Case Title: AUDIT SERVICES INC v ANDERSON

Citation: 

Docket Number: 83-534

State: montana

Court: Montana Supreme Court

Date: 1984-07-23T00:00:00Z

Document:
NO. 8 3 - 5 3 4 I N THE SUPREME COURT OF THE STATE OF MONTANA 1 9 8 4 AUDIT SERVICES, I N C . , a M o n t a n a corp. , P l a i n t i f f and A p p e l l a n t , WAYNE ANDERSOiJ d/b/a WAYNE ' S ELECTRIC, D e f e n d a n t and R e s p o n d e n t . APPEAL FROM: D i s t r i c t C o u r t of t h e E i g h t h J u d i c i a l D i s t r i c t , I n and for t h e C o u n t y of C a s c a d e , T h e H o n o r a b l e John P . 1 . M c C a r v e l , Judge presiding. COUNSEL OF RECORD: F o r A p p e l l a n t : C u r e , B o r e r & D a v i s ; Maxon R. D a v i s , G r e a t F a l l s , Montana F o r R e s p o n d e n t : H o w a r d F . S t r a u s e , G r e a t F a l l s , M o n t a n a - - S u b m i t t e d on B r i e f s : M a r c h 2 3 , 1 9 8 4 D e c i d e d : J u l y 2 3 , 1 9 8 4 i t f l. f 5UQ4 F i l e d : " 1 . Justice L . C. Gulbrandson delivered the Opinion of the Court. This case comes on appeal froin a September 22, 1983, order of the District Court, Eighth Judicial District, Cascade County, granting the respondent, Wayne Anderson, summary judgment against the appellant, Audit Services, Inc. We reverse and remand. On September 1, 1977, Wayne Anderson, a Great Falls electrical contractor doing business as Wayne's Electric, signed two agreements with Local 122 of the International Brotherhood of Electrical Workers (IBEW). The first agreement, a "letter of assent," bound Anderson to the terms of current and successive collective bargaining agreements negotiated between Local 122 and the Montana Chapter National Electric Contractors Association, Great Falls Division (NECA). NECA was designated as Anderson's collective bargaining representative. The second document signed by Anderson was a participating agreement for the IBEW-NECA Health and Accident Trust. The trust agreement was also signed by the IBEW and NECA. According to the trust agreement, Anderson was to make health and welfare contributions to the trust at a rate set forth in the collective bargaining agreements. Six trustees were to he appointed to administer the funds paid into the trust. The trustees, who are the assignors of Audit Services, Inc. in this action, did not sign and were not a party to either the collective bargaining agreements or the trust agreement. In July, 1981, a representative of the trust examined Anderson's payroll records and determined that Anderson had not made full and proper contributions to the trust. When Anderson r e f u s e d t o pay t h e amounts a l l e g e d l y due, t h e t r u s t ' s c l a i m was a s s i g n e d t o Audit S e r v i c e s , I n c . f o r t h e purpose of c o l l e c t i o n . Audit S e r v i c e s , Inc. f i l e d t h i s a c t i o n on June 22, 1982. A follow-up a u d i t was conducted and a d d i t i o n a l sums were found t o be owed t h e t r u s t . An amended complaint combining t h e two a u d i t s was f i l e d by Audit S e r v i c e s , Inc. Meanwhile, on December 11, 1981, IBEW Local 122 f i l e d a l a w s u i t a g a i n s t Anderson i n F e d e r a l D i s t r i c t Court. The l a w s u i t was based upon S e c t i o n 301 of t h e Labor-Management R e l a t i o n s A c t (LMRA), 29 U.S.C. Sec. 185, and a l l e g e d v i o l a t i o n s of t h e same c o l l e c t i v e b a r g a i n i n g agreements between