United States District Court, N.D. Illinois, Eastern Division
June 7, 2005.
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and HOWARD McDOUGALL, Trustee, Plaintiffs,
WATERLAND TRUCKING SERVICE, INC., a Michigan corporation, Defendant.
The opinion of the court was delivered by: ELAINE E. BUCKLO, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs Central States, Southeast and Southwest Areas
Pension Fund and Howard McDougall, one of its trustees
(collectively, the Pension Fund), sue defendant Waterland
Trucking Services, Inc. (Waterland) under the Employee Retirement
Income Security Act of 1974 (ERISA), as amended by the
Multi-employer Pension Plan Amendment Act of 1980 (MPPAA) for
interim partial withdrawal liability payments. Before the court
is the Pension Fund's motion for summary judgment. For the
reasons given below, I grant the motion.
The MPPAA requires that an employer who withdraws from a
multi-employer pension plan must pay its pro rata share of the
plan's unfunded vested liability. 29 U.S.C. § 1381. The purpose
of withdrawal liability generally is to protect other employers
in a multi-employer plan from having to pay the benefits of the withdrawing employer's employees. Santa Fe Pacific v. Central
States Pension Fund, 22 F.3d 725, 726-27 (7th Cir. 1994). In
this case, Waterland's liability for partial withdrawal
liability was predicated upon a 70 % decline in its contribution
from one plan year to another. 29 U.S.C. § 1385(a)(1).
Even where an employer believes that it has a good faith
defense to a claim for withdrawal liability, it must pay first
and resolve the dispute later through arbitration. Waterland was
obligated by contracts with various labor unions to make
contributions to the Pension Fund. In July 2004, the Pension Fund
served a notice and demand on Waterland stating that as a result
of a decline in Waterland's contributions, Waterland had effected
a "partial withdrawal" from the plan and incurred withdrawal
liability to the plan in the amount of $304,481.86, as determined
under Section 4201(b) of ERISA, 29 U.S.C. § 1381(b). Under the
notice and demand, the amount claimed could be paid in a lump sum
or in installments beginning September 1, 2004. Waterland made no
payments. Instead, it initiated an arbitration. On October 27,
2004, plaintiffs filed this action to obtain payment of all
installments past due under the notice plus prejudgment and
post-judgment interest, attorneys' fees and costs, and an order
compelling Waterland to make its future interim withdrawal
liability payments in accordance with the schedule determined by the Pension Fund. On March 24, 2004, plaintiffs filed their
motion for summary judgment.
Waterland does not dispute the facts underlying plaintiffs'
claim insofar as they relate to the amount of its contributions
to the plan from one year to the next. However, Waterland seeks
to avoid the "pay now, dispute later" mechanism of the statute.
It argues that it is entitled to an exemption from withdrawal
liability provided in ERISA to companies substantially all of
whose employees perform work in the building and construction
industry (29 U.S.C. § 1383(b) and 1388(d)). Neither ERISA nor
MPPAA defines the term "substantially all", but the Seventh
Circuit has defined it to mean 85% or more. Central States Pension
Fund v. Robinson Cartage, 55 F.3d 1318, 1321 (7th Cir. 1995).
Summary judgment is proper only if there is no genuine issue as
to any material fact and the moving party is entitled to judgment
as a matter of law. Fed.R.Civ.P. 56(c). In deciding a motion
for summary judgment I must evaluate admissible evidence in the
light most favorable to the non-moving party. I may not make
credibility determinations or weigh the evidence. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Payne v.
