OPINION AND ORDER INTERPRETING THE FRINGE BENEFIT CLAUSE OF THE COLLECTIVE BARGAINING AGREEMENT

PATRICK J. DUGGAN, District Judge.

I. INTRODUCTION

This is an action for unpaid fringe benefit contributions. Plaintiffs, the Trustees of the Painters Union Deposit Fund, filed this lawsuit on July 30, 2013, alleging that Defendants G&T Commercial Coatings, Inc. (G&T) and Anastasios G. Liangis, its principal, failed to make fringe benefit contributions as required under the terms of the parties' collective bargaining agreement (CBA). The Trustees seek $159,378.24 in allegedly unpaid contributions on behalf of thirtytwo G&T employees for the period beginning January 1, 2012 through May 9, 2013, and liquidated damages in the amount of $31,875.65, for a total of $191,253.89.1 The Trustees also seek costs and attorney fees. Defendants argue that they paid all the fringe benefit contributions to which the Trustees are entitled during the relevant time period.

In its Opinion and Order issued on June 17, 2014, the Court asked the parties to submit briefs regarding the proper interpretation of the following provision of the CBA:

The Court hereinafter refers to this provision as "the fringe benefit clause."

As noted in the Court's June 17 Opinion, the parties disagree about the meaning of the fringe benefit clause. Defendants argue that the phrase "and covered by this Agreement" modifies "each hour worked," thus requiring G&T to contribute only for hours spent performing work that is covered by the CBA. Conversely, the Trustees argue that the phrase "and covered by this Agreement" modifies "employees employed by him," thus requiring G&T to contribute for all work performed by covered employees regardless of the nature of the work.2

In light of this disagreement and the insufficient briefing on point, the Court asked the parties to brief the following issues:

Regarding the first issue, the Court noted that the rules of construction articulated in International Union v. Yard-Man, Inc., 716 F.2d 1476, 1479-80 (6th Cir. 1983) likely apply and, pursuant to that authority, invited the parties to address the following six considerations:

The parties have filed briefs discussing these factors and the matter is now ready for decision.

II. LEGAL STANDARD GOVERNING INTERPRETATION OF COLLECTIVE BARGAINING AGREEMENTS

In interpreting the fringe benefit clause, the Court applies the following rules of construction:

Yard-Man, 716 F.2d at 1479-80 (citations omitted).

III. ANALYSIS

A. Does "Covered by this Agreement" Modify "Hour Worked" or "Employees"?

The Court now addresses the above six considerations under the Yard-Man framework to determine whether the phrase "covered by this Agreement" modifies "each hour worked," as urged by Defendants," or "employees employed by him," as urged by the Trustees.

1. Yard-Man Consideration (1) — Express Language

The Sixth Circuit has held that "court[s] should first look to the explicit language of the collective bargaining agreement for clear manifestations of intent." Yard-Man, 716 F.2d at 1479. The Trustees argue that their interpretation is more plausible as a matter of grammar and syntax because "it would be highly unusual for the modifying phrase of `covered by this Agreement' to appear thirteen words after the phrase . . . it is supposed to be modifying." 7/11/14 Supp. Br. at 4-5 (ECF No. 49 Page ID 1275-76). The Trustees also argue that their interpretation is consistent with: (1) the union's intent "to provide fringe benefits for as many workers as possible . . . and to protect workers so that they receive all fringe benefits to which they are entitled," id. at Page ID 1275, and (2) the holding of the only other case that has interpreted materially identical fringe benefit language, Painters Union Deposit Fund v. D.P.L. Painting, Inc., No. 83-CV-0374 (E.D. Mich. Apr. 1, 1985) (unpublished) (attached at Exhibit H to Trustees' Motion for Summary Judgment, see ECF No. 27-1 Page ID 482-497).

Defendants contend that the Court has a duty to avoid interpretations that render words or phrases nugatory, and argue that if the Trustees' interpretation is accepted by the Court, the modifying phrase "and covered by this Agreement" would be rendered nugatory. Defendants point out that the term "employee" is expressly defined in the CBA; thus, there is no difference between the CBA's use of "employee" and "employee covered by this Agreement" because all "employees," as defined in the CBA, are necessarily "covered."3 Defendants also argue that if, in fact, the parties intended to require fringe benefit contributions for all hours worked by covered employees, as the Trustees urge, clearer and more efficient language could have been used to convey that intent.

