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Central States South v. Waste Manag, 10-3286 (2012)

Court: Court of Appeals for the Seventh Circuit Number: 10-3286 Visitors: 41
Filed: Feb. 29, 2012
Latest Update: Feb. 22, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit No. 10-3286 C ENTRAL S TATES, S OUTHEAST AND S OUTHWEST A REAS P ENSION F UND, and A RTHUR H. B UNTE, JR., as Trustee, Plaintiffs-Appellees, v. W ASTE M ANAGEMENT OF M ICHIGAN, INC., a Michigan corporation, Defendant-Appellant. Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 09 C 5216—William J. Hibbler, Judge. A RGUED N OVEMBER 29, 2011—D ECIDED F EBRUARY 29, 2012 Before P OSN
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                               In the

United States Court of Appeals
                For the Seventh Circuit

No. 10-3286

C ENTRAL S TATES, S OUTHEAST AND
S OUTHWEST A REAS P ENSION F UND, and
A RTHUR H. B UNTE, JR., as Trustee,
                                                  Plaintiffs-Appellees,
                                   v.

W ASTE M ANAGEMENT OF M ICHIGAN, INC.,
a Michigan corporation,
                                  Defendant-Appellant.


              Appeal from the United States District Court
         for the Northern District of Illinois, Eastern Division.
               No. 09 C 5216—William J. Hibbler, Judge.



    A RGUED N OVEMBER 29, 2011—D ECIDED F EBRUARY 29, 2012




  Before P OSNER and             K ANNE,      Circuit     Judges,   and
P RATT, District Judge.Œ
  K ANNE, Circuit Judge. Waste Management of Michigan,
Inc., sought an early withdrawal from its obligation to


Œ
  The Honorable Tanya W. Pratt, District Judge for the Southern
District of Indiana, sitting by designation.
2                                            No. 10-3286

make pension contributions to Central States, Southeast
and Southwest Areas Pension Fund (the “Fund”), a
multiemployer pension fund. But Waste Management’s
agreements with the Fund did not provide for an early
withdrawal; in fact, clear language prevented it from
taking such action. Waste Management was thus left
in the unenviable position of arguing that the clear lan-
guage in its agreements perhaps was not so clear. Un-
doubtedly, that is true in some cases. But this is not
one of those cases.
  Waste Management entered into a collective bar-
gaining agreement (“CBA”) with Teamsters Local Union
No. 247, requiring Waste Management to make contribu-
tions on behalf of covered employees to the Fund. As
part of its agreements with the Fund, Waste Management
was obligated to make contributions through the stated
term of the CBA. But as time went on and the stated
term of the CBA neared its expiration, Waste Manage-
ment decided it no longer wanted to participate in the
Fund’s plan and instead sought an alternate arrange-
ment with Local 247. Waste Management also decided
that financially, it would be more beneficial to withdraw
from the Fund’s plan immediately, rather than continue
making contributions through the stated term of the
CBA. Seizing upon any language in its agreements
that might plausibly permit this course of action, Waste
Management entered into a new CBA with Local 247
that immediately abrogated the obligation to make
pension contributions to the Fund—six weeks prior to
the expiration of the old CBA.
No. 10-3286                                             3

  The Fund brought suit in district court, seeking damages
for the unpaid pension contributions. The district court
granted the Fund’s motion for summary judgment,
finding that the terms of the plan documents unambigu-
ously prohibited Waste Management’s actions. We affirm.


                    I. B ACKGROUND
  In 2005, Waste Management entered into a CBA with
Local 247 covering the period of February 1, 2005,
through January 31, 2009. As part of this agreement, Waste
Management agreed to make pension contributions to
the Fund for the duration of the CBA. A number of
other documents set forth the terms under which Waste
Management participated in the pension fund, although
not all of them are relevant for purposes of this appeal.
  A Trust Agreement executed by the parties required
Waste Management “to contribute to the Fund for
the entire term of any [CBA] accepted by the Fund on
the terms stated in that [CBA].” Moreover, the Trust
Agreement created a Board of Trustees empowered to
consider “[a]ll questions or controversies, of whatsoever
character, arising in any manner between any parties or
persons in connection with the Fund or the operation
thereof.” It also vested the Trustees with “discretionary
and final authority in construing plan documents of the
Pension Fund” and provided that “any construction
adopted by the Trustees in good faith shall be binding
upon the Union, Employees and Employers.”
 The parties also entered into a Participation Agreement.
This agreement required any change in the CBA agreed
4                                            No. 10-3286

