IBEW Local Union No. 102 v. Star-Lo Electric, Inc.

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________

No. 10-4559
_____________

IBEW LOCAL UNION NO. 102; IBEW LOCAL 102 WELFARE, PENSION,
ANNUITY AND JOINT APPRENTICESHIP TRANING FUNDS AND THEIR
BOARD OF TRUSTEES; IBEW LOCAL 102 DISTR FUND, as collection agent for the
National Electrical Benefit Fund

v.

STAR-LO ELECTRIC, INC.; STARKO ELECTRIC SERVICES, INC.;
STAR-LO COMMUNICATIONS, INC.; ROBERT O'MALLEY ELECTRICAL
CONTRACTORS, INC.; LESSNER ELECTRIC COMPANY; LOUIS R. VITO &
COMPANY, INC.; ELECTRO-JET ELECTRIC; P.J. SMITH ELECTRICAL
CONTRACTORS, INC.

STAR-LO ELECTRIC, INC.; STARKO ELECTRIC SERVICES, INC.; STAR-LO
COMMUNICATIONS, INC. ROBERT O'MALLEY ELECTRICAL CONTRACTORS,
INC.; LESSNER ELECTRIC COMPANY; LOUIS R. VITO & COMPANY, INC.;
P.J. SMITH ELECTRICAL CONTRACTORS, INC.,
Appellants
_____________

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Civil No. 08-cv-00900)
District Judge: Honorable Stanley R. Chesler
____________

Submitted Under Third Circuit LAR 34.1(a)
September 13, 2011
____________

Before: RENDELL, JORDAN and BARRY, Circuit Judges
 (Opinion Filed: September 15, 2011)
____________

OPINION
____________

BARRY, Circuit Judge

Defendants-Appellants Star-Lo Electric, Inc., et al., were granted leave to file this

interlocutory appeal of the District Court‟s order in favor of Local Union No. 102 of the

International Brotherhood of Electrical Workers and five of its employee benefit funds on

cross-motions for summary judgment. They also appeal the Court‟s subsequent grant of

the prevailing parties‟ motion for reconsideration, which led the Court to modify its

original opinion. Appellees‟ underlying suit alleges violations of the Employee

Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., and claims that

Appellants tendered insufficient benefit fund contributions owed pursuant to a collective

bargaining agreement that calculates said obligations as a percentage of “gross labor

payroll.” The parties contest the meaning of this phrase, which the Court concluded is

unambiguous. We will vacate and remand for further proceedings.

I. Background1

Since 1946, the International Brotherhood of Electrical Workers (IBEW) and the

National Electrical Contractors Association (NECA) have been parties to an employee

benefits agreement. In January 2000, they promulgated a Restated Employees Benefit

1
Writing primarily for the parties, who are well-acquainted with the background of
this case, we discuss only those facts essential to our analysis.
2
Agreement and Trust for the National Electrical Benefit Fund (NEBF) (hereinafter,

“Trust Agreement”), which “embodie[s] … the Parties‟ collective bargaining agreement

… [and] the basic agreement and declaration of trust for the National Electrical Benefit

Fund.” JA at 237. Per Part I, Provision 3, local unions‟ and employers‟ collective

bargaining agreements must “require … contributions to the NEBF,” while said entities

are required “to recognize and bind themselves to th[e Trust] Agreement.” Id.

Appellees are longtime parties to successive collective bargaining agreements

(CBAs) with the Highland Division of the Northern New Jersey Chapter of the NECA, of

which Appellants are members. Pursuant to those CBAs and associated trust agreements,

Appellants are obligated to make contributions to various employee benefit funds based

on a percentage of monthly “gross labor payroll” (GLP). The parties‟ 2003-2007 CBA

sets forth employers‟ obligations to various benefit funds, but does not specifically define

GLP.2 Article III, § 3.1(b), however, provides that payments shall be made according to a

specific schedule, listing “3% Gross Labor Payroll” for the NEBF, followed by eight

other funds and their contribution rates. JA at 104-05. Six of these also use GLP, a

seventh specifies “Gross Labor Payroll (with no wage gap),” and an eighth provides for a

rate of “$0.01 per hour of productive electrical labor payroll.” Id. Examining these and

other CBA provisions – especially Article IX, which binds parties to the Trust Agreement

2
The CBA referenced in this opinion covered the period June 1, 2003 through May
31, 2007. Other CBAs are part of the record, and while we note that there are some
differences among them, compare JA at 69 with JA at 104-05, we agree with the District
Court that these differences are immaterial to the dispute in this case.
3
– the District Court concluded that “the NEBF [has] a special status.” Id. at 4.

