Bakery & Confection v. Ralph's Grocery Co

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BAKERY AND CONFECTIONERY
UNION AND INDUSTRY INTERNATIONAL
PENSION FUND; BOARD OF
TRUSTEES OF THE BAKERY AND
CONFECTIONERY UNION AND INDUSTRY
No. 96-1095
INTERNATIONAL PENSION FUND,
Plaintiffs-Appellants,
v.
RALPH'S GROCERY COMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Alexander Williams, Jr., District Judge.
(CA-94-2630-AW)
Argued: April 11, 1997
Decided: July 9, 1997
Before MURNAGHAN, Circuit Judge, and BUTZNER and
PHILLIPS, Senior Circuit Judges.
_________________________________________________________________
Reversed and remanded by published opinion. Senior Judge Butzner
wrote the opinion, in which Judge Murnaghan and Senior Judge Phil-
lips joined.
_________________________________________________________________
COUNSEL
ARGUED: Julia Penny Clark, BREDHOFF & KAISER, P.L.L.C.,
Washington, D.C., for Appellants. William B. Irvin, Sr.,
MCLAUGHLIN & IRVIN, Los Angeles, California, for Appellee.
ON BRIEF: Alice O'Brien, BREDHOFF & KAISER, P.L.L.C.,
Washington, D.C., for Appellants. Kenneth W. Irvin, MORRISON &
FOERSTER, Washington, D.C., for Appellee.
_________________________________________________________________
OPINION
BUTZNER, Senior Circuit Judge:
The Confectionery Union and Industry International Pension Fund
(Fund) and its trustees filed this suit pursuant to section 515 of the
Employee Retirement Income Security Act of 1974 (ERISA), 29
U.S.C. § 1145, to recover delinquent pension fund contributions from
Ralph's Grocery Company (Company). The central issue in this case
is whether the plan documents and the Company's collective bargain-
ing agreement with the local union require it to make pension contri-
butions to the Fund based on severance pay received by the
Company's employees. The district court concluded that the Com-
pany was not required to make contributions for severance pay and
entered summary judgment for the Company. We reverse and remand
with instructions to enter judgment in favor of the Fund.
When the facts are undisputed, summary judgment is appropriate
only if one party is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(c). We review the entry of summary judgment de novo,
applying the same standard as the district court. Stone v. Liberty
Mutual Ins. Co., 105 F.3d 188, 190-91 (4th Cir. 1997). When review-
ing cross-motions for summary judgment, we may, if appropriate,
direct entry of judgment in favor of the party whose motion was
denied by the district court. Monahan v. County of Chesterfield, 95
F.3d 1263, 1265 (4th Cir. 1996).
I
Section 515 of ERISA, 29 U.S.C. § 1145, states:
Every employer who is obligated to make contributions to
a multiemployer plan under the terms of the plan or under
2
the terms of a collectively bargained 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.
Section 515 "creates a federal right of action independent of the con-
tract on which the duty to contribute is based." Bituminous Coal
Operators' Ass'n, Inc. v. Connors, 867 F.2d 625, 633 (D.C. Cir.
1989).
In a collection action based on section 515, a multiemployer plan
can enforce, as written, the contribution requirements found in the
controlling documents. Central Pennsylvania Teamsters Pension
Fund v. McCormick Dray Line, Inc., 85 F.3d 1098, 1103 (3d Cir.
1996). In this respect, section 515 puts multiemployer plans in a
stronger position than they otherwise occupy under common law con-
tract principles. See, e.g., Central States, Southeast and Southwest
Areas Pension Fund v. Independent Fruit and Produce Co., 919 F.2d
1343, 1348 (8th Cir. 1990); Conners, 867 F.2d at 633-34. Because an
employer's obligation to a multiemployer plan usually arises through
a collective bargaining agreement negotiated and agreed to by the
employer and union, the multiemployer plan is, under common law
contract principles, a third party beneficiary of the collective bargain-
ing agreement. See Sinai Hospital of Baltimore, Inc. v. National Bene-
fit Fund for Hospital & Health Care Employees, 697 F.2d 562, 568
(4th Cir. 1982). Although a third party beneficiary can enforce the
terms of a contract that inure to its benefit, it is subject to defenses
that the promisor could assert against the original party to the con-
tract. Connors, 867 F.2d at 632. This often meant a multiemployer
plan would be subject to defenses the employer could assert against
the local union. Independent Fruit and Produce , 919 F.2d at 1348; but
see Lewis v. Benedict Coal Corp., 361 U.S. 459 (1960) (recognizing,
before the enactment of section 515, an exception to the common law
third party beneficiary rule in the context of multiemployer funds).
