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N.Y. TEAMSTERS CONFERENCE PENSION v. UNITED PARCEL SERV.

April 9, 2002

NEW YORK STATE TEAMSTERS CONFERENCE PENSION & RETIREMENT FUND, NEW YORK STATE TEAMSTERS COUNCIL HEALTH & HOSPITAL FUND, J. DAWSON CUNNINGHAM, FRANK POSATO, THOMAS GOODWIN, BRIAN MASTERSON, JOHN BULGARO, ANTHONY SIMOES, DANIEL SCHMIDT AND DON LITTLE, PLAINTIFFS,
V.
UNITED PARCEL SERVICE, INC. DEFENDANT.



The opinion of the court was delivered by: Frederick J. Scullin, Jr., Chief United States District Judge.

  MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiffs New York State Teamsters Conference Pension and Retirement Fund ("Pension Fund") and New York State Teamsters Council Health and Hospital Fund ("Health Fund") (collectively "the Funds") commenced this action pursuant to § 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1145.*fn1 The Funds sought an Order requiring Defendant United Parcel Service, Inc. ("UPS") to pay all delinquent contributions including liquidated damages and interest. Additionally, the Funds sought an Order requiring UPS to execute Participation Agreements for the period August 1, 1993 to the present, which UPS has failed to execute. UPS answered and asserted a counterclaim, which sought credit for alleged overpayments it had made to the Funds.

From June 4 through June 8, 2001, the Court conducted a bench trial in this action in which the Funds sought delinquent contributions for UPS's alleged underpayment to the Funds for the period of August 1, 1990 through December 31, 1994.*fn2 Based upon the evidence adduced at trial, the following constitutes the Court's findings of fact and conclusions of law as required by Rule 52(a) of the Federal Rules of Civil Procedure.

II. DISCUSSION*fn3

A. Findings of Fact
The Funds were created and exist pursuant to Agreements and Declarations of Trusts ("Trust Agreements"), which are entered into between participating employers and union locals affiliated with the International Brotherhood of Teamsters, A.F.L.-C.I.O. ("Teamsters"). See Joint Pretrial Stipulations at "Facts Not in Dispute" at ¶ 1. A Board of Trustees manages the Funds. See id. at ¶ 4. The Funds provide pension, hospital, medical, dental, death and disability benefits to qualified participants who satisfy the applicable eligibility requirements. See id.

In 1989, the Funds and UPS executed Settlement Agreements relating to the Health and Pension Funds (collectively "1989 Settlement Agreement"), which settled a dispute between the parties concerning contributions for the period of January 1, 1975 through December 31, 1986.*fn4 See id. at ¶¶ 15, 17; P-11, P-12. Thereafter, the Teamsters and UPS executed an amendment to the 1987-1990 United Parcel Service Upstate New York District Supplemental Agreement ("1989 Amendment"). See Joint Pretrial Stipulations at "Facts Not in Dispute" at ¶ 11.

On March 25, 1993, the Funds and UPS executed another set of Settlement Agreements relating to the Health and Pension Funds (collectively "1993 Settlement Agreement"), which settled a dispute covering the period of January 1, 1987 through December 31, 1988. See id. at ¶¶ 18-19.
UPS has not signed any Participation Agreements for the contract periods of August 1, 1993 through July 31, 1997 or thereafter. See id. at ¶ 14. Pursuant to the CBA, UPS is contractually obligated to sign such Participation Agreements. See P-8 (1990-1993 CBA) at Article 60, Section 2; P-9 (1993-1997 CBA) at Article 61, Section 2.
During the period of May 1995 through April 1997, the Funds conducted an audit of UPS's books and records. See Joint Pretrial Stipulations at "Facts Not in Dispute" at ¶ 20. Based upon that audit, the Funds claimed that UPS owed $2,878,506.10 to the Pension Fund and $457,008.95 to the Health Fund in delinquent contributions and statutory penalties for the period of January 1, 1989 through December 31, 1994.*fn5 See id. at ¶ 21. Specifically, the Funds contend that UPS owes contributions with respect to the following categories (1) overtime, (2) unused sick leave, (3) holidays and roving holidays, (4) vacations, (5) sick leave, (6) workers compensation and disability, (7) orientation, and (8) jury duty, funeral leave and military leave. As discussed below, UPS denies that it owes the Funds any additional contributions and, in addition, contends that it has made overpayments in some of these categories and, therefore, seeks reimbursement for those alleged overpayments.

