United States District Court, Northern District of New York
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,
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
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
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
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.
Local unions affiliated with the Teamsters represent many of UPS's
340,000 employees. See id. at ¶ 6. UPS's upstate New York operations
are centered in two distribution "hubs" — the Upstate New York
District, which is centered in Syracuse,
and the West New York District,
which is centered in Buffalo. See id. at ¶ 8. UPS makes
contributions on behalf of approximately 3,200 employees in the Upstate
New York District and approximately 1,800 employees in the West New York
District. See id. at ¶ 9. UPS and the Teamsters have most recently
entered into collective bargaining agreements ("CBA") for the periods of
1987-1990, 1990-1993, 1993-1997 and 1997-2002. See id. at ¶ 10.
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
B. Conclusions of Law
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
Despite the language of the 1989 Settlement Agreement and the 1989
Amendment, the eight-hours-per-day cap was not explicitly included in
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,
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
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.
In addition, the Funds point to the fact that when negotiating the
1990, 1993 and 1997 CBAs, the Teamsters' and UPS's "side-by-sides"
contained the original language for Article 61 (later Article 63), which
is the provision of the CBA that relates to pension contributions, as
to the language contained in the 1989 Amendment. See P-75.
Furthermore, the Funds note that, when negotiating and executing
subsequent CBAs, UPS failed to include the eight-hours-per-day cap.
According to the Funds, this lends credence to their argument that the
parties never intended the cap to apply beyond the expiration date of the
1987-1990 CBA. Moreover, even after learning about the audit relating to
this dispute and the fact that the Funds were seeking contributions for
hours worked over eight hours per day, UPS still failed to address the
issue during the 1997 collective bargaining negotiations.*fn11
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.
"[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 concepts which control such private
`. . . [I]t is a generalized code to govern a myriad
of cases which the draftsmen cannot wholly
anticipate. . . . The collective agreement covers the
whole employment relationship. It calls into being a
new common law — the common law of a particular
industry or of a particular plant.'"
Id. at 311-12 (quoting [Transportation Union v. Union Pacific R. Co., 385
U.S.] at 160-161, 87 S.Ct., at 371 (citation omitted) (quoting
Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S., at 578-579, 80
S.Ct., at 1350-1351)).
Even if a collective bargaining agreement is different from the
ordinary commercial contract, "[h]owever, traditional rules of
contractual interpretation are applied so long as their application is
consistent with federal labor policies." Int'l Org. of Masters, Mates &
Pilots v. Victory Carriers, Inc., No. 84 Civ. 7073, 1985 WL 514, *2
(S.D.N.Y. Apr. 19, 1985) (citation omitted). Thus, if the agreement is
unambiguous, the court is not free to consider the practice, usage and
custom applicable to such agreements. See id. at *3 (citation
see also Hunt Ltd. v. Lifschultz Fast Freight, Inc., 889 F.2d 1274, 1277
(2d Cir. 1989) ("If the terms of a contract are unambiguous, the
obligations it imposes are to be determined without reference to
extrinsic evidence, . . ., and trade custom and usage is not admissible
to contradict or qualify its provisions, . . .") (internal citations
Applying these principles of contract interpretation to the evidence in
the record, the Court concludes that the 1989 Amendment was in effect
during the audit period at issue and, thus, under the CBAs, UPS's
contribution obligations were limited to an eight-hours-per-day cap. Once
the 1989 Amendment amended the 1987-1990 CBA to provide for an
eight-hours-per-day cap, that cap remained in effect until such time as
the parties negotiated a different arrangement. Despite the Teamsters'
initial proposals to remove the eight-hours-per-day cap in both 1993 and
1997, they withdrew those proposals and the eight-hours-per-day cap
remained a part of the CBAs. Moreover, as UPS noted, there would have
been no need for the Teamsters to propose an amendment which would have
eliminated the eight-hours-per-day cap if such a cap had not existed.
Furthermore, the Court cannot, as the Funds would have it do, read the
1990-1993 CBA without reference to the terms of prior CBAs. Nor does
Article 42 of the CBAs require the Court to do so. In fact, Article 42
supports the Court's conclusion that those provisions of the CBA that
were not revised continued to be part of subsequent CBAs. Finally,
Article 42, Section 3's reference to the effective date solely for
revisions is another indication that those parts of the CBA which are not
changed remain a part of the next CBA.
b. The impact of the Participation Agreements on UPS's
The Funds contend that even if the Court finds that the
eight-hours-per-day cap set forth in the 1989 Amendment was intended to
continue beyond the expiration date of the 1987-1990 CBA, such a cap is
null and void because it is inconsistent with the Participation
Agreements, which provide for a weekly cap, but not a daily cap. See,
e.g., P-28 (New York State Teamsters Conference Pension and Retirement
Fund Participation Agreement ("Participation Agreement")) at ¶ 1(c)
("The employer agrees to contribute to the New York State Teamsters
Conference Pension and Retirement Fund, as follows, not to exceed the
maximum: Effective 8/1/91, 3.595 per hour, 143.80 weekly").*fn12 The
Participation Agreement also provides that
[n]o agreement between the employer and the Union
shall alter this rule or any other rule or provision
of this [Participation Agreement]. That in the event
there is any agreement between employer and Union that
is contrary to or inconsistent with the terms of this
[Participation Agreement] or the rules of the Pension
Fund, such inconsistent provisions shall be null and
void and superseded by the terms of this
[Participation Agreement] and/or the rules of the
See P-28 (Participation Agreement) at ¶ 1(b).
