Opinion ID: 2823457
Heading Depth: 2
Heading Rank: 2

Heading: Labonte Drywall's Audit Obligations

Text: Plaintiffs argue that even if the April 3, 2007 letter did terminate Labonte Drywall's obligations under the collective bargaining agreement, they are still entitled to audit Labonte Drywall's records through August 31, 2009. This argument is premised on plaintiffs' belief that, under the collective bargaining agreement, Labonte Drywall's notice of termination was not effective until that date. The termination provision of the collective bargaining agreement in effect from September 1, 2005 through August 31, 2009, 7 Plaintiffs' reliance on Construction Industry Laborers Pension Fund v. Augers Unlimited, Inc., No. 05-4058-CV-C-NKL, 2006 WL 1236063 (W.D. Mo. May 4, 2006), is inapposite. In Augers Unlimited, the court held that an employer's letter to terminate its collective bargaining relationship with the union was not effective because the employer had sent the letter to trustees of various employee benefit funds and not the union itself. Id. at . In so ruling, the court found that there is no evidence that [the trustees] notified the [u]nion of the termination letter or that the [u]nion did in fact know of the termination letter. Id. at  n.2, . As explained above, there is ample evidence in this case that the Union knew of Labonte Drywall's letter to terminate its agreement. - 21 - states: This agreement will expire on August 31, 2009 except that if neither party to this Agreement gives notice in writing to the other party on or before July 1, 2009 that it desires a change after August 31, 2009, then this Agreement will continue in effect until August 31, 2010 . . . . Because this provision does not permit a party to terminate the agreement before August 31, 2009, plaintiffs contend that Labonte Drywall should be bound by its audit obligations through that date. Labonte Drywall counters that this termination provision does not apply because Labonte Drywall was not a signatory to the collective bargaining agreement. The company only signed its statewide agreement with the Union, and, Labonte Drywall contends, its termination of the statewide agreement was effective on April 3, 2007. Reviewing this issue of contract interpretation de novo, see OfficeMax, Inc., 658 F.3d at 97, we agree with Labonte Drywall's understanding of the statewide agreement. The termination provision of the statewide agreement states: The duration of this statewide agreement shall be coextensive with the terms set out in the collective bargaining agreements . . . unless either party to this statewide agreement gives notice of termination of this agreement . . . . (emphasis added). Therefore, the statewide agreement would terminate on August 31, 2009 (coextensive with the terms of the collective - 22 - bargaining agreement) unless either party had given notice of termination. Labonte Drywall gave notice of termination on April 3, 2007, and, therefore, it terminated the statewide agreement on that date. Plaintiffs' contention that both the statewide agreement and the collective bargaining agreement did not expire until August 31, 2009 would render the unless clause of the statewide agreement superfluous and contravene the well-recognized canon of construction that every word and phrase of an instrument is if possible to be given meaning, and none is to be rejected as surplusage if any other course is rationally possible.8 FDIC v. Plaintiffs' reliance on Orrand v. Scassa Asphalt, Inc. is 8 misplaced. See No. 14-3954, 2015 WL 4430447 (6th Cir. July 21, 2015). In that case, the applicable termination provision stated that the parties' agreement shall remain in full force and effect . . . until expressly terminated by notice in writing from one party to the other party at least sixty (60) days prior to its anniversary date. Id. at . The employer argued that it had received a notice letter from the union terminating the agreement. Id. at . However, the Sixth Circuit upheld the district court's determination construing the letter as a notice of contract modification, not a notice of termination, because the Union expressly stated its 'desire to modify, amend, and/or negotiate a new agreement' and 'to open negotiations for a new agreement covering wages, hours and conditions of employment.' The language of the Union's letter also indicated a desire on the part of the Union to continue the relationship between the parties, not to terminate it. Id. at  (internal citation omitted). For this reason, the court found that the parties' collective bargaining relationship remained in force because neither the Union nor [the employer] gave