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BRIDGE v. TRANSPERSONNEL

STEPHEN BRIDGE, MICHAEL COLGAN, PAUL DiGRAZIA, WILLIAM O'LEARY, JOHN NAUGHTON, ROBERT PERSAK, HUGH ROBERTS and GERALD ZERO, as TRUSTEES of the LOCAL 705 INTERNATIONAL BROTHERHOOD OF TEAMSTERS PENSION FUND, Plaintiffs,
v.
TRANSPERSONNEL, INC., an Illinois corporation, Defendant.



The opinion of the court was delivered by: REBECCA PALLMEYER, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiffs are trustees of the Local 705 International Brotherhood of Teamsters Pension Fund (the "Fund"), a multiemployer pension plan and employee benefit plan under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Defendant Transpersonnel, Inc. was a signatory to the Local 705 International Brotherhood of Teamsters' collective bargaining agreements and was required to make contributions to the Fund on behalf of covered employees. In July 2002, the Fund demanded withdrawal liability payment from Transpersonnel due to an alleged series of partial withdrawals, followed by complete withdrawal from the Fund. Transpersonnel challenged the assessment and attempted to settle the dispute with the Fund. The company failed, however, to make the statutorily required interim withdrawal liability payments during the settlement negotiations.

Plaintiffs ultimately filed suit to recover the interim payments, and also sought interest, liquidated damages, attorneys' fees, and costs. Upon receiving the Complaint, Transpersonnel paid all outstanding withdrawal liability plus interest. Arguing that this payment has rendered Plaintiffs' allegations moot, the company seeks summary judgment in its favor. Plaintiffs have filed a cross-motion for summary judgment, claiming that they are entitled to interest, liquidated damages, attorneys' fees and costs because they did not receive payment until they filed this lawsuit. For the reasons set forth here, Plaintiffs' motion is granted and Transpersonnel's motion is denied.

  FACTUAL BACKGROUND

  On July 1, 2002, the Fund served Transpersonnel and its attorney, Mark A. Spognardi, with four letters demanding $441,826.96 in payment for withdrawal liability in each of four plan years. Specifically, the Fund requested $283,029.06 for a partial withdrawal in 1995; $129,767.89 for a partial withdrawal in 1997; $29,030.01 for a partial withdrawal in 1998; and $0 for a complete withdrawal in 2002.*fn1 (Defendant's Statement of Material Facts As to Which There is No Genuine Issue (hereinafter "Def.'s 56.1 Stmt.") ¶ 7; Notices and Demands for Payment dated 7/1/02, Exs. A-D to Def's 56.1 Stmt.; Plaintiff's Statement of Material Facts (hereinafter "Pltf.'s 56.1 Stmt.") ¶¶ 16-20.) The letters were addressed to both Mr. Spognardi and Robert P. Hanley, a former president of Transpersonnel who had retired from the company in February 2000, and outlined a schedule of interim payments to commence on September 1, 2002. (Pltf.'s 56.1 Stmt. ¶¶ 17-19; Letters from J. Witt to R. Hanley, Ex. A to Def.'s 56.1 Stmt.) Upon receiving the notices, Transpersonnel initiated discussions with the Fund regarding the amount owed and the possibility of settlement. (Def.'s 56.1 Stmt. ¶ 8.)

  By letters dated July 30, September 10, and September 30, 2002, Transpersonnel requested that the Fund provide additional information necessary to assess the accuracy of the Fund's liability estimate. (Id. ¶ 9.) Also on September 30, 2002, the company served the Fund with a formal Request for Review of the Fund's withdrawal liability demands as provided under ERISA. (Id. ¶ 10.) See 29 U.S.C. § 4219(b)(2)(A). Shortly thereafter on November 7, 2002, the Fund sent Transpersonnel three letters — one for each of the three partial withdrawal claims resulting in financial liability — stating that the company was delinquent in its interim withdrawal liability payments and demanding that such payments be made within 30 days for plan year 1998, and within 60 days for plan years 1995 and 1997. (Pltf.'s 56.1 Stmt. ¶ 24.) These letters, addressed only to Mr. Hanley, were not sent or copied to Mr. Spognardi. (Def.'s 56.1 Stmt. ¶ 11.) Transpersonnel neither admits nor denies receiving the letters, but the Fund received Certified Mail Return Receipts for all three. (Pltf.'s 56.1 Stmt. ¶ 29.)

  On or about January 9, 2003, Mr. Spognardi met with the Fund's attorney, Robert Seltzer, to discuss settlement.*fn2 (Def.'s 56.1 Stmt. ¶ 12.) At one point in the meeting, Mr. Seltzer asked Mr. Spognardi whether Transpersonnel had been making interim withdrawal payments. Mr. Spognardi replied that the company had not done so due to the pending settlement negotiations. In response, Mr. Seltzer neither demanded that payments be made, nor mentioned the letters the Fund had sent to the company in that regard. (Id.) Shortly thereafter on January 16, 2003, Transpersonnel sent the Fund a letter offering to settle the matter for $100,000. (Id. ¶ 13.)