Before section 515 was enacted, collection actions by multiem-
ployer plans often were complicated by issues that had arisen between
the employer and the local union but were unrelated to the employer's
obligation to the plan. Central States, Southeast and Southwest Areas
Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148, 1152-53
3
(7th Cir. 1989); Independent Fruit and Produce, 919 F.2d at 1348.
Injecting these tangential issues into collection actions consumed plan
resources by increasing the cost and delay involved in litigation. See,
e.g., Independent Fruit and Produce, 919 F.2d at 1348. And, in cases
in which the employer's defense was successful, the plan was left
without contributions it had been promised and had expected. See,
e.g., id. Ultimately, these losses were shouldered by employee benefi-
ciaries through reduced benefits and other employers through
increased contributions. Id.; Gerber Truck Service, 870 F.2d 1151;
Benson v. Brower's Moving & Storage, Inc., 907 F.2d 310, 314 (2d
Cir. 1990). Because multiemployer plans typically involve many
employers and unions across the nation, in most cases it would be dif-
ficult and costly for such plans to monitor the problems or under-
standings that arise between the individual unions and employers.
McCormick Dray Line, 85 F.3d at 1103; Gerber Truck Service, 870
F.2d at 1151.
Section 515 strengthens the position of multiemployer plans by
holding employers and unions to the literal terms of their written
commitments. Because an employer's obligation to a multiemployer
fund is determined by the plain meaning of the language used in the
collective bargaining agreement, the actual intent of the contracting
parties (i.e., the employer and the local union) is immaterial when the
meaning of that language is clear. Independent Fruit and Produce,
919 F.2d at 1349, 1352-53; see also Connors, 867 F.2d at 635-36.
Consequently, an employer is not permitted to raise defenses that
attempt to show that the union and the employer agreed to terms dif-
ferent from those set forth in the agreement. See, e.g., Gerber Truck
Service, 870 F.2d 1148 (refusing to enforce an oral agreement
between employer and union). Nor is an employer permitted to raise
defenses that relate to claims the employer may have against the
union. See, e.g., Agathos v. Starlite Motel, 977 F.2d 1500, 1505 (3d
Cir. 1992) (fraud in the inducement); Connors, 867 F.2d at 632-36
(mistake of fact). By allowing multiemployer funds to enforce the lit-
eral terms of an employer's commitment, section 515 increases the
reliability of their income streams, reduces the cost and delay associ-
ated with collection actions, and reduces or eliminates the cost of
monitoring the formation of collective bargaining agreements. Never-
theless, multiemployer funds are not permitted to"enforce a nonexis-
tent contractual obligation." Teamsters Industrial Employees Welfare
4
Fund v. Rolls-Royce Motor Cars, Inc., 989 F.2d 132, 138 (3d Cir.
1993).
II
The Fund is a multiemployer defined benefit pension plan, which
was created in 1955 to provide retirement benefits for employees
working in the baking and candy industries. The Fund was formed
through an Agreement and Declaration of Trust (trust) and is adminis-
tered by a board of trustees, which is composed of an equal number
of employer and union representatives. Pension benefits are funded by
participating employers through periodic contributions. Currently,
1,100 employers with over 60,000 employees participate in the Fund,
and the Fund pays benefits to over 40,000 retired employees.
The Company is a member of the Food Employers Council, Inc.
(Council), which was formed by the grocery supermarket industry in
Southern California. The Council is a labor relations association that
negotiates and administers industry-wide collective bargaining agree-
ments with unions representing employees of the Council's members.
