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TEAMSTERS JOINT COUNCIL NO. 83 v. HOOK UP

June 15, 2005.

TEAMSTERS JOINT COUNCIL NO. 83 OF VIRGINIA HEALTH AND WELFARE FUND, et al., Plaintiffs,
v.
HOOK UP, INC., Defendant. HOOK UP, INC., Third-Party Plaintiff, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND; CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND; and HOWARD McDOUGALL, Trustee, Third-Party Defendants.



The opinion of the court was delivered by: JOHN GRADY, District Judge

MEMORANDUM OPINION

This ERISA case is before us on the motion of third-party defendants for summary judgment. For the reasons explained below, the motion is granted.

BACKGROUND

  This case was reassigned to this court's calendar pursuant to our finding that it is related to Central States, Southeast & Southwest Areas Pension Fund v. Hook Up, Inc., No. 03 C 3194 ("Hook Up I"). In Hook Up I, plaintiffs Central States, Southeast and Southwest Areas Pension Fund; Central States, Southeast and Southwest Areas Health and Welfare Fund (the "Health Fund") (together, the "Funds"); and the Funds' Trustee Howard McDougall (together, "Central States") filed a three-count action against Hook Up, Inc. ("Hook Up"). Central States sought payment of withdrawal liability, delinquent contributions based on reported work history, unpaid contributions based on unreported work history that were revealed by an audit, interest, liquidated damages, attorney's fees and costs, and audit costs. Central States moved for summary judgment against Hook Up, which was granted. The following brief summary of the facts of Hook Up I is taken from our memorandum opinion:
Hook Up was an employer required to contribute to the Funds on behalf of its employees under collective bargaining agreements executed with various Teamsters Local Unions. On August 31, 2002, Hook Up permanently ceased all covered operations under the Pension Fund.
When Hook Up ceased operations, it effectuated a "complete withdrawal" from the Pension Fund within the meaning of ERISA, 29 U.S.C. § 1383. When an employer withdraws from a multiemployer plan, the employer becomes immediately liable for its proportionate share of unfunded vested benefits.
. . . In October 2002, the Pension Fund calculated Hook Up's withdrawal liability ($2,782,644.50) and sent Hook Up a notice of that liability and a demand for payment. Hook Up admits that it did not make any withdrawal liability payments, nor did it initiate arbitration to contest the withdrawal liability assessment. The Funds also claim that Hook Up failed to make contributions based on reported work history in addition to misreporting some employees' work history.
Hook Up I, No. 03 C 3194, 2004 WL 2997495, at *1 (N.D. Ill. Dec. 23, 2004) (citations omitted). We entered judgment in favor of Central States and against Hook Up in the total amount of $3,906,356.74.

  The instant case, filed several months after Hook Up I, was originally brought in the Eastern District of Virginia by the Teamsters Joint Council No. 83 of Virginia Health and Welfare Fund and its trustees ("Joint Council No. 83"). Like Central States, Joint Council No. 83 sought delinquent pension and health care contributions on behalf of selected Hook Up employees. Hook Up filed a third-party complaint against Central States seeking a refund of contributions made to Central States on behalf of Hook Up employees who were transferred from Hook Up's Virginia facility to its Pennsylvania facility. Hook Up's position is that in the event it is found liable for contributions to Joint Council No. 83, Hook Up is entitled to a refund from Central States because it had made contributions, for a period of six months, on behalf of the transferred employees to Central States when it should have been making contributions to Joint Council No. 83.

  Pursuant to Central States's motion, Judge Payne of the Eastern District of Virginia severed the third-party action between Hook Up and Central States from the main case and transferred it to this court for all further proceedings. Judge Payne's order was entered on December 6, 2004, a few days after Central States had filed a motion for summary judgment. That motion is now pending before us. Hook Up has not filed any response, which is not surprising considering that in late January, we granted the motion of Hook Up's counsel to withdraw.*fn1 Counsel indicated that there were no representatives employed by Hook Up with whom to consult concerning the litigation and that Hook Up was delinquent in paying its attorney's fees and could no longer pay for counsel. Accordingly, we now proceed to decide Central States's motion for summary judgment without the benefit of any submission by Hook Up, which is now evidently defunct.

