Collective Bargaining Agreements-Contracts

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7^th Circuit Court of Appeals

Case Name: Central States Southeast & Southwest Areas Pension Fund v. Transervice Logistics, Inc.

Case No.: 20-3437

Officials: Sykes, Chief Judge, and Hamilton and Brennan, Circuit Judges.

Focus: Collective Bargaining Agreements-Contracts

Defendant employers Transervice Logistics, Inc. and Zenith Logistics, Inc. agreed that for the entire duration of two collective bargaining agreements, they would make pension contributions on behalf of covered employees to plaintiff Central States, Southeast and Southwest Areas Pension Fund. Both collective bargaining agreements contained so-called “evergreen clauses” that extended them a year at a time until either party provided timely written notice expressing an “intention to terminate” the agreements.

Both agreements were set to expire on January 31, 2019. After the window for timely notice of intention to terminate on that date had passed, the employers and the union signed new collective bargaining agreements requiring pension contributions to a different fund beginning February 1, 2019. The employers notified the plaintiff fund that they were ceasing contributions, relying on letters the union sent them back in November 2018. The question in these consolidated appeals is whether those letters expressed the union’s intent to terminate the existing collective bargaining agreements, so as to satisfy the termination procedure in the evergreen clauses and end the employers’ obligations to contribute to the plaintiff fund on January 31, 2019.

The Circuit court concluded that the supposed termination letters did not mention termination. They noted the date that the collective bargaining agreements would expire and expressed a desire to meet to negotiate new agreements. But neither of these points communicated an intent to terminate the existing agreements. A desire to negotiate a new contract is quite consistent with a desire to leave the existing agreement in place unless and until a new deal is reached. The old agreements thus renewed under the evergreen clauses, and the defendant employers remained obligated to contribute to the plaintiff fund for one more year. The Circuit court therefore reversed the district court’s dismissals for failure to state a claim for relief.

Reversed and Remanded

Decided 12/22/22

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