The Company has participated continuously in the Fund since
1957. Its commitment to the Fund has been set forth in the collective
bargaining agreements that it has negotiated through the Council. In
1992, the Company and the Bakery, Confectionery, and Tobacco
Workers International Union, Local No. 37 (Union) entered into a
three-year collective bargaining agreement, which consists of 35 sec-
tions and the standard clause. The Union represents the employees at
one of the Company's plants. The Company and the Union were par-
ties to similar collective bargaining agreements during past years.
The collective bargaining agreement includes a provision that enti-
tles the Company's employees to severance pay under specified cir-
cumstances. The severance pay provision, section XV, states:
[T]he Employer shall not be required to make Benefit Fund,
Pension or any other contributions of any nature on any Sev-
erance Pay paid pursuant to the provisions of this SEC-
TION.
5
Section XXVI of the collective bargaining agreement provides that
the Company shall make contributions to the Fund of an agreed
amount. This section of the bargaining agreement makes reference to
an agreement supplement that sets forth "the terms and conditions of
section XXVI in more detail." This supplement is the Standard Col-
lective Bargaining Clause, which the Union and the Company exe-
cuted as a part of their collective bargaining agreement. The Fund
requires every participating employer and union, as a condition on
participation in the Fund, to include the standard clause in their col-
lective bargaining agreement. The standard clause establishes each
employer's required rate of contribution. Subsequently, the parties
executed superseding standard clauses that adjusted the Company's
contribution rate for 1994 and 1995.
The standard clause contains the following provisions:
a. The Employer hereby agrees to be bound as a
party by all the terms and provisions of the Agree-
ment and Declaration of Trust dated September 11,
1955, as amended, establishing the Bakery and
Confectionery Union and Industry International
Pension Fund (hereinafter called the Fund) and
said Agreement is made part hereof by reference.
***
g. This clause encompasses the sole and total
agreement between the Employer and the Union
with respect to pensions or retirement.
After the Company and the Union executed the collective bargain-
ing agreement, including the standard clause, they forwarded a copy
to the Fund. The agreement was reviewed by one of the Fund's cleri-
cal employees, who completed a contract analysis form, which indi-
cates, among other things, that the employee checked the severance
pay provision and noted that the standard clause had been completed.
On the basis of this review, the Fund, by letter, approved the Compa-
ny's continued participation in the Fund.
6
In 1971, by formal resolution, the trustees declared that participat-
ing employers were required to make contributions based on sever-
ance pay. The Fund has communicated this policy to participating
employers on several occasions. In 1982 and twice in 1985, the Fund
sent notices of the policy to the Company's payroll department. In
addition, the remittance form that the Fund has provided to employers
from 1975 through 1993 states that contributions are required for sev-
erance pay. The Company's payroll department completed the form
each month and sent it to the Fund along with the monthly contribu-
tion.
In the fall of 1992, the Company began to reduce the workforce
covered by the collective bargaining agreement, and, in 1993, it began
disbursing severance pay to approximately 200 employees. This was
the first time the Company had awarded severance pay. It did not
make pension contributions based on those payments. When the Fund
discovered this, it informed the Company that contributions are
required for severance pay, and it demanded the delinquent contribu-
tions. When the Company refused to pay, the Fund filed this lawsuit.
Following discovery, the parties stipulated the facts and filed cross-
motions for summary judgment. In its motion, the Company took the
position that it is not required to make contributions for severance pay
because the main agreement expressly excludes such an obligation.
On the other side, the Fund argued that the extent of the Company's
obligation is controlled by section 515 of ERISA and the standard
clause, which it contends requires contributions based on severance
pay.
The district court granted the Company's motion for summary
judgment. See Bakery and Confectionery Union and Industry Interna-
tional Pension Fund v. Ralph's Grocery Co., Civil No. AW-94-2630
(D. Md. Dec. 12, 1995) (unpublished). The court decided that the
entire collective bargaining agreement, rather than only the standard
clause, determines the extent of the Company's obligation to the
Fund. The court pointed out that section XV expressly excludes sev-
erance pay contributions while the standard clause does not specifi-
cally refer to severance pay. The district court also ruled that the
Fund's 1971 severance pay resolution does not affect the Company's
7
obligation because the resolution is ineffective. In the court's view,
the resolution exceeded the trustees' authority to amend the trust.
