Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-03-02254/USCOURTS-ca8-03-02254-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

---

1

The Honorable Clyde H. Hamilton, United States Circuit Judge for the Fourth

Circuit, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 03-2254

___________

Trustees of the Graphic *

Communication International Union *

Local 1B Health and Welfare * 

Fund "A"; Trustees of the Graphic *

Communication International Union *

Local 1B Heath and Welfare *

Fund "B", * Appeal from the United States

* District Court for the

Appellees, * District of Minnesota.

*

v. *

*

Tension Envelope Corporation, *

*

Appellant. * 

___________

Submitted: May 14, 2004

Filed: July 7, 2004

___________

Before WOLLMAN, HAMILTON,1

 and BYE, Circuit Judges.

___________

BYE, Circuit Judge.

This case involves a dispute between the trustees of two multiemployer trust

funds and an employer who participates in the funds. The employer's contributions

Appellate Case: 03-2254 Page: 1 Date Filed: 07/07/2004 Entry ID: 1785017 
2

The Honorable Ann D. Montgomery, United States District Judge for the

District of Minnesota.

-2-

to the funds were governed in part by a Collective Bargaining Agreement (CBA)

between it and its unionized employees. The employer entered into a Side Letter with

the union to limit trust fund contributions for medical and dental benefits to a single

monthly premium for employees married to each other, since one spouse would be

covered as a dependent of the other. The trustees sued, contending the employer must

continue to pay a monthly premium for each spouse, as it had been doing since 1990.

The trustees moved for summary judgment, and the district court2

 granted the

motion. The district court determined 1) the trust fund agreements and the CBA

conflicted; 2) in the case of a conflict, the trust fund agreements controlled; and 3) the

trust fund agreements required the employer to pay contributions for all employees.

In the alternative, the district court noted the Side Letter, by its own terms, would be

withdrawn if "a prior agreement" obligated the employer to pay for both spouses. The

district court held the employer's agreement to participate in the trust funds, and past

practice of paying contributions for each spouse, constituted "a prior agreement" and

thus the Side Letter was ineffective. With this alternative ground we agree, and

therefore affirm without reaching the purported conflict between the trust fund

agreements and the CBA.

I

On February 14, 1990, Tension Envelope Corporation began participating in

two multiemployer trust funds established pursuant to § 302(c)(5) of the Labor

Management Relations Act of 1947 (LMRA), 18 U.S.C. § 186(c)(5), and governed

by the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.

§§ 1001-1461. Trust Fund A provides medical benefits, along with life and disability

insurance, while Trust Fund B provides dental benefits to its participants.

Appellate Case: 03-2254 Page: 2 Date Filed: 07/07/2004 Entry ID: 1785017 
3

The Side Letter affected five married couples who worked for Tension – Petar

and Spomenka Budisa, Armin and Fatma Dzihic, Muharem and Nusreta Huskic,

Ahmet and Fikreta Jaganjac, and Norman and Sonja Marsolek.

-3-

Tension's participation in the trust funds was memorialized in a Participation

Agreement, which contemplated a CBA would govern Tension's obligations to

contribute monthly premiums on behalf of its employees. Specifically, the

Participation Agreement indicated it "does not . . . modify or supersede any side

agreement entered into between an Employer and the Union, or alter any other

provision of the Labor Agreement [CBA]." The trust fund documents in turn

provided the contributions required of any employer were to be "governed by the . .

. applicable collective bargaining agreements." The CBA pertinent to this litigation

was effective between April 1, 2000, and March 31, 2004; Articles 26 (medical

benefits) and 27 (dental benefits) of the CBA governed the contributions to be made

to the trust funds.

As required by the pertinent CBA and its predecessors, Tension has contributed

monthly premiums to the trust funds on behalf of each of its eligible employees,

including those married to each other, since it began participating in the trust funds

in 1990. On April 9, 2002, however, Tension entered into a Side Letter with the

Union purporting to amend the terms of the CBA. The Side Letter provided "[w]ith

respect to Article 26, if there are eligible employees married to one another, the

Employer will pay only one monthly premium, and the spouse would be covered as

a dependent on the other employee and would not pay any monthly medical

contribution amount." The Side Letter contained a similar provision regarding dental

benefits under Article 27.3

 Both provisions contained the following condition: "If the

Union can provide documentation of a prior agreement where the Employer agreed

to pay for both spouses, the Employer will withdraw this subparagraph."