UPS does not dispute that the Participation Agreements provide for a
weekly, rather than a daily, cap. Instead, UPS argues that the
Participation Agreements are contracts between the Teamsters and UPS, not
the Funds and UPS, and that the Participation Agreements are intended to
be substantively the same as the CBAs. To support this assertion, UPS
notes that the Participation Agreements provide that they "shall continue
in full force and effect for the same term as the Labor Agreement. A new
[Participation Agreement] must be signed and submitted for each
subsequent Collective Bargaining Agreement." See P-28 (Participation
Agreement) at ¶ 18. UPS also points to the fact that the paragraph
directly above the signature line provides that "[w]e hereby certify that
the provisions, terms and wording in the Collective Bargaining Agreement
are not contrary to or inconsistent with the provisions, terms and
wording in this [Participation Agreement]."*fn13 See id. at ¶ 20.
UPS further contends that it is not bound by the Participation
Agreements because when signing the Participation Agreement that related
to the 1990-1993 CBA it included the phrase "subject to contract," see
P-28 (Participation Agreement); and it refused to sign the Participation
Agreements which relate to the 1993-1997 and 1997-2002 CBAs. At trial,
Gerald Nerone, UPS's Regional Labor Relations Manager, testified that he
included the phrase "subject to contract" next to his name when he signed
the Participation Agreement that covered the period of 1990-1993 because
he "wanted to make sure that what [he] was signing pertained to what was
in the [CBA]." See Trial Tr. at 685, G. Nerone. He also testified that
it was not his understanding that he was given "permission" to modify the
Participation Agreement, see id. at 686, G. Nerone, and that he signed
the Participation Agreement "subject to contract" mostly for money
reasons. See id. at 696, G. Nerone ("[I]t was mostly the money. The
money was incorrect in the top, on the top portion of the [Participation
Agreement], and I was concerned that I was signing something that was
going to cost more money than what was agreed to."). Nerone also stated
that neither the Funds nor the Teamsters returned the Participation
Agreement to him to dispute his inclusion of the phrase "subject to
contract." See id. at 682, G. Nerone. UPS also contends that because it
is not an employer covered by the General Freight Agreement, it was not
required to sign the Participation Agreements related to the CBAs
covering the same periods.*fn14 To support this proposition, UPS relies
upon the language of the CBA which provides, in pertinent part, that
[t]he Employer and Union hereby agree simultaneously
herewith to execute a stipulation submitted by the
Pension Trustees [and Health and Hospital Trustees]
setting forth the provisions relating to the Pension
Fund [and Hospital Fund] as negotiated for the General
Freight Agreement and certifying that the Employer has
entered into a written agreement containing such
provisions. The Fund Trustees may reserve the right
to refuse to accept contributions from the Employers
who fail to execute such stipulation.
See P-8 (1990-1993 CBA) at Article 61, Section 2; P-9 (1993-1997 CBA) at
Article 63, Section 2.
UPS's assertion that it is not bound by the Participation Agreements is
unavailing and unsupported by case law construing participation
agreements similar to the ones at issue in this case. In Truckmen's &
Warehousemen's Ass'n of Rochester v. N. Y. State Conference Pension &
Retirement Fund, 751 F. Supp. 351 (W.D.N.Y. 1990), the court concluded
that the paragraph in a participation agreement exactly like ¶ 1(b)
in this case was neither arbitrary nor capricious. See id. at 357. The
court explained that as a wholly independent body, "`the Fund is not
bound by agreements entered into by local affiliates of the [union]. . . .
[and] [t]herefore, the trust provisions are to govern when in conflict
with contrary provisions in a collective bargaining agreement.'" Id. at
358 (internal quotation and internal citations and other citations
omitted) (emphasis added). Here, assuming that the 1989 Amendment, with
its eight-hours-per-day cap, became part of subsequent CBAs, those CBAs
are inconsistent with the Participation Agreements, which do not have an
eight-hours-per-day cap. Therefore, because the Participation Agreements
govern, the eight-hours-per-day cap in the CBAs is void and UPS is not
entitled to rely upon that cap to limit its contribution obligations.
