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

March 19, 2002

TEAMSTERS & EMPLOYERS WELFARE TRUST OF ILLINOIS, PLAINTIFF-APPELLANT,
v.
GORMAN BROTHERS READY MIX, DEFENDANT-APPELLEE,



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

Before Bauer, Posner, and Easterbrook, Circuit Judges.

The opinion of the court was delivered by: Posner, Circuit Judge

Argued December 4, 2001

A multiemployer welfare trust filed suit under ERISA in 1999 against the Gorman construction company to recover some $200,000 in delinquent contributions (including interest and attorneys' fees) for the period 1993-1998. 29 U.S.C. sec. 1145. After a bench trial, the district judge held the suit barred by the doctrine of laches and so entered judgment for the company. 139 F. Supp. 2d 976 (C.D. Ill. 2001).

Gorman had signed a three-year collective bargaining agreement with a Teamsters local in 1991. The agreement required Gorman to contribute to a Teamsters welfare trust a specified dollar amount weekly (rising from $63 in the first year of the agreement to $105 in the last year of the latest successor agreement) for any employee who drove a ready-mix concrete truck during the week, however small a fraction of his work week the driving occupied. He might drive such a truck for only an hour a week, yet Gorman would have to contribute the same dollar amount as if he'd spent his whole work week in that activity. This was an expensive proposition (imagine having to make a $105 weekly contribution for a $10-an-hour employee who worked one hour a week), and Gorman failed to make the required contributions, as was discovered by an audit conducted by the plan during the term of the collective bargaining agreement. Dale Stewart, however, who was both the head of the local union and the chairman of the welfare trust, told Eric Leonhardt (Gorman's proprietor), according to the latter, that as a favor to him he had "made the audit go away."

The collective bargaining agreement was renewed, with substantially the same terms except for the amount of the employer contributions, in 1994 and 1997. In 1998 the trust conducted another audit, again found that Gorman was not making the required contributions, and this time sued. Gorman admits that the trust has made a prima facie case for the recovery of the delinquent contributions, but, as we said, the district judge upheld the defense of laches.

"Laches," the corruption of an Old French word (lasche) meaning "lax," in law means culpable delay in suing. Traditionally, suits in equity were not subject to statutes of limitations, but such a suit could be dismissed on the basis of unreasonable, prejudicial delay by the plaintiff. Piper Aircraft Corp. v. Wag-Aero, Inc., 741 F.2d 925, 938-39 (7th Cir. 1984) (concurring opinion). The contrast is between rules and standards as regulatory devices. A statute of limitations cuts off the right to sue at a fixed date after the plaintiff's cause of action accrued. Laches cuts off the right to sue when the plaintiff has delayed "too long" in suing. "Too long" for this purpose means that the plaintiff delayed inexcusably and the defendant was harmed by the delay. Costello v. United States, 365 U.S. 265, 282 (1961); United States v. Administrative Enterprises, Inc., 46 F.3d 670, 672 (7th Cir. 1995); Herman v. City of Chicago, 870 F.2d 400, 401 (7th Cir. 1989); Whiting v. United States, 231 F.3d 70, 75 (1st Cir. 2000); Ivani Contracting Corp. v. City of New York, 103 F.3d 257, 259 (2d Cir. 1997).

The parties agree that ERISA does not contain a limitations periods for suits against employers to recover contributions owed to a multiemployer plan. 29 U.S.C. sec. 1145. Closest is 29 U.S.C. sec. 1451(f), which does cover suits by multiemployer plans, but only suits for withdrawal liability, Jay Conison, Employee Benefit Plans in a Nutshell 19-20 (2d ed. 1998), which this suit is not; Gorman has not withdrawn from the Teamsters plan.