  On January 27, 2003, Transpersonnel filed a demand for arbitration to dispute the withdrawal liability assessment, which remained pending as of the date of these motions. (Id. ¶ 14.) See 29 U.S.C. § 1401. On February 7, 2003, the Fund sent Transpersonnel a letter rejecting its settlement offer and demanding $356,170.88 to settle the matter. (Def.'s 56.1 Stmt. ¶ 15.) The letter advised Transpersonnel that the figure was "a final offer which will be open until February 28, 2003," and that if the company did not accept the offer by that date, "the Fund will immediately take appropriate legal action to collect any delinquent withdrawal liability installment payments owed by Transpersonnel to the Fund, plus interest, liquidated damages and attorneys' fees and costs." (Letter from B. Hillman to M. Spognardi dated 2/7/03, Ex. E to Def.'s 56.1 Stmt.)

  Over the next two months, the parties continued to engage in settlement discussions and exchanged several settlement offers. Transpersonnel claims that throughout these discussions, the Fund never demanded that the company make interim withdrawal payments. (Def.'s 56.1 Stmt. ¶ 15.) On April 9, 2003, however, the Fund filed this lawsuit seeking full payment plus interest, liquidated damages, attorneys' fees, and costs. (Id. ¶ 16; Pltf.'s 56.1 Stmt. ¶ 33.) The following day, another Fund attorney, Peter C. Swanson, sent Transpersonnel attorney Spognardi a letter advising him of the lawsuit and of the November 7, 2002 letters demanding interim payments. (Id. ¶ 17; Letter from P. Swanson to M. Spognardi dated 4/10/03, Ex. F to Def.'s 56.1 Stmt.)

  In response to the lawsuit, Transpersonnel sent the Fund a letter offering $225,000 to settle the case and requesting a statement of the arrearages in the interim payments. (Id. ¶ 18; Letter from M. Spognardi to R. Seltzer dated 5/8/03, Ex. G to Def.'s 56.1 Stmt.) On May 23, 2003, Transpersonnel hand-delivered to Fund attorney Seltzer a check in the amount of $300,627.63 to cover past interim payments, and a letter stating that the company would be making monthly payments pursuant to the Fund's established schedule. (Id. ¶ 19.) The Fund acknowledges that Transpersonnel has now paid the full principal amount of its withdrawal liability, but claims that the company still owes interest, liquidated damages, and "other collection costs." (Pltf.'s 56.1 Stmt. ¶ 38.) Transpersonnel insists that the Fund has received all it is due and has no basis for further recovery. DISCUSSION

  Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). See also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). When considering cross-motions for summary judgment, the court must view the evidence in a light most favorable to the party opposing the motion under consideration. O'Regan v. Arbitration Forums, Inc., 246 F.3d 975, 983 (7th Cir. 2001).

  I. ERISA Withdrawal Liability

  Under ERISA, an employer that withdraws from a multiemployer pension plan is required to make contributions to ensure that it pays its share of the unfunded vested benefits of the plan. 29 U.S.C. §§ 1381, 1391; Central States, Southeast and Southwest Areas Pension Fund v. Bomar Nat'l, Inc., 253 F.3d 1011, 1014 (7th Cir. 2001). An employer may contest a fund's assessment of withdrawal liability but must make "interim withdrawal liability payments" pending arbitration. Central States, Southeast and Southwest Areas Pension Fund v. Hunt Truck Lines, Inc., 204 F.3d 736, 739 (7th Cir. 2000). See also Bomar Nat'l, 253 F.3d at 1014-15. This "pay now, dispute later" scheme "reduc[es] the risk that an employer will not pay and . . . encourag[es] speedy adjudication by requiring immediate arbitration before the courts become involved in the merits of the dispute." Bomar Nat'l, 253 F.3d at 1015 (citing 29 U.S.C. §§ 1399(c)(2)). If an employer fails to make timely interim withdrawal liability payments as required by statute, a fund may file an appropriate action in federal court. 29 U.S.C. § 1451(b). In addition to recovering the delinquent payments, a fund may be awarded interest, liquidated damages, attorneys' fees and costs. 29 U.S.C. §§ 1451(b) and (e). See Central States v. Bomar Nat'l, Inc., No. 99 C 0346, 2000 WL 263979, at *5 (N.D. Ill. Feb. 29, 2000), aff'd, 253 F.3d 1011 (7th Cir. 2001).

  Plaintiffs claim that they are entitled to interest, liquidated damages, attorneys' fees and costs because they had to file this lawsuit to recover the interim withdrawal liability payments required by statute. Transpersonnel argues that Plaintiffs' lawsuit is moot now that the company has paid its withdrawal liability in full, and that Plaintiffs are not prevailing parties entitled to recover under ERISA §§ 1451(b) or (e). Transpersonnel also claims that Plaintiffs are ...


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