The fact that UPS signed the 1990-1993 Participation Agreement "subject
to contract" does not require a different result. It is well-settled
that one party cannot unilaterally modify the terms of a contract. See
Beaver Employment Agency, Inc. v. Noestring, Inc., 160 Misc.2d 454, 455
(Civil Court, N.Y. County, 1993) (citing Becker v. Faber, 280 N.Y. 146,
19 N.E.2d 997 (1939), rehearing denied 280 N.Y. 730, 21 N.E.2d 216
(1939)). Thus, UPS could not modify the Participation Agreement by
adding the terms "subject to contract" without the consent of the
Teamsters. There is no dispute that the Teamsters did not consent to
this additional term. Thus, "the original terms of the [Participation
Agreement] remain[ed] in effect." Id. (citing Beacon Terminal Corp. v.
Chemprene, Inc., 75 A.D.2d 350, 429 N.Y.S.2d 715 (2d Dept. 1980)).*fn15
Finally, the fact that UPS did not sign any subsequent Participation
Agreements and that the Funds, nonetheless, accepted UPS's contributions
does not mandate a finding that UPS is not bound by the terms of those
Participation Agreements. Each of the Participation Agreements clearly
[t]his Participation Agreement . . . is the basis for
participation in the New York State Teamsters
Conference Pension and Retirement Fund. The
employer, the Union and the employees, as a condition
of participation in the Fund, are bound by all the
rules and regulations of the Fund now and/or
hereinafter adopted by the Board of Trustees of the
See P-28 (Participation Agreement) at ¶ 1(a) (emphasis added).
There is no question that UPS signed the relevant CBAs with the
Teamsters and that UPS participated in the Funds by making contributions
to the Funds on behalf of its employees. Nonetheless, UPS argues that it
participated in the Funds only to the extent that its participation was
consistent with the terms of the CBAs.
The Court finds this argument unpersuasive. The CBAs required UPS to
sign Participation Agreements, and, therefore, the Court finds that UPS
is governed by
the terms of the Participation Agreements whether or not
it signed them. Moreover, although the CBAs provide the Trustees of the
Funds with the option "to refuse to accept contributions from the
Employers who fail to execute [the Participation Agreement]," see P-8
(1990-1993 CBA) at Article 61, Section 2; P-9 (1993-1997 CBA) at Article
63, Section 2, their decision not to exercise that option does not
absolve UPS of its obligation to abide by the terms of the Participation
Agreements. Accordingly, the Court concludes that under the terms of the
relevant Participation Agreements, there was no eight-hours-per-day cap
on UPS's contribution obligations during the audit period at issue.*fn16
2. Alleged delinquent contributions related to entitlement pay
The Funds contend that, pursuant to the terms of the Participation
Agreements as well as the CBAs and certain Fund Rules, UPS owes
contributions for hours relating to entitlement pay, which includes
vacation time, holidays, sick leave and unused sick leave.
Specifically, the Funds claim that, pursuant to paragraph 1(c) of the
Participation Agreements, UPS is required to make contributions for up to
2,080 hours per year (forty hours per week for fifty-two weeks).*fn17
See Trial Tr. at 575-76, R. Morreale.
UPS does not dispute that under the CBA it is required to contribute to
the Funds for entitlement pay and, in fact, asserts that it does so.
However, UPS contends that, by interpreting the Participation Agreements
in such a way as to require UPS to make such payments up to a maximum of
2,080 hours, the Funds are in essence requiring UPS to make double
contributions in some instances. Specifically, UPS contends that the
Funds are seeking additional contributions for sick leave (payments made
to covered employees for sick days never used and that are not
attributable to any particular day); accrued, but unused, vacation time
paid to an employee when he or she terminates employment (which is not
attributable to any particular vacation period); holidays and roving
holidays where the employee either receives wages for working the holiday
or is on vacation and receives vacation pay for the same day; and sick
leave (where the employee actually comes to work and is paid regular
wages for that day).
The issue for the Court to determine is whether it was reasonable for
the Funds' auditors to interpret the relevant documents to require UPS to
make contributions for up to 2,080 hours per year for each employee who
was eligible for entitlement pay, regardless of when UPS actually paid
those employees for these entitlements.
a. Unused sick leave*fn18
Pursuant to the CBA, UPS is required to compensate its employees for
unused sick leave.*fn19 Full time employees receive "eight (8) hours
straight-time pay for each sick day and part-time employees shall receive
four (4) hours straight-time pay for each sick day." See P-8 (1990-1993
CBA) at Article 68; P-9 (1993-1997 CBA) at Article 70, Section 2; P-10
(1997-2002 CBA) at Article 70, Section 2. The Funds contend that if an
employee received the unused sick leave pay in a week in which the
employee had already received forty hours of pay, UPS did not make
contributions for the additional entitlement pay. UPS acknowledges that
it did not make contributions for the unused sick leave pay if it had
already made contributions for forty hours during that week. See Trial
Tr. at 355-56, R. Morreale.