Local 122 and NECA t o which Anderson was bound by v i r u t e of h i s e x e c u t i o n of t h e " l e t t e r of a s s e n t . " Count I of t h e u n i o n ' s complaint a l l e g e d a brea.ch of h i r i n g h a l l p r o v i s i o n s of t h e c o l l e c t i v e b a r g a i n i n g agreements. I n e f f e c t , t h e union claimed t h a t Anderson had f a i l e d t o h i r e p e r s o n s r e f e r r e d from t h e union h a l l . Count I s t a t e d t h a t t h e c o l l e c t i v e b a r g a i n i n g agreements r e q u i r e d Anderson t o c o n t r i b u t e t o t h e t r u s t a s w e l l a s make payments of o t h e r f r i n g e b e n e f i t s . Thus, a s set f o r t h i n Count I , p e r s o n s who had been denied employment by Anderson because of h i s a l l e g e d h i r i n g h a l l v i o l a t i o n s had l o s t c o m p e n s a t i o n , i n c l u d i n g t r u s t c o n t r i b u t i o n s , t o which t h e y would have been e n t i t l e d p u r s u a n t t o t h e c o l l e c t i v e b a r g a i n i n g agreements. Count I1 o f t h e u n i o n ' s c o m p l a i n t a l l e g e d t h a t Anderson v i o l a t e d t h e c o l l e c t i v e b a r g a i n i n g a g r e e m e n t s because he f a i l e d t o r e q u i r e p e r s o n s who he d i d h i r e t o j o i n t h e union. The r e l i e f which t h e union sought was t h a t Anderson pay t h e wages of p e r s o n s who were n o t , h u t should have been, h i r e d through t h e union r e f e r r a l mechanism. Paragraph 2 of t h e p r a y e r a l s o asked t h a t Anderson be r e q u i r e d t o pay t h e n e c e s s a r y f r i n g e b e n e f i t s i n c l u d i n g h e a l t h and w e l f a r e c o n t r i b u t i o n s t o t h e t r u s t . On January 24, 1983, t h e union and Anderson s t i p u l a t e d t o a d i s m i s s a l w i t h p r e j u d i c e of t h e F e d e r a l D i s t r i c t Court c o m p l a i n t . An o r d e r t o t h a t e f f e c t was e n t e r e d t h e following day. I n t h e meantime, Audit S e r v i c e s , I n c . , a s a s s i g n e e of t h e t r u s t ' s c l a i m a g a i n s t Anderson, proceeded w i t h its c o l l e c t i o n a c t i o n i n s t a t e c o u r t . A f t e r t h e p a r t i e s had made cross-motions f o r summary judgment, t h e D i s t r i c t Court q r a n t e d Anderson summary judgment on September 22, 1983. The D i s t r i c t Court accepted Anderson's argument t h a t t h e d i s m i s s a l with p r e j u d i c e of t h e u n i o n ' s F e d e r a l D i s t r i c t Court l a w s u i t stood a s res j u d i c a t a , b a r r i n g t h e t r u s t c l a i m s t h a t were being l i t i g a t e d i n S t a t e c o u r t . From t h e o r d e r of t h e D i s t r i c t Court, Audit S e r v i c e s , I n c . a p p e a l s r a i s i n g one i s s u e : d i d t h e d i s m i s s a l w i t h p r e j u d i c e of t h e u n i o n ' s l a w s u i t a g a i n s t Anderson f o r v i o l a t i o n of t h e i r c o l l e c t i v e b a r g a i n i n g agreements s e r v e a s r e s j u d i c a t a f o r t h e c l a i m s of t h e t r u s t e e s of t h e t r u s t fund t o c o l l e c t c o n t r i b u t i o n s based upon hours worked by Anderson's employees? W e n o t e f i r s t t h a t s t a t e c o u r t s h a v e c o n c u r r e n t j u r i s d i c t i o n with f e d e r a l c o u r t s i n t r u s t fund c o l l e c t i o n c a s e s and f e d e r a l s u b s