## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

N o. 09

- 2964 C ENTRAL S TATE S, S OUT HE AS TAN D S OUTHWEST A REAS P EN S I ON F UND , et al., P la intif fs-A pp ellees , v.
A UF FE NB ER G F O RD , I NC ., D ef endant-Appellant.
Appeal from the United States District Court fo r the N o rthernDi stricto f Illino is, Eas tern Di v isi on. No . 08 C1103

—Robert W . G ettleman, Judge
.
A RG UE D O CT OB ER 28, 2010

— D ECI DE D M AR CH 11, 2011

Befo re M A NI ON, R OV NER, a nd S YKES, C ircu it Judges. M A NI ON, C ircu it Judge. Cen tr alS ta te s, S o uthe as t an d Sout hw est A reas P en s io n Fu nd and i ts tru stee, H ow ard M cDougal l ( col l ecti vel y “ the F und ”) , fi l ed sui t a gai nst Auffenbe r gF o r d, I nc . unde r the Em pl o yee Re ti r ement I ncom e Se curi ty A ct ( “ERIS A ”) , 29 U
. S. C. § 1001 , in ord er to col l ec t u npaid co ntributi ons to the F und

. The di str i ct2 N o. 09

- 2964

Un de r 2 9 U. S

. C

. § 1 3 90 ( a) , “ [ a ] n e mpl o y e r wh o wi t h dr a ws 1 from a p lan in co m p lete or p artia l w ithd raw a l i s n ot liab le to (co n tin u ed ...) co ur t g r an te d s um m ar y j udg m en t i n the F und’ s f av o r, a nd A u ffen b er g no w ap p ea ls. B ec au se th e ter m s of t h e c ollective bargaininga g r ee m en t ( “CBA”) r equi r ed Au ffenberg to c o nt i nue c o nt r ibut i ngt o the F und, no twi th st an di ng a n y o r a l a g r e e me n tt o th e c o n t r a r y , w e a f fi r m.

I. Auffenbe r gi s anI l l i no i s ca r dealers hi p e m pl o y i ng w or ker s re prese nted by Local U ni on 5 0, a unio n affi l i ate d wi ththe I nt erna ti o na l Br o th erho o d of Tea m st er s. The Fu nd i s a m ultiem p lo y e r pen sion fun d i n w hich A uff enbe r gpa r ti ci pat ed f r o m 1 98 0 to 1 997, r equi r i ng A uffenber g t o p ay contr ibuti ons on be hal fo fi ts un i o ni ze d e m pl o y ee s. Auf f enbe r gwi th dr ew fr o m the Fund in 1997, r esul ti ng i n a “ w i thdraw al l i abi l i ty” o f alm os t $ 50 ,00 0, w h ich it p aid in fu ll. I n 200 1, the Pres i dent ofLocal50 , J ohn Gree n, pro posed t h a tA u f f e nb e r gr e - e nt e r th e F u n d

. S e v e r a l l o n g t i me em plo yee s f el l j ust shor t of the ti m e needed to qu alify for a h igh er be n efit lev el, so A u ffen b er g w a s int er es te d in e x t e n d i n g i t s t e r m w i t h t h e F u n d t o a c c o m m o d a t e t h e m. Because Au f f enber g w as worr i ed abo ut the possibi l i ty ofag ai n i ncurr i ng a “w i thdrawal l iab ility, ” i t a ske d to be el i gibl e for the fi ve- yea r “fre e l oo k” exem pti on that w oul d al l ow itto part i ci pa te i n the Fund and withdraw w i thi n fi ve yea rs witho ut l i abi l i ty. I n J une 200 1, after 1N o. 09

- 2964 3

(

. . . c on t i nu e d) 1 the plan [ f or w ithd raw al li ability] ifthe em ployer .

