United States District Court, N.D. Illinois, Eastern Division
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND AND ARTHUR H. BUNTE, JR., Plaintiffs,
BULK TRANSPORT, CORP., Defendant.
MEMORANDUM OPINION AND ORDER
THOMAS M. DURKIN, District Judge.
Plaintiffs Central States, Southeast and Southwest Areas Pension Fund and Arthur H. Bunte, one of its trustees (collectively, the "Fund"), seek a declaratory judgment that the Fund properly denied defendant Bulk Transport Corporation's ("Bulk") request for a refund of pension contributions that it made on behalf of Terry Loniewski, one of its employees. See R. 1 ¶ 8; see also id. at 8. Bulk has filed a counterclaim seeking a declaration that the Fund improperly denied its refund request. See R. 8 ¶¶ 75-80 (Count III). The parties have filed cross motions for summary judgment. For the following reasons, the Court grants the Fund's motion, and denies Bulk's motion.
I. Factual Background
The Fund is a multiemployer pension plan under the Employee Retirement Income Security Act ("ERISA"), as amended by the Multiemployer Pension Plan Amendment Act ("MPPAA"). See R. 34 ¶ 4; see also 29 U.S.C. § 1002(37). The Court infers from the record that Bulk is an Indiana trucking company. See R. 34 ¶¶ 6, 16. Terry Loniewski began working for Bulk as a mechanic in or around 1972. See R. 34 ¶ 8. Bulk made pension fund contributions on Loniewski's behalf from the outset of his employment. See id. at ¶ 8. Since at least 1990, Bulk reported Loniewski to the Fund as an employee covered by collective bargaining agreements ("CBAs") between Bulk and Local 135 of the International Brotherhood of Teamsters ("Local 135"). See R. 34 ¶¶ 7-8. In connection with the contributions it made on behalf of Local 135 employees, Bulk completed reporting forms containing the following Certification Clause:
The employer hereby reaffirms his obligation to make contributions required by the Collective Bargaining Agreement and further represents that all employees eligible to participate in the Fund, in accordance with the rules of the Fund and the "Employee Retirement Income Security Act of 1974, " are being reported and only those eligible employees are being reported.
See id. ¶ 29; R. 27-3 at 6; R. 27-5 at 85. Bulk also paid union dues to Local 135 on Loniewski's behalf. R. 34 ¶ 33.
Prior to 2004, Bulk and Local 135 were parties to two separate CBAs, one covering "highway work" (the "Construction CBA") and the other covering "non-construction site work" (the "Yard CBA"). Id. ¶ 18. The Pension Plan contains multiple "Benefit Classes" providing different benefit levels and associated contribution rates. Id. ¶ 19. The Construction CBA required "Benefit Class 16" contributions (up to $85 per week), and the Yard CBA required "Benefit Class 9" contributions ($33 per week). Id. A "Twenty-Year Service Pension Benefit" at age 60 is $485 per month at Benefit Class 9, and $900 per month at Benefit Class 16. Id .; see also R. 27-8 at 33, 40. In or around 1999, the Fund's Field Services Department
was advised by Bulk employees that the selection of employees who were reported under the Benefit Class 16 Agreement was not based upon whether the employee was performing construction work. Instead, the Bulk employees indicated that Bulk had adopted the practice of reporting employees under the Benefit Class 9 Agreement until they were within 5 years of retirement, at which time they were reported under the Benefit Class 16 Agreement so that the employees would receive a full Benefit Class 16 pension at retirement.
R. 27-5 at 9 (Minutes of the Pension Board Meeting, February 19, 2003 ("Feb. 19, 2003 Minutes")); see also R. 34 ¶ 20. According to the Fund, this practice violated the Pension Plan's "adverse selection rule." R. 27-5 at 12. Bulk conceded that since 1995 it had "transferred" five employees from the Yard CBA to the Construction CBA, including Loniewski, but maintained that it did so at Local 135's request. R. 34 ¶¶ 20-21. As of February 2003, two of those five employees had already retired and had "been receiving Benefit Class 16 pensions for 2 years." R. 27-5 at 12 (Feb. 19, 2003 Minutes). The Fund estimated that the Benefit Class 16 benefits already paid to the two retirees, and that would be owed to the three active employees upon their retirement (including Loniewski), would "exceed the contributions paid on their behalf by $37, 000." Id.
