Opinion ID: 808377
Heading Depth: 3
Heading Rank: 2

Heading: Unpaid Remittances.

Text: We turn next to the claim for unpaid remittances. Neither the district court's decision to order remittances referable to Jagodowski's work nor the amount of those remittances is contested on appeal. The plaintiffs argue, however, that the district court should have ordered additional payments with respect to certain unidentified employees. Whether the defendant was required to remit certain payments is a matter of contract. See Gastronomical Workers Union Local 610 & Metro. Hotel Ass'n Pension Fund v. Dorado Beach Hotel Corp., 617 F.3d 54, 62 (1st Cir. 2010). Federal common law supplies the substantive rules by which labor agreements are interpreted. See Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 211 (1985); Sweeney v. Westvaco Co., 926 F.2d 29, 36 (1st Cir. 1991) (Breyer, C.J.). A special gloss applies: a court interpreting a collective bargaining agreement must take an industry-specific view, considering the scope of other related collective bargaining agreements, as well as the practice, usage and custom pertaining to all such agreements. Transp.-Commc'n Emps. Union v. Union Pac. R.R., 385 U.S. 157, 160-61 (1966); see Senior v. NSTAR Elec. & Gas Corp., 449 F.3d 206, 220-21 (1st Cir. 2006). We review the district court's findings of fact for clear error and its -11- conclusions of law (including its interpretation of the CBA) de novo. See Dist. Lodge 26, Int'l Ass'n of Machinists & Aerospace Workers, AFL-CIO v. United Techs. Corp., 610 F.3d 44, 51 (2d Cir. 2010); Smart v. Gillette Co. Long-Term Disab. Plan, 70 F.3d 173, 178 (1st Cir. 1995). In construing the terms of contracts that are governed by federal common law, we are guided by common-sense canons of contract interpretation. Smart, 70 F.3d at 178 (internal quotation marks omitted). One such canon holds that contract language is normally considered ambiguous where an agreement's terms are inconsistent on their face or where the phraseology can support reasonable difference of opinion as to the meaning of the words employed and obligations undertaken. Fashion House, Inc. v. K mart Corp., 892 F.2d 1076, 1083 (1st Cir. 1989). If a contractual provision is not susceptible of reasonable but conflicting interpretations, it is not ambiguous. Avery v. Hughes, 661 F.3d 690, 694 (1st Cir. 2011). In the absence of an ambiguity, contractual language must be construed according to its plain and natural meaning. Smart, 70 F.3d at 178. Three articles contained in the CBA are of particular pertinence here. Article I states that the CBA shall apply to all work . . . in connection with all operations usually performed in the sand and gravel industry, described in Article IV. Article IV sets out various types of employee classifications. Article VI -12- requires benefit-remittance payments for each payroll hour . . . for each employee covered by this Agreement. The district court concluded that the CBA was ambiguous as to how employees [were] to be classified and, relatedly, the extent to which an employer was required to make contributions under Article VI. Haluch I, 792 F. Supp. 2d at 136-37 (emphasis in original). In reaching these conclusions, the court relied heavily on the fact that Article IV was couched in terms of employee classifications, not work descriptions per se. See id. at 134-36. We find the district court's interpretation insupportable. Its construction of the CBA undervalues the sensible rule forbidding the balkanization of contracts for interpretive purposes. Smart, 70 F.3d at 179. By virtue of Article I, the CBA applies to covered work; that is, work in connection with all operations usually performed in the sand and gravel industry. Article IV is couched in terms of employee classifications, but this compendium (for example, the reference to Maintenance Mechanic, Operators on shovels, cranes, drag-lines, bulldozers, plant operators, front end loaders, power leaders of all types and similar equipment) is obviously intended to describe covered work. By the same token, the text of Article VI (for each payroll hour . . . for each employee covered by this Agreement) requires remittance for hours of covered work. Viewing these provisions in context and as a seamless whole, the only reasonable -13- interpretation is that an employer must remit benefit payments for each hour of work covered by the CBA. Ironically, the district court's resolution of the claim relating to Jagodowski's benefits fits hand in glove