The Court is persuaded by the grammar and syntax argument made by the Trustees. "Operating on the assumption that most contracts follow most rules of grammar, courts tend to prefer interpretations that conform to those rules." Payless Shoesource, Inc. v. Travelers Cos., Inc., 585 F.3d 1366, 1371 (10th Cir. 2009). Relevant for the present purposes is the grammatical rule that "a qualifying or modifying phrase be construed as referring to its nearest antecedent." New Castle Cnty. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 174 F.3d 338, 348 (3d Cir. 1999). See also W. Strunk & E. White, The Elements of Style 30 (50th anniversary ed. 2009) ("Modifiers should come, if possible, next to the words they modify."). Applying this basic rule to the present construction problem, the nearest antecedent to the modifying phrase "and covered by this Agreement" is "employees employed by him." As the Trustees point out, if the Court were to accept Defendants' interpretation, it would have to conclude that the modifying phrase "and covered by this Agreement" modifies an antecedent phrase placed thirteen words earlier in the sentence, not the antecedent phrase found immediately before the modifying phrase. Based on the structure of the sentence and the placement of the modifying phrase relative to the phrase "hour worked," Defendants' proposed interpretation is not as plausible as the Trustees' suggested interpretation.

The Court rejects Defendants' argument that the Trustees' interpretation renders the phrase "and covered by this Agreement" unnecessary. This argument ignores the fact that the drafters of the CBA unambiguously use the phrase "covered by this Agreement" to modify "employee" or "employees" throughout the CBA. By the Court's count, the exact phrase "employee covered by this Agreement" or "employees covered by this Agreement" is employed no less than seven times throughout the CBA. See CBA at 3, 4, 5, 7, 11 (ECF No. 25 Page ID 398, 399, 400, 402, 406). Unlike the wording of the fringe benefit clause, where it is not entirely clear what the phrase "and covered by this Agreement" modifies, it is very clear in at least seven other places in the CBA that the drafters used the phrase "and covered by this Agreement" to modify "employee" or "employees." The use of the phrase "employee covered by this Agreement" or "employees covered by this Agreement" throughout the CBA indicates that the drafters either did not view the use of the phrase "and covered by this Agreement" to modify "employee" or "employees" as a superfluous use of words or did view it as a superfluous use of words but opted to use those words anyway.4 See Yard-Man, 716 at 1480 ("Where ambiguities exist, the court may look to other words and phrases in the collective bargaining agreement for guidance.").

Moreover, Defendants cite no authority supporting their argument that the efficiency with which a right is conveyed in a contract is relevant to discerning the intent of the parties. Thus, the Court rejects Defendants' argument that the interpretation urged by the Trustees should not prevail merely because the drafters of the CBA could have conveyed the right more efficiently.

For these reasons, the Court concludes that the language of the fringe benefit clause strongly favors the interpretation urged by the Trustees. However, the Court acknowledges "that grammatical rules are bent and broken all the time, and [courts] will not enforce the more grammatical interpretation of a contract `when evident sense and meaning require a different construction.'" Payless Shoesource, 585 F.3d at 1371 (quoting Link, Inc. v. City of Hays, 266 Kan. 648, 654, 972 P.2d 753, 758 (Kan. 1999)). Therefore, the Court does not rely on grammar and syntax alone and examines the remaining Yard-Man considerations.

2. Yard-Man Consideration (2) — Context

The Sixth Circuit has noted that CBA language "can . . . only be understood in light of the context which gave rise to its inclusion." Yard-Man, 716 F.2d at 1479. Defendants argue, without citation to evidence, that the interpretation urged by the Trustees would cause harm to the intended beneficiaries of the fringe benefit clause. Defendants contend that an interpretation of the fringe benefit clause requiring contributions for all work, regardless of type of work involved, would:

7/11/14 Supp. Br. 6-7 (ECF No. 50 Page ID 1298-99).

In the section of their brief devoted to context, the Trustees state, without citation to evidence, that the fringe benefit clause was the result of a compromise between employers, who wanted to limit their costs, and the union, who wanted to provide fringe benefits to as many workers as possible. The Trustees state that these "competing interests were reconciled in a negotiated fringe benefit rate, currently $16.08 per hour" — a rate that "provides a contractually agreed-upon compromise allowing the Union to provide fringe benefits to as many workers as possible while limiting the cost for participating employers." 7/11/14 Supp. Br. at 6 (ECF No. 49 Page ID 1277). The Trustees accuse Defendants of now trying to "punch holes in the Agreement's meaning to save money," and argue that the fringe benefit clause would have been worded differently — by using the phrase "covered work" — if the drafters intended to require contributions based on the nature of the work performed, as Defendants urge. Id. at 7 (Page ID 1278).