In 2003, Bulk and the Fund executed a Settlement Agreement and Release pursuant to which Bulk agreed to pay the Fund $40, 000. See R. 34 ¶¶ 23, 25; see also R. 27-5 at 20, ¶ 1. The Settlement Agreement further provided that Bulk would continue to pay the Class 16 contribution rate on behalf of Loniewski and the other two active employees whom it had "transferred" to the Construction CBA:
2. The Pension Fund and Bulk agree that the following individuals will be red-circled and will have contributions remitted on their behalf at the Benefit Class 16 contribution rate of $85 per week for as long as they continue to be covered by any collective bargaining agreement between Bulk and Local 135 regardless of whether they perform work under the Construction Agreement, the Yard Agreement or any other labor agreements between Bulk and Local 135: Gary D. Frye, Robert W. Hayes and Terry J. Loniewski. Bulk will not contribute to the Pension Fund after the execution of this Agreement on behalf of any other employee represented by Local 135 at the $85 weekly rate, unless Bulk and Local 135 agree that the $85 weekly rate will be due on behalf of all of the employees of Bulk represented by Local 135. Bulk will not contribute to the Pension Fund after the execution of this Agreement on behalf of Frye, Hayes or Loniewski at a rate in excess of the $85 weekly rate, unless Bulk and Local 135 have agreed that Bulk will contribute at the very same rate in excess of the $85 weekly rate on behalf of all of Bulk's other employees represented by Local 135.
3. The Pension Fund agrees to accept the current and any future Construction Agreement and the current and any future Yard Agreement between Bulk and Local 135, even if the $85 contribution rate paid on behalf of the three individuals listed in paragraph 2 is different from the contribution rate paid by Bulk on behalf of other employees represented by Local 135 who perform the same work as the three individuals listed in paragraph 2. This paragraph shall not prevent the Pension Fund from refusing to accept any Construction Agreement, Yard Agreement or other agreement between Bulk and Local 135 submitted after the execution of this Agreement that is otherwise inconsistent with the Pension Fund's rules.
R. 34 ¶ 25. At no point during the audit process, or during settlement negotiations, did Bulk contend that Loniewski was not covered by a Local 135 CBA. Id. at ¶ 24.
In April 2004, Bulk and Local 135 combined the Construction and Yard CBAs into a single CBA. R. 40 ¶ 13; see also R. 27-3 at 31-32, 27-4 at 1-18 (CBA between Local 135 and Bulk, April 1, 2004 - March 31, 2009 (the "2004 CBA")). Article 16 of the 2004 CBA, entitled "Pension, " included the following provision:
Section 16.01. Except as otherwise provided herein, effective April 1, 2009, the Employer shall contribute to the [Fund], the sum of thirty ($30.00) per week for each eligible employee covered by this Agreement who has been on the payroll thirty (30) days or more. In accordance with a settlement agreement and release made and entered into between Employer and [the Fund] in 2003, Employer agrees to contribute to the [Fund] the sum of eighty-five dollars ($85.00) per week for the following employees: Gary D. Frye, Robert W. Hayes, and Terry J. Loniewski.
R. 27-4 at 13. An employee of the Fund, Carol Huron, reviewed the 2004 CBA and prepared a "Contract Policy/Review Checklist" summarizing its terms. R. 40 ¶ 14. Next to the heading "CLASSIFICATIONS, " Huron wrote: "Drivers." R. 34-1 at 12.
In April 2009, Bulk and Local 135 renewed the 2004 CBA. See R. 40 ¶ 15; see also R. 27-4 at 19-29 (CBA between Local 135 and Bulk, April 1, 2009 - March 31, 2014 (the "2009 CBA")). Section 16.01 of the 2009 CBA largely mirrors the same section of the 2004 CBA:
Section 16.01. Except as otherwise provided herein, effective April 1, 2009, the Employer shall contribute to the [Fund], the amount listed below per week for each eligible employee covered by this Agreement who has been on the payroll thirty (30) days or more.