to between Waste Management and Local 247 to be sub-
mitted to the Fund, and provided that any agreement
“which affects [Waste Management’s] contribution ob-
ligation which has not been submitted . . . shall not
be binding on the Trustees.” Importantly—and as we
will discuss below in greater detail—the Participation
Agreement expressly barred modifications to the CBA
purporting to reduce or eliminate Waste Management’s
obligation to contribute to the Fund. The Participation
Agreement also stated that the “Participation Agree-
ment shall control” in the event of a conflict with
any provisions contained in the CBA.
   In 2008, Waste Management and Local 247 entered
into early negotiations for a new CBA to replace the
2005 CBA, which was set to expire on January 31, 2009.
On December 14, 2008, they agreed to a new CBA that
no longer obligated Waste Management to make con-
tributions to the Fund. Likely seeking to minimize
its withdrawal liability from the pension fund, the new
CBA purported to abrogate Waste Management’s ob-
ligation to make contributions as of December 14, 2008—
six weeks prior to the expiration of the 2005 CBA. The
Fund, however, maintained that Waste Management
was required to continue making pension contributions
through January 31, 2009, and that any agreement pur-
porting to eliminate this duty was invalid under the
terms of the Participation and Trust Agreements.
  The dispute was then brought to the Trustees, in accor-
dance with the dispute resolution process contained in
the Trust Agreement. Largely agreeing with the position
No. 10-3286                                                  5

taken by the Fund, the Trustees found the terms of the
Participation Agreement and the Trust Agreement ex-
pressly barred the actions taken by Waste Management,
and that Waste Management was required to continue
making pension contributions through the stated term
of the 2005 CBA.
   On August 25, 2009, the Fund filed suit in district court
pursuant to section 515 of the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1145,
claiming Waste Management breached its agreement to
make pension contributions to the Fund. On January 14,
2010, the Fund filed a motion for summary judgment,
contending there was no need for discovery because
the case turned solely on the application of unambiguous
contractual terms. The Fund also argued that the
district court could only review the Trustees’ decision
for an abuse of discretion. Waste Management disagreed
and filed a Rule 56(f) 1 motion for discovery, arguing
that discovery was needed to ascertain possible con-
flicts of interest influencing the Trustees’ decision, as
well as the Fund’s past practice in dealing with other
contractually bound employers. Waste Management
also contended that de novo review of the Trustees’ deci-
sion was appropriate.
 On May 19, 2010, the district court largely denied
Waste Management’s motion for discovery, permitting


1
  Rule 56 has since been amended, and Rule 56(f) now appears
as Rule 56(d). See Fed. R. Civ. P. 56 advisory committee’s note
(2010 amends.) (“Subdivision (d) carries forward without
substantial change the provisions of former subdivision (f).”).
6                                               No. 10-3286

only limited discovery into whether the Fund took
steps to address any possible conflicts of interest by the
Trustees. The district court also agreed with the Fund
that the Trustees’ decision could only be reviewed for
an abuse of discretion. On September 2, 2010, the court
granted the Fund’s motion for summary judgment,
finding that the terms of the plan documents unambigu-
ously barred Waste Management from ceasing or re-
ducing contributions to the Fund prior to January 31,
2009. Waste Management then filed this timely ap-
peal, arguing that the district court erred in both
denying its motion for discovery and granting sum-
mary judgment in favor of the Fund.


                       II. A NALYSIS
  In interpreting the language of an ERISA-governed
plan, we apply the federal common law rules of contract
interpretation. Kamler v. H/N Telecomm. Servs., Inc., 
305 F.3d 672
, 680 (7th Cir. 2002). Our first task is to deter-
mine whether the contract at issue is ambiguous or unam-
biguous. Neuma, Inc. v. AMP, Inc., 
259 F.3d 864
, 873
(7th Cir. 2001). “Contract language is ambiguous if it is
susceptible to more than one reasonable interpretation.”
Id. Where the
terms of a plan document are unam-
biguous, we “will not look beyond its ‘four corners’ in
interpreting its meaning.” Trs. of S. Ill. Carpenters Welfare
Fund v. RFMS, Inc., 
401 F.3d 847
, 849 (7th Cir. 2005).
Contract interpretation lends itself to resolution by sum-
mary judgment because “the determination of whether
a contract is ambiguous is a matter of law.” Barnett v.
No. 10-3286                                             7