In conducting the audit, after assessing all other contributions, the
auditors determined whether UPS had made contributions for 2,080 hours
per year for each employee. If the 2,080-hour maximum had not been met,
the auditors allocated the unused sick leave contributions to a week in
which the employee received less than forty hours of pay. To support
this method of allocating UPS's contribution obligations, the Funds'
auditors testified that they relied upon paragraph 1(c) of the
Participation Agreements, which they interpreted as requiring
contributions for up to 2,080 hours per year, see Trial Tr. at 118, T.
Nanna; as well as a November 3, 1986 memorandum, see Trial Tr. at 120,
T. Nanna; P-220; and an April 27, 1987 memorandum, see id. at 119, T.
Nanna; P-222. Additionally, the auditors acknowledged that they relied
upon a February 26, 1990 memorandum and the meeting minutes attached to
that memorandum (the "Paravati interpretation"); see Trial Tr. at 578,
R. Morreale; P-34; and a March 18, 1987 memorandum, see Trial Tr. at
601, R. Morreale; P-221.
The November 3, 1986 memorandum provides that "[w]henever a
participating employer is required to compensate its employees for Unused
Sick Leave, the rate of contribution required by the Health and Pension
Funds shall be the rate in effect for the contract year that the payment
for Unused Sick Leave is earned by the employee[.]" See P-220.
However, pursuant to the April 27, 1987 memorandum, contributions to the
Health Fund for unused sick leave were no longer required. See P-222.
The March 18, 1987 memorandum provides that "the Fund will not require
contributions from Participating Employers that exceed the maximum of
forty (40) hours in a week and not to exceed the maximum of fifty-two
(52) weeks in a calendar year." See P-221. Fund Auditor Russell
Morreale testified that this provision is relevant and impacted the audit
because the two caps set forth in this provision, "make one cap of 2,080
hours." See Trial Tr. at 602, R. Morreale.
As noted, the auditors also relied upon a February 26, 1990 memorandum
meeting minutes attached to that memorandum. See P-34. The
meeting minutes are from a Pension Fund meeting, and the parties refer to
these minutes as the "Paravati interpretation." According to Morreale,
the Paravati interpretation supports the Funds' application of a
2,080-hour-per-year cap. See Trial Tr. at 582-83, R. Morreale.
However, neither the memorandum nor the meeting minutes specifically make
reference to a 2,080-hours-per-year cap.*fn20
Morreale also testified that the language of the minutes "was confusing
as it was written, and [that the auditors] felt that [they] needed to
clarify it with Mr. Paravati as far as how it would apply to non-Master
Freight companies[.]" See Trial Tr. at 589, R. Morreale. Thus, the
auditors "had a discussion with Mr. Paravati, and he conveyed to [them],
. . ., that the maximum that a non-freight company would be required to
contribute would be [2,080] hours." See id. at 589-90, R. Morreale; see
also Trial Tr. at 134, T. Nanna (Paravati told the auditors that they
"could not bind employers who were non-Master Freight to contribute more
than 2,080 hours in a year."). Morreale testified that he relied upon
Paravati's interpretation of the document in conducting the audit. See
Trial Tr. at 590.
Looking at the record as a whole, the Court concludes that the
auditors' conclusion that UPS is required to make contributions for up to
2,080 hours per year for each bargaining unit employee, regardless of
when UPS actually pays an employee for unused sick leave, is reasonable.
Morever, if the Court were to adopt UPS's interpretation, UPS could avoid
its obligation to make contributions for unused sick leave by paying its
employees for their unused sick leave in weeks in which those employees
had worked forty hours. Such an interpretation would be unreasonable
because it would permit UPS, in effect, to avoid its unambiguous
obligations under the terms of the CBAs. In addition, such an
interpretation — if acted upon — would have grave
consequences for the fiscal integrity of the Funds.
b. Holidays and roving holidays
In assessing contributions for holiday pay, the auditors relied upon
paragraph 10 of the Participation Agreements, which provides that
"[p]ayments to the Fund must be paid by the employer for the employees'
paid vacations and holiday periods." See P-28 (Participation Agreement)
at ¶ 10; Trial Tr. at 109, T. Nanna. The auditors also relied upon
some of the same documents upon which they relied when assessing
contributions for unused sick leave, which the Funds contend established
a 2,080-hours-per-year cap. See P-34; P-220; P-221; P-222.
The Funds' auditors assessed contributions for holidays and roving
holidays under two different sets of circumstances: when UPS provided the
employee with holiday pay prior to or after the actual holiday, see Trial
Tr. at 542-43, R. Morreale, and when UPS only contributed for a
forty-hour vacation period when an employee took vacation during a
holiday week. See id. at 553-54, R. Morreale.
