
does not necessarily contradict the CBAs. Rather, the policies provide eligibility instructions
where the CBAs provide no clear guidance. Indeed, as plaintiffs point out, defendants are
willing to accept the policies’ averaging method and definition of gross payroll.
6
Accordingly, we identify no reason to reject the contribution policies’ instruction to include
all paid hours.4
Defendants also argue that if the parties intended to use “gross payroll” or “paid
hours” to calculate the hours requirement, they could have specified those terms, especially
when “gross payroll” is used in the twenty-hour provisions. We agree that the CBAs’ use
of “gross payroll,” which includes paid hours, supports defendants’ interpretation by
demonstrating that “when the parties intended to draw a distinction” between worked or paid
hours, “they did so explicitly.” See Brown v. Health Care & Ret. Corp. of Am., 25 F.3d at
92-93; see also Werbungs Und Commerz Union Austalt v. Collectors’ Guild, Ltd., 930 F.2d
1021, 1026 (2d Cir. 1991) (concluding that assignment of interest in “editions” was
ambiguous when incorporated contract referred to “editions and illustrations” because parties
knew how to include expressly “illustrations”). Plaintiffs’ interpretation, however, draws
support from the CBAs’ text for the same reason. The CBAs instruct that vacation pay shall
be computed based on hours or time “actually worked,” but that certain absences are
considered “time worked” for determining vacation. i-3 CBA at 27-28; i-4 CBA at 22-23;
Kettle Brook CBA at 24-25. Thus, the parties also knew how to distinguish expressly
4
Nor are we persuaded by defendants’ contention that the policies are irrelevant
because they were amended on November 20, 2008, the day defendants sent notices to
employees warning of the calculation change. Whether the prior contribution policies
differed from the amended version is a question of fact reviewed for clear error. See New
Windsor Volunteer Ambulance Corps, Inc. v. Meyers, 442 F.3d 101, 111 (2d Cir. 2006)
(noting that “existence and terms” of a contract are questions of fact). We identify no such
clear error in the magistrate’s judge conclusion that the operative language was unchanged
when defendants stipulated to the relevance of the contribution policies for purposes of
admission and provided no evidence of a differing version.
7
between hours “actually worked” and paid hours, and sometimes counted unworked absences
as time worked. Considering the conflicting usage of “work,” “actually worked,” and “gross
payroll,” and the contribution policies’ reference to paid hours, we agree with the magistrate
judge that the twenty-hour minimum provision is ambiguous.
Because defendants do not here contest the magistrate judge’s factual determination
interpreting the ambiguous provision as including paid hours, they have forfeited any such
arguments. See, e.g., Nationwide Mut. Ins. Co. v. Mortensen, 606 F.3d 22, 28-29 (2d Cir.
2010). In any event, we identify no clear error in that conclusion where the evidence showed
that defendants included paid hours in determining contribution eligibility for ten years and
all other employers followed the same practice.
2. Judicial Estoppel
Defendants assert that the magistrate judge erred in not applying judicial estoppel
against plaintiffs for successfully arguing in Brown v. Health Care & Retirement Corp. of
America that the twenty-hour minimum was based on actual work hours instead of regularly
scheduled hours.5 See 25 F.3d at 92. Reviewing the question de novo, we identify no error.
See Uzdavines v. Weeks Marine, Inc., 418 F.3d 138, 143 (2d Cir. 2005).6
5
Because, as already discussed, we agree with defendants that past practice does not
create an ambiguity, we need not address their argument that plaintiffs should be judicially
estopped from arguing otherwise.
6
Because we identify no error on de novo review, we need not conclusively decide
the review standard for a denial of judicial estoppel, an open question in this court, see, e.g.,
DeRosa v. Nat’l Envelope Corp., 595 F.3d 99, 103-05 (2d Cir. 2010) (vacating district
court’s application of judicial estoppel without clarifying standard of review); Uzdavines v.
Weeks Marine Inc., 418 F.3d at 143 (using de novo standard without discussion), but one
that some of our sister circuits have resolved in favor of abuse-of-discretion review, see, e.g.,
8
To invoke judicial estoppel, defendants must show that (1) plaintiffs adopted a factual
position “clearly inconsistent with [their] earlier position”; (2) the prior position was
“adopted in some way by the court in the earlier proceeding”; and (3) plaintiffs would
“derive an unfair advantage” against defendants in asserting the inconsistent statements.
DeRosa v. Nat’l Envelope Corp., 595 F.3d 99, 103 (2d Cir. 2010) (internal quotation marks
omitted); see also New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (noting that party may
not maintain “contrary position” to position taken in prior proceeding if change prejudices
party who “acquiesced in the [former] position”). We limit judicial estoppel to where “the
risk of inconsistent results with its impact on judicial integrity is certain.” DeRosa v. Nat’l
Envelope Corp., 595 F.3d at 103 (internal quotation marks omitted).
Even assuming that plaintiffs’ prior positions on the ambiguity of the minimum-hour
provision were factual (as opposed to legal), which is not clear, judicial estoppel does not
apply because there is no clear inconsistency between the positions. In the prior litigation,
plaintiffs, like the district court, used the term “actual work” to argue that the twenty-hour
requirement was not calculated based on scheduled hours. Brown v. Health Care & Ret.
Corp. of Am., 25 F.3d at 92. Plaintiffs never asserted that the minimum-hour provision does
not include all paid hours or only includes hours physically worked. See DeRosa v. Nat’l
Envelope Corp., 595 F.3d at 104 (vacating application of judicial estoppel when “context of
the statements” showed they were “reconcilable”). Accordingly, we affirm the magistrate
judge’s denial of judicial estoppel.
Capella Univ., Inc. v. Exec. Risk Specialty Ins. Co., 617 F.3d 1040, 1051 (8th Cir. 2010);
Global NAPs, Inc. v. Verizon New Eng. Inc., 603 F.3d 71, 89 (1st Cir. 2010).
9
We have considered defendants’ remaining arguments on appeal and conclude that
they are without merit. For the foregoing reasons, the judgment of the magistrate judge is
AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
10