01-2029 Teamsters & Employers Welfare Trust of Illinois v. Gorman Brothers Ready Mix

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“[T]here had to be reliance and it had to be reasonable. As to whether there was reliance, we note that Leonhardt testified that he didn’t understand the ‘making the audit go away’ comment that he attributes to Stewart to mean that there would never be a subsequent audit under a subsequent collective bargaining agreement. He also testified that Stewart did not tell him he was making the collective bargaining agreements go away; never ‘indicate[d] that [Gorman] would be immune from any future audits’; and never told him ‘that [Gorman did] not have to comply with the … collective bargaining agreements.’ But even if, as Gorman argues and we greatly doubt, the inflection of Leonhardt’s testimony – his tone of voice, the emphasis he placed on particular words – might justify a finding that the district judge never made that Leonhardt somehow understood Stewart to be promising that no future audits would be conducted or efforts made to collect delinquent contributions under future collective bargaining agreements, it would have been unreasonable for Leonhardt to rely on such an understanding as a basis for violating the future collective bargaining agreements. Leonhardt had no reason to think Stewart authorized to modify a collective bargaining agreement orally or to waive orally the entitlements of the welfare plan, let alone to do so in advance of such an agreement’s coming into effect. He had no reason to think that Stewart could bind the other trustees of the welfare plan, let alone his or their successors. A reasonable person in Leonhardt’s position, when asked to sign the subsequent collective bargaining agreements, would, at the very least, have asked Stewart whether Gorman would be bound by the provisions relating to contributions to the plan. He did not do so, or consult a lawyer, or take any other step to determine whether he could violate his contractual obligations with impunity. He must have been gambling that Stewart would be able to keep the Teamsters trust off his back. An unsuccessful gamble is not a form of reasonable reliance.”

Reversed and remanded.

Appeal from the United States District Court for the Central District of Illinois, Mills, J., Posner, J. No. 99-3059-Richard Mills, Judge