As noted, the Funds contend that the auditors "found situations where a
full-time employee, . . . would receive 40 hours of work, 40 hour[s] [of]
vacation and again, UPS omitted to remit the contribution in that period
when the employee took the time off for vacation." See id. at 537-38,
R. Morreale. In support of their assertion that UPS engaged in a
practice of providing entitlement pay (for holidays, vacation, sick leave)
prior to or after the actual period when the time was taken, the Funds
submitted the payroll record of Mr. Donald Clark for the year 1994. See
P-147. This is one of the records for which the Funds' auditors made an
assessment. See Trial Tr. at 539, R. Morreale. According to this
payroll record, during the week ending June 25, 1994, Clark "was paid
34.94 hours of straight time and some overtime hours, but he was also
paid 20 hours of vacation hours, vacation time, and the preceding week,
[which was the] week ending 6/18, he has no pay[.]" See id. Morreale
testified that since no contributions were submitted for the week of June
18, 1994, in his opinion, this represents a scenario in which the
vacation period was omitted. See id.
At trial, the Funds also introduced a demonstrative aid, see P-183,
which was intended to illustrate a way in which an employer could avoid
making significant amounts of contributions for entitlement pay.
Morreale testified that the aid demonstrated a way
[f]or an employer to avoid contributions for
holidays, sick time, vacation time, by allowing the
employer to pay their employee [in] the first paycheck
of the year all of his vacation pay, all of his sick
time and all of his holidays, and if you stick
strictly to the rule that contributions are only
required up to 40 hours in a week, in those subsequent
periods, when the [employee] took a vacation period,
or when there was a holiday or [the employee] took a
sick day, then the employer would not be required to
contribute for that time  which is actually the time
off for vacation or for sick time.
See Trial Tr. at 542, R. Morreale.
Although the Funds admit that the demonstrative aid shows the "worst
case scenario," Morreale testified that with respect to sick pay,
vacation pay and holiday pay, UPS's practices mirrored this scenario to a
lesser extent. See id. at 542-43, R. Morreale.
UPS contends that the Funds are seeking contributions for holidays (and
also vacations) because they used an auditing technique known as
"`filling the holes,' i.e. going beyond the weekly contribution maximum
and assessing contributions for holiday — or roving holiday-related
See UPS's Post-Trial Brief at 29 at ¶ 81. UPS asserts
that this technique is improper because it forces UPS to make
contributions beyond the forty-hours-per-week cap.*fn22
Second, as noted, during the audit, the auditors found that if a
during the same week in which an employee was on
vacation, UPS did not pay contributions for the holiday. According to
Morreale, even though the employee would receive pay for forty-eight
hours, UPS would only make contributions for forty hours. See Trial Tr.
at 553, R. Morreale. UPS does not dispute that it failed to make
contributions under these circumstances but rather contends that it was
not required to make such "double" contributions. See UPS's Post-Trial
Brief at 5 at ¶ 9 (UPS contends that, with respect to holidays and
roving holidays, it "contributes to the Funds for holidays and roving
holidays taken by its covered employees, but does not `double contribute'
for a day when the employee is out on vacation during a week in which a
holiday falls or when the employee works on the holiday.").
Based upon all the evidence, the Court concludes that with respect to
contributions that UPS was required to make for holidays and roving
holidays, the Funds' use of a 2,080-hours-per-year cap is reasonable. In
addition, the Court finds that by relying upon the 2,080-hours-per-year
cap and allocating UPS's contribution obligations to weeks in which UPS
had not made contributions in excess of the forty-hours-per-week cap, the
Funds complied with the terms of both the CBAs and the Participation
Agreements and did not require UPS to do anything other than to meet its
obligations under those agreements.
A related issue involves UPS's obligation to make contributions for
vacation pay, holiday pay and sick pay of its part-time employees.
According to Morreale, "concerning a part-time employee who would receive
20 hours of work time and 20 hours of vacation and/or entitlement pay,
UPS normally would only contribute on the 20 hours of work time and
ignore the contribution for the vacation and/or entitlement pay." See
Trial Tr. at 537, R. Morreale.
At trial, UPS's former District Labor Relations Manager for the Upstate
New York District, John Scanlon, was asked how UPS contributes for
part-time employees' vacations. See id. at 395, J. Scanlon. Scanlon
testified that if a part-time employee works twenty hours in one week and
then takes twenty hours of vacation, UPS makes contributions for forty
hours. See id. at 396, J. Scanlon. Scanlon also stated that "40-hour
max" applies to both part-time and full-time employees. See id. at 397,
J. Scanlon. Although Scanlon's testimony specifically related to
vacation pay, his acknowledgment that UPS is required to pay for up to
forty-hours for part-time employees also applies to holidays and sick
leave since the contributions for those categories are similar to
contributions for vacations. In addition, Scanlon's testimony is
consistent with Morreale's in the sense that Scanlon indicated that UPS
has already made contributions for these part-time employees while
Morreale stated that, during the course of the audit, it was learned that
UPS did not make such contributions. When asked specifically whether
Scanlon's testimony with regard to the method for contributing for
vacations and entitlement pay was inconsistent with the audit results,
Morreale answered, "Yes, it was." See id. at 537, R. Morreale. Based
upon the testimony at trial, the Court concludes that UPS is required to
make contributions for part-time employees for up to forty hours per
c. Vacation time
In assessing contributions for vacation time, the auditors once again
relied upon paragraph 10 of the Participation Agreements, which provides
that "[p]ayments to the Fund must be paid by the employer for the
employees' paid vacations
and holiday periods." See P-28 (Participation
Agreement) at ¶ 10; Trial Tr. at 109, T. Nanna. The auditors also
relied upon primarily the same Fund Rules that they used when assessing
contributions for unused sick pay and holiday pay, including the Paravati
interpretation, see Trial Tr. at 133, T. Nanna; P-34; a November 3, 1986
memorandum, see Trial Tr. at 579, R. Morreale; P-220; an April 27, 1987
memorandum, see Trial Tr. at 579, R. Morreale; P-221; and a March 18,
1987 memorandum, see Trial Tr. at 579, R. Morreale; P-222.
