United States District Court, D. Minnesota
J. Holly, Esq., Kirsten E. Schubert, Esq., and Tiana Towns,
Esq., Dorsey & Whitney LLP; and Lee Thomas Polk, Esq.,
Epstein Becker Green, P.C., counsel for Plaintiff.
Deborah A. Ellingboe, Esq., Faegre Baker Daniels LLP; and
Charles Herrick Morgan, Esq., and Jonathan Gary Rose, Esq.,
Alston & Bird LLP, counsel for Defendant.
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE
matter is before the Court on a Motion for Partial Summary
Judgment filed by Plaintiff Transport Drivers, Inc.
(“TDI”). (Doc. No. 82.) Also pending is a Motion
for Summary Judgment filed by Defendant Coca-Cola
Refreshments USA, Inc. (“CCR”). (Doc. No. 88.)
TDI seeks reimbursement from CCR of more than $500, 000 in
withdrawal liability assessed pursuant to the Employee
Retirement Income Security Act of 1974, 29 U.S.C. §
1001, et seq. (“ERISA”). This liability
arose from TDI's withdrawal from a multiemployer pension
plan following CCR's termination of the parties'
labor services leasing arrangement. CCR denies that it has
any obligation to pay and argues that TDI must indemnify CCR
for the claims TDI asserts in this lawsuit. For the reasons
set forth below, the parties' motions are both granted in
provides labor leasing services throughout the United States.
(See Doc. No. 99 (“CCR Index”) at 1, Ex.
5 (“R. Formento Dep.”) at 6-7; CCR Index at 2,
Ex. 7 (“J. Formento Dep.”) at 49; CCR Index at 3,
Ex. 22 (“TDI Website”).) TDI employs laborers who
perform work for TDI's customers, and TDI provides
services to its customers relating to labor negotiations,
payroll, and employee benefits. (R. Formento Dep. at 14-15;
TDI Website.) Ronald Formento was TDI's President from
1976 until 2013. (R. Formento Dep. at 6.) Jonathan Formento
became President thereafter. (J. Formento Dep. at 32.) During
his tenure with the company, Ronald Formento negotiated more
than five hundred business agreements. (R. Formento Dep. at
8-9.) Based on his professional experiences, Ronald Formento
was familiar with withdrawal liability that may arise from
collective bargaining agreements; he testified that he was
“more attuned to withdrawal liability than a lot of
other people.” (Id. at 18-22, 34, 40-41.)
a subsidiary of The Coca-Cola Company, and the corporate
successor of Coca-Cola Bottling Midwest, Inc.
(“CCBM”) and Coca-Cola Enterprises Inc.
(“CCE”). (Doc. No. 97 (“Manning
Decl.”) ¶¶ 3-4, 6-9, Exs. A-E.) According to
the Associate General Counsel of The Coca-Cola Company,
“CCR is the successor in interest to (1) contracts
entered into by and property of the former entity [CCBM]; and
(2) contracts entered into by and property of the former
entity [CCE].” (Manning Decl. ¶¶ 3, 5.)
The 2000 Agreement and the Parties' Ongoing Business
December 28, 2000, TDI reached out to CCBM, proposing that
TDI adopt as written an existing labor services contract
between CCBM and a company that was going out of business.
(Doc. No. 86 (“R. Formento Aff.”) ¶ 11, Ex.
A (“2000 Agreement”).) CCBM accepted TDI's
proposal. (Id.) The 2000 Agreement consisted of a
letter with an attached agreement entered into between a
predecessor leasing company and CCBM in 1985. (See
id.) TDI did not seek attorney consultation to negotiate
the 2000 Agreement based on timing concerns. (R. Formento
Dep. at 56-59.)
2000 Agreement contains the following relevant provisions:
1. Lease of Personnel. [CCR] agrees to lease from
[TDI] drivers or other personnel (“Workers”) as
needed by [CCR] in connection with the transportation or
storage of goods, upon the terms and conditions set forth in
this Agreement and in the Schedules A. Each Schedule A will
become part of and subject to this Agreement upon execution
by both parties.
2. Services Provided by [TDI]. [TDI] agrees to
provide the following services to [CCR]: . . .