From that conclusion, the District Court proceeded to hold that the Trust

Agreement‟s definition of GLP controls for purposes of the CBA. Trust Agreement §

6.2.1 specifies that “[t]he term „3% of the gross labor payroll‟ shall mean … 3% of all

wages and other compensation paid to, or accrued by, the … Employees.” JA at 245. In

rejecting Appellants‟ argument that GLP means only wages for actual hours worked, the

Court reasoned that reading all CBA references to GLP to mean “all wages and other

compensation,” per the Trust Agreement, coheres with the CBA‟s qualification of the

term elsewhere. That is, providing different formulas for some funds confirms that “gross

labor payroll,” on its own, means “all wages and other compensation.” The Court also,

however, acknowledged that certain of these qualifications – e.g., the CBA‟s use of the

phrase “gross labor payroll (productive electrical payroll)” – “is puzzling and has an

ambiguous meaning.” JA at 7.

Shortly after the District Court granted, on May 6, 2010, Appellees‟ motion for

summary judgment, the Court also granted their motion for reconsideration, premised on

“concern about possible implications of some of the Court‟s language explaining the

reasoning underlying its decision” – to wit, that “„[t]he Court‟s current Opinion saddles

the Local 102 Funds with the NEBF‟s exception of extraordinary bonuses from all wages

and other compensation.‟” JA at 12-13 (quoting Plaintiffs‟ District Court Br. at 16). The

Court observed “that „the distinction between the claims of the Local 102 Funds and the

4
NEBF was not an issue raised by anyone‟” and, “to respond to Plaintiffs‟ concern[,] …

modif[ied] one sentence” in its original opinion. Id. (quoting Plaintiffs‟ District Court Br.

at 7). The sentence stating “that the parties intended to incorporate … provisions [6.2.1

and 6.2.3 of the Trust Agreement] into the CBA” (i.e., to define GLP) thus was revised to

read, “the parties intended to incorporate the language of provision 6.2.1 into the CBA.”

JA at 5, 13. On July 15, 2010, the Court granted Appellants‟ motion for leave to file an

interlocutory appeal, which we thereafter permitted to proceed.

II. Discussion

In this suit premised on alleged ERISA violations pursuant to 29 U.S.C. §§ 185,

1132, & 1145, the District Court exercised jurisdiction pursuant to 28 U.S.C. § 1331. We

exercise jurisdiction pursuant to 28 U.S.C. § 1292.

A. Definition of “Gross Labor Payroll”

We apply plenary review to the District Court‟s disposition of cross-motions for

summary judgment, examining both its grant and its denial of the parties‟ respective

motions. Int’l Union, United Mine Workers of Am. v. Racho Trucking Co., 897 F.2d

1248, 1252 & n.2 (3d Cir. 1990). Summary judgment is appropriate “if the movant shows

that there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56. Facts are “material” when they

could affect the outcome of the proceeding, and a dispute about a material
fact is genuine if the evidence is sufficient to permit a reasonable jury to
return a verdict for the nonmoving party. In conducting our inquiry, we
consider the evidence in the light most favorable to the nonmovant and
draw all reasonable inferences in that party‟s favor.
5
Roth v. Norfalco LLC, --- F.3d ----, 2011 WL 2547576 at *5 (3d Cir. 2011) (internal

quotation marks and citations omitted).

Appellants argue that the District Court erred when it concluded that GLP

“unambiguously consist[s] of all compensation from whatever source,” but “without

examining undisputed extrinsic evidence” of various kinds – here including affidavits of

officials associated with the parties, which, according to Appellants, suggests that the

parties did not construe GLP to meal “all wages and other compensation.” Appellants‟

Br. at 2. We decline to decide whether Appellants‟ construction of GLP can or should

prevail, but given the standard that applies to summary judgment, agree that the Court‟s

decision must be vacated. See, e.g., Einhorn v. Fleming Foods of Pennsylvania, Inc., 258

F.3d 192, 197 (3d Cir. 2001) (remanding because disputed terms‟ ambiguity created “a

genuine issue of material fact that preclude[d] entry of summary judgment for either

side.”).

