Trustees of the Southern California IBEW-NECA Pension Trust fund v. Flores
Unites States Court of Appeals for the Ninth Circuit
Appeal from the United Stated District Court of the Central District of California
Cite as 06-55812

The Appellate Court Upheld the PSA Agreement and Ordered Benefit Contributions for All Workers

In late August 2003, the Los Angeles Unified School District entered into a construction contract with a general contractor for their Commonwealth Avenue and Hoover Elementary School Safety and Technology Upgrades Project.

Herman Flores, doing business as BHF Electrical Contractors, worked as an electrical subcontractor on the project.

October 1, 2003, Flores signed a Subscription Agreements with local union 11 to the International Brotherhood of Electrical workers in which he agreed make pension trust fund contributions on behalf of his employees.

In addition, Flores’s obligation to make trust fund contributions was regulated by a Project Stabilization Agreement (PSA), the Local Union 11’s Inside Wireman’s Agreement (IWA) and other trust agreements.

Pertinent sections of the Project Stabilization Agreement (PSA), namely, sections 4.6 and 4.8 obligated Flores to hire all project workers, excluding his core employees, from the union’s referral system, unless the referral system did not fulfill Flores’s request within forty-eight hours.

In several occasions, Flores made phone calls requesting for union workers, which the union failed to accede, until December 8, 2003.  In the meantime, Flores used his own workforce of nonunion employees for the works.

Flores made no contributions to the pension to the pension trust fund on behalf of his employees before December 8, 2003 which later was discovered after an audit conducted by the BHF having unpaid contributions for project performed before December 8, 2003.

The Trustees of the Southern California IBEW-NECA Pension Trust fund filed an action to collect delinquent trust fund contributions from employer Herman Flores.

On March 13, 2006, the federal district court for the central district of California entered a judgment in favor of Flores.  In part, the district court held among others that:

• The Project Stabilization Agreement (PSA) was ambiguous because it never defines the term covered employees and never expressly requires contributions for nonunion workers;


• After considering parol evidence, concluded that Flores’s subscription agreement was not in effect and his obligations under the Project Stabilization Agreement (PSA) did not arise until December 8, 2003.

On this score, the Trustees of the Southern California IBEW-NECA Pension Trust fund move to amend or alter the judgment, which was denied by the district court on May 10, 2006.

The Trustees of the Southern California IBEW-NECA Pension Trust fund appealed the district court judgment to the Unites States Court of Appeals for the Ninth Circuit.

On appeal, the Trustees of the Southern California IBEW-NECA Pension Trust fund contend that the district court erred by holding that the term “covered employees” in the relevant collective bargaining agreement is ambiguous and by considering extrinsic evidences of the party’s oral representations.

The Unites States Court of Appeals for the Ninth Circuit has ordered the reversal and remand of the case to the district court for further proceedings.

The court of appeals in part held in the following respects.

Where the electrical subcontractor entered into subscription agreement with the union for worker referrals in which he agreed to make pension trust fund contributions on behalf of employees, but did not make such contributions for non-union employees during period before union began referring workers, he is bound by such subscription undertaking.  Consequently, he is obliged to make benefit contributions for all workers irrespective on actual referral of union workers.

The district court erred in holding the following:

1. That term "covered employees" in relevant collective bargaining agreement was ambiguous, and


2. In considering extrinsic evidence of party’s oral representations in the collection suit.

The appealed court reasoned that the collective agreements required Flores to make beneficial contributions for all electrical workers engaged in project work and did not condition subcontractor’s obligation to contribute on actual referral of union workers.