Written Notice Of Oral Benefit Plan Agreement Does Not Satisfy Writing Requirement
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND v. AUFFENBERG FORD, INC. (March 11, 2011)
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Auffenberg Ford employs workers who are represented by Local 50 of the International Brotherhood of Teamsters. Auffenberg participated in a multi-employer pension fund for several years before withdrawing in 1997. It had to pay a $50,000 withdrawal liability at the time. A few years later, the Local's president encouraged Auffenberg to re-enter the fund. Auffenberg agreed to do so only if it could withdraw again after five years without any withdrawal liability. Auffenberg and the Local’s president orally agreed on that point, but the Collective Bargaining Agreement did not include that term. Instead, it provided that all of its terms would remain in effect until a new agreement was negotiated. The CBA expired in April of 2006 but negotiations for a new agreement continued into February of 2007. The Local's new president orally agreed to honor the 2001 commitment. Auffenberg advised the Fund of this new oral agreement by letter. Auffenberg and the Local agree that Auffenberg’s obligation to the Fund stopped when the CBA expired in April 2006. But the Fund disagreed. It filed suit under ERISA to collect what it considered unpaid contributions. Judge Gettleman (N.D. Ill.) granted summary judgment to the Fund, concluding that evidence of the 2001 oral agreement was barred by the parole evidence rule. Auffenberg appeals.
In their opinion, Judges Manion, Rovner, and Sykes affirmed. ERISA requires that benefit plan terms be "established and maintained" in a written instrument. Similarly, the Labor Management Relations Act requires that the basis of a benefit plan payment be described in writing. The only written agreement here, the 2001 CBA, required fund contributions until a new CBA was negotiated. The Court concluded that the 2001 oral agreement did not change the terms of the CBA, even though notice of the oral agreement was given in writing. The oral commitments of the Local's presidents are simply unenforceable.
ReMapp International Corp. ("ReMapp") and Comfort Keyboard Co. ("Comfort") had done business together for several years. ReMapp provided electronic materials, including circuit boards. In 2006, the parties engaged in oral and written communications regarding the purchase of several thousand circuit boards and several thousand microprocessors. When Comfort did not pay for the material, ReMapp brought a breach of contract action. At a bench trial, the court awarded damages for Comfort's failure to pay for the circuit boards. Although the court also found that Comfort had breached the contract with respect to the microprocessors, the court also found that ReMapp had not mitigated its damages and so awarded no damages. Comfort appeals.