. . had an obl i gat i on t o c ont ribut e t o the pl an f or no m or e tha n . . . the n u m b er o f y ea rs re q u ir ed for v es tin g u n d er th e p la n .” T he relev an t lang u ag e states: 2 Al l o fthe t e r m s a nd pr ov i s i on s o fthi s c on t r a c t s ha l l be c o n t i n u e d i n fu l l f o r c e a n d e f f e c t a n d e x t e n de d f ro m t he ter m in a t i onda t e h e r e oft o s uc h t i m e a s the pa r t i e s e i ther en t er i nt o a ne w A gr ee m en t, or Agre em entc ont ai ni ng t he des i re d m odi fi c at i ons , or t er m i nat e fur t he r ne got i at i on i n t he m a nn e r a bo ve m e nt i on e d. nego ti ati ons between A uffenber g a nd Local50 , a CB A was f o r m al i ze d. Appar en tl y , dur i ngthe ne g o ti at i o ns , Auffen berg an d J ohn Gre en oral ly a g r e ed that A uffenb erg’s o bl i g at i o n t o c o nt r ibut e to the F und wo ul d e nd whe n the CB A expi re d in fi ve yea rs . But thi s co nd i ti on was not m em or i aliz ed i n the CB A ; i nstea d, the CBA co ntai ned an“ ev er g r ee n c l au se ” st at i ngtha t al l the t er m s an d p ro vis ion s o f th e C B A w ou ld rem ain in e ffe c t u n til a ne w CB A w as ne gotiated or un tilnegot ia t ions w ere ter m i nated. In a d dit i on t o the CBA , A uffenber g was 2 a p ar ty t o a P a r t i c i pa t i o n Ag r e e men ta nd a T r us tAg r e em ent that req uir ed A uffenber g t o pay co ntributi ons to t h e F u n d i n a c c o r d a n c e wi t h th e t e r ms o fth e C B A. In e ar ly 20 06 , L oc al 50 so ught neg oti ati ons f ora re pl ac ementCBA be ca us e th e 20 01 CBA w as soo n t o e xpir e. By thi s t i m e, J ohn Gree n ofLocal50 had passed a w ay. A l th o ugh hi s r e pl a c e men t, S c o t tAl e xa nd e r, wa s a tfi rs t una war e o fthe a l l eg ed 20 01 o ral agre ement, wheni n-4 N o. 09

- 2964 form ed of it, A lexan d er oral ly agreed that A uffenb erg coul d cea se contributi ng to the Fund as o fA pri l 30 , 20 06, th e d ay th e 2001 C B A ex p ired. I n M ay, A u ff enberg’s l aw yerm ai l ed a l ett erto the Fu n d , s tati ng tha t i ts obl i g at i o n to contr ibut e to the F und h ad en ded wi ththe expir ation of the CBA

. The Fund re pli ed that the o bl i gati on t o contr ibute had not e n ded

. N ego ti ati ons f ora new CB A co n tin u ed duri ng the sum m erand f al l o f20 06. A se c on d let te r, n o w sign ed by bo th A u ffen b er g’s p re siden t an d Lo ca l 5 0’ s re pr es en ta ti ve , was mai l ed to the Fund in N ove m ber200 6; the l ett erst ate d that Loca l 50 an d A uffenb erg had an u nd erstan d ing tha t A uffenb erg’s parti ci pati on i n the Fund e n d ed o n A pri l 30 , 20 06, bu t t h at “a w ritten agreem en t form ali zing th is und erst an di ngha d no t be en fi na l i ze d. ” A thi r d l et te r t o the sam e e f f ect w as sent to the F und by A uffe nberg ’ s l aw yer i n Decem ber20 06. A new C BA was eve ntual l y neg oti ated , a n d on Febr uary 10, 2007, the Fund re cei ved a copy o fthi s a gr eem en t. The F und ac cepte d the ne w CBA a s en di ng Au f f e nb e r g ’ s d u t y t o co n t r ib u t e u n d e r th e o l d 2 0 0 1 C B A, but i t s ti l l cl ai m ed that A uffenber g was r equi re d to pay co nt r ibution s f o r the ni ne - m o nth pe r i o d b et wee n the expir ati on o fthe 2001 CB A and the e n tr y o fthe new CB A , an am ount tot al i ng $46, 500, not i ncl ud i n g in ter est, f ee s, a nd c o st s. W he n A uffenbe r gr efus ed to pa y , the Fund fi l ed sui t. The di st r i ctc o ur t g r an te d s um m ar y j udg m en t i n the F und’ s f av or, fi ndi ngtha t Auffenbe r g ’ s o r ala g r ee m en t re ached w i th Gree n duri ng the nego ti ati ons i n 200 1 wasN o. 09

- 2964 5 b ar re d by th e p ar ol ev id e n c e ru le a n d u n en for c ea b le in vi ew o fERIS A ’ s pro vi si ons. A uffenber g a pp eal s.