B. Conclusions of Law

1. Overtime

The Funds assert that there is no eight-hours-per-day cap on UPS's contribution obligations but rather that there is only a weekly and yearly cap. Therefore, the Funds assert that UPS is obligated to make contributions for up to forty hours per week and 2,080 hours per year for each bargaining unit employee.*fn6 To the contrary, UPS contends that an eight-hours-per-day cap exists and, thus, contributions assessed for hours worked in excess of eight hours per day are improper.
The question of whether an eight-hours-per-day cap applies to UPS's contribution obligations during the audit period at issue (August 1990-December 1994) can only be answered by reference to the history of the contractual relationship between the Funds, UPS and, to some extent, the Teamsters. Therefore, the Court will begin its discussion of this issue by reviewing the terms of the documents the parties introduced at trial, starting with the 1979-1982 CBA.

a. The parties' contracting history

The 1979-1982 CBA explicitly provided for an eight-hours-per-day cap. See P-91 (1979-1982 CBA) at Article 56 ("Effective 5/1/79, the Employer agrees to contribute the sum of $1.025 per hour paid to any and all of his employees covered by this Agreement but not to exceed a maximum of eight (8) hours per day or forty (40) hours per week, $41.00." (emphasis added)). This eight-hours-per-day cap, however, was not explicitly included in subsequent CBAs; for example, the CBA, which covered the period of May 1, 1982 through June 1, 1985, provided that "[e]ffective April 1, 1982, the Employer agrees to contribute the sum of seventy-seven and one half cents ($.77 1/2) per hour paid to any and all of its employees covered by this Agreement, but not to exceed thirty one dollars ($31.00) per week." See P-92 (1982-1985 CBA) at Article 56.*fn7
In 1987 the Teamsters proposed a change to Article 61 of the CBA, which would have provided that the "employer [is] to make contributions on all hours worked and/or paid, including overtime and shall increase contribution rates $.50 per hour per year." See D-7. However, that proposal was subsequently withdrawn, and Article 61 of the 1987-1990 CBA provided that "[e]ffective August 1, 1987, the Employer agrees to contribute the sum of seventy-seven and one half cents ($.77 1/2) per hour paid to any and all of its employees covered by this Agreement, but not to exceed thirty-one dollars ($31.00) per week. . . ." See P-7 (1987-1990 CBA) at Article 61, Section 1.
Then, in 1989, UPS and the Funds entered into a Settlement Agreement, which provided, in pertinent part, that "it is agreed that [UPS] is not obligated to make contributions for any hour paid to an employee in excess of either eight hours per day or forty hours per week." See P-11 (1989 Settlement Agreement) at ¶ 5 (emphasis added). Subsequently, UPS and the Teamsters signed the 1989 Amendment, which amended Article 61, Section 1 of the 1987-1990 CBA to read, in pertinent part, that "[e]ffective August 1, 1987, the Employer agrees to contribute the sum of $2.755 per hour to any and all of its employees covered by this Agreement, but not to exceed a maximum of eight (8) hours per day or forty hours per week, $110.20."*fn8 See P-13 (1989 Amendment) at ¶ 1 (emphasis added).

Despite the language of the 1989 Settlement Agreement and the 1989 Amendment, the eight-hours-per-day cap was not explicitly included in subsequent CBAs.*fn9 In particular the 1990-1993 CBA provides, in pertinent part, that "[e]ffective August 1, 1990, the Employer agrees to contribute the sum of three dollars and fifty and one half cents ($3.505) per hour paid to any and all of its employees covered by this Agreement, but not to exceed one hundred forty dollars and twenty cents ($140.20) per week." See P-8 (1990-1993 CBA) at Article 61, Section 1 (emphasis added). Moreover, in both 1993 and 1997, the Teamsters again proposed changes to Article 63 of the CBA which would have obligated UPS to make contributions on all hours worked, including overtime, with no maximum hours. See D-12 at UPS678; P-62 at UPS088. These proposals, however, were subsequently withdrawn.

UPS asserts that the 1989 Amendment to the 1987-1990 CBA was carried forward into all subsequent CBAs and that, therefore, an eight-hours-per-day cap applies to its contribution obligations for the audit period at issue. To support this contention, UPS points to Article 42 of the CBA, the duration clause, which provides, in pertinent part, that
Where no such cancellation or termination notice is served [pursuant to Section 1] and the parties desire to continue said Agreement but also desire to negotiate changes or revisions in this Agreement, either party may serve upon the other a notice at least sixty (60) days prior to July 31, 1990 or July 31st of any subsequent contract year, advising that such party desires to revise or change terms or conditions of such Agreement.
See P-7 (1987-1990 CBA) at Article 42, Section 2. UPS also contends that Article 42, Section 3, which provides that any revisions become effective as of August 1st of the subsequent contract year, see P-7, only sets the date that revisions become effective because those terms that are not revised continue to be part of the CBA. See UPS's Post-Trial Brief at 12 at ¶ 29.

