United States Court of Appeals

For the Eighth Circuit

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No. 13-2521

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Twin City Pipe Trades Service Association, Inc., a Minnesota non-profit corporation

lllllllllllllllllllll Plaintiff - Appellant

v.

Frank O'Laughlin Plumbing & Heating Company, a Minnesota corporation, doing

business as O'Laughlin Plumbing & Heating

lllllllllllllllllllll Defendant - Appellee

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 Appeal from United States District Court 

for the District of Minnesota - Minneapolis

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 Submitted: May 15, 2014

 Filed: July 17, 2014 

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Before WOLLMAN, BYE, and BENTON, Circuit Judges.

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BYE, Circuit Judge.

This is an action brought pursuant to 29 U.S.C. § 11451

 to collect fringe benefits

allegedly owed to union employee benefit funds by a plumbing company. The district

court determined Frank O'Laughlin Plumbing & Heating Company (O'Laughlin)

1

Section 515 of the Employee Retirement Income Security Act (ERISA).
unequivocally terminated its participation in a collective bargaining agreement (CBA)

with Plumbers and Pipe Fitters Local 6 (the Union), and thus was not required to

contribute fringe benefits for work performed by O'Laughlin's employees. We reverse

and remand for further proceedings.

I

O'Laughlin has been a signatory contractor to successive CBAs with the Union

since at least 2000. At the start of the 2011 calendar year, O'Laughlin was a signatory

to the CBA then in effect. The terms of the pertinent CBA stated it was in full force

and effect between December 1, 2009, and April 30, 2011, and required O'Laughlin

to contribute to employee benefit funds for all pipe work performed by its employees. 

The CBA further provided it would "remain in effect from year to year thereafter"

unless either party "notif[ied] the other in writing ninety (90) days prior to the

expiration date of the intent to cancel or amend this Agreement, or to renegotiate a

new Agreement."

On January 27, 2011, O'Laughlin sent a letter to the Union which stated the

plumbing company would be "terminating its existing work agreement[] with Local

# 6 Plumbers & Fitters Effective January 31 2011." By its plain terms, then, the letter 

purported to terminate O'Laughlin's participation in the CBA on a date different than

the CBA's expiration date of April 30, 2011, and purported to give only four days'

notice rather than the ninety-day notice required by the CBA. For the three months

following January 31, 2011, however, O'Laughlin nonetheless complied with the

terms of the CBA by making fringe benefit contributions on behalf of its employees.

In the spring of 2011, the Union began negotiations with the other signatory

contractors for a new CBA commencing May 1, 2011. Corey O'Laughlin, one of the

owners of O'Laughlin, attended several negotiation meetings with members of the

Union's management between February 15, 2011, and April 26, 2011. O'Laughlin's

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principal owner, Kim O'Laughlin, also met with Union management several times

after May 1 – when the new CBA was in place – in attempts to negotiate specific CBA

terms to address O'Laughlin's difficulties competing in the market (O'Laughlin

operates in Winona County, a smaller market than the Minneapolis/St. Paul area

where most of the signatory contractors operate, and O'Laughlin was having difficulty

competing with non-union plumbers in Winona County). O'Laughlin acknowledged

he met with union representatives to discuss O'Laughlin's difficulties competing

against non-union plumbers and to see what the Union "could do to help them out."

After May 1 – when the new CBA was in place – and throughout the rest of the

2011 calendar year, O'Laughlin continued to make fringe benefit contributions on

behalf of its employees. In December 2011, the terms of the new CBA increased the

local pension rate by six cents per hour. For the month of December, O'Laughlin's

fringe benefits contributions included the rate increase set forth in the new CBA.

On December 27, 2011, O'Laughlin sent the Union a second letter. This letter

stated O'Laughlin "will be terminating all existing work agreement with Local #6

Plumbers and Pipe fitters effective January 1, 2011. We will not be employing any

union members, paying any dues at that time." Shortly thereafter, four O'Laughlin

employees sent letters to the Union resigning their membership in the Union. 