“[F]ederal law governs the construction of collective bargaining agreements, [and]

traditional rules of contract interpretation apply when not inconsistent with federal labor

law.” Teamsters Indus. Emp. Welfare Fund, et al., v. Rolls-Royce Motor Cars, Inc., 989

F.2d 132, 135 (3d Cir. 1993). Whether contract terms are ambiguous is a pure question of

law, subject to plenary review. Id. Thus, “[t]o affirm a grant of summary judgment on an

issue of contract interpretation, we must conclude that the contractual language is subject

to only one reasonable interpretation.” Sanford Inv. Co. v. Ahlstrom Mach. Holdings,

6
Inc., 198 F.3d 415, 420-21 (3d Cir. 1999) (quotation omitted). If we “determine[] that a

given term in a contract is ambiguous, then the interpretation of that term is a question of

fact for the trier of fact to resolve in light of the extrinsic evidence offered by the parties

in support of their respective interpretations.” Id. at 421. Rolls-Royce provides that, in

deciding whether a CBA is ambiguous,

we hear the proffer of the parties and determine if there are objective indicia
that, from the linguistic reference point of the parties, the terms of the
contract are susceptible of different meanings. Before making a finding
concerning the existence or absence of ambiguity, we consider the contract
language, the meanings suggested by counsel, and the extrinsic evidence
offered in support of each interpretation. Extrinsic evidence may include
the structure of the contract, the bargaining history, and the conduct of the
parties that reflects their understanding of the contract’s meaning.

989 F.2d at 135 (emphasis added; internal brackets, quotation marks, and citations

omitted).

As a threshold matter, the District Court did not apply Rolls-Royce‟s directive that

it consider extrinsic evidence in determining whether the disputed contract term – here,

GLP, as used in the CBA – is ambiguous. Rather, it simply concluded that Appellants‟

proffered evidence of the parties‟ course of dealing “is barred.” JA at 9. In doing so, it

relied on the caution in one of our cases that “[t]here are … limits on the use of extrinsic

evidence in interpreting collective bargaining agreements.” Int’l Union, United Auto.,

Aerospace & Agric. Implement Workers of America v. Skinner Engine Co., 188 F.3d 130,

146 (3d Cir. 1999). While that observation is salutary, it does not trump Rolls-Royce‟s

rule, which Skinner expressly cites. See id. at 145. Moreover, Skinner rejects using

7
extrinsic evidence “to create an ambiguity where none exists.” Id. (emphasis added).

Because, here, the CBA does not itself define GLP, Appellants‟ argument that the Court

should have considered its proffered extrinsic evidence does not run afoul of Skinner, and

comports with Rolls-Royce.3 Likewise, Appellees‟ contention that GLP‟s meaning is

facially self-evident is unpersuasive,4 while their subsequent claim that the Trust

Agreement “is of no relevance to the meaning of other terms in the … CBA,” Appellees‟

Br. at 19, curiously attacks the very basis for the Court‟s decision in their favor.5

That the Trust Agreement has a special status for the parties is clear, but what the

Appellees‟ own argument on appeal also makes clear is that the extent to which that

Agreement‟s definition of GLP carries over to the CBA is disputed. Moreover, to look to

the Trust Agreement to supply a definition for GLP, as the District Court did, is to rely on

extrinsic evidence, further undercutting the claim that that phrase, as used in the CBA, is

unambiguous. Indeed, with respect to at least one fund, the Court noted that more than

3
Even if there were tension between Rolls-Royce (1993) and Skinner (1999), it would
be resolved in favor of Rolls-Royce. Holland v. N.J. Dep’t of Corrs., 246 F.3d 267, 278
n.8 (3d Cir. 2001) (“[T]o the extent that [a case within this Circuit] is read to be
inconsistent with earlier case law, the earlier case law . . . controls.”) (citation omitted).
4
Appellees‟ argument is striking: “The only reason the NEBF Trust Agreement had
any bearing on the „meaning‟ of gross labor payroll is because the … Agreement uses a
meaning that would not be evident to anyone reading the plain, simple and unambiguous
words „gross labor payroll.‟” Appellees‟ Br. at 20-21 (emphasis added).
5
Appellees‟ reliance on a 1990 NEBF executive‟s memorandum clarifying the
meaning of GLP, see Appellees‟ Br. at 17-18, contradicts their assertions (1) that the term
is unambiguous, and (2) that its meaning can be determined without reference to materials
extrinsic to the CBA itself. See also id. at 19-20 (asserting as error the District Court‟s
conclusion that the CBA utilizes the Trust Agreement‟s definition for GLP for purposes
of setting the contribution amounts to various benefit funds).
8
three-quarters of employers made contributions according to one qualified rendering of

GLP, which “means that 22% … did something else. It is extremely unclear what all this

means . . . .” JA at 9. To be sure, Appellants‟ emphasis on the CBA‟s qualifications of

GLP does not convince us that their proposed definition is unambiguously correct. But

the sum total of the vagaries that they highlight, especially given Rolls-Royce‟s

requirement and the fact that all reasonable inferences are drawn in Appellants‟ favor,

precludes awarding summary judgment in favor of Appellees. Contracts are construed as

a whole, and the CBA uses too many terms, sometimes overlapping and other times not,

for us to conclude that the critical term “gross labor payroll” is unambiguous such as to

permit summary judgment.6 See RCI Northeast Svcs. Div. v. Boston Edison Co., 822 F.2d

199, 202 (1st Cir. 1987) (“[W]here the plain meaning of a contract phrase does not spring

unambiguously from the page or from the context, its proper direction becomes one for

the factfinder, who must ferret out the intent of the parties.”).