The Funds' rationale for assessing contributions for vacation time is
similar to their rationale for assessing contributions for holiday pay.
In particular, the Funds contend that UPS avoided making payments for
contributions by providing its employees with vacation pay prior to or
after the actual vacation period. See Trial Tr. at 539, R. Morreale.
Again, in support of this assertion, the Funds point to the payroll
records of Mr. Donald Clark, see Trial Tr. at 539, R. Morreale; P-147, as
well as the demonstrative aid, see Trial Tr. at 542-43, R. Morreale;
P-183. The Funds contend that when determining contributions, the Funds
are required to look at the actual holiday or vacation period as opposed
to the date when the money is actually paid to the employee.*fn23 See
Trial Tr. at 131, T. Nanna.
According to the Funds' auditors, when assessing contributions for
vacation pay, they would assess such contributions by allocating the
vacation contributions to a week in which no contributions were made.
See Funds' Pre-Trial Brief at 19. Again, UPS contends that the auditing
technique the auditors used was improper.
The Court concludes that the Funds' auditors' practice of looking at an
employee's actual holiday or vacation period, rather than the date on
which UPS actually paid the employee for this time, was reasonable. In
addition, the Court finds that Funds' auditors' reliance upon the
2,080-hours-per-year cap as a basis for allocating these contributions
was also reasonable. As noted above, by relying upon both the
forty-hours-per-week and 2,080-hours-per-year caps, the Funds complied
with both the relevant CBAs and the Participation Agreements and required
UPS to contribute only that which it was required to contribute under
d. Sick leave
In assessing the contributions for sick leave, the Funds' auditors
relied upon Article 68 of the CBA, which provides, in pertinent part,
[e]mployees shall have the option after vacations are
bid and weeks are available during the non-peak time
to use these sick days for vacation, five (5) days at
a time only. Any employees who select this option may
elect to use roving holidays for future sick days.
See P-8 (1990-1993 CBA) at Article 68; Trial Tr. at 107, T. Nanna.
The dispute surrounding UPS's contribution obligations for sick leave
is similar to that regarding its contribution obligations for vacation
pay. The Funds contend that, when an employee is paid for sick leave, UPS
is required to make contributions. See Trial Tr. at 95-96, T. Nanna.
Based upon Article 68 of the 1990-1993 CBA, in certain situations, sick
days are treated like vacation days and, thus, the Funds contend that
contributions are to be made for this time. See id. at 107. Again,
central to this issue is the Funds' assertion that UPS avoided making
contributions for sick leave by providing its employees with sick-leave
pay prior to or after the actual sick-leave period.
UPS again contends that the Funds used an improper audit technique.
UPS also asserts that the Funds are attempting to require UPS to make
"double contributions" and are thereby adjusting the amount of its
contributions and that such an adjustment is not permissible. The Court
finds these arguments unpersuasive.
For the same reasons as those stated above, the Court finds that the
auditors' use of the 2,080-hours-per-year cap, together with the
forty-hours-per-week cap, for determining UPS's contribution obligations
for sick leave was reasonable.*fn24
3. Workers Compensation and Disability
The Funds seek contributions for workers compensation and disability
absences. UPS contends that it was improperly assessed for contributions
for employees out of work on workers compensation
and disability leave.
UPS also asserts that contributions were improperly assessed for causal
employees and that the techniques that the auditors used when considering
these two categories were improper.
In assessing a delinquency against UPS for employees on disability, the
Funds' auditors relied upon paragraph 14 of the Participation Agreements
and a "Rules of the Fund" memorandum dated April 19, 1982.*fn25
Trial Tr. at 95, 145, T. Nanna; P-22 (Participation Agreement) at ¶
14; P-32 (Memo regarding "Rules of the Fund," dated April 19, 1982).