Ameren Corp., 
436 F.3d 830
, 833 (7th Cir. 2006). We
review the district court’s grant of summary judgment
de novo, construing all facts and drawing all reasonable
inferences in favor of the nonmoving party. Moore v.
Vital Prods., Inc., 
641 F.3d 253
, 256 (7th Cir. 2011).
   Waste Management argues that the plan documents
are ambiguous because they are subject to more than
one reasonable interpretation. The crux of its argument
lies in the purported ambiguity of the term “prospec-
tively,” contained in the Participation Agreement. In
relevant part, the Participation Agreement states:
   The following agreements shall not be valid:
   a) an agreement that purports to retroactively
   eliminate or reduce the Employer’s contracted or
   statutory duty to contribute to the Fund(s); b) an
   agreement that purports to prospectively re-
   duce the contribution rate payable to the Pension
   Fund[;] or c) an agreement that purports to pro-
   spectively eliminate the duty to contribute to
   the Pension Fund during the stated term of a
   collective bargaining agreement that has been
   accepted by the Pension Fund.
Although Waste Management concedes that it could not
“prospectively” (or retroactively) eliminate the duty to
contribute to the Fund under the terms of the Participa-
tion Agreement, it contends that the new CBA signed
in 2008 did not eliminate this duty prospectively—it did
so immediately. Thus, Waste Management asserts that
the term “prospectively” is ambiguous because it could
reasonably be interpreted to allow for immediate action.
8                                               No. 10-3286

Defying common sense and logic, Waste Management
posits that an agreement to stop paying contributions
tomorrow or even one hour in the future would be
barred by the Participation Agreement, but an agree-
ment to do so immediately would be perfectly fine.
We disagree—this is not a reasonable interpretation of
the Participation Agreement.
  Waste Management makes an equally unconvincing
argument regarding “ambiguities” in the 2005 CBA. The
CBA states:
    This Agreement shall be in full force and effective
    from February 1, 2005 to and including January 31,
    2009, and shall continue in full force and effect
    from year to year thereafter unless written notice
    of desire to cancel or terminate the Agreement
    is served by either party upon the other by Certi-
    fied Mail at least sixty (60) days prior to the date
    of expiration.
Waste Management asserts that the opt-out provision
in the last clause could be interpreted to allow either
party to the CBA to unilaterally cancel the agreement
at any time during the four-year period of the CBA, so
long as sixty days’ notice was provided. If the 2005
CBA allowed either party to cancel the CBA at any time,
then the plan documents—which only require Waste
Management to make contributions for the stated term
of the CBA—necessarily also contemplate a party opting
out. Therefore, Waste Management concludes, the 2005
CBA could be read to allow for the unilateral can-
cellation of the CBA and the cessation of contribution
payments prior to January 31, 2009.
No. 10-3286                                                       9

  Waste Management’s reading of the 2005 CBA is gram-
matically inaccurate and unreasonable. The first clause,
stating the duration of the CBA, is separated from the
remainder of the language by a comma, and is then
followed by an automatic renewal provision. The opt-
out provision follows, modifying only the automatic
renewal provision; the opt-out provision does not
modify the first clause. Thus, the CBA unambiguously
allows either party to unilaterally cancel the automatic
renewal of the 2005 CBA, so long as sixty days’ notice
is provided prior to the expiration of the CBA. It does
not, as Waste Management asserts, allow for the uni-
lateral cancellation of the CBA during the stated term
of the CBA. As the district court aptly noted, Waste Man-
agement’s reading of the CBA “would be absurd if for
no other reason than that it would allow either party to
opt out of the contract at any time during the four-
year term of the agreement except for the last sixty
days.” Cent. States, Se. & Sw. Areas Pension Fund v. Waste
Mgmt. of Mich., Inc., 
737 F. Supp. 2d 952
, 957 (N.D. Ill.
2010). Plainly, the terms of the relevant documents
are unambiguous.2



2
   Waste Management also identifies an additional ambiguity
concerning the Fund’s Rehabilitation Plan, which relates to an
employer withdrawing from the pension fund while the Fund
is in critical status. But Waste Management did not preserve
this argument for appeal, relegating it to only a footnote in
its briefing to the district court. See Moriarty ex rel. Local Union
No. 727 v. Svec, 
429 F.3d 710
, 722 (7th Cir. 2005) (“A footnote
                                                      (continued...)
10                                                  No. 10-3286

  Waste Management also contends that there were
latent ambiguities in the agreements that create an issue
of material fact. A latent ambiguity is present when a
contract appears unambiguous, but a disputed term
“actually means something different from what it
appears to mean on its face.” 
Neuma, 259 F.3d at 876
. In
limited circumstances, parties may present extrinsic
evidence to demonstrate a latent ambiguity despite the
fact that a contract appears clear on its face, 
id. at 875-
76, because the ambiguity “becomes apparent only in
consideration of the surrounding circumstances,” Int’l
Union v. ZF Boge Elastmetall LLC, 
649 F.3d 641
, 649 (7th
Cir. 2011).
  But Waste Management does not identify any specific
latent ambiguities in the language of the plan docu-
ments—ostensibly because the district court allowed
for only limited discovery, and not because there are
none. Accordingly, Waste Management argues that
broader discovery was necessary to allow it to identify
evidence of a latent ambiguity, notwithstanding the
unambiguous terms of the documents. This brings us
to a related point and the second issue on appeal:
Waste Management’s claim that the district court
abused its discretion in denying broader discovery.