timely written notice to the other party of an intent to terminate. Id. at . As demonstrated above, Labonte Drywall gave timely written notice of termination to the Union through the April 3, 2007 letter. - 23 - Singh, 977 F.2d 18, 22 (1st Cir. 1992) (internal quotation marks omitted). Plaintiffs argue that interpreting the statewide agreement in this way would permit Labonte Drywall to spontaneously cancel the collective bargaining agreement in violation of federal labor law. Pls.' Br. at 31. Pursuant to the National Labor Relations Board's decision in John Deklewa & Sons, Inc., plaintiffs contend that Labonte Drywall was not free to unilaterally repudiate its agreement with the Union before the August 31, 2009 expiration of the collective bargaining agreement. See 282 N.L.R.B. 1375, 1385 (1987); see also C.E.K. Indus. Mech. Contractors, Inc. v. NLRB, 921 F.2d 350, 357 (1st Cir. 1990) (adopting Deklewa as the law in this circuit). Assuming that Deklewa applies to the agreement between Labonte Drywall and the Union,9 plaintiffs' argument fails because 9 The rule in Deklewa that employers cannot unilaterally repudiate their agreements with unions applies only to agreements made pursuant to § 8(f) of the National Labor Relations Act. See Deklewa, 282 N.L.R.B. at 1385 (1987) (Neither employers nor unions who are party to [§] 8(f) agreements will be free unilaterally to repudiate such agreements.). Although [a] union must usually demonstrate majority support among an employer's employees in order to enter a collective bargaining agreement with an employer, NLRB v. Goodless Bros. Elec. Co., Inc., 285 F.3d 102, 104 (1st Cir. 2002), § 8(f) agreements permit unions and employers in the construction industry [to] enter into collective bargaining agreements in the absence of a demonstration of majority representation by the union. Haas Elec., 299 F.3d at 27 n.3 (Stahl, J., concurring) (citing Goodless Bros. Elec. Co., 285 F.3d at 104-05). The parties do not dispute that Labonte Drywall - 24 - Labonte Drywall did not unilaterally repudiate its obligations under the collective bargaining agreement. Instead, Labonte Drywall terminated its collective bargaining relationship with the Union pursuant to the agreed-upon termination provision of the statewide agreement. The Union was a signatory to the statewide agreement and subject to its terms and conditions, which provided Labonte Drywall authority to terminate the agreement before the collective bargaining agreement's August 31, 2009 expiration date. Therefore, Labonte Drywall's termination cannot be considered unilateral. Because Labonte Drywall's agreement to abide by the terms and obligations of the collective bargaining agreement was only incorporated by reference in the statewide agreement, and Labonte Drywall's termination of the statewide agreement was effective on April 3, 2007, the company had no duty to submit to plaintiffs' audit requests through August 31, 2009.10 Plaintiffs entered into a § 8(f) agreement with the Union, and we therefore assume that the statute covers Labonte Drywall's agreement with the Union. Plaintiffs make no argument in their brief that Labonte 10 Drywall must still submit to an audit request for the period between January 1, 2007 to April 3, 2007. We, therefore, consider any such argument waived. See Rodríguez v. Municipality of San Juan, 659 F.3d 168, 175 (1st Cir. 2011) ([W]e deem waived claims not made or claims adverted to in a cursory fashion, unaccompanied by developed argument.). - 25 - 'are not entitled to enforce a nonexistent contractual obligation.'11 DeVito v. Hempstead China Shop, Inc., 38 F.3d 651, 654 (2d Cir. 1994) (quoting Teamsters Indus. Emps. Welfare Fund v. Rolls-Royce Motor Cars, Inc., 989 F.2d 132, 138 (3d Cir. 1993)).12 Affirmed. 11 As they did in the district court, plaintiffs devote much of their briefing to explain the important obligation that benefit funds have in collecting contributions from employers under ERISA. However, as the district court stated, [n]one of this . . . is a matter of dispute. Labonte Drywall Co., 2014 WL 2566136, at  n.4. Plaintiffs are not asserting an ERISA contribution claim against Labonte Drywall. Instead, plaintiffs contend that they have a right to conduct an audit of Labonte Drywall's records, a contractual obligation that is derived from Labonte Drywall's statewide agreement to abide by the terms of the collective bargaining agreement. 12Because we conclude that Labonte Drywall had no obligation to submit to plaintiffs' audit requests, we do not need to reach the issue of whether the defense of laches is available to Labonte Drywall in this action. - 26 -