The Court concludes that the parties' arguments regarding the context giving rise to the fringe benefit clause do not shed light on the meaning of the provision because the arguments asserted by both parties are devoid of evidentiary support.5 Defendants' argument, which focuses on who the drafters of the CBA intended to benefit and the deleterious effects that would follow if the Court adopted the Trustees' interpretation, is speculative and entirely unsupported by evidence. Likewise, the Trustees' argument about the goals of the contracting parties is devoid of evidentiary support. For these reasons, the "context" inquiry under the Yard-Man framework does not weigh in either party's favor.

3. Yard-Man Considerations (3) & (4) — Consistency and Other Words/Phrases in the CBA

"[C]ourt[s] should also interpret each [CBA] provision in question as part of the integrated whole" and, "[i]f possible, each provision should be construed consistently with the entire document and the relative positions and purposes of the parties." Yard-Man, 716 F.2d at 1479. Moreover, "[w]here ambiguities exist, . . . court[s] may look to other words and phrases in the [CBA] for guidance" because "[v]ariations in language used in other durational provisions of the agreement may, for example, provide inferences of intent useful in clarifying a provision whose intended duration is ambiguous." Id. at 1480.

The Trustees argue that the reference in the fringe benefit clause to Article XX of the CBA supports their proposed interpretation that contributions are required for covered employees and not covered work. Article XX — which addresses technical details relating to the Painters Union Deposit Fund and other trust funds, audit rights, and penalties for failure to contribute — does not discuss what type of work would trigger an obligation to contribute, suggesting that the CBA's contribution requirement is not tied to the nature of the work performed. The Trustees also point out that Article XX refers to "each hour worked" as the measure by which the employer shall contribute for fringe benefits, suggesting again that the nature of the work performed is not a relevant consideration in determining whether contributions are necessary.6

Defendants' argument on the "consistency" and "other words/phrases" element of the Yard-Man framework is difficult to follow. They state in their brief:

7/11/14 Def. Br. at 4 (ECF No. 50 Page ID 1296). Defendants also refer the Court to sections seven through ten of Article III of the CBA, which address fringe benefit rates for three specific kinds of work. CBA at 3 (ECF No. 25 Page ID 398).7 According to Defendants, "[t]his provides additional evidence that the Clause intended to require contributions based on the type of work performed rather than the status of [the] employee who performs the work." 7/11/14 Def. Br. at 5 (ECF No. 50 Page ID 1297).

The Court concludes that words and phrases found outside the fringe benefit clause suggest that the requirement to make fringe benefit contributions is not tied to the nature of the work being performed. Although the CBA contains very detailed provisions in Articles III and XX addressing fringe benefit contributions, there is no provision in those articles, or anywhere else in the CBA, even arguably suggesting that the requirement to make fringe benefit contributions depends on the nature of the work being performed. If the requirement to make fringe benefit contributions is, in fact, dependent on to the type of work performed, as Defendants urge, such a basic aspect of the CBA's fringe benefit framework would undoubtedly be conveyed in a CBA as detailed as the present one, and the CBA would contain language distinguishing between work that triggers an obligation to contribute and work that does not trigger an obligation to contribute.

Defendants argue that the following CBA provision defines "covered" work — work for which fringe benefit contributions are required under a fringe benefit contribution framework that ties the obligation to contribute to the type of work performed: "[A]ny preparatorial work, wall washing, painting, hanging of wallpaper, or wall covering, removal of wallpaper or paper cleaning." This language is contained in the following CBA provision:

CBA at 7 (ECF No. 25 Page ID 402). According to Defendants:

7/11/14 Def. Br. at 14 (ECF No. 50 Page ID 1306). While Defendants may be correct that this provision was meant to describe work that is "covered" under the CBA, Defendants fail to point to any CBA language suggesting that fringe benefit contributions are required only for the type of work described.