B. The Motion for Reconsideration

6
Appellees‟ argument that res judicata and collateral estoppel apply, citing Nat’l Elec.
Benefit Fund v. StarKo Elec. Svcs., Inc. (StarKo), No. 06-1446, 2008 WL 2683617
(D.N.J. Jul. 1, 2008), is a red herring. To be sure, StarKo addressed the meaning of GLP
and its definition in the Trust Agreement, but involved a different alignment of parties –
which Appellees concede – and the specific issue there, as opposed to here, was “whether
vacation and holiday pay constitute a part of … „gross labor payroll.‟” Id. at *3.
Accordingly, their res judicata and collateral estoppel argument fails. See United States v.
5 Unlabeled Boxes, 572 F.3d 169, 173 (3d Cir. 2009) (“Res judicata requires,” inter alia,
“a final judgment on the merits in a prior suit involving the same claim . . . . Collateral
estoppel … requires,” inter alia, “that … the identical issue was previously adjudicated
… [and] the part[ies] being precluded from relitigating the issue w[ere] fully represented
in the prior action.”” (emphasis added; internal quotations marks and citations omitted)).
9
 Appellants also contest the District Court‟s ruling on Appellees‟ Rule 59(e) motion

for reconsideration, the purpose of which “is to correct a clear error of law or to prevent a

manifest injustice in the District Court‟s original ruling.” United States v. Dupree, 617

F.3d 724, 732 (2010). While we generally review a court‟s ruling on a Rule 59(e) motion

for abuse of discretion, our review is de novo to the extent that that ruling “is predicated

on an issue of law.” Max’s Seafood Cafe ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d

669, 673 (3d Cir. 1999) (citation omitted).7

The District Court did not explain how its decision met the requirements of

Dupree, and it granted Appellees‟ motion without addressing the effect of its revised

opinion on this case‟s central, disputed issue. This leads us to more searching review, see

Max’s Seafood, 176 F.3d at 673, and underscores the need for remand, see, e.g., Forbes v.

Twp. of Lower Merion, 313 F.3d 144, 149 (3d Cir. 2002) (quoting Protective Comm. for

Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 434 (1968),

for the proposition that reviewing courts require a basis for evaluating “„well-reasoned

conclusions arrived at after a comprehensive consideration of all relevant factors‟”).

Of concern to us, given the parties‟ arguments on appeal, is that in revising its

opinion, the District Court excised its reference to § 6.2.3 of the Trust Agreement,

retaining only its reference to § 6.2.1 (defining GLP). Section 6.2.3, however, expressly

7
Our case law generally addresses denials of a motion for reconsideration, which are
subject to review for abuse of discretion, see, e.g., Dupree, 617 F.3d at 733, but there is
no reason not to apply the same standard to review of a grant of such motion, see, e.g.,
10
limits the definition set forth by § 6.2.1, and the issue in this case concerns how to define

GLP. The upshot of this, then, is that granting Appellees‟ motion for reconsideration

effectively endorsed their preference for how GLP will be defined for purposes of

evaluating this case‟s claims on the merits moving forward. This goes beyond the more

restricted legal question, relevant at this stage of the litigation, of whether the disputed

term is ambiguous.8 The result is that GLP is now, as a matter of law, defined in the CBA

more broadly than in the Trust Agreement – evidently to Appellees‟ liking – while

Appellants‟ proffered extrinsic evidence, which arguably cuts the other way, was “barred”

(to use the District Court‟s phrase) from consideration. This reinforces our conclusion

that summary judgment was premature.

III. Conclusion

For the foregoing reasons, and having duly considered the parties‟ remaining

arguments, we will vacate the District Court‟s grant of summary judgment in favor of

Appellees, and remand for further proceedings consistent with this opinion.

Flynn v. Dick Corp., 481 F.3d 824, 829 (D.C. Cir. 2007) (district court rulings on motions
for reconsideration are subject to review for abuse of discretion).
8
It is telling that Appellees framed their motion for reconsideration in terms of
wanting to avoid being “saddled” with a Trust Agreement-premised definition of GLP
that excludes certain benefits. Aside from this argument presenting a classic “wanting to
have your cake and eat it too” scenario, it implicates fact-intensive line-drawing properly
entrusted to the expertise of the District Court.
11