II. W e rev iew de novo a d istri ct cou rt’s grant of sum m ary ju d g m e n t
. Wi ns l ey v . Cook Cnty. , 56 3 F
. 3d 598, 60 2 ( 7th Cir

. 2009 )

. I n i ts or der gr anti ng sum m ar y j ud gm en t to the Fund, the dist ri ct cour t rul ed that the 2001 or al agre em en t w as barred by th e p a r o l evid en ce ru le. A uffenb erg do e s no t c ha l l e ng e t hi s r ul i ng o n a pp e a l

. I nste a d, A u ffen b er g a rg u es th at th e d ist ric t c ou rtinc or re c tly f ocuse d on the orig inal o ra l ag re em ent m ade bet w een Auffe nb e r ga n d L o c a l 5 0 i n 2 0 0 1

. I ta l s o c l a i ms th a tthe cour t neg l ecte d to consi de r the e f f ect ofthe 2006 di scussi o ns b et wee n Auf f enbe r ga nd Lo ca l 5 0’s b ar g ai ni ng rep resen tative, Scott A lexan d er. I n particu lar, A uffenb erg c o n t e n d s th a td u r i n gth e n e g o t i a t i o n s i n 2 0 0 6 , i tc a me to an or al agr eem ent w i th Local 50 that i t coul d ce ase contr ibuti ons as o f A pri l 30 , 20 06. S i nce the Fund w as p rop erly inform ed of th is or al agreem en t by letter, Auffenbe r gc l ai m s th atthe 2 00 6 o r ala g r ee m en t i s en f o r ce ab l e an d abs o l ve d i t fro m the duty o fmaki ngc o ntr ibuti ons to the F und

. A uffenber g a sse rt s that s i nce the di str i ct c ourter re d by no t co nsi dering the e f f ects o f the 2 006 agr eem ent, thi s co urt shoul d re m an d the ca se to the di str i ct c ourtf ora deter m i nati on o fthi s i ssue. A s a pre l i m i narym att er, the Fund a rg u es that Auffenbe r gf ai le d t o r ai se thi s ar g um en t be l o w and thus has w ai ved the opportunity t o bri ng i t n ow on ap p e a l. T he pa rties presen ted suffi cient eviden ce before6 N o. 09

- 2964 th e d i s t r i c t c o u r t a b o u t t h e e v e n t s i n 2 0 0 6 , i n c l u d i ng t he ex istence o fan o ra l ag re em ent a nd the w ri tte n noti ces to th e F und. Ther ef o r e Auffenbe r gha s no t wai ve d i ts a r g um ent o n appeal

. The questi on then i s whether an o ra l ag r ee m en t be twe enAuf f enbe r ga nd Loc al5 0 to e nd A uffenber g’ s co ntra ctualo bl i gati ons to contr ibute t o th e F und i s en for ce ab l e as l o nga s wri tt enno ti ce i s g i ve n. I t i s no t. Under ERI S A, the t er m s ofe m pl o y ee b en efi t pl an s m ust be “e stabl i shed an d m ai ntai ned pu rs uant to a wri tt eni ns tr um en t.” 2 9 U. S

. C. § 1 10 2( a) ( 1)

. Al so , the Labor M anage m ent Rel ati on s A ct ( “LM RA ”) r equi re s that “ th e d eta i l ed basi s o n w hi ch such paym ents ar e t o be made i s spe ci fi ed i n a wri tt enag r ee m en t wi ththe empl o y er . ” 29 U. S

. C. § 1 86 ( c) ( 5) ( B)