III
According to section 515, the scope of the Company's obligation
to the Fund is controlled by the plan documents and the representa-
tions that appear in the collective bargaining agreement. Interpreting
those documents in accordance with the principles embodied in sec-
tion 515, we hold that the Company is required to make contributions
based on severance pay.
The first question we examine is whether the Company's obliga-
tion to the Fund is limited by section XV's severance pay provision.
According to the trust, each participating employer's collective bar-
gaining agreement with the union determines that employer's rate of
contribution to the Fund. However, in order to be approved for partic-
ipation in the Fund, the collective bargaining agreement must specify
the contribution rate that corresponds to the benefit package promised
to that employer's workers. Those contribution rates are set by the
Fund.
The collective bargaining agreement in this case includes both sec-
tion XV and the standard clause. Although section XV purports to
exclude contributions based on severance pay, the standard clause
renders section XV's exclusion ineffective against the Fund. The stan-
dard clause states that "[t]his clause encompasses the sole and total
agreement between the Employer and the Union with respect to pen-
sions or retirements." By agreeing to this language, the Company
unambiguously represented that it had not agreed with the Union on
any other terms relating to pensions. By virtue of section 515, the
Fund is permitted to rely on and enforce the literal meaning of the
Company's representation. In other words, the Fund was entitled to
assume that, as promised, the standard clause was the parties' com-
plete agreement on pensions. The Fund was not required to comb
through the other parts of the collective bargaining agreement search-
ing for additional terms related to pensions. See Central Pennsylvania
Teamsters Pension Fund v. W & L Sales, Inc., 778 F. Supp. 820, 830
(E.D. Pa. 1991). Instead, because the Fund was permitted to rely on
the standard clause's representation of completeness, additional pen-
8
sion terms set forth outside the standard clause do not alter the Com-
pany's obligation to the Fund.
The primacy of the standard clause also finds support in the trust
to which the Company agreed. The trust authorizes the trustees to
require employers, as a condition on participation in the Fund, to exe-
cute any written instruments the trustees prescribe. It is pursuant to
this authority that the trustees require employers and unions to enter
into the standard clause. According to the trust, the Fund's acceptance
of an employer is based on the terms of the prescribed instruments.
Therefore, the terms of the standard clause form the basis for the
Company's relationship with the Fund.
Furthermore, allowing the Fund to rely on the "sole and total agree-
ment" language of the standard clause is consistent with the congres-
sional policies embodied in section 515. As noted in the previous
section, multiemployer funds typically serve many employers and
unions nationwide. One purpose of section 515 is to reduce the cost
of administering these funds. Gerber Truck Service, 870 F.2d at 1154.
Other courts have recognized that such costs are minimized when a
fund implements uniform rules applicable to all employers. W & L
Sales, 778 F. Supp. at 830; Gainey v. Vemo, 627 F. Supp. 408, 411
(W.D. Wash. 1986).
The Fund uses the standard clause to achieve a uniform standard
of participation for all participating employers. By means of the stan-
dard clause, the Fund requires every employer to agree to make con-
tributions at the specified rate, to be bound by the trust's terms and
conditions, and not to enter into any additional agreements with the
union regarding pensions. By promising that the parties have not
agreed to additional terms regarding pensions, the employer relieves
the Fund of the need to search the rest of the agreement for additional
pension terms. This arrangement reduces the cost of administering the
Fund in two ways. First, the Fund need not retain counsel to inspect
every provision of every collective bargaining agreement it handles.
Second, the Fund does not bear the risk of losing contributions due
to overlooked or misinterpreted provisions that appear outside the
standard clause and purport to alter the uniform standard of participa-
tion.
9
IV
The Company argues that the severance pay exclusion is not
trumped by the standard clause. In its view, the integration language,
which purports to make the standard clause the parties' exclusive
agreement on pensions, should not be given effect. The Company
points out that inclusion of an integration clause in a writing does not,
by itself, establish that the writing is, in fact, the parties' entire agree-
ment. According to the Company, the evidence in this case establishes
that the contracting parties, the Union and itself, did not intend the
standard clause to be their exclusive agreement on pensions. The
strongest evidence the Company can offer in this regard is the sever-
ance pay provision itself. If the parties intended the standard clause
to be their exclusive agreement on pensions, the Company argues,
they would not have bothered to negotiate and agree to an additional
term involving pension contributions. Because the contracting parties
did not intend to make the standard clause their complete agreement,
the Company contends that the integration clause is ineffective.