with this interpretation. The court determined that seventy-five percent of Jagodowski's time was spent operating and repairing heavy equipment such as front-end loaders and bucket loaders and, thus, came within the ambit of the CBA. Haluch I, 792 F. Supp. 2d at 136. We think that this determination, which is not challenged on appeal, indicates the lack of ambiguity and bolsters our construction of the CBA. The absence of any material ambiguity is of decretory significance here. Under both federal common law and labor law, an unambiguous contract must be enforced according to its tenor. Senior, 449 F.3d 219. Plain meaning prevails.5 This plain-meaning interpretation casts light on the plaintiffs' claim that they are entitled to remittances for covered work performed by unidentified employees. Under ERISA, every employer shall . . . maintain records with respect to each of his employees sufficient to determine the benefits due or which may 5 Because the language of the CBA is sufficiently clear, we eschew any further inquiry into the broader context surrounding its execution. See Senior, 449 F.3d at 219. -14- become due to such employees. 29 U.S.C. § 1059(a)(1).6 The statute further provides that [t]he employer shall furnish to the plan administrator the information necessary for the administrator to make the [required] reports. Id. The evidence presented in the court below indicates quite clearly that some covered work was done by unidentified employees. The plaintiffs contend that the lack of required records triggered a burden-shifting paradigm under which the defendant had to show which hours represented covered work and which did not. The district court rebuffed this contention, reasoning that the plaintiffs did not produce sufficient evidence to support a shifting of the burden. Haluch I, 792 F. Supp. 2d at 138. In charting this course, the court distinguished a line of cases proffered by the plaintiffs on the ground that, in those cases, the relevant employees were . . . indisputably performing covered work, and the employer failed to maintain any records concerning the work performed; whereas in this case the plaintiffs adduced no evidence . . . indicating that any other classified employee actually performed covered work under the Agreement after 6 We note that at least one of the plaintiffs is a multiemployer benefit plan. This feature would appear to call for the application of section 1059(a)(2) rather than section 1059 (a)(1). See Bard v. Bos. Shipping Ass'n, 471 F.3d 229, 230 & n.2 (1st Cir. 2006). The parties, however, have argued the record-keeping point exclusively in terms of section 1059(a)(1), and we accept their implicit agreement that section 1059(a)(1) is the relevant statutory provision. See United States v. Bayard, 642 F.3d 59, 6263 (1st Cir. 2011). -15- Jagodowski left. Id. (emphasis in original). We review the district court's rulings about the required quantum of proof and the legal effect of the ERISA record-keeping provision de novo. There can be no question but that section 1059(a)(1) requires an employer to document work covered by a collective bargaining agreement. See Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 566 (1985); Mich. Laborers' Health Care Fund v. Grimaldi Concrete, Inc., 30 F.3d 692, 695 (6th Cir. 1994); Combs v. King, 764 F.2d 818, 822-23 (11th Cir. 1985). Although we have not previously spoken to the question, several other courts have concluded that an employer's failure to keep adequate records as required by section 1059(a)(1) may trigger burden-shifting. See, e.g., Mich. Laborers' Health Care Fund, 30 F.3d at 695-96; Brick Masons Pension Trust v. Indus. Fence & Supply, Inc., 839 F.2d 1333, 1337-39 (9th Cir. 1988); Combs, 764 F.2d at 826-27. Under any view, however, such burden-shifting is not automatic. In a case like this one, in which ERISA-protected benefit plans seek to enforce remittance requirements, burdenshifting occurs only when a fiduciary seeking remittance of unpaid benefit contributions shows both that some employees performed covered work that was not reported to the benefit plan and that the employer neglected to maintain adequate records. See Motion Picture Indus. Pension & Health Plans v. N.T. Audio Visual Supply, Inc., 259 F.3d 1063, 1066 (9th Cir. 2001). In such a case, the -16- presumption is that the employer is liable for all hours potentially representing covered work. See Brick Masons Pension Trust, 839 F.2d at 1338-39. This presumption is rebuttable: to reduce its liability the employer must separate wheat from chaff and offer some evidence that will allow a court to calculate the extent of covered work previously unreported. See Motion Picture Indus., 259 F.3d at 1066; Combs, 764 F.2d at 826-27. The burden-shifting paradigm makes good sense. As the Supreme Court noted in an analogous context, an employer should not be heard to complain that the damages lack the exactness and precision of measurement that would be possible had he kept records [as required]. Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 688 (1946); see Mich. Laborers' Health Care Fund, 30 F.3d at 697 (drawing the same analogy); Brick Masons Pension Trust, 839 F.2d at 1339 (similar). Put another way, an employer cannot evade responsibility for benefit remittances by the simple expedient of failing to keep the records that the law requires. The circumstances of this case trigger the presumption. At trial, Joanne Martins, the defendant's president and the person who oversaw its day-to-day operations since 2006, testified that she had knowledge of work performed by the defendant's employees; that both the nature and volume of the work performed remained essentially the same during the period from 2006 to 2011; that she knew the extent of Jagodowski's duties; that, upon Jagodowski's -17- departure in 2006, other employees continued to use and maintain the equipment he had used; and that no records existed showing either who used that equipment or the number of hours it was used. Inasmuch as no remittances were made to the plaintiffs with respect to the work performed by the unidentified employees after Jagodowski left, Martin's testimony was sufficient to trigger the burden-shifting paradigm. We do not accept the district court's suggestion that the burden-shifting cases are inapposite here. To begin, the court's conclusion that the plaintiffs had to show that employees performing covered work are classified employee[s], Haluch I, 792 F. Supp. 2d at 138, is incorrect because, as we have explained, the focal point of the inquiry contemplated by the CBA is covered work — not job classifications per se. Even more important, the district court's reasoning, if endorsed, would destroy the efficacy of the burden-shifting paradigm. The reality is that an employer has a strong incentive to underreport the number of covered employees because underreporting reduces the amount of the remittances it must make. Cent. States, 472 U.S. at 567; see Brick Masons Pension Trust, 839 F.2d at 1335-37. A view of the presumption that would leave the defendant better off if it kept fewer records rather than more would drain the presumption of any meaning. -18- To sum up, the presumption is that the defendant is liable for all hours worked . . . in which [employees] were shown to have performed some covered work. Brick Masons Pension Trust, 839 F.2d at 1339. The employer, despite its record-keeping lapses, may offer evidence in an effort either to overcome the presumption or to limit its effect. In the absence of such evidence, however, the presumption controls. Here, the benchmark for the operation of the presumption is the district court's determination that seventy-five percent of Jagodowski's work was covered by the CBA. Haluch I, 792 F. Supp. 2d at 136-37. From this determination, it can be presumed that one or more employees performed Jagodowski's work after he left, that those employees worked each year the same total number of hours as Jagodowski, and that seventy-five percent of that work was covered by the CBA. Accordingly, the defendant is presumptively liable for the same number of hours of covered work for each successive year through October 31, 2010 (the last date encompassed by the plaintiffs' claim). As we have said, this presumption is rebuttable. So far, the defendant has not rebutted it. Nevertheless, the validity and contours of this burden-shifting paradigm have, until now, been a matter of guesswork within this circuit. Given this lack of clarity, we think that the fairest course is to vacate the challenged portion of the district court's decision in Haluch I and -19- remand so that the district court, applying the presumption and considering any countervailing evidence that the defendant adduces, may determine the amount of remittances owed on account of covered work performed by unidentified employees. Cf. Pruell v. Caritas Christi, 678 F.3d 10, 12-15 (1st Cir. 2012) (allowing plaintiffs to amend their complaint as a result of recent clarification in pleading requirements).