Beginning January 1, 2012, O'Laughlin stopped submitting fringe benefits

contributions on behalf of its employees, but continued to employ individuals

performing work of the kind subject to the CBA.

Twin City Pipe Trade Services Association (Twin City) is the non-profit

corporation designated to receive the fringe benefit payments made by the signatory

contractors to the CBA. After O'Laughlin stopped making contributions on behalf of

its employees, Twin City brought this action to collect fringe benefits allegedly owed

by O'Laughlin. Twin City contended O'Laughlin never effectively terminated its

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participation in the 2009-2011 CBA, and therefore remained obligated to contribute

fringe benefits on behalf of its employees.

Twin City moved for summary judgment in the district court. In response, 

O'Laughlin filed affidavits and other evidence to explain the two letters it sent on

January 27 and December 27, 2011, its participation in the negotiations for a new

CBA, and the fringe benefit contributions it made on behalf of its employees

throughout 2011.

As to the first letter sent on January 27, Kim O'Laughlin explained the letter's

stated termination date of January 31 was intended to reflect compliance with the

ninety-day notice period in the 2009-2011 CBA, rather than a reference to the actual

termination date of the CBA. As to the second letter sent on December 27, Kim

O'Laughlin explained it merely reiterated that the CBA was no longer in effect. Kim

O'Laughlin did not explain the second letter's reference to an effective termination

date of January 1, 2011, which was inconsistent with the January 31 date referenced

in the first letter, and inconsistent with O'Laughlin's post hoc explanation that the

January 31 date was intended to reflect the beginning of the ninety-day notice period. 

 O'Laughlin now contends the second letter's reference to January 1, 2011, was a

typographical error, and the letter should have said January 1, 2012. A January 1,

2012, termination date is, however, also inconsistent with the first letter and

inconsistent with the CBA's expiration date of April 30, 2011.

With respect to its participation in negotiations for a new CBA during the

spring of 2011, Corey O'Laughlin explained he attended the meetings to see if the

parties could reach a special deal that would have brought O'Laughlin back into a

CBA with the Union, but the negotiations were unsuccessful.

Finally, with respect to the fringe benefit contributions O'Laughlin continued

to make on behalf of its employees throughout the 2011 calendar year (which included

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complying with rate increases set forth in the new CBA during the month of

December), Kim O'Laughlin explained the payments were only made voluntarily as

a "gesture of good will," and thus O'Laughlin did not consider itself still bound by the

CBA when making the payments.

After considering the parties' summary judgment filings, the district court

granted summary judgment in favor of O'Laughlin.2

 First, the district court noted 

courts generally limit the defenses an employer can raise in a suit brought pursuant to

29 U.S.C. § 1145 to collect fringe benefits, and the purported termination of the CBA

is not widely recognized as such a defense. See Central States, Se. & Sw. Areas

Pension Fund v. Indep. Fruit & Produce Co., 919 F.2d 1343, 1349 (8th Cir. 1990) ("In

sum, the courts recognize only two defenses to a collection action: that the pension

contributions are themselves illegal or that the collective bargaining agreement is

void.") (citing Benson v. Brower's Moving & Storage, 907 F.2d 310, 314 (2d Cir.

1990)). The district court nonetheless held O'Laughlin could argue it had terminated

its participation in the CBA as a defense in this collection action, citing a decision

from the Sixth Circuit and a Minnesota district court decision recognizing such a

defense. See Laborers Pension Trust Fund-Detroit & Vicinity v. Interior Exterior

Specialists Constr. Grp., 394 F. App'x 285, 290 (6th Cir. 2010) ("[W]hile many

traditional contract defenses are unavailable in collection actions, trust funds are not

entitled to enforce a nonexistent contractual obligation, at least where it is evident

upon a cursory review of the parties' actions that the contract has been terminated[.] 