t a n t i v e law p r o v i d e s t h e b a s i s f o r our d e c i s i o n s . A u d i t S e r v i c e s , I n c . v. Harvey B r o s . C o n s t r u c t i o n Co. (Mont. 1 9 8 3 ) , 665 P.2d 792, 40 St.Rep. & 1 0 1 9 ; Lowe e t a1. v. O'Conner ( 1 9 7 3 ) , 1 6 3 Xont. 1 0 0 , 515 P.2d 677. Where c o m p a t i b l e w i t h f e d e r a l l a b o r l a w , s t a t e law may be r e s o r t e d t o i n o r d e r t o f i n d a r u l e t h a t w i l l b e s t e f f e c t u a t e f e d e r a l p o l i c y . T e x t i l e Workers Union v. L i n c o l n M i l l s ( 1 9 5 7 ) , 353 U.S. 448, 77 S.Ct. 9 1 2 , 1 L.Ed.2d 972. The d o c t r i n e o f res j u d i c a t a p r o v i d e s t h a t t h e p a r t i e s t o an a c t i o n i n which a judgment on t h e m e r i t s h a s b e e n r e n d e r e d , o r t h e i r p r i v i e s , are b a r r e d f r o m r e l i t i g a t i n g t h e same c a u s e of a c t i o n i n a s e c o n d p r o c e e d i n g . E x p e r t E l e c t r i c I n c . v . L e v i n e ( 2 d C i r . 1 9 7 7 ) , 554 F.2d 1227. T h i s C o u r t i n S m i t h v . County o f M u s s e l s h e l l ( 1 9 7 0 ) , 1 5 5 pllont. 3 7 6 , 472 P.2d 8 7 8 , s t a t e d t h a t f o u r c r i t e r i a m u s t be met b e f o r e a p l e a o f res j u d i c a t a c a n b e s u s t a i n e d : (1) t h e p a r t i e s o r t h e i r p r i v i e s m u s t b e t h e same; ( 2 ) t h e s u b j e c t m a t t e r o f t h e a c t i o n m u s t b e t h e same; ( 3 ) t h e i s s u e s m u s t be t h e same and r e l a t e t o t h e same s u b j e c t matter; a n d ( 4 ) t h e c a p a c i t i e s of t h e p e r s o n s m u s t b e t h e same i n r e f e r e n c e t o t h e s u b j e c t matter a n d t o t h e i s s u e s between them. I n g r a n t i n g A n d e r s o n ' s m o t i o n f o r summary judgment o n t h e b a s i s o f res j u d i c a t a , t h e D i s t r i c t C o u r t s t a t e d t h a t A u d i t S e r v i c e s I n c . ' s s i t u a t i o n was a n a l a g o u s t o t h a t of t h e u n i o n i n S t . L o u i s T y p o g r a p h i c a l Union No. S v. The H e r a l d Co. (E.D. Mo. 1 9 6 7 ) , 277 F.Supp. 276. I n t h e S t . L o u i s Typographical case, c e r t a i n u n i o n members s u e d t h e e m p l o y e r i n d i v i d u a l l y f o r b e n e f i t s a l l e g e d l y d u e u n d e r a c o l l e c t i v e b a r g a i n i n g a g r e e m e n t . A f t e r t h e i n d i v i d u a l u n i o n members l o s t t h a t s u i t , t h e u n i o n s u e d the e m p l o y e r f o r t h e same b e n e f i t s . I n d e c i d i n g t h a t t h e u n i o n ' s c a s e was b a r r e d b y res j u d i c a t a , t h e - S t . L o u i s T y p o g r a p h i c a l c o u r t s a i d : ". . . t h e u n i o n h a s no b e n e f i c i a l i n t e r e s t i n a n y p o s s i b l e r e c o v e r y . Although its r i g h t t o s u e is g r a n t e d by t h e f e d e r a l l a w , it p r o s e c u t e s t h e p r e s e n t s u i t s o l e l y a s t h e a g e n t o r r e p r e s e n t a t i v e of t h o s e who would r e c e i v e t h e proceeds of any recovey." S t . Louis Typograhical, s u p r a , p. 282. T h e S t . Louis Typographical c o u r t went on t o s a y t h a t r e s j u d i c a t a a p p l i e d because t h e p l a i n t i f f ' s i n t h e two a c t i o n s were i n " p r i v i t y . " The S t . Louis Typographical c o u r t s a i d " p r i v i t y " d e s i g n a t e s a person s o i d e n t i f