Opinion ID: 479181
Heading Depth: 2
Heading Rank: 3

Heading: Directed Verdicts on Counts XI and XXIV

Text: 43 In Count XI, the Employees allege that Ward's termination of the Plan on August 31, 1974 without prior notice to union members was unlawful. The claim is based on language included in the Plan, and in a separate labor agreement executed by Ward and various unions. 44 Article XIII of the Plan gives the company the right to change, modify, amend, suspend, or discontinue the Plan at any time except as modified by any Labor Agreement between the Company and the Union. (emphasis added). 45 An August 1971 labor agreement, to which three labor unions and Ward were parties, provides in part: 46 With respect to those employees in the respective collective bargaining units represented by said unions, WITNESSETH 47 Whereas the parties hereto have agreed that this Pension Plan, a copy of which is attached and made a part hereof ... shall apply to said employees; 48 It is mutually understood and agreed as follows: 49 1. Honiron, Division of Ward Foods, Inc. will maintain the Plan in full force and effect under the applicable sections of the Internal Revenue Code until June 30, 1974. This agreement shall be deemed renewed for successive three (3) year periods after June 30, 1974, unless any party hereto, within the period hereinafter designated, gives notice to the other parties hereto of his desire to amend, modify, or terminate this agreement, which notice shall be served not earlier than seventy-five (75) days nor later than sixty (60) days prior to June 30, 1974, or to succeeding termination dates at three (3) year intervals in case notice was not served within the period designated. 50 Count XI appears to assert third party beneficiaries' rights under the separately negotiated union/Honiron agreement. However, the Employees argued before the district court that Article XIII's language incorporates by reference the labor agreement's notice provision. 51 The Employees contend that the labor agreement's notice provision modified the Plan for all Plan participants, and not only as applied to union members. Ward counters that the Employees have no rights under the labor agreement, and that the effect of that agreement was to preclude termination of the Plan without notice only with respect to union members. 9 The district court found the Plan's language ambiguous and refused to grant summary judgment. See Cunha, 545 F.Supp. at 97. At trial, however, the court directed a verdict in Ward's favor. 52 Interpretation of a contract presents a mixed question of law and fact. Whether ambiguity exists is a question of law. See State Farm Mutual Automobile Insurance v. Fernandez, 767 F.2d 1299, 1301 (9th Cir.1985). If ambiguity does exist, then the court must determine the parties' intent, which presents a question of fact. DiTullio v. Hawaiian Insurance & Guaranty Co., 1 Hawaii App. 149, 616 P.2d 221, 226 (1980). 53 An ambiguity exists when there is doubt as to what written words mean. Government Employees Insurance Co. v. Franklin, 66 Haw. 384, 662 P.2d 1117, 1119 (1983); MPM Hawaiian, Inc., v. World Square, 4 Haw.App. 341, 666 P.2d 622, 626 (1983). When a document incorporates outside material by reference, the subject matter to which it refers becomes a part of the incorporating document just as if it were set out in full. See State v. Hawaiian Dredging Co., 48 Haw. 152, 397 P.2d 593, 606 (1964). 54 The 1971 labor agreement modified Ward's right to terminate the Plan [w]ith respect to those employees in the respective collective bargaining units represented by said unions. (Emphasis added). 10 Although the parties concede that none of the Employees were members of the signatory unions, the record is unclear regarding whether any non-union employees were included in the collective bargaining units represented by the unions. See Wallace Corp. v. NLRB, 323 U.S. 248, 255, 65 S.Ct. 238, 241, 89 L.Ed. 216 (1944) (The duties of a bargaining agent ... extend beyond the mere representation of the interests of its own group members. By its selection as bargaining representative, it has become the agent of all the employees, charged with representing their interests fairly and impartially.); In re Beatrice Foods Co., 84 NLRB 512, 514 (1949) (employees cannot be excluded from a bargaining unit simply because those employees are under the jurisdiction of another union); In re Hardy Plastics & Chemical Corp., 76 NLRB 463, 466 n. 10 (1948) (as long as the union provides adequate representation, non-union employees may be included in the bargaining unit represented by such union). 55 We therefore remand this claim for a determination as to whether the Employees, although not union members, nevertheless were included within the collective bargaining units represented by the unions. 56 If the Employees were included within the collective bargaining units, then as a matter of law, we would conclude that the Plan's language is not ambiguous and that Ward could not terminate the Plan with respect to the Employees without providing the requisite notice. If, however, the Employees were not part of the collective bargaining units, because they were all supervisory personnel, for example, then we would agree with the district court that an ambiguity exists in Article XIII's language. It then would be necessary to look to the parties' intent to determine whether Article XIII should be construed to require notice to employees not represented by the unions in addition to requiring notice to the represented employees. 57 The burden rests with the party attempting to enforce its view of the contract to show that its asserted version of the agreement is what the parties intended. Hawaii State Teachers Association v. Hawaii Public Employment Relations Board, 60 Haw. 361, 590 P.2d 993, 997 (1979). At trial, the Employees presented no evidence regarding intent except to argue that their interpretation of the Plan's language was the most reasonable. The Employees argue that because the Plan document does not distinguish between union and non-union participants, then no modification of the Plan through a labor agreement should be interpreted to draw such a distinction either. The Employees do not explain why this conclusion logically follows from Article XIII's language. We discern no reason why Ward and the non-union Employees necessarily would have bound themselves by the results of future labor negotiations in this manner. 58 Ward argues that inclusion of the phrase with respect to those employees in the respective collective bargaining units in the labor agreement renders inapplicable to the Employees any Plan modification. Ward presented testimony at trial that neither Ward's negotiators nor the union representatives ever stated or intended that the August 1971 labor agreement apply to non-union plan participants. While these intentions are not dispositive of what the Employees thought that Article XIII meant, this evidence is probative and tends to undermine the reasonableness of the Employees' claimed version of the provision. 59 Because the Employees did not present substantial evidence to the contrary, we would be inclined to hold that the only reasonable conclusion that the trier of fact could have drawn is that Ward's proffered explanation accurately reflects the parties' intent. Nevertheless, for the reasons stated supra, we remand Count XI for further findings by the district court. In addition, if the district court should find that the Employees were included within the collective bargaining units represented by the unions, then dismissal of Count XXIV--which alleges that the Plan continued in existence and is subject to ERISA's requirements because Ward's failed to comply effectively with the termination provisions--would constitute error.