The usual practice when a federal statute fails to specify a limitations period for suits under it has been to "borrow" a state's analogous statute of limitations, and that is what we and other courts have done in the case of ERISA suits for the recovery of employers' delinquent contributions. Central States, Southeast & Southwest Areas Pension Fund v. Jordan, 873 F.2d 149, 152, 154 (7th Cir. 1989); Felton v. Unisource Corp., 940 F.2d 503, 511 (9th Cir. 1991); see generally Doe v. Blue Cross & Blue Shield United, 112 F.3d 869, 873 (7th Cir. 1997); Harrison v. Digital Health Plan, 183 F.3d 1235, 1238 (11th Cir. 1999) (per curiam); Adamson v. Armco, Inc., 44 F.3d 650, 652 (8th Cir. 1995). We remarked in Doe that a borrowed statute of limitations can be either state or federal, but the parties to this case do not argue for borrowing a federal statute of limitations, and we note that Trustees of Wyoming Laborers Health & Welfare Plan v. Morgen & Oswood Construction Co., 850 F.2d 613, 618-20 (10th Cir. 1988), a case similar to ours, refused to borrow the six-month limitations period in the National Labor Relations Act. Instead it borrowed the forum state's 10-year statute of limitations for suits on written contracts; that was the type of suit the court thought most like a suit for delin quent contributions. The Illinois statute of limitations that the district court borrowed for use in this case is also ten years. It is possible that some other statute of limitations, state or federal, would make a better fit with the nature and purpose of a suit for delinquent ERISA contributions, but we are not called upon to decide that, as the parties are not contending for a different statute of limitations.

For purposes of this appeal, therefore, it's as if ERISA contained a (10-year) statute of limitations; and this raises the question (not discussed by the parties) when if ever laches can be used to shorten a statute of limitations. It turns out that just as various tolling doctrines can be used to lengthen the period for suit specified in a statute of limitations, so laches can be used to contract it. Hutchinson v. Spanierman, 190 F.3d 815, 823 (7th Cir. 1999); Maksym v. Loesch, 937 F.2d 1237, 1248 (7th Cir. 1991); Martin v. Consultants & Administrators, Inc., 966 F.2d 1078, 1100-01 (7th Cir. 1992) (concurring opinion). This is regardless of whether the suit is at law or in equity, because, as with many equitable defenses, the defense of laches is equally available in suits at law. Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813, 822 (7th Cir. 1999); A.C. Aukerman Co. v. R.L. Chaides Construction Co., 960 F.2d 1020, 1029-30 (Fed. Cir. 1992) (en banc). We may assume without having to decide that, as with equitable tolling and (perhaps--the question is unsettled) equitable estoppel, the relevant doctrine of laches is that of the state whose statute of limitations is being borrowed. See Shropshear v. Corporation Counsel, 275 F.3d 593, 596-98 (7th Cir. 2001).

We are mindful that some courts have invoked a presumption against the use of laches to shorten the statute of limitations. E.g., Herman Miller, Inc. v. Palazzetti Imports & Exports, Inc., 270 F.3d 298, 321 (6th Cir. 2001); United States v. Rodriguez Aguirre, 264 F.3d 1195, 1207-08 (10th Cir. 2001); Lyons Partnership v. Morris Costumes, Inc., 243 F.3d 789, 799 (4th Cir. 2001). One even made the presumption conclusive, Ivani Contracting Corp. v. City of New York, supra, 103 F.3d at 259-61, on the odd ground that abridging a statutory period for suit by means of a judge-made doctrine is in tension with the separation of powers. When Congress fails to enact a statute of limitations, a court that borrows a state statute of limitations but permits it to be abridged by the doctrine of laches is not invading congressional prerogatives. Ashley v. Boyle's Famous Corned Beef Co., 66 F.3d 164, 170 n. 4 (8th Cir. 1995) (en banc). It is merely filling a legislative hole. And none of the courts we've cited questions the use of the judge-made doctrines of equitable estoppel and equitable tolling to lengthen the statutory period--and laches, as the Hutchinson, Maksym, and Martin opinions cited above all point out (the majority as well as the concurring opinion in Martin, see 966 F.2d at 1090-91), is the mirror image of equitable estoppel.