2
  (...continued)
does not preserve an issue for review.”); To-Am Equip. Co. v.
Mitsubishi Caterpillar Forklift Am., Inc., 
152 F.3d 658
, 663 (7th
Cir. 1998) (finding that argument “buried” in a footnote in
a brief to the district court did not preserve the issue for
review). Thus, we will not consider it.
No. 10-3286                                                11

  “It is well-settled that district courts enjoy broad discre-
tion in controlling discovery.” McCarthy v. Option One
Mortg. Corp., 
362 F.3d 1008
, 1012 (7th Cir. 2004). We
review the district court’s decision to deny Waste Man-
agement’s Rule 56(f) motion for an abuse of discretion.
King v. Burlington N. & Santa Fe Ry. Co., 
538 F.3d 814
, 817
(7th Cir. 2008). We have previously noted a general re-
luctance to grant extensive discovery in ERISA cases,
Semien v. Life Ins. Co. of N. Am., 
436 F.3d 805
, 813 (7th
Cir. 2006) (citing Perlman v. Swiss Bank Corp. Comprehensive
Disability Prot. Plan, 
195 F.3d 975
, 982 (7th Cir. 1999)), and
the present case allows us to echo this sentiment. Here,
discovery would be costly and produce very little
relevant information when the terms of the plan docu-
ments are unambiguous.
  Waste Management has not offered any other rea-
sonable interpretation of the unambiguous language in
the plan documents, even assuming there was extrinsic
evidence to support such a hypothetical alternative
interpretation. “Although extrinsic evidence is ad-
missible to show that a written contract which looks
clear is actually ambiguous . . . there must be either
contractual language on which to hang the label of am-
biguous or some yawning void that cries out for an
implied term.” ZF Boge 
Elastmetall, 649 F.3d at 649
(internal punctuation omitted). Such contractual lan-
guage or the presence of a void is notably absent in
the various documents, and Waste Management should
not be entitled to expansive discovery when it has only
the mere speculative allegation of a latent ambiguity.
“[D]iscovery is not to be used as a fishing expedition.”
12                                             No. 10-3286

EEOC v. Harvey L. Walner & Assocs., 
91 F.3d 963
, 971
(7th Cir. 1996).
  Moreover, it is unclear how the issues Waste Manage-
ment identified for discovery—conflicts of interest by
the Trustees rendering the initial decision and the
Fund’s “pattern of practice” in dealing with other em-
ployers—would help ascertain any latent ambiguity.
Waste Management spent much time and effort arguing
that the district court erred in holding that the Trustees’
interpretation should be reviewed under a deferential
abuse of discretion standard, rather than de novo.
But such an argument was largely wasted because, as
previously stated, the terms of the documents are unam-
biguous. Thus, the standard of review is of no conse-
quence. And as a result, any potential conflict of inter-
est—which would be relevant to determine if there was
an abuse of discretion—was largely irrelevant because
the Trustee’s decision would be upheld even under a
de novo standard.
  It is also unclear how the Fund’s “pattern of practice”
in dealing with other employers—Waste Management
asserts that the Fund did not enforce similar con-
tractual rights with respect to other employers—would
reveal latent ambiguities. Such business practice can
hardly be considered novel; for a number of reasons,
large companies commonly might choose to waive
their contractual rights when dealing with some cus-
tomers. Even if the Fund waived its contractual rights
arising out of separate agreements with different em-
ployers, the Fund is still entitled to enforce its contrac-
No. 10-3286                                              13

tual rights according to the terms of its agreements with
Waste Management. Extrinsic evidence of the Fund’s
practice with other employers would hardly demon-
strate a latent ambiguity. Thus, the district court did not
abuse its discretion in denying Waste Management’s
motion for broader discovery.
  Perhaps sensing the overall weakness of its argument,
Waste Management concludes by boldly asserting that,
as construed by the district court, the Participation Agree-
ment and the other documents do not allow an em-
ployer to ever withdraw from the pension fund. But this
assertion is preposterous; Waste Management was
only obligated to make contributions to the Fund
through January 30, 2009. The parties, each sophisticated
entities represented by competent legal counsel, bar-
gained for this end date. Waste Management was free
to bargain for an earlier end date or the option to
withdraw earlier. But it chose not to, and instead agreed
to make contributions through the stated term of the
2005 CBA. Although it scoured the plan documents
looking for some plausible loophole allowing for an
early withdrawal, Waste Management did so in vain.


                    III. C ONCLUSION
  For the foregoing reasons, we A FFIRM the judgment of
the district court.



                           2-29-12

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