Allowing the assertion of a termination defense provided the inquiry is superficial . . .

sensibly balances the competing interests in a fund's avoiding complex litigation . . .

and ensuring that the employer has a legitimate contractual obligation to make

employee contributions.") (internal quotation marks and citations omitted); Heimerl

2

O'Laughlin did not formally bring a cross-motion for summary judgment. But

in opposing Twin City's motion for summary judgment, O'Laughlin requested

summary judgment in its favor if the district court found the CBA was properly

terminated.

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v. Tech Elec. of Minn., Inc., No. 12-cv-612, 2013 WL 1364249, at *5-6 (D. Minn.

Apr. 4, 2013) (recognizing a termination defense in a fringe benefit collection action).3

Having determined O'Laughlin could raise a termination defense, the district

court limited its inquiry to a cursory review of the parties' actions to determine

whether O'Laughlin unequivocally communicated its intent to withdraw from the

CBA.4

 See Laborers Pension Trust, 394 F. App'x at 290 ("For a termination to be

effective, this limited inquiry must reveal that the employer unequivocally

communicated the intent to withdraw.") (internal quotation marks and citation

omitted). In its limited review of the parties' actions, the district court credited Kim

O'Laughlin's explanation of the first letter sent on January 27, 2011, finding the letter

unequivocally expressed O'Laughlin's intent to terminate its participation in the CBA

and complied with the CBA's 90-day notice requirement. The district court further

determined O'Laughlin's subsequent conduct in making voluntary payments

throughout 2011 did not invalidate the termination, nor did O'Laughlin's participation

in negotiations for a new CBA. The district court concluded: "O'Laughlin is a small

company that tried to do the right thing and made some missteps in the process. These

missteps, however, are not enough to negate its unequivocal termination of the CBA."

3

Other courts also appear to have recognized a termination defense in a fringe

benefits collection action. See, e.g., La. Bricklayers & Trowel Trades Pension Fund

& Welfare Fund v. Alfred Miller Gen. Masonry Contracting Co., 157 F.3d 404, 409

n.12 (5th Cir. 1998).

4

To the extent courts have held a termination defense is available in an action

to collect fringe benefits, they have limited their inquiry to a cursory review of the

parties' actions in order to keep the collection action from becoming complex or

costly. See Central States, 919 F.2d at 1348 (explaining that collections actions had

become complex and costly prior to the enactment of § 1145, riddled with various

contract formation defenses, and Congress intended to simplify such actions by

passing the statute).

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Twin City filed a timely appeal. On appeal, Twin City argues the district court

erred in concluding O'Laughlin unequivocally terminated its participation in the CBA.

II

We review the district court's grant of summary judgment de novo. Stein v.

Chase Home Finance, LLC, 662 F.3d 976, 979 (8th Cir. 2011).

On appeal, O'Laughlin urges this court to recognize termination as a valid

defense in a fringe benefits collection action brought pursuant to 29 U.S.C. § 1145. 

O'Laughlin further asks us to affirm the district court's determination that O'Laughlin

unequivocally expressed its intent to terminate its participation in the CBA. We

decline to formally recognize a termination defense in this case, however, because the

circumstances involved here would not support such a defense in any event. The two

letters O'Laughlin sent to the Union in January and December 2011 purporting to

terminate O'Laughlin's participation in the CBA, when viewed alongside O'Laughlin's

inconsistent conduct throughout 2011 by continuing to make fringe benefit payments,

do not evince the unequivocal intent necessary to terminate participation in a CBA. 

See, e.g., Int'l Union of Operating Eng'rs, Local No. 181 v. Dahlem Constr. Co., 193

F.2d 470, 475 (6th Cir. 1952) (indicating the "notice to terminate [a CBA] must be

clear and explicit").

