Trustees of the Screen Actors Guild-Producers Pension and Health Plans v. NYCA, Inc.
Filed July 15, 2009
Cite as 08-55409

Party not Signatory not Required to Pay Unpaid Contributions

NYCA, Inc. was an advertising agency based in southern California. It was a party to the “Commercials Contract”, a collective bargaining agreement with the Screen Actors Guild, a union that represents actors.

The Commercials Contract required the “producers” or the signatory advertising agencies to contribute to employee health and pension plans. An amount equal to 14.30 percent of the gross compensation must be paid by the producers to “principal performers” for acting in commercials. In other words, each time a performer performs, the agreement required producers to contribute to the plans.

Meanwhile, TaylorMade-Adidas Golf Company, Inc. (TaylorMade), a manufacturer of golf-related products, recruited famous golfer, Fred Couples. The agreement provided that in case payments were made, TaylorMade would make the required contributions. However, TaylorMade was not a signatory to the Commercial Contract.

NYCA and TaylorMade also had their own contractual relationship even before TaylorMade signed the endorsement deal with Couples. Under this contract, NYCA would act as TaylorMade’s exclusive advertising agent for golf-related products and equipment. In one provision, TaylorMade recognized that NYCA was a signatory to Commercial Contract and that the hiring and use of talent by NYCA would subject them to such contract.

The income from Couples’ endorsement was divided between NYCA and TaylorMade. However, NYCA calculated its contribution obligations under the Commercials Contract with only with payments to Couples rather than the combined payments made by NYCA and TaylorMade.

Consequently, the trustees of the benefit plans covered by the Commercials Contract filed a suit against NYCA and TaylorMade. They claimed that the Employee Retirement Income Security Act of1974 (ERISA) required NYCA to base their contribution not only on the portion paid by NYCA but based on Couple’s total compensation.

The district court denied the claim for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

In its appeal, the trustees contended that even if TaylorMade was not a signatory to the Commercial Contract, it was liable as “joint employer” of Couples. On the other hand, TaylorMade argued that the district court should have dismissed the case based on lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1).

The United States of Court of Appeals ruled as follows:

1. The determination of whether TaylorMade was an employer who was obligated to contribute to a benefit plan was a question on the merits of the claim and not an issue of subject-matter jurisdiction.


2. Since TaylorMAde was not a party to the Commercials Contract ERISA does not allow benefits plans to recover unpaid contributions from it.


3. The district court would be required to determine whether the parties' practice, usage, and custom shed light on the meaning of "gross compensation”. By doing so, it would be determined if whether producer was required to calculate its payments to employee benefit plan based on entire compensation performer received or specifically on portion paid by producer.


4. Agreement between producer and other entity requiring other entity to indemnify producer for required contributions, but imposing an affirmative obligation on other entity to contribute did not create a third-party beneficiary cause of action under California law.

Considering the foregoing findings, the appellate court Affirmed, reversed and remanded.