The absence of any provision of the CBA describing a framework in which the requirement to make fringe benefit contributions is tied to the nature of the work being performed suggests that such a framework was not intended. By the same token, the presence of a reasonably discernable framework in the CBA suggesting a system whereby fringe benefit contributions are required for all work performed by covered employees leads the Court to believe such a framework was intended. The Court believes the framework is reasonably discernable because, as discussed, grammar and syntax support the conclusion that contributions are required for work performed by covered employees, and the word "employee" is explicitly defined in the CBA.

4. Yard-Man Consideration (5) — Federal Labor Law

The Sixth Circuit has stated that a court's interpretation of a CBA should be consistent with federal labor policy in that it should "not denigrate or contradict basic principles of federal labor law." Yard-Man, 716 F.2d at 1480. Defendants argue that the Trustees' urged interpretation denigrates federal labor policy because it ties the right to fringe benefit contributions to union membership:

7/11/14 Def. Br. at 10 (ECF No. 50 Page 1302).

Defendants' argument is unpersuasive. One flaw in Defendants' argument lies in the belief that their proposed interpretation of the fringe benefit clause "allow[s] employees to choose whether or not they wish to become union members." Defendants do not explain why they believe this to be so. Notably, the CBA contains a so-called "union-shop" clause:

CBA at 1 (ECF No. 25 Page ID 396). Union-shop clauses like the one here are permissible, except that employees must be allowed at least thirty days from the beginning of their employment (and not seven, as the CBA here provides) to join the union:

2 Patrick Hardin & John E. Higgins, Jr., The Developing Labor Law 1968 (4th ed. 2001) (footnote omitted). Therefore, under this CBA, no one can choose whether to become a union member, so it cannot be the case that the interpretation of the fringe benefit clause urged by Defendants gives an employee that choice.

Another problem with Defendants' argument is the assumption that the Trustees' proposed interpretation "determines compensation based on union status or past performance." Under the Trustees' proposed interpretation, fringe benefit contributions must be made for all hours worked by "employees covered by this Agreement." As noted above, the word "employee" is defined in the CBA as follows: "The term `Employee' shall include all journeymen, foremen, or any employee who acts in the capacity of foreman, supervising the men directly on the job and apprentices as hereinafter set forth." CBA at 1 (ECF No. 25 Page ID 396). This definition, which uses the word "include" in an illustrative sense and is therefore not necessarily an exhaustive list of who may be deemed an "employee" under the CBA, see Trustees of Laborers Pension Trust Fund v. Metallizers of Mid-America, Inc., No. 13-CV-14874, 2014 WL 4059864, at *4 (E.D. Mich. Aug. 14, 2014) (unpublished) (discussing the meaning of the contractual term "including"), does not itself require union membership; rather, it is the union-shop clause that requires union membership. It is possible that, under the Trustees' interpretation of the fringe benefit clause, fringe benefit contributions may be required for hours worked by employees in the first thirty days of their employment, before they are required to join the union. In sum, Defendants' assumption that the Trustees' interpretation would provide fringe benefits only to union members is unexplained and flawed.

For these reasons, Defendants have not convincingly argued that accepting the Trustees' proposed interpretation of the fringe benefit clause would "denigrate or contradict basic principles of federal labor law." Yard-Man, 716 F.2d at 1480.

5. Yard-Man Consideration (6) — Other Indicia of Intent

Under the Yard-Man framework, courts may look to other indicia of intent, such as "the bargaining history, the context in which the contract was negotiated, the interpretation of the contract by the parties, and the conduct of the parties bearing upon its meaning." Int'l Bhd. of Elec. Workers v. Nat'l Labor Relations Bd., 788 F.2d 1412, 1414 (9th Cir. 1986). Defendants argue that the conduct of the Trustees, counsel for the Trustees, the auditor of the Trustees, and Defendants' employees reflect their understanding that contributions are required for covered work. Specifically, Defendants point out:

Based on this, Defendants argue that the conduct of the Trustees during the course of this litigation indicates their agreement with Defendants' proposed interpretation of the fringe benefit clause.

The Trustees do not offer an explanation for the statements made by their counsel and auditor, which clearly evince their understanding that fringe benefit contributions are required for covered work. With regard to Mr. Barajas' deposition testimony, the Trustees argue that "contributions are due to [him] even if he does not understand he is eligible for fringe benefits that were not paid on his behalf." 7/28/14 Supp. Resp. Br. at 4 (ECF No. 52 Page ID 1326).

