Summary
The Ninth Circuit considered whether ERISA permits employee benefit plans to recover unpaid contributions from a non-signatory alleged to be a joint employer under a collective bargaining agreement. The court held that ERISA § 1145 enforces pre-existing contribution obligations and does not independently impose such obligations on a non-signatory joint employer. It further held that the collective bargaining agreement's use of “gross compensation” was ambiguous, requiring remand for consideration of extrinsic evidence, while affirming dismissal of the state-law third-party-beneficiary claims.
Topics
Practice areas
Questions Presented
- Whether the status of a defendant as an employer obligated to make contributions under ERISA § 1145 is a jurisdictional issue or an element of the merits.
- Whether ERISA § 1145 imposes contribution liability on a nonsignatory joint employer that had no pre-existing obligation under a collective bargaining agreement.
- Whether the Commercials Contract's term "gross compensation" is unambiguous and excludes compensation paid by a nonsignatory co-employer.
- Whether the trustees were intended third-party beneficiaries of the NYCA-TaylorMade agreement or the endorsement agreement under California law.
Holdings
- Whether a defendant is an employer obligated to make contributions under 29 U.S.C. § 1145 is a merits issue, not a subject-matter-jurisdiction issue, when the plaintiff asserts a nonfrivolous federal claim.
- ERISA § 1145 does not independently obligate an employer to make benefit-plan contributions; it provides a federal cause of action to enforce pre-existing contribution obligations created by a plan or collective bargaining agreement. A nonsignatory joint employer is not liable under § 1145 solely because it jointly exercised control over an employee.
- The Commercials Contract is ambiguous as to whether "gross compensation" includes payments made by a nonsignatory co-employer, so the trustees stated a claim against NYCA and the issue could not be resolved on the pleadings.
- The trustees did not state third-party-beneficiary claims because the agreements were not made expressly for the benefit of the plans and imposed no affirmative obligation on NYCA or TaylorMade to make contributions in the first instance.
Key quotations
“whether a defendant is an “employer who is obligated to make contributions” within the meaning of 29 U.S.C. § 1145 is a question on the merits of the claim, not an issue of subject-matter jurisdiction.” (8937)
“§ 1145 imposes no independent obligation upon employers; it merely provides a federal cause of action to enforce pre-existing obligations created by collective bargaining agreements.” (8937-8938)
“The plain language of Section 46.A is therefore susceptible to the reading that the trustees urge: that the Commercials Contract measures a producer’s contribution obligation by a percentage of the gross compensation paid to principal performers even by entities other than the producer.” (8941)
Factual background
NYCA, an advertising agency and signatory to the Screen Actors Guild Commercials Contract, served as TaylorMade's advertising agent for golf-related products. TaylorMade recruited golfer Fred Couples to endorse its products, and NYCA and TaylorMade shared the payments for Couples's services. NYCA calculated its benefit-plan contributions based only on the amount it paid Couples, while the trustees contended that contributions were owed on Couples's total compensation.
Procedural history
The trustees sued NYCA and TaylorMade, alleging that ERISA and the Commercials Contract required contributions based on Fred Couples's total compensation, including payments made by TaylorMade. The district court dismissed the action under Rule 12(b)(6); the opinion's disposition refers to the ruling as grants of summary judgment. The trustees timely appealed.
Remand instructions
On remand, the district court must consider the parties' practice, usage, and custom, together with other appropriate interpretive aids and extrinsic evidence, to determine the meaning of "gross compensation" under the Commercials Contract. The dismissals of TaylorMade and the state-law causes of action remain affirmed.