Moreover, UPS claims that the fact that the Teamsters proposed a change to Article 56 in 1987 and to Article 63 in 1993, both of which would have obligated UPS to make contributions for all hours worked, including overtime, with no maximum hours, demonstrates that both parties recognized that an eight-hours-per-day cap existed at the time of their negotiations; otherwise, according to UPS, there would have been no need for these proposals.

At trial, former District Labor Relations Manager for the Upstate New York District, Jack Pridell, testified that "the chairman, Mr. Mackey, made the proposal that we contribute for all hours, meaning over eight hours a day, meaning over 40 hours a week[.]" See Trial Tr. at 293, J. Pridell. Pridell further stated that during the negotiations, "Mr. Mackey was talking about going over the eight hour pay per day and 40 hours per week and that's what their proposal was." See Trial Tr. at 296, J. Pridell; see also Trial Tr. at 363, J. Scanlon ("Bill Mackey explained all their proposals to us, when he got to the pension proposal, they were asking to pay all hours, he explained that, and said that they were looking for all hours, over 40, over eight, whenever we paid somebody, they wanted to — us to make a contribution.").*fn10 When asked about this 1993 proposal at trial, Paul Bush, who is the Director of Operations and Mergers and Acquisitions for the Funds and a former member of the Teamsters' negotiating committee with UPS, stated that "[t]he negotiating committee was seeking [that] this employer pay on all hours paid, that there would be no max, as I think — example of a fellow who works 13 hours on that day, you pay 13 hours; you work 1300 hours that week, you pay on all hours paid, and that included the vacation, et cetera, et cetera." See Trial Tr. at 646-47, P. Bush.

To the contrary, the Funds assert that the 1989 Amendment expired on July 31, 1990, the same date that the CBA in effect at the time that the parties executed the 1989 Amendment was scheduled to expire. See P-7 (1987-1990 CBA); P-13 (1989 Amendment). To support this contention, they point to the language of the 1989 Amendment itself, which provides, in pertinent part,
Article 61, Section 1 of the Agreement shall read as follows, effective August 1, 1987 through July 31, 1990, in lieu of the current printed version of said section: "Section 1: Effective August 1, 1987, the Employer agrees to contribute the sum of $2.755 per hour paid to any and all of its employees covered by this Agreement, but not to exceed a maximum of eight (8) hours per day or forty (40) hours per week, $110.20. . . ."

See P-13 (1989 Amendment).

The Funds also note that UPS and the Teamsters engaged in extensive contract negotiations, which culminated in a new CBA in 1990 and, thus, presumably either one or both of those parties provided acceptable notice regarding their desire to amend the 1987-1990 CBA. Therefore, the Funds assert that, under the express terms of Article 42, Section 4 of the CBA, the 1987-1990 CBA expired sixty-one days after that notice was given. See Funds' Post-Trial Brief at 8-9 (quoting P-7 at 55, Article 42, Section 4 (providing that "[i]f notice is given in accordance with the provisions of this Section, the expiration date of this Agreement shall be the sixty-first (61st) day following such notice.")). Thus, the Funds urge that "`there is no ground whatever for considering that the old agreement [or in this case, the old Amendment] still governs the relationship of the parties.'" See id. at 9 (quoting Procter & Gamble Ind. Union v. Procter & Gamble Mfg. Co., 312 F.2d 181, 184 (2d Cir. 1962)).
Finally, in response to UPS's argument that the Teamsters would not have proposed amendments to the CBA that sought pay for all hours, including those in excess of eight hours per day and forty hours per week, unless the eight-hours-per-day cap had been in place, the Funds assert that in making these proposals the Teamsters merely sought to increase the amount of benefits received by its members and wanted contributions on all hours paid; i.e., contributions for hours worked in excess of the forty-hours-per-week maximum. In support of this assertion, Thomas Goodwin, former President of Teamsters Local 317, testified that the Teamsters sought contributions for all hours paid "[b]ecause a lot of the full-time employees at [UPS] work more than 40 hours a week, . . ." See Trial Tr. at 168, T. Goodwin. In addition, Kenneth Stilwell testified that "[t]here is . . . no participating employer that has any hour-per-day cap." See Trial Tr. at 57, K. Stilwell.
"[C]ollective-bargaining agreements may include implied, as well as express, terms." Consolidated Rail Corp. v. Ry. Labor Executives' Ass'n, 491 U.S. 299, 311 (1989) (citation omitted). Likewise, it is well-settled that "the parties' `practice, usage and custom' is of significance in interpreting their agreement." Id. (citation omitted). As the Supreme Court reiterated in Ry. Labor Executives' Ass'n,
"[a] collective bargaining agreement is not an ordinary contract for the purchase of goods and services, nor is it governed by the same old common-law ...

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