This argument misses the point. It is generally true that, although
the inclusion of an integration clause "suggests that the agreement is
fully integrated, it does not by itself dictate that conclusion." Bowden
v. United States, 106 F.3d 433, 440 (D.C. Cir. 1997). And, it is also
generally true that "a writing cannot of itself prove its own complete-
ness, and wide latitude must be allowed for inquiry into circum-
stances bearing on the intention of the parties." Restatement (Second)
of Contracts § 210 cmt. b (1981). Traditional rules of contract con-
struction, however, apply to collective bargaining agreements only
when they do not conflict with federal labor law. See Rolls-Royce
Motor Cars, 989 F.2d at 135. In the specific context of a multiem-
ployer suit for delinquent contributions, the traditional rules regarding
integration clauses conflict with section 515. See Connors, 867 F.2d
at 635-36. According to section 515, the literal terms of the agreement
control the employer's obligation to the Fund. The actual intent of the
contracting parties is immaterial when it differs from the ordinary
meaning of the language used in the writing. Independent Fruit and
Produce, 919 F.2d at 1349, 1352-53. By reason of section 515, the
Company and the Union are bound by the statement that says that the
standard clause is the "sole and total agreement" on pensions or retire-
ment.
10
V
The Company also argues that section 515 requires us to enforce
the severance pay provision of section XV as written. The difficulty
with this argument is that it ignores the unavoidable conflict between
the severance pay provision and the standard clause's integration lan-
guage. If the severance pay provision is given effect and considered
to be part of the parties' agreement on pensions, the integration lan-
guage in the standard clause becomes meaningless. On the other hand,
if the standard clause is taken to be the parties' complete agreement
on pensions, then the severance pay provision is left out.
When two conflicting provisions of a collective bargaining agree-
ment cannot be harmonized, the court must decide which provision
should be given effect. See Arizona Laborers, Teamsters and Cement
Masons Local 395 Health and Welfare Trust Fund v. Conquer Cart-
age Co., 753 F.2d 1512, 1518 (9th Cir. 1985). In this case, section
515 makes the choice clear. The purpose of section 515 is to permit
multiemployer funds to rely on the representations made to it. Section
515 allows the Fund to impose uniform participation requirements
and to rely on the representation agreed to by the Company and the
Union in the standard clause.
VI
The question that arises next is whether the standard clause
requires the Company to make contributions based on severance pay.
We conclude that it does.
By agreeing to the 1993 standard clause, the Company promised to
contribute $2.083 to the Fund "[f]or each hour . . . for which an
employee, subject to the Collective Bargaining Agreement, receives
pay." By its plain meaning, this phrase requires the Company to make
a contribution for each hour of pay received by an employee. Its
application is not limited to a certain kind of pay, and there is no
doubt that severance pay is a type of pay. Cf. Nolde Brothers, Inc. v.
Bakery & Confectionery Workers Local 358, 430 U.S. 243, 248-49
n.4 (1977) (noting that severance pay is a form of deferred compensa-
tion). The Company awards severance pay on an hourly basis (with
a maximum limit of 900 hours). Therefore, the standard clause obli-
11
gates the Company to make a pension fund contribution for each hour
for which an employee receives severance pay. Cf. Bakery & Confec-
tionery Union v. United Baking Co., 495 F. Supp. 170 (W.D. Pa.
1980) (interpreting a similar provision--"for each day or portion
thereof on which an employee subject to the collective bargaining
agreement receives pay"--to require severance pay contributions);
Bakery & Confectionery Union and Industry International Pension
Fund v. Stroehmann Brothers Co., No. HM82-3259 (D. Md. Jul. 18,
1984) (unpublished) (interpreting a standard clause similar to the one
in this case--"for each hour . . . for which an employee, subject to the
Collective Bargaining Agreement, receives pay"--to require sever-
ance pay contributions).