Pauley, 337 F.3d 767, 770 (7th Cir. 2003). The party who bears
the burden of proof on an issue may not rest on the pleadings but
must affirmatively demonstrate that there is a genuine issue of fact that requires trial. Celotex Corp. v. Catret, 477 U.S. 317, 324
The court has no general equitable power to excuse interim
payments. The only basis on which Waterland can avoid having to
make interim payments while its liability is being determined in
the statutorily mandated arbitration is to demonstrate both
that the claim made by the Pension Fund is frivolous (i.e.,
devoid of rational support in fact or law) (Trustees of Chicago
Truck Drivers v. Rentar Ind., 951 F.2d 152, 155 (7th Cir. 1991)
and that making the requested interim payments will cause
Waterland irreparable harm. Robbins v. McNichols Transp. Co.,
819 F.2d 682, 685 (7th Cir. 1987). If a contributing employer
cannot make this double showing, the trial court has no
discretion to excuse the interim payments.
I cannot conclude that the Pension Fund's claim is frivolous.
Putting aside the question of the quality of Waterland's proof as
to what a given percentage of its employees actually do that is
construction related, its argument is clearly based on the notion
that work performed outside the boundaries of construction sites
is work in the "building and construction industry" so long as
the products its drivers deliver to the sites are used in
construction and the drivers provide some work on site. Waterland
Memorandum at 3-4. The legislative history of ERISA shows that
Congress intended that the words "building and construction
industry" as employed in ERISA should "be given the same meaning as has developed in the
administration of the Taft-Hartley Act." Rep. No. 869, 96th
Congress, Sec. Sess., Part 1 at 67, 76, reprinted in 1980 U.S.
Code Congressional and Administrative News 2918, 2935.
Accordingly, neither the National Labor Relations Board (NLRB)
nor the courts have been willing to give the term the expansive
meaning claimed by Waterland. Compare NLRB v. International
Brotherhood of Teamsters Local 294, 342 F. 732, 738-39 (6th Cir.
1991); In re Tedesca Corp., 1996 WL 138068, (N.L.R.B. Office of
General Counsel, Advice Div., Feb 2, 1996). It is clear that
drivers who merely deliver materials to a construction site are
not engaged in the "construction industry" for all purposes, and
that the Pension Fund's position in arguing that Waterland's
claimed exemption does not apply, is at least a colorable
argument and not a frivolous one.
Moreover, even if the exemption were to apply, Waterland's
factual showing could not be held to raise a triable issue of
fact. The affidavits it submits are conclusory in nature, and
there is no way of determining from the exhibits attached thereto
what percentage of Waterland's employees performs work directly
related to construction or what percentage of their time is spent
by its drivers performing construction related duties on
construction sites.*fn1 As the Pension Fund has argued,
Waterford's affidavits do not give sufficient information nor cover the requisite time
period to defeat summary judgment.
In view of my holding that Waterland has failed to demonstrate
that the claim of the Pension Fund is frivolous, it would be
superfluous to consider Waterland's claim that it will suffer
irreparable injury if it is required to make the payments
directed by the Pension Fund. Trustees of Chicago Truck Drivers
v. Rentar Ind., 951 F.2d 152, 155 (7th Cir. 1991)); Central
States, Southeast and Southwest Areas Pension Fund v. Manning
Motor Express, Inc., 125 F.Supp.2d 1113, 1117 (N.D.Ill. 2000).
The motion for summary judgment is granted. Under
29 USC § 1132(g)(2), the Pension Fund is entitled to recover interest on
the missed interim withdrawal liability payments, liquidated
damages, costs and, in the discretion of the court, attorneys'
fees. The liquidated damages awarded are mandatory. Central
States v. Lady Baltimore Foods, Inc., 960 F.2d 1339, 1347 (7th
The Pension Fund has represented that because both the amount
of delinquent payments and interest due change on a monthly
basis, it will require two weeks in which to prepare a schedule
showing the amounts due. The Pension Fund is directed to submit
proof of the claimed amount of the interim payments, plus any
interest, liquidated damages and fees and costs the Fund seeks,
on or before June 28, 2005. Defendant is directed to respond to
the Fund's submission concerning the judgment amount on or before
July 12, 2005. The case is set for status hearing and possible entry of a
final judgment on July 15, 2005 at 10:00 a.m.