United States District Court, D. Hawaii
HAWAII ANNUITY TRUST FUND FOR OPERATING ENGINEERS, BY ITS TRUSTEES, LANCE WILHELM, KATHLEEN THURSTON, MARNIE KOGA HURSTY, CHAD GOODFELLOW, LEONARD DEMPSEY, RUSSELL E. BURNS, PANE MEATOGA, JR., DAN REDING, STEVE INGERSOLL AND MICHAEL AKAU; Plaintiff,
KAUAI VETERANS EXPRESS COMPANY, LTD., A HAWAII CORPORATION; Defendant.
GRANTING PLAINTIFFS TRUSTEES OF THE HAWAII ANNUITY TRUST FUND
FOR OPERATING ENGINEERS' RENEWED MOTION FOR PARTIAL
SUMMARY JUDGMENT, ECF NO. 37, AND DENYING DEFENDANT KAUAI
VETERANS EXPRESS COMPANY, LTD.'S MOTIONS FOR PARTIAL
SUMMARY JUDGMENT, ECF NOS. 39, 48.
Michael Seabright, Chief United States District Judge
(“Trustees”) are trustees of the Hawaii Annuity
Trust Fund for Operating Engineers (“the Trust”),
a multiemployer employee benefit plan established pursuant to
a trust agreement incorporated in a collective bargaining
agreement (“CBA”) between Defendant Kauai
Veterans Express Company, Ltd. (“Kauai Veterans”)
and the Operating Engineers Local Union No. 3 of the
International Union of Operating Engineers, AFL-CIO
(“the Union”). See Compl. ¶¶
1-5, ECF No. 1. Trustees seek summary judgment on their
asserted right to audit Kauai Veterans' payroll records
to determine whether funds are due to the Trust. Mot. at 1,
ECF No. 37. And they seek a judgment finding invalid Kauai
Veterans' defense based on the Union's alleged breach
of the CBA's Favored Nations clause. Id.
before the court, are Kauai Veterans' motion for partial
summary judgment regarding its “Favored Nations”
defense and its amended motion for partial summary judgment
regarding the alleged end-date of its obligation to make
payments to the Trust. ECF Nos. 39, 48. For the reasons
stated below, the Trustees' motion is granted, and Kauai
Veterans' motions are denied.
Veterans and the Union entered into a CBA entitled
“Kauai Trucking Agreement 2011-2014” (“the
2011 Agreement”). ECF No. 1-1. It incorporated the
trust agreements applicable to the “Operating Engineers
Pension/Annuity Trust” which is a multiemployer benefit
plan within the meaning of the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C.
§§ 1001 et seq. Id. §
14.02.00; Compl. ¶ 3. Among other things, the CBA
required Kauai Veterans to make certain regular payments to
the Trust. 2011 Agreement §§ 14.02.00-14.03.02. It
also required Kauai Veterans to “provide the
appropriate Trustees or their authorized representative(s)
with information and records necessary to carry out the
[Trust's] purposes” and “permit an audit of
[its] payroll records . . . to ascertain whether all
contributions due have been paid.” Id. §
14.03.02. By its terms, the 2011 Agreement was in effect
until at least June 30, 2014, and it remained in effect
thereafter unless Kauai Veterans provided the Union with
written notice of termination consistent with “Section
8(d) of the National Labor Relations Act, as amended.”
Id. § 01.01.00.
approximately July or August 2014, Kauai Veterans and the
Union entered into another agreement (“the 2014
Agreement”), which states, “It is understood that
unless modified by this Memorandum of Agreement, the terms
and conditions of the existing collective bargaining
Agreement shall be unchanged.” ECF No. 1-2 at 1. The
2014 Agreement provides that it is effective from July 1,
2014 through at least June 30, 2019. Id.
Veterans underwent audits for 2014 and 2015 that were
performed by Hawaii Benefit Administrators, Inc.
(“HBA”). Noelle Tagaban Decl. ¶¶ 4-5,
ECF No. 28-3. The initial auditor for those periods, who is
apparently no longer with HBA, raised no issues or concerns
during his review, but the current auditor states that as a
result of “further review of said audit results, our
office came to the conclusion that further audit was
necessary given clear discrepancies in the self-reported data
provided by [Kauai Veterans].” Id. ¶ 6.
Kauai Veterans refused to submit to further audits. Compl.
November 11, 2016, Trustees filed their complaint requesting
Kauai Veterans be ordered to submit reports and payments in
accordance with the CBA and Trust agreement and to permit
Trustees to audit its “payroll books and records for
the period of January 1, 2015 to the present, ” and
earlier if necessary. Compl. at 9. Trustees also requested
damages based on any sums due following the audit.
February 1, 2017, Kauai Veterans sent an email to counsel for
the Union and Trustees purporting to withdraw recognition of
the Union effective July 1, 2017. ECF No. 49-8 ¶ 3; ECF
No. 49-10 at 1. Attached to the email was a letter addressed
to Kauai Veterans' counsel Jeffrey Harris that contained
the following paragraphs:
On January 26, 2017 a meeting between Shop Steward James K.
Kanei 3rd, other employee (sic) was conducted in which they
decided that they no longer desired to be part of the
Operating Engineers Local Union #3.
They decided to withdraw their membership from the union
immediately upon your approval of the proper correspondence
to facilitate their request to the union so they can stop
further financial contributions to the Operating Engineers
Local Union #3.
ECF No. 49-10. at 2. The letter included a chart listing the
names and signatures of nine employees; checkmarks
appeared next to each employee's name in a column marked
“Leave.” Id. Below that chart, however,
was the following statement: “My initial and signature
above indicates my . . .
desire to participate as a member of Operating Engineers
Local Union #3. This choice was made of my own free will and
desire and was not coerced in making my
February and August, 2017, the Union filed charges of unfair
labor practices against Kauai Veterans with the National
Labor Relations Board (“NLRB”), encompassing
actions bearing on the Union's alleged loss of majority
filed their motion for partial summary judgment on August 8,
2017. ECF No. 37. Kauai Veterans filed its motion for
partial summary judgment on its Favored Nations defense the
same day. ECF No. 39. It filed an opposition to Trustees'
motion on November 7, 2017. ECF No. 58. And Trustees replied
on November 14, 2017. ECF No. 59.
Veterans filed its motion for summary judgment regarding the
end-date of its contribution obligation on August 29, 2017.
ECF No. 48. Trustees opposed the motion on November 7, 2017.
ECF No. 55. ...