This straightforward interpretation of the standard clause's contri-
bution requirement is supported by the Fund's consistent and long-
standing severance pay policy. Through the standard clause, the
Company agreed to be bound by the rules of the trust. The trust pro-
vides that the employers are bound by the trustees' actions taken pur-
suant to the trust. Adopting the severance pay resolution was such an
action. As a result, it obligates the employers, including the Company,
to make severance pay contributions.
VII
The Company resists our interpretation of the standard clause. The
standard clause provides:
[T]he Employer agrees to make payments to the Bakery and
Confectionery Union and Industry International Pension
Fund for each employee working in job classifications cov-
ered by the said Collective Bargaining Agreement as fol-
lows:
***
For each hour or portion thereof, for which an
employee, subject to the Collective Bargaining
Agreement, receives pay, the Employer shall make
a contribution . . . (emphasis in original).
12
The Company directs our attention to the qualifying phrase "subject
to the Collective Bargaining Agreement." In its view, that phrase
makes the Company's obligation subject to any additional terms or
conditions set forth outside the standard clause. In that way, the Com-
pany argues, section XV's severance pay provision becomes part of
the standard clause.
We reject that construction. In the first place, it runs contrary to the
rules of grammar. "Grammatical construction of contracts generally
requires that a qualifying phrase be construed as referring to its near-
est antecedent." Gibbs v. Air Canada, 810 F.2d 1529, 1536 (11th Cir.
1987). Application of this rule requires the qualifying phrase to mod-
ify the term "employee." Read in this way, the phrase simply makes
it clear that contributions are required only for those employees who
are in the pertinent "job classifications covered by" the collective bar-
gaining agreement. The phrase does not, as the Company suggests,
subordinate the contribution requirement to terms or conditions set
forth in other parts of the collective bargaining agreement.
This is not only the better grammatical construction of the clause,
it is also the more plausible construction. The Company's interpreta-
tion renders the standard clause unnecessary. Under its interpretation,
employers and local unions could amend or supplant the standard
clause's contribution requirement simply by striking their own bar-
gain and including it elsewhere in their collective bargaining agree-
ment. If that were the case, requiring employers and unions to enter
into the standard clause would be a pointless endeavor.
VIII
The Company's next argument challenges the validity of the trust-
ees' 1971 resolution, which established the Fund's severance pay pol-
icy. The Company contends that the trustees exceeded their authority
under the trust by adopting the resolution. The trust specifies:
No amendment [to the trust agreement] may be adopted
which will . . . be in conflict with the Collective Bargaining
Agreements with the Local Unions as such agreements
affect contributions to the Fund . . . .
13
The Company claims that the severance pay policy is, in effect, an
amendment to the trust that conflicts with the severance pay provision
of its collective bargaining agreement. For that reason, the Company
argues that the severance pay resolution is invalid. The district court
agreed.
The primary difficulty with this argument is the premise that the
Fund's severance pay policy is in conflict with the Company's collec-
tive bargaining agreement. Such a conflict arises only if the collective
bargaining agreement excludes severance pay contributions. But, the
meaning of the collective bargaining agreement is the very issue in
this case. As previously explained, the controlling language in the col-
lective bargaining agreement is found in the standard clause, and, as
we have seen, that language is consistent with the Fund's severance
pay policy.
Furthermore, there is no evidence that shows the Fund's severance
pay policy conflicted with any collective bargaining agreements at the
time it was adopted. The policy was adopted in 1971, but the Com-
pany added its severance pay provision to its collective bargaining
agreement in 1980.
Another difficulty with the Company's position is that the trustees'
action did not amend the trust. By adopting the resolution, the trustees
simply exercised their undisputed authority to establish the minimum
amounts and rates of contributions required for participation in the
Fund. Requiring severance pay contributions amounted to no more
than an adjustment of the minimum requirements for participation.