Appellate Case: 03-2254 Page: 3 Date Filed: 07/07/2004 Entry ID: 1785017 
-4-

Tension provided a copy of the Side Letter to the board of trustees who operate

the trust funds. The trustees discussed the Side Letter during a June 20, 2002,

meeting. In July 2002, Tension contributed just a single medical and dental monthly

premium to the trust funds for each of the five married couples affected by the Side

Letter. That same month, the trustees filed suit against Tension contending another

monthly medical and dental premium should be paid to the trust funds for each of the

five married couples. The parties brought cross-motions for summary judgment.

Tension filed a timely appeal after the district court granted the trustees' motion.

II

 We review the district court's grant of summary judgment de novo "and will

affirm if we determine there are no genuine issues of material fact and that judgment

as a matter of law is appropriate." Bhd. of Locomotive Eng'rs v. Kansas City S. Ry.

Co., 26 F.3d 787, 791 (8th Cir. 1994). In reviewing the grant of summary judgment,

we likewise review de novo the district court's interpretation of unambiguous contract

language. Winthrop Res. Corp. v. Eaton Hydraulics, Inc., 361 F.3d 465, 470 (8th Cir.

2004).

Although the trustees posit several reasons for affirming the district court, we

address only one – their contention the Side Letter contains a condition precedent that

nullifies its provision permitting one premium per married couple. The Side Letter

provided Tension would withdraw the one-premium provision if there was "a prior

agreement where the Employer agreed to pay for both spouses." The trustees argue

Tension's agreement to participate in the trust funds, and Tension's concomitant

obligation to provide premium payments for each of its participating employees,

satisfy this condition precedent and nullify the Side Letter.

The language of the Side Letter is unambiguous and provides that if, prior to

the execution of the Side Letter, Tension had agreed to contribute monthly premiums

Appellate Case: 03-2254 Page: 4 Date Filed: 07/07/2004 Entry ID: 1785017 
-5-

for both spouses, the one-premium provision would be withdrawn. Tension's

agreement to participate in the trust funds satisfies this condition. By signing the

Participation Agreement, Tension "agree[d] to be bound by the Agreement and

Declaration of Trust establishing the Fund, together with any amendments thereto and

the rules and regulations adopted thereunder." The trust agreements in turn required

Tension to make "contributions at the level required by the Trustees . . . on behalf of

each participant who is to receive benefits under this Fund." (Emphasis added). 

It is undisputed employess married to each other were participants entitled to

receive benefits under the trust funds, as evidenced by Tension's continuous payment

of monthly premiums on behalf of each spouse since it began participating in the trust

funds in 1990. Thus, prior to the execution of the Side Letter, Tension clearly had a

contractual obligation to pay for both spouses pursuant to its participation in the

multiemployer trust funds. Tension's agreement to participate in the trust funds also

triggered a legal obligation to pay for each participant. See 29 U.S.C. § 1145 ("Every

employer who is obligated to make contributions to a multiemployer plan under the

terms of the plan or under the terms of a collectively bargained agreement shall . . .

make such contributions in accordance with the terms and conditions of such plan or

such agreement."). We conclude this contractual (and corresponding legal) obligation

was such "a prior agreement where the Employer agreed to pay for both spouses" and

therefore satisfies the Side Letter's nullifying condition.

Tension argues this is an unreasonable reading of the Side Letter, because

Tension would effectively be precluded from ever negotiating the universe of benefiteligible employees for whom it must make a contribution to the trust funds. Tension

claims this "eternal status quo interpretation" is unreasonable because Tension's

"contribution obligation would be frozen from 1990 through eternity." Tension's

Brief at 26-27. See Bd. of Trs. of the Watsonville Frozen Food Welfare Trust Fund

v. Cal. Coop. Creamery, 877 F.2d 1415, 1426 (9th Cir. 1989) (suggesting a court

Appellate Case: 03-2254 Page: 5 Date Filed: 07/07/2004 Entry ID: 1785017 
-6-

cannot "ignore the possibility of any future negotiations between the company and

the union regarding employee benefits").

Tension's argument is flawed. Our interpretation of the Side Letter's condition

is not the problem – the problem is the condition itself. Our holding does not forever

bar Tension from negotiating with the Union about which employees will be covered

by the trust funds. Certainly, Tension was not required to add the nullifying

condition, but having chosen to include the condition, we have no choice but to

interpret it according to its own terms. Without expressing any opinion on whether

the trust agreements would otherwise allow Tension to limit contributions to a single

monthly premium per employee couple, we note Tension is certainly free to negotiate

another Side Letter with the Union that does not include a condition referring to "a

prior agreement where the Employer agreed to pay for both spouses."

III

We affirm the judgment entered in the district court in favor of the trustees.

______________________________

Appellate Case: 03-2254 Page: 6 Date Filed: 07/07/2004 Entry ID: 1785017