The Court agrees with Defendants that the Trustees' attorney and auditor have made statements during the course of this litigation that undercut the interpretation for which the Trustees are advocating. This Yard-Man consideration weighs in favor of construing the fringe benefit clause in accordance with Defendants' position.

Having conducted the required analysis, the Court concludes that the interpretation proposed by the Trustees should prevail. Although one of the Yard-Man factors favors the interpretation proposed by Defendants, that one factor is not enough to overcome the other factors weighing in the Trustees' favor. In particular, the Court places a heavy emphasis on the express language of the fringe benefit clause. Based on the phrasing of the clause at issue, the Court concludes that the parties intended to require the payment of fringe benefit contributions for work performed by "employees," as that word is defined in the CBA, and not based on the nature of the work performed.

The Court's construction of the fringe benefit clause is consistent with the only other case to have interpreted a materially identical clause — D.P.L. Painting — a case involving the same Plaintiff as in the present case. There, U.S. District Judge Philip Pratt interpreted the following CBA language:

D.P.L. Painting, slip op. at *2. The dispute in D.P.L. Painting was the same as here — whether "and covered by this agreement" modifies "each hour worked," as urged by the employer, or "employees employed by him," as urged by the Trustees:

Id. at *5. In reaching its ultimate conclusion in favor of the construction urged by the Trustees (i.e., "and covered by this agreement" modifies "employees employed by him"), the court did not engage in the analysis required by the Sixth Circuit in Yard-Man even though Yard-Man predated D.P.L. Painting. Instead, D.P.L. Painting relied on a number of other cases interpreting remotely similar — but by no means materially similar — CBA language. See Waggoner v. C & D Pipeline Co., 601 F.2d 456 (9th Cir. 1979) (interpreting CBA language requiring fringe benefit contributions for "hours worked by (or paid) each employee under this Agreement"); Kemmis v. McGoldrick, 706 F.2d 993 (9th Cir. 1983) (same); Burke v. Lenihan, 606 F.2d 840 (9th Cir. 1979) (same); Teamster's Local 348 Health & Welfare Fund v. Kohn Beverage Co., 749 F.2d 315 (6th Cir. 1984) (failure of CBA to distinguish between union members and non-union members led to conclusion that CBA covered both).

Because D.P.L. Painting did not engage in the required analysis pursuant to Yard-Man, the Court does not find the case particularly instructive. The Court does, however, agree with D.P.L. Painting's observation that the CBA's "silence on covered and uncovered work suggests, at least by inference, that the agreement covers all work performed by covered employees." Id. at *8. This is a permissible consideration under the Yard-Man framework and an observation that the Court has made in its analysis above.8

B. Who is an "Employee" who is "Covered by this Agreement"?

In light of the Court's interpretation of the fringe benefit clause to require fringe benefit contributions for all work performed by covered employees, the final issue that must be addressed is who qualifies as an "employee" who is "covered by this Agreement." The answer is found in the CBA. As discussed, the CBA defines "employee" as follows: "The term `Employee' shall include all journeymen, foremen, or any employee who acts in the capacity of foreman, supervising the men directly on the job and apprentices as hereinafter set forth." CBA at 1 (ECF No. 25 Page ID 396). Pursuant to this definition, the Court concludes that "employee covered by this Agreement" includes, at a minimum, the categories of workers described. See Metallizers of Mid-America, 2014 WL 4059864, at **4-5 (discussing the meaning of the participle "including," noting that it typically "indicates a partial list") (quoting Black's Law Dictionary (9th ed. 2009). However, the class of workers for whom fringe benefit contributions must be made pursuant to the fringe benefit clause is limited by the title of the clause, which clarifies that fringe benefit contributions under that particular provision of the CBA are only required for "Commercial, Industrial Painters." The words "commercial" and "industrial" are undefined in the CBA.9

IV. CONCLUSION

For the reasons discussed above, the Court construes the fringe benefit clause, found at Article III, section three of the CBA, to require fringe benefit contributions for all hours worked by "employees" who are "covered by this Agreement." Covered employees "shall include all journeymen, foremen, or any employee who acts in the capacity of foreman, supervising the men directly on the job and apprentices as hereinafter set forth," subject to the limitation that contributions are only required under the fringe benefit clause for employees who are "commercial, industrial painters."

The Court will issue a notice setting a status conference for the purpose of discussing how the parties wish to proceed. The parties shall confer prior to the status conference and attempt to agree on a mutually agreeable course of action.

SO ORDERED.