IX
The Company also argues that the structure of the trust prevents the
Fund from compelling it to make contributions based on severance
pay. As previously noted, the trust specifies that the collective bar-
gaining agreement determines an employer's rate of contribution. The
trust regulations specify that, if an employer's collective bargaining
agreement does not provide for the minimum contribution required to
support that employer's benefit plan, as determined by the trustees,
the Fund can disapprove the employer for participation. Relying on
these provisions, the Company contends that disapproval is the only
14
course of action available to the Fund if a collective bargaining agree-
ment fails to require sufficient contributions. Applying its reasoning
to its own case, the Company argues that the Fund cannot retroac-
tively impose a contribution requirement that was not specified in the
collective bargaining agreement; rather, the Fund's only recourse was
to disapprove the collective bargaining agreement.
The difficulty with this argument is apparent. The issue before us
is not whether the Fund can impose contribution requirements in addi-
tion to those specified in the collective bargaining agreement, but
rather, whether the collective bargaining agreement, properly inter-
preted, requires severance pay contributions. If that agreement
requires the contributions, as we have decided it does, there is no
doubt the Fund can recover the unpaid portion of those contributions.
X
As an alternative defense, the Company asserts that the Fund is
equitably estopped from pursuing its claim. The Company claims that
the Fund misled it by approving each of its collective bargaining
agreements since 1980 even though those agreements included the
severance pay provision. Because the Fund failed to inform the Com-
pany of the inconsistency between the severance pay provision and
the standard clause, the Company contends that the Fund should be
precluded from collecting the severance pay contributions.
In this circuit, equitable estoppel is not available to modify the
written terms of an ERISA plan in the context of a participant's suit
for benefits. Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 58-60
(4th Cir. 1992). We need not decide now whether equitable estoppel,
when premised on the misconduct of a multiemployer fund, is avail-
able as a defense to an action for delinquent pension contributions.
The reason is that the facts in this case would not support such a
defense even if it were available. See McCormick Dray Line, 85 F.3d
at 1106.
Equitable estoppel "arises when one party has made a misleading
representation to another party and the other has reasonably relied to
his detriment on that representation." Black v. TIC Investment Corp.,
900 F.2d 112, 115 (7th Cir. 1990). Reliance on the misrepresentation
15
is reasonable only if the party asserting estoppel does not or should
not know the truth. Heckler v. Community Health Services of Craw-
ford County, Inc., 467 U.S. 51, 59-60 n.10 (1984) ("If, at the time
when he acted, such party had knowledge of the truth, or had the
means by which with reasonable diligence he could acquire the
knowledge so that it would be negligence on his part to remain igno-
rant by not using those means, he cannot claim to have been misled
by relying upon the representation or concealment."); see also
Cannon v. Group Health Service of Oklahoma, Inc., 77 F.3d 1270,
1276-77 (10th Cir. 1996) (listing common law elements of equitable
estoppel).
Although the same person signed all the pertinent documents on
behalf of the Company, it asserts that he was unaware of the Fund's
severance pay policy when he signed the standard clause. Neverthe-
less, the Company should have known about the Fund's policy and
about the inconsistency between section XV and the standard clause.
The Fund sent at least three notifications of its policy to the Com-
pany, and the remittance forms, which the Company completed
monthly from 1975 through 1993, conspicuously stated that severance
pay contributions were required. It is evident that the Fund repeatedly
disclosed its policy to the Company. In addition, because the Com-
pany reviewed and agreed to the standard clause on a regular basis,
it was in as good a position as the Fund to detect the inconsistency
between the standard clause and the severance pay provision.
Heckler, 467 U.S. at 59-60 n.10. In fact, the Company is arguably in
a better position to detect the inconsistency because it deals with one,
not 1,100, collective bargaining agreements. The Company's equita-
ble estoppel defense is unsupported by the facts.
XI
The Fund is entitled to prevail because the collective bargaining
agreement, construed in light of section 515, requires the Company
to make pension fund contributions based on severance pay. The ordi-
nary meaning of the standard clause's integration language, upon
which the Fund is permitted to rely, precludes enforcement of section
XV's severance pay provision. As a result, the extent of the Compa-
ny's obligation is controlled exclusively by the standard clause which,
together with the trust's 1971 resolution, requires severance pay con-
16
tributions. Finally, the Company's equitable estoppel claim is not sup-
ported by the facts. Accordingly, we reverse and remand with
instructions to enter judgment in favor of the Fund and move on to
the computation of contributions.
REVERSED AND REMANDED
17