i e d i n i n t e r e s t w i t h a p a r t y t o former l i t i g a t i o n t h a t ". . . he r e p r e s e n t s p r e c i s e l y t h e same l e g a l r i g h t i n r e s p e c t t o t h e s u b j e c t m a t t e r i n v o l v e d . " S t . L o u i s T y p o g r a p h i c a l , s u p r a , 277 F.Supp a t 284. Thus, t h e D i s t r i c t Court i n t h e p r e s e n t a c t i o n concluded t h a t r e s j u d i c a t a b a r r e d Audit S e r v i c e s I n c . ' s a c t i o n because Audit S e r v i c e s I n c . was b r i n g i n g t h e s u i t s o l e l y a s t h e r e p r e s e n t a t i v e of t h e union members. However, i n t h e i n s t a n t c a s e , Audit S e r v i c e s , Inc. was n o t r e p r e s e n t i n g p r e c i s e l y t h e same l e g a l r i g h t i n r e s p e c t t o t h e s u b j e c t m a t t e r involved a s i n t h e u n i o n ' s F e d e r a l D i s t r i c t Court s u i t a g a i n s t Anderson. The u n i o n ' s F e d e r a l D i s t r i c t Court a c t i o n concerned Anderson's a l l e g e d breach of t h e " h i r i n g h a l l " and "union s e c u r i t y " c l a u s e s of h i s c o l l e c t i v e b a r g a i n i n g agreements. While mention was made of h e a l t h and w e l f a r e t r u s t c o n t r i b u t i o n s , it was w i t h i n t h e c o n t e x t of t h e compensation t h a t was l o s t t o t h o s e union members n o t h i r e d due t o Anderson's breach of t h e " h i r i n g h a l l " c l a u s e of t h e c o l l e c t i v e b a r g a i n i n g agreements. By c o n t r a s t , t h e c l a i m s of t h e t r u s t e e s a s s i g n e d t o Audit S e r v i c e s , Inc. were f o r c o n t r i b u t i o n s based upon a c t u a l hours worked by Anderson's employees. The f a c t t h a t both Audit S e r v i c e s , Inc. and t h e union sought enforcement of c e r t a i n p r o v i s i o n s of t h e same c o l l e c t i v e b a r g a i n i n g a g r e e m e n t d o e s n o t s a t i s f y t h e " i d e n t i t y o f i s s u e s " r e q u i r e m e n t n e c e s s a r y f o r t h e d o c t r i n e o f res j u d i c a t a . A s s t a t e d by t h e c o u r t i n American B r o a d c a s t i n g Companies, I n c . v. Muhammad A l i (S.D.N.Y. 1 9 7 7 ) , 434 F. Supp. 1108: "The l i m i t a t i o n of t h e d o c t r i n e t o t h e 'same c a u s e o f a c t i o n ' is h i g h l y s i g n i f i c a n t . Where two d i s t i n c t c a u s e s of a c t i o n e x i s t , t h e y may be sued on s e p a r a t e l y n o t w i t h s t a n d i n g t h e f a c t t h a t t h e y a r i s e from t h e same g e n e r a l c o u r s e of e v e n t s , Kernel K u t t e r , I n c . v. Fawcett P u b l i c a t i o n s , I n c . , 284 F.2d 675, 676 ( 7 t h C i r . 1 9 6 0 ) ; Bankers T r u s t Co. v. P a c i f i c Employers I n s u r a n c e Go., 282 F.2d 106, 1 1 1 ( 9 t h C i r . 1 9 6 0 ) , c e r t . d e n i e d , 368 U.S. 822, 82 S.Ct, 41, 7 L.Ed.2d 27 ( 1 9 6 1 ) , t h a t an element of damages is common t o b o t h s u i t s , H e r e n d e e n v. Champion I n t e r n a t i o n a l Corp., 525 F. 2d 130, 134 (2d C i r . 1 9 7 5 ) . , o r both might have been a s s e r t e d a t t h e same t i m e , H e r e n d e e n , s u p r a , a t 1 3 5 ; S e c o r v. S t u r g i s , 1 6 N . Y . 