  DISCUSSION

  Summary judgment "shall be rendered forthwith if 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 a judgment as a matter of law." Fed.R.Civ.P. 56(c). In considering such a motion, the court construes the evidence and all inferences that reasonably can be drawn therefrom in the light most favorable to the nonmoving party. See Pitasi v. Gartner Group, Inc., 184 F.3d 709, 714 (7th Cir. 1999).

  Once the moving party has supported its motion for summary judgment, the "adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Any fact asserted in the movant's affidavit will be accepted by the court as true unless the adverse party submits its own affidavits or other evidence contradicting the assertion. See Curtis v. Bembenek, 48 F.3d 281, 287 (7th Cir. 1995). If the adverse party does not respond with evidence complying with Rule 56, "summary judgment, if appropriate, shall be entered against the adverse party." Fed.R.Civ.P. 56(e).

  The first argument presented by Central States is that Hook Up has failed to state a cognizable claim for a refund of contributions because ERISA does not provide employers with a means to recover mistakenly paid contributions and because ERISA preempts any state laws under which an employer can seek those contributions. Central States acknowledges that some courts have found that federal common law affords employers the right to recover overpayments under an equitable restitution theory. Central States contends, however, that these cases can no longer be considered good law in view of the ruling in Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204, 218 (2002). In Great-West Life, the Supreme Court held that for a restitution claim to lie in equity, a plaintiff must seek to restore particular funds or property in the defendant's possession—not simply some funds for benefits that were conferred. In Central States's view, Hook Up has no claim for equitable restitution because all employers' contributions to the plans are pooled, and Hook Up cannot point to a specific, segregated account containing its purported overpayment. And even if Hook Up has adequately stated a claim, Central States contends, summary judgment in its favor is appropriate because its Trustees' decision to deny a refund to Hook Up was reasonable.

  Assuming, without deciding, that Hook Up has stated a valid claim for a refund of the contributions for the transferred employees, we agree that summary judgment for Central States is appropriate. Central States sets forth the following facts in its statement of undisputed material facts, all of which are deemed to be admitted by Hook Up because it has failed to controvert the facts set forth in the statement (at all) and because the facts are properly supported by references to evidentiary material. See Stewart v. McGinnis, 5 F.3d 1031, 1034 (7th Cir. 1993); N.D. Ill. Local Rule 56.1.

  Hook Up entered into a nationwide collective bargaining agreement, the National Master Automobile Transporters Agreements ("NMATA") that covered Hook Up's facilities in Pennsylvania and Virginia. The NMATA required Hook Up to contribute to Central States for the Pennsylvania facility and to Joint Council No. 83 for the Virginia facility. Hook Up also entered into a Central States Participation Agreement (the "Participation Agreement") requiring Hook Up to contribute to Central States. The Participation Agreement indicated that any disputes concerning Hook Up's obligation to contribute to Central States would be submitted for resolution by Central States's Trustees.

  Hook Up was also bound by the Central States Trust Agreements (the "Trust Agreements"). The Trust Agreements provide that mistaken overpayments must be used to offset other contribution obligations and that a cash refund is available only if the employer has ceased participation in Central States and has fulfilled its contribution and withdrawal liability obligations to Central States. In addition, the Trust Agreement for the Health Fund bars refund requests unless they are made within twenty days after the end of the month in which the overpayment was made. The Trust Agreements provide that interest or earnings attributable to excess contributions shall not be returned to an employer and grant the Trustees broad discretionary authority to resolve all disputes relating to the Funds and to construe the Trust Agreements.

  In early 2002, Hook Up lost its Virginia customers to a competitor and was forced to permanently close its Virginia facility. Hook Up offered to transfer its Virginia employees to its Pennsylvania facility; some employees accepted the offer. Hook Up then made contributions to Central States on those employees' behalf in accordance with the NMATA and the Participation Agreement. From March 2002 through August 2002, Central ...


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