(b) Wages and Benefits. [TDI] will pay all wages,
provide all benefits, pay all federal and state wage taxes .
. . and maintain payroll records for the Workers.
(c) Collective Bargaining Agreements. [TDI] will
negotiate and administer any collective bargaining agreements
applicable to the Workers.
3. Payments. [TDI] will invoice [CCR] each week for
all charges payable for that week as described in the
Schedules A, and for all other charges provided for in this
Agreement. . . .
4. Employment Relationship. . . . If any of the
Workers are covered by a collective bargaining agreement,
[CCR] will not violate or cause [TDI] to violate that
collective bargaining agreement, and will defend, indemnify
and hold [TDI] harmless against any claim, loss, expense or
liability resulting from any such violation.
5. Regulations. [CCR] assumes responsibility for
compliance by the Workers with U.S. Department of
Transportation Hours of Service and other applicable federal
and state governmental regulations (including those related
to environmental impairment), and will defend, indemnify and
hold [TDI] harmless against any claim, loss, expense, fine or
penalty resulting from any violation of these regulations. .
6. Insurance and Indemnification. . . .
(e) Indemnification. . . . [CCR] agrees to release,
indemnify, defend and hold harmless [TDI], its officers,
employees (including the Workers), agents, affiliates and
insurers, against all claims, liabilities, losses, legal fees
and other expenses . . . for personal injuries or death and
for loss or damage . . . to the vehicles, cargo, real estate
or other property of any person (including [TDI], [CCR] and
their respective officers, employees and agents), except to
the extent of recovery under any insurance policy provided by
[TDI] or [CCR] under this Agreement, arising out of (i)
ownership, maintenance, operation or use, including loading
and unloading, of vehicles operated or maintained by the
Workers, whether resulting from the sole negligence of [TDI]
or a Worker, or otherwise, (ii) services performed by the
Workers under this Agreement, (iii) the conduct of
[CCR]'s business, and (iv) [CCR]'s failure to comply
with the provisions of this Paragraph 6 and of any insurance
policy provided under this Paragraph 6.
7. Termination. Either party may terminate this
Agreement in its entirety upon at least 30 days prior written
notice to the other party.
8. Default. . . . [TDI] may also recover all costs
and expenses which it incurs in protecting its interests and
enforcing its remedies under this Agreement, including
reasonable legal fees.
(2000 Agreement.) The “Schedule A” referred to in
the 2000 Agreement is an invoice outlining payments due to
TDI by CCR. (See Id. at attached Invoice.) It
provides for wages, a service charge, and other employee
benefits, including pension benefits. (See
id.) The 2000 Agreement is governed by Minnesota
law. (See Id. at 1, § 15.)
Formento explained that “[t]here was nothing in [the
2000 Agreement] that addressed withdrawal liability at the
time, because there was no withdrawal liability.” (R.
Formento Dep. at 42.) To explain how the 2000 Agreement
obligated CCR to pay for the withdrawal liability, he pointed
to Sections 4, 5, and 6(e). (Id. at 35-36, 48-54.)
Jonathan Formento, testifying on behalf of TDI, explained
that withdrawal liability was “not outlined, but . . .
not excluded” in the 2000 Agreement. (See CCR
Index at 2, Ex. 6 (“TDI 30(b)(6) Dep.”) at 4,
17-19.) When asked what provision governed CCR's
obligation to reimburse TDI for withdrawal liability, he did
not specify a particular section, but referenced “the
section in the contract that identifies benefits . . . and
pension.” (J. Formento Dep. at 98-99.) Dennis Mulvaney,
TDI's Regional Vice President responsible for TDI's
operations at CCR's Eagan, Minnesota facility, identified
the indemnification clause as the source of CCR's
obligation to pay for withdrawal liability. (See CCR
Index at 2, Ex. 8 (“Mulvaney Dep.”) at 5, 10-11,
18-19, 25-26, 44.)
TDI's business relationship with CCR, TDI entered into
four collective bargaining agreements (“CBAs”)
with the Teamsters Local Union No. 120 (the
“Union”) covering TDI's mechanics working at
a facility in Eagan, Minnesota. (Doc. No. 87 (“J.