This point turns out to be important in this case, and so we'll take a moment to explain it. The doctrine of equitable estoppel allows the plaintiff to extend the statute of limitations if the defendant has done something that made the plaintiff reasonably believe that he had more time to sue. E.g., LaBonte v. United States, 233 F.3d 1049, 1053 (7th Cir. 2000); Bomba v. W. L. Belvidere, Inc., 579 F.2d 1067, 1071 (7th Cir. 1978); Wall v. Construction & General Laborers' Union, Local 230, 224 F.3d 168, 176 (2d Cir. 2000). One example is the defendant's promising not to interpose the defense of the statute of limitations, Athmer v. C.E.I. Equipment Co., 121 F.3d 294, 296 (7th Cir. 1997); Cada v. Baxter Healthcare Corp., 920 F.2d 446, 450-51 (7th Cir. 1990); another is his concealing the cause of action from the plaintiff, Santa Maria v. Pacific Bell, 202 F.3d 1170, 1177 (9th Cir. 2000); Rhodes v. Guiberson Oil Tools Division, 927 F.2d 876, 878-79 (5th Cir. 1991); Pruet Production Co. v. Ayles, 784 F.2d 1275, 1280 (5th Cir. 1986); a third is promising to pay the plaintiff's claim, Bomba v. W. L. Belvidere, Inc., supra, 579 F.2d at 1071; McAllister v. FDIC, 87 F.3d 762, 767 (5th Cir. 1996). See generally Shropshear v. Corporation Counsel, supra, 275 F.3d at 597-98. Conversely, if a plaintiff does something that reasonably induces the defendant to believe he won't be sued and the defendant's ability to defend himself against the plaintiff's suit is impaired as a result, the plaintiff can be barred by the defense of laches from suing. Wauchope v. U.S. Dept. of State, 985 F.2d 1407, 1412 (9th Cir. 1993); TransWorld Airlines, Inc. v. American Coupon Exchange, Inc., 913 F.2d 676, 696 (9th Cir. 1990); EEOC v. Alioto Fish Co., 623 F.2d 86, 88-89 (9th Cir. 1980); 1 Dan B. Dobbs, Law of Remedies, sec. 2.4(4), p. 105 (2d ed. 1993). What is sauce for the goose (the plaintiff seeking to extend the statute of limitations) is sauce for the gander (the defendant seeking to con tract it).

Laches is thus a form of equitable estoppel rather than a thing apart. Maksym v. Loesch, supra, 937 F.2d at 1248; Thompson v. Board of County Commissioners, 34 P.3d 278, 280 (Wyo. 2001); Callenders, Inc. v. Beckman, 814 P.2d 429, 434 (Idaho App. 1991); Central Improvement Co. v. Cambria Steel Co., 210 Fed. 696, 713 (8th Cir. 1913) (per curiam), aff'd under the name Kansas City Southern Ry. v. Guardian Trust Co., 240 U.S. 166 (1916); 1 Dobbs, supra, sec. 2.4(4), p. 105. The only difference is which party asserts it. That is not a ma terial difference; the fact that laches is asserted defensively by the employer sued by the plan, whereas equitable estoppel is used offensively to obtain extra benefits, does not destroy the symmetry between laches and equitable estoppel. Failure to recover employer contributions imposes the same cost on the plan as being forced to pay additional benefits in the same amount.

The symmetry is particularly marked in this case because it isn't really a case of laches at all, at least in the technical sense, though that is the term the district judge used and the terminology is supremely unimportant; for if we are right that laches and equitable estoppel are the same thing, it can't matter which term is used. The reason it is not a case of laches, strictly speaking, is that the Teamsters trust is not suing to recover the delinquent contributions identified in the first audit. Gorman's argument is not that the second suit, the suit on the later delinquencies, should have been filed sooner, but that it shouldn't have been filed at all because the company was misled by the disappearance of the first audit. The company is really arguing that the disappearance should estop the trust to bring a suit for later-accruing delinquencies, even ...


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