Fund Auditor Thomas Nanna testified that the auditors followed New York
State disability law and made assessments based upon records that UPS
provided and on which UPS indicated whether an employee was on
See Trial Tr. at 147, T. Nanna. Also, Fund Auditor
Russell Morreale testified that if UPS's records indicated that an
employee was "casual" or an "extra" employee, the auditors did not assess
contributions for workers compensation and disability. See id. at 540,
With respect to contributions for employees on disability, UPS contends
that contributions should have been assessed only for "regular" employees
and not "casual" employees or others. UPS also points to the fact that
the Funds' auditors relied upon UPS's payroll records to determine
whether an employee was on disability. However, UPS contends that these
payroll records did not indicate whether the employee's required
notification of the disability was proper.*fn27 Moreover, UPS contends
that the Funds did not apply the terms of the 1993 Settlement Agreement
when making calculations for disability.*fn28
Thus, the Funds "did not
make any adjustment, or credit any amounts relating to contributions for
disabilities lasting fewer than eight days." See UPS's Post-Trial Brief
at 34 at ¶ 93 (citations omitted).*fn29 Based upon the trial
testimony, it is clear that the auditors relied upon UPS's records when
assessing contributions for workers compensation and disability. The
Court finds that it was logical for the auditors to do so because UPS, as
the employer, was responsible for maintaining those records and was in
the best position to ensure their accuracy.
With respect to UPS's assertion that the Funds failed to consider the
terms of the 1993 Settlement Agreement (which covered the 1987-1988 and
1989-1990 audit periods), even assuming that the 1993 Settlement
Agreement applied to the audit period at issue, Funds Auditor Russell
Morreale testified that "the records that UPS had provided to [the
auditors] did not allow [them] to determine whether [UPS] made
contributions on any illnesses of less than eight days." See Trial Tr. at
551, R. Morreale. Since UPS had an obligation to maintain accurate
records and to provide the Funds with information that related to the
circumstances of its employees on disability and workers compensation
leave, any error that the Funds may have made in calculating UPS's
contribution obligations, which were due to UPS's failures, must be borne
by UPS. Accordingly, the Court concludes that, based upon the evidence
that the auditors had before them, they correctly assessed UPS for
workers compensation and disability contributions.
4. Orientation time
The parties dispute whether UPS was required to make contributions to
the Funds for the three or four day period that UPS's employees spend in
orientation sessions, which they are required to attend at the beginning
of their employment. To
support their assertion that contributions are
required for employees during this orientation period, the Funds point to
the fact that paragraph 1(b) of the Participation Agreements requires UPS
to contribute for "all employees doing bargaining unit work."*fn30 See
P-22 (Participation Agreement) at ¶ 1(b). Moreover, paragraph 1(c) of
the Participation Agreements requires that "contributions begin on all
employees from the first hour of the first day of employment." See P-22
(Participation Agreement) at ¶ 1(c); Trial Tr. at 554-55, R.
Morreale. Neither the Participation Agreements nor the CBAs define
"bargaining unit work."
UPS contends that the Funds' auditors improperly assessed delinquencies
related to employees who were attending mandated orientation sessions.
During the orientation period, employees "learn the general practices,
rules, safety, payroll, [and] the different aspects of the company,
including the company history, and the job they're about to do. . . ."
See Trial Tr. at 380, J. Scanlon. According to UPS, although it pays its
employees for the time they spend in orientation sessions, see Trial Tr.
at 394, J. Scanlon, the employees are not performing "bargaining unit
work" during that time and, thus, according to UPS, it is not required to
make contributions to the Funds for that time. See Trial Tr. at 393, J.
Scanlon; Trial Tr. at 482, E. Kozlowski.
The Court finds that UPS's interpretation of "bargaining unit work" as
limited to "handling packages" is too narrow. When read together,
paragraphs 1(b) and 1(c) of the Participation Agreements indicate that
contributions should begin on the first day of employment, regardless of
the type of work the employees are performing; i.e, attending orientation
sessions or handling packages. Moreover, the Court finds that the time
spent learning the responsibilities and techniques of their jobs as well
as the history and operations of UPS is undoubtedly directly related to
job performance and, thus, constitutes "bargaining unit work."
Accordingly, the Court concludes that UPS must contribute to the Funds
from the first hour that employees begin working at UPS, including the
hours they spend attending orientation sessions.
5. Jury Duty, Funeral Leave and Military Leave
The Funds also seek contributions for jury duty, funeral leave, and
military leave. There was very little testimony relating to these
categories adduced at trial. Moreover, in their Pre-Trial Stipulations,
the parties do not list these three categories as constituting "facts in
dispute." Nonetheless, in their Post-Trial Reply Brief, the Funds state
that contrary to UPS's claim that contributions are only being sought for
"certain audit categories,"
the Funds seek to recover all delinquencies
identified in the audit. See Funds' Post-Trial Reply Brief at 9. Based
upon the relevant documents, the Court concludes that UPS is required to
make contributions to the Funds for jury duty, funeral leave and military
leave on behalf of its bargaining unit employees.
