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Central States v. Allega Concrete Corp.

United States District Court, N.D. Illinois, Eastern Division

January 9, 2014


For Central States, Southeast and Southwest Areas Pension Fund, Arthur H. Bunte, Jr, Plaintiffs: Charles H. Lee, John Joseph Franczyk, Jr., Central States Law Department, Rosemont, IL; Emily E. Gleason, Rebecca Kate McMahon, Central States Funds, Rosemont, IL.

For Allega Concrete Corp., Defendant: Craig R. Thorstenson, LEAD ATTORNEY, Ford & Harrison, Chicago, IL; Keith L Pryatel, LEAD ATTORNEY, Kenneth M. Haneline, Kastner Westman & Wilkins LLC, Akron, OH; Steven L. Brenneman, LEAD ATTORNEY, Fox Swibel Levin & Carroll LLP, Chicago, IL.

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John J. Tharp, Jr., United States District Judge.

In this case, a pension fund and one of its trustees seek a declaratory judgment and injunction to bar an arbitration initiated by the defendant employer concerning the employer's withdrawal liability to the pension fund. The gist of the dispute is whether the defendant initiated the arbitration within the statutorily prescribed period, and the defendant has moved to

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dismiss the complaint on a variety of grounds. The plaintiffs, in turn, have raised by motion a threshold issue that must be addressed before the Court can address the merits of the motion to dismiss, namely, whether the timeliness of the employer's initiation of the arbitration proceeding is a question that should be determined by the arbitrator or this Court. Agreeing with the plaintiffs that this is a question for the Court under controlling Seventh Circuit authority, the Court grants the plaintiffs motion to stay the arbitration pending the Court's ruling on the timeliness issue.


Plaintiff Central States, Southeast and Southwest Areas Pension Fund (" the Plan" ) is a multiemployer pension plan (meaning that a number of different employers contribute to the plan on behalf of their employees; see 29 U.S.C. § 1301(a)(3)). Plaintiff Bunte is a trustee of the Plan and he and his fellow trustees are the " plan sponsor" of Central States. 29 U.S.C. § 1301(a)(10)(A). For a period between approximately 2004 and 2008, Allega Concrete Corporation, the defendant in this case, was required to contribute to the Plan by virtue of collective bargaining agreements governing a Teamsters local comprising some of Allega's employees. In 2012, pursuant to the requirements of the Multiemployer Pension Plan Amendments Act of 1980 (" MPPAA" ), the Plan determined that as of December 6, 2009, Allega had effected a " complete withdrawal" from the circumstances requiring it to contribute to the Plan. Pursuant to 29 U.S.C. § 1381(b), the Plan determined that Allega had incurred withdrawal liability in the amount of $371,570.83.[1] The Plan sent notice of this withdrawal liability to Allega on or about November 8, 2012.

Under the MPPAA, an employer has 90 days after receipt of notice of a withdrawal liability assessment to request review of that assessment. 29 U.S.C. § 1399(b)(2)(A). If there remains a dispute about the assessment of withdrawal liability after the 90-day review period, the employer may " initiate" arbitration of the dispute within a 60-day period beginning 120 days after the date that the employer requested review of the withdrawal liability.[2] 29 U.S.C. § 1401(a)(1). If the employer fails to timely initiate arbitration, the assessment becomes due and owing and the plan sponsor may bring an action in a state or federal court to collect the assessment. 29 U.S.C. § 1401(b).

On January 17, 2013, within the permitted 90-day period after notice of the withdrawal liability, Allega requested review of the withdrawal liability assessment. In addition to setting out grounds for the requested reconsideration, Allega stated that " depending on the outcome of the request for reconsideration, it is the intention at this juncture for the employer to demand arbitration under 29 U.S.C. § § 1401 et. seq. " Ex. B, Def.'s Mem., Dkt. 16-1. Over the next six months, Allega

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also sent seven required withdrawal liability progress payments to the Plan via overnight express mail; [3] each of these mailings included a cover letter that reiterated Allega's " intention . . . to demand arbitration" in the event that its request for review was denied. Ex. C, Def.'s Mem., Dkt. 16-1.

Based on the date of its request for review, Allega had 180 days, until July 16, 2013, to initiate an arbitration to resolve its dispute concerning withdrawal liability.[4] On July 9, 2013, Allega sent a letter to the Plan stating, in part, that " [n]o information [in response to Allega's request for review] was forthcoming from the Fund, thus necessitating this demand for arbitration." Ex. D, Def.'s Mem., Dkt. 16-1. About three weeks later, on July 29, 2013, Allega submitted its claim to the American Arbitration Association (" AAA" ). Ex. B, Pl.'s Reply, Dkt. 27-2; Ex. H, Def.'s Mem., Dkt. 16-1. The Plan, in turn, notified the AAA on August 13, 2013, that it " disputes the AAA's jurisdiction of this case due to the fact that Allega Concrete did not timely initiate arbitration." Ex. A, Pl.'s Reply, Dkt. 27-1. Notwithstanding its objection to the AAA's " jurisdiction," the Plan participated in a conference call with the arbitrator and Allega's counsel on September 23, during which it objected to the arbitrator's adjudication of the question of whether Allega had timely initiated the arbitration. The Plan then ...

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