Formento Aff.”) ¶ 25, Ex. I.) When the CBAs were
being negotiated, CCR provided input to TDI on various terms.
(See R. Formento Aff. ¶¶ 32-33, Ex. G;
see also Doc. No. 95 (“Second Polk
Aff.”) ¶ 2, Ex. 1(“Sypniewski Dep.”)
at 41; see also Mulvaney Dep. at 23-24, 46; CCR
Index at 2, Ex. 12 (“Wagner Dep.”) at 39-41,
58-62.) Each CBA contained a provision obligating TDI to make
ongoing contributions to the Minneapolis Food Distributing
Industry Pension Plan (the “Pension Plan”).
(See J. Formento Aff. ¶ 25, Ex. I.) On April 1,
2001, TDI executed an Employer Participation Agreement with
the Pension Fund's Trustees (“Participation
Agreement”) which was incorporated into the CBA between
TDI and the Union. (R. Formento Aff. ¶ 20, Ex. H.)
employed, paid, and provided W-2s for the individuals
providing services on behalf of TDI at CCR's Eagan
facility. (CCR Index at 2, Ex. 11, Nos. 7-9.) CCR then
reimbursed TDI for invoiced labor costs, including wages,
overtime, health benefits, and pension payments.
(See Wagner Dep. at 32-34.) Ronald Formento claims
that TDI and CCR shared an understanding that the 2000
Agreement “contemplated [CCR's] reimbursement of
all labor costs including wages and fringe benefits.”
(R. Formento Aff. ¶ 10.) In particular, he described it
as “a pass-through contract” under which all
labor costs were invoiced by TDI and paid by CCR.
(Id. ¶¶ 13, 26; see also J.
Formento Aff. ¶ 10, Ex. C; R. Formento Dep. at 54-56,
143-46.) Jonathan Formento also described the parties'
contract as a “pass-through contract” and
explained that costs were passed through to CCR “[i]f
agreed upon . . . and understood by both parties.” (J.
Formento Aff. ¶ 26; TDI 30(b)(6) Dep. at 20-21.) He
testified that TDI kept CCR informed of all costs to be
assessed. (TDI 30(b)(6) Dep. at 24-25.) Ronald Formento
explained that “TDI always considered its withdrawal
liability payments to the Fund as contract labor costs
required to be reimbursed by Coca-Cola under the 2000
Agreement.” (R. Formento Aff. ¶ 44.) In
particular, TDI considered withdrawal liability to be the
same as the ongoing pension costs which CCR was obligated to
pay. (Id. ¶¶ 56-57.)
acknowledged that the 2000 Agreement governed, at least
initially. (Doc. No. 85 (“Polk Aff.”) ¶ 2,
Ex. 1, Nos. 1-2.) However, Tom Sypniewski, CCR's Midwest
Business Unit Fleet Manager from 2006 to 2012, denied that
the parties had a “pass-through” contract.
(Sypniewski Dep. at 8-9, 35-36.) Janet Wagner, CCR's
Fleet Supervisor at the Eagan facility, “reviewed
[TDI's] invoices to ensure that what [CCR was] paying
were the expressly agreed to amounts for the expressly agreed
to items that [CCR] and TDI had agreed to.” (Wagner
Dep. at 14, 101-02; see also Id. at 105-06.)
The 2010 Agreement and the Parties' Continued Course of
February 10, 2010, Ronald Formento signed an agreement with
CCR titled “Coca-Cola Enterprises Bottling Companies
Services Agreement” (the “2010 Agreement”).
(R. Formento Aff. ¶ 35, Ex. B (“2010
Agreement”).) Page 1 of the 2010 Agreement includes a
recitation of consideration as follows: “For good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, Coca-Cola
Enterprises Inc., its divisions, subsidiaries and affiliates
(“Bottler”) and TRANSPORT DRIVERS
(“Supplier or Contractor”) agree . . ., ”
(Id. at 1.) With respect to services and
compensation, the 2010 Agreement states:
1. Description of Services and related Equipment
Contractor shall provide to the Bottler the following
services and related equipment at the following location:
Vehicle maintenance & repairs. . . .
Contractor shall be compensated by the Bottler for providing
the services described above ...