. I n thi s ca se , the w ri tte n “ev er gr een c l ause” ofthe 2001 CB A r equi re d Auffenbe r gt o c o nt i nue maki ngc o nt r ibut i o ns to the Fund aft erthe CB A expi re d a n d u nti l such t i m e a s th e p ar tie s e ith er en t e re d int o a n ew ag re em en t o r te rm ina te d ne g o ti at i o ns . No wr i tt en ag r ee m en t m o di fy i ng th e t er m s o fthe CB A was f or m al i zed and subm i tte d to th e Fun d before Februa ry 10, 2 0 0 7 . Ins tead , A uffenb erg conte nd s that i t had an or al ag re em en t with Local 50 du ri ng i ts nego ti ati ons in 2 006 f ol l owing the e xpir ati on o fthe 2001 CB A , and that thi s o ral a greem ent was s u f fi c i e n tt o mo d i fy i t s o b l i g a t i o n s u n d e r th e 2 0 0 1 C B A. The LM RA an d E R I S A “pr ev en t[ ] a c o ur t f r o m g i vi ng f o r ce t o o r alunde r st an di ng s be twe enuni o n a nd em p loy er thatco ntra dictthe w ri ti ngs. ” C ent. Sta tes, Se. & Sw
. Areas Pension Fund v . G er be r Truck Se rv. , Inc. , 87 0 F
. 2dN o. 09

- 2964 7 1 1 4 8 , 1 1 5 4 ( 7 t h Ci r . 1 9 8 9) (en ba nc ) ( c i t i ng2 9 U. S

. C. § 18 6(c)( 5) ( B) a nd 29 U
. S. C. § 1 145)

. A uffenber g a tte m pts to dist i nguish this r ule by ar gui ng tha t a n or al ag re em ent m odi fyi ng i ts obl i gat i ons u n der the CBA i s e nfo rce ab l e as l o nga s wri tten no ti ce o fthe o r ala g r ee m en t i s g i ven , a s w as done her e bynot i fyi ng the Fund by l ett er . But not onl y doe s A u ff enber g’ s co ntenti on co nfl i ctwi tho ur r ul i ngi n G er be r Truck, i t co nfl i cts w i th E R ISA ’s re q u i r em en t t h at “[e ]ve ry em p loy ee be n efit pl a n s ha l l b e e s t a b l i s he d a nd m ai nt ai ne d pu rs uant to a w rit te n ins tr u m en t.” 29 U .S.C . § 11 02 (a)( 1) ( e m p h as is ad d ed ). A uffenberg ci tes C entra l Sta tes, So uth east & So uth w est A re as Pensi on Fund v. Behnke, Inc. , 883 F.2d 454 ( 6 t h Cir. 1989 ) , i n supp or t o fthe propos itio n t h at CB A s ca n be o r al l y modi fi ed as l o nga s wri tt enno ti ce is g i ve n. But the Be h nke c as e s ta n d s fo r th e o p p os ite p ro p os itio n : i n Behn ke, the cour t f ound that a n o ral CB A was unenfo rce abl e be cause “the LM RA and ERIS A r equi re em plo yer c on tr ibuti ons to tr ust fund s o n behal fo fem plo yee s t o b e p ur s uantt o de t a i l e d wri t t e n ag r ee m en ts s pec i fy i ngthe em plo yer ’ s duty t o contr ibute. ” Id. at 45 9 (e m p h as is i n o r i g i n a l )

. A u f f e nb e r gf o c u s e s o n th e b i n d i n g“ i n t e r i m” CBA i n Behn ke, claim in g t h at it w as b in d in g b ec au se it was c o m m uni ca ted i n wr i tingt o the pe ns i o n fund, b ut thi s o ver l oo ks the f act that the i nter i m CB A was a w rit te n, an d n ot ora l, ag re em en t. Se ei d. at45 6- 57. I n s ho r t, we fi nd n o s up po r ti n e i t he r s t a t ut o r y o r c ase l aw f orthe propos i tio n that, as l ong as w ri tte n noti ce i s g i ven, an o ra l a gr eem ent i s ca pabl e o fm odi fyi ng a8 N o. 09

- 2964 wri tt ena g r ee m en t r equi r ing empl o y ee b en efi t co nt r ibuti o ns . Any o r ala g r ee m en t r ea ch ed i n 2 00 6 co nt r ad ict i ng Auffenbe r g ’ s wri tten o bl i g at i o ns t o c o nt r ibut e to the Fund is unenf or ceabl e. W e A FFIRM .

3- 11- 11