5 4 8 , 554 ( 1 8 5 8 ) ( ' I t makes no d i f f e r e n c e t h a t t h e c a u s e s of a c t i o n might be u n i t e d i n a s i n g l e s u i t . ' I d . ) " Moreover, w e r e j e c t t h e D i s t r i c t C o u r t ' s c o n c l u s i o n t h a t r e s j u d i c a t a a p p l i e s t o t h e p r e s e n t c a s e because t h e t r u s t e e s and t h e union a r e " p r i v i e s . " A s t h e t r u s t e e s 1 f u n c t i o n s h a v e d e v e l o p e d u n d e r f e d e r a l l a b o r l a w , a s i g n i f i c a n t d i s t a n c e h a s b e e n r e c o g n i z e d b e t w e e n t h e t r u s t e e s of a j o i n t l y a d m i n i s t e r e d b e n e f i t t r u s t fund and a union which is a co-sponsor of t h e t r u s t . By S e c t i o n 403 of t h e Employee R e t i r e m e n t Income S e c u r i t y A c t (ERISA), 29 U.S.C. S e c t i o n 1103, t h e t r u s t e e s , r a t h e r t h a n t h e union, t h e p a r t i c i p a t i n g employers o r any t h i r d p a r t i e s , a r e g i v e n t h e e x c l u s i v e a u t h o r i t y t o manage and c o n t r o l t h e a s s e t s of t h e p l a n . The c o u r t i n Waggoner v. D a l l a i r e ( 9 t h C i r . 1 9 8 1 ) , 649 F.2d 1362, s a i d : "The d i s t r i c t c o u r t ' s c o n c l u s i o n h i n g e s upon t h e l e g a l f i n d i n g t h a t Local 12 and F o r t s e n a c t e d a s t h e T r u s t e e s ' a g e n t s . T h i s may have been a proper conclusion under C a l i f o r n i a a g e n c y law: i t i s i n c o r r e c t under f e d e r a l law. A s a m a t t e r of f e d e r a l l a w , a u n i o n and i t s r e p r e s e n t a t i v e s a r e n o t a g e n t s of a t r u s t fund c r e a t e d by a c o l l e c t i v e b a r g a i n i n g 2greement. T r u s t a u t h o r i t i t e s s e t up p u r s u a n t t o s e c t i o n 302 of t h e LMRA have long been h e l d t o c o n s t i t u t e a d i s t i n c t and independent e n t i t y s e p a r a t e from t h e u n i o n t h a t n e g o t i a t e s t h e c o l l e c t i v e b a r g a i n i n g a g r e e m e n t e s t a b l i s h i n g a t r u s t . See Lewis v. Benedict Coal Corp., 361 U.S. 459, 465-71, 80 S . C t . 4 8 9 , 493-496, 4 L.Ed.2d 442 ( 1 9 6 0 ) . These t r u s t a u t h o r i t i e s by l a w h a v e n o a u t h o r i t y t o d i r e c t union a c t i v i t i e s and u n i o n s a r e i n v o l v e d w i t h t h e t r u s t a u t h o r i t i t e s o n l y t o t h e e x t e n t o f s e l e c t i n g h a l f of t h e t r u s t e e s . S e c t i o n 3 0 2 ( c ) ( 5 ) of t h e LMRA, 29 U.S.C. S e c t i o n 1 8 6 ( c ) ( 5 ) . Moreover, a l l funds i n t r u s t must be used ' f o r t h e s o l e and e x c l u s i v e b e n e f i t of employees.' Id. 'Thus, t h e fund is no way an a s s e t o r p r o p e r t y of t h e u n i o n . ' Lewis v. B e n e d i c t C o a l Corp., 361 U.S. a t 465, 80 S.Ct. a t 493." The t r u s t e e s have l e g a l d u t i e s independent of both t h e union and t h e employer i n a d m i n i s t e r i n g t h e t r u s t fund. N.L.R.B. v. Amax Coal Co. ( 1 9 8 1 ) , 453 U.S. 322, 333-334, 101 S.Ct. 2789, 69 L.Ed.2d 672. A union cannot r e l i e v e t h e t r u s t e e s of those d u t i e s e i t h e r by a c t i o n or non-action. T h i s is t h e f e d e r a l l a b o r p o l i c y w i t h i n which t h i s Court is t o a p p l y t h e d o c t r i n e of r e s j u d i c a t a . W e r e v e r s e t h e d e c i s i o n of t h e D i s t r i c t Court and remand t h e cause f o r f u r t h e r p r o c e e d i n g s i n accordance w i t h t h i s opinion. J u s t i c e .'' / We concur: @ d d , C h i e f Justice