United States District Court, N.D. Illinois, Eastern Division
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND; and ARTHUR H. BUNTE, JR., as Trustee, Plaintiffs,
ALLEGA CONCRETE CORPORATION, Defendant.
MEMORANDUM OPINION AND ORDER
JOHN J. THARP, Jr., 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. The defendant has moved to dismiss the complaint on a variety of grounds. None has merit and the Court denies the motion to dismiss. Further, because there do not appear to be any disputes of fact material to the claim for declaratory relief and rejection of the motion to dismiss necessarily resolves the legal issues presented by the plaintiffs' complaint, the Court provides notice pursuant to Federal Rule of Civil Procedure 56(f) that it is considering entering judgment on the complaint in favor of the plaintiffs. The defendant has leave to file a response on or before February 14, 2014, setting forth any reasons that summary judgment should not be granted in light of this opinion.
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. 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. 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 also sent seven required withdrawal liability progress payments to the Plan via overnight express mail; 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. 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 filed its complaint in this Court for declaratory judgment and to enjoin arbitration with the AAA on September 25, 2013, and two days later, on September 27, 2013, filed with the AAA a motion to stay the arbitration. Ex. B, Pl.'s Reply, Dkt. 27-2.
The plaintiffs then filed, on December 20, 2013, a motion to stay the arbitration proceedings pending a ruling by this Court on whether the timeliness issue was a matter for judicial or arbitral resolution. The Court granted that motion. See January 9 Order.
Allega first contends that the Plan lacks standing to assert the claims set forth in the complaint. The Court addressed, and disposed of, Allega's standing argument in its January 9 Order. While it is true, as Allega contends, that ERISA's remedial provisions permit only plan participants, beneficiaries, and fiduciaries to bring suit to enforce the statute's requirements, that fact has no relevance as to the plaintiffs in this case. The Seventh Circuit has squarely held that a multiemployer pension plan is a fiduciary under ERISA. See Line Constr. Benefit Fund v. Allied Elec. Contractors, Inc., 591 F.3d 576, 579 (7th Cir. 2010). Moreover, Allega does not (and cannot) dispute that Plaintiff Bunte, a trustee of the Plan, is an ERISA fiduciary. Whether the Plan has standing or not, Bunte does. Thus, Allega's standing argument goes nowhere. Both plaintiffs have standing to assert claims relating to Allega's withdrawal liability.
Allega's principal argument for dismissing the plaintiffs' complaint is that its arbitration demand was timely under the rules promulgated by the Pension Benefit Guaranty Corporation ("PGBC"). Under the MPPAA, the PBGC has the authority to promulgate implementing regulations. 29 U.S.C. § 1399(c)(7). Allega maintains that its July 9, 2013, arbitration demand was a timely initiation of arbitration and complied fully with the PBGC implementing regulations. The arbitration demand was sent to the Plan before the 60-day window closed and the PBGC rules require that the notice of arbitration be sent only to the opposing party (as it was in this case), and not to the arbitrator or any other person or entity. See 29 C.F.R. § 4221.3(c). The PBGC rules impose some limited requirements as to the contents of the notice of arbitration- see 29 C.F.R. § 4221.3(d)-but the plaintiffs do not argue that the notice was deficient in that regard. Since it is undisputed that the Plan received the July 9 demand for arbitration before the 60-day arbitration initiation window closed on July 16, Allega maintains that it timely initiated arbitration and that the Plan is therefore required to arbitrate the issues pertaining to Allega's purported withdrawal liability.
As the Plan points out, however, the PBGC implementing regulations also allow a plan to adopt, in lieu of the procedures specifically adopted by the PBGC, alternative arbitration rules to those promulgated by the PBGC itself. The PBGC regulations specifically provide that "an arbitration may be conducted in accordance with an alternative arbitration procedure approved by the PBGC." 29 C.F.R. § 4221.14(a). In 1986, the PBGC approved the AAA's arbitration rules. See 51 Fed Reg. 22, 585 (June 20, 1986); Central States, Southeast & Southwest Areas Pension Fund v. Ditello, 974 F.2d 887, 892 (7th Cir. 1992) ("Central States has adopted the AAA arbitration rules which, pursuant to 29 C.F.R. § 2641.13(c), have been approved by the PBGC."). The plaintiffs assert that Allega's compliance with the PGBC's own arbitration procedures is irrelevant because Allega failed to comply with the procedures required under the AAA rules, which the Plan had-as authorized by the PGBC-adopted as its own.
The AAA rules provide, among other things, that to "initiate" an arbitration, the party demanding arbitration must file at any Regional Office of the AAA two copies of the arbitration demand (along with a required administrative fee). Ex. F, Def.'s Mem., Dkt. 16-1. Section 6(b)(1) of the Plan expressly adopts the AAA arbitration rules:
Manner of Initiation: Arbitration is initiated by written notice to the Chicago Regional Office of the American Arbitration Association ("AAA") with copies to the Fund (or if initiated by the Fund to the Employer) and the bargaining representative (if any) of the affected employees of the Employer. Such arbitration will be conducted, except as otherwise provided in these rules, in accordance with the "Multiemployer Pension Plan Arbitration Rules" (the "AAA Rules") administered by the AAA. The initial filing fee is to be paid by the party initiating the arbitration proceeding. ...