6. UPS's counterclaim
UPS asserts a counterclaim seeking a credit or reimbursement for the
following items (1) contributions made on behalf of employees absent,
without pay, due to a non-work related illness lasting less than eight
days; (2) contributions made for holidays paid during a vacation week;
(3) contributions made for employees in orientation; and (4)
contributions made in excess of the three-hour maximum applicable to
part-time employees out on workers compensation or disability.
The Funds contend that the evidence presented at trial demonstrates
that UPS has an "utter lack of support" for its counterclaim and that
such claim "was nothing more than an attempt by UPS to gain a bargaining
advantage in settlement discussions with the Funds regarding the
1989-1994 audit."*fn31 See Funds' Post-Trial Brief at 15. The Funds
also point to the fact that the only document UPS provided to show a
basis for its counterclaim was created by UPS's current counsel, Glenn
Butash. See Trial Tr. at 469, E. Kozlowski; P-89; P-90. In addition,
the Funds note that during trial the amount of credit UPS sought
decreased by approximately $1 million. See P-89; P-90; Trial Tr. at
478, E. Kozlowski (alleged Pension Fund overpayment for contributions
made on behalf of absent employees, without pay, due to a non-work
related illness lasting fewer than eight days decreased from $925,554.97
to $694,166.22); Trial Tr. at 511-12, E. Kozlowski (alleged Pension Fund
overpayment for orientation decreased from $298,999 to approximately
$125,000); Trial Tr. at 517, E. Kozlowski (alleged Health Fund
overpayment for orientation decreased from $363,917 to $69,103).
Finally, the Funds point to the fact that UPS used estimates and
amounts from an already settled audit period to determine the amount of
its alleged overpayment to the Funds. See Trial Tr. at 473-80, E.
Kozlowski (testifying that it was his understanding that, when alleging
that it had made overpayments to the Funds and drafting a document
containing those alleged overpayments, UPS drew its figures from the 1993
Settlement Agreement, which covered the period of January 1, 1987 through
December 31, 1988). Moreover, UPS conducted a mere two-day audit and
used samples of data from time periods outside of the audit to arrive at
the figures in its counterclaim. See id. at 488-93, E. Kozlowski
(testifying that in determining the alleged overpayment for orientation,
UPS based its analysis on new hires for 1996 as opposed to actually
considering the number of new hires for the time period at issue.).
Based upon these factors, the Funds contend that UPS's counterclaim
consists of only a "compilation of unsubstantiated allegations."
To the extent that the Court has determined that UPS is liable for
certain categories of contributions, its counterclaim is
Furthermore, with respect to the disability pay issue, the
Court finds that UPS has failed to provide adequate support for that part
of its counterclaim. At trial, Fund Auditor Russell Morreale was asked
about UPS's counterclaim with respect to the issue of illnesses lasting
less than eight days and the notice requirement. In response to a
question from the Funds' counsel as to whether Morreale "perform[ed] a
calculation to determine how many absences for illnesses of less than
eight days would have had to have occurred for UPS to arrive at the
overpayment figure of $694,166.22[,]" Morreale answered
Yes, I did. Approximately 2,000 cases per year would
have had to have occurred or illnesses of less than
eight days, and in every one of those cases UPS would
have had to have [made an] overpa[yment] . In the
years '97 through '99 we did a quick average and UPS
paid on approximately 367 disability cases per year,
so that the 2,000 cases every single year just didn't
— didn't show — didn't appear at all.
See Trial Tr. at 551-52, R. Morreale.
Likewise, the Court finds that UPS failed to establish that it is
entitled to any reimbursement for contributions which it contends were
made in excess of the three-hour maximum applicable to part-time
employees out on workers compensation or disability. Accordingly, the
Court dismisses UPS's counterclaim in its entirety.
After carefully considering the record in this matter, including the
evidence adduced at trial and the parties' pre- and post-trial
briefs, the Court hereby ORDERS that the Participation Agreements govern
UPS's contribution obligations and because the Participation Agreements
do not include an eight-hours-per-day cap, but rather only a weekly cap,
the eight-hours-per-day cap in the CBAs is not to be applied when
calculating UPS's contribution obligations for the audit period at
issue; and the Court further ORDERS that in calculating UPS's
contribution obligations for entitlement pay for the audit period at
issue the Funds must comply with the forty-hours-per week and
2,080-hours-per-year caps; and the Court further
ORDERS that UPS is liable to the Funds for workers compensation and
disability contributions as assessed by the Funds; and the Court further
ORDERS that UPS must contribute to the Funds from the first hour that
employees begin working at UPS, including the hours the employees spend
attending orientation sessions; and the Court further
ORDERS that UPS must contribute to the Funds for jury duty, funeral
leave and military leave; and the Court further
ORDERS that UPS's counterclaim is dismissed in its entirety; and the
Court further ORDERS that a conference is scheduled for May 16, 2002, at
4:00 p.m., in Syracuse, New York, for the purpose of establishing the
procedure to be followed to ascertain the amounts that UPS owes to the
Funds consistent with this Memorandum-Decision and Order.
IT IS SO ORDERED.