We conclude O'Laughlin did not unequivocally express an intent to terminate

its participation in the CBA for two reasons. First, under the circumstances involved

in this case, our examination of O'Laughlin's conduct is paramount to our

consideration of the two letters it sent to the Union. An employer's conduct is

important because "it is well established that a collective bargaining agreement is not

dependent on the reduction to writing of the parties' intention to be bound. All that

is required is conduct manifesting an intention to abide and be bound by the terms of

an agreement." Capitol-Husting Co., Inc. v. N.L.R.B., 671 F.2d 237, 243 (7th Cir.

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1982) (internal citation omitted); see also Central States, 919 F. 2d at 1353 (citing

Robbins v. Lynch, 836 F.2d 330, 332 (7th Cir. 1988)).5

 Here, O'Laughlin manifested

an intention to abide and be bound by the terms of the CBA by continuing to make

fringe benefit contributions on behalf of its employees throughout the 2011 calendar

year.

The district court discounted O'Laughlin's conduct because Kim O'Laughlin

explained he made the fringe benefit contributions voluntarily as a gesture of good

will. But a benefit fund such as Twin City "is entitled to 'assume that all participating

employers in a plan are following the stated terms: no other approach permits

accurate actuarial computations and proper decisions about which claims to pay.'" Id.

at 1349 (quoting Robbins, 836 F.2d at 333) (emphasis added in Central States). The

stated terms of the CBA do not contemplate employers making voluntary payments. 

When an employer's objective conduct indicates a continued acceptance of the CBA,

while at the same time the employer inconsistently states it intends to terminate the

CBA, we are hard pressed to conclude the intent to terminate is clear, explicit, and

unequivocal. See Miner v. Local 373, 513 F.3d 854, 861 (8th Cir. 2008) (determining

the validity of a CBA based on "the objective intent of the parties – not their

subjective beliefs"). If we concluded otherwise, the administrator of a benefit plan

would have no concrete manner by which to determine whether an employer is bound

or not bound by the terms of the CBA.

5

In Robbins, an employer who had signed a master CBA in 1975, "never signed

the 1979-82 agreement . . . [but] paid the union scale, turned over dues under a

checkoff system, negotiated grievances, and paid (some) pension and welfare

contributions. It later invoked the termination clause of the agreement. Employers

may adopt a collective bargaining agreement by a course of conduct . . . [Employer]

did so . . . [Employer] may have had a private intent [to no longer be bound], but the

signs visible to the union all pointed to [Employer's] acceptance of the collective 

bargaining agreement. [Employer] is bound by its terms." 836 F.2d at 332.

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Second, the two letters O'Laughlin sent to the Union were ineffective to express

an unequivocal intent to terminate participation in the CBA in any event. The first

letter clearly stated O'Laughlin intended to terminate its participation in the CBA

"effective January 31, 2011." This statement was ineffective because O'Laughlin was

obligated to participate in the CBA through April 30, 2011, and could not unilaterally

terminate the CBA on a different date. The first letter did not explicitly refer to the

CBA's 90-day notice provision, nor did it reference the correct termination date of

April 30, 2011. Thus, the first letter was not the type of "clear and explicit" notice

required to express an unequivocal intent to terminate.

The second letter added nothing to help clarify the first letter. Like the first

letter, it did not refer to the correct termination date of April 30, 2011. Indeed, the

second letter merely added to the confusion because it was inconsistent with the first

letter. The first letter purported to terminate participation in the CBA at the end of

January 2011, while the second letter purported to terminate participation in the CBA

at the beginning of January 2011. Even if we credited O'Laughlin's explanation of the

second letter as containing a typographical error, the two letters would still be

inconsistent – the first letter would have purported to terminate participation in the

CBA at the end of January 2011, while the second letter would have purported to

terminate participation in the CBA eleven months later. Neither of those dates was

a permissible date upon which to terminate the CBA pursuant to its provisions. The

two letters did not, therefore, unequivocally express the clear and explicit intent

necessary to terminate participation in a CBA.

III

We reverse the district court and remand this case for further proceedings to

determine what amounts O'Laughlin is still obligated to contribute to the employee

benefit plans managed by Twin City.

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