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Quad/Graphics, Inc. v. Graphic Communications Conference of International Brotherhood of Teamsters (GCC-IBT)

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

September 30, 2016

QUAD/GRAPHICS, INC., Plaintiff/Counter-Defendant,
v.
GRAPHIC COMMUNICATIONS CONFERENCE OF THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS (GCC-IBT), NATIONAL PENSION PLAN, Defendant/Counter-Plaintiff.

          MEMORANDUM OPINION AND ORDER

          REBECCA R. PALLMEYER United States District Judge

         Plaintiff Quad/Graphics, Inc. is a Wisconsin printing company and the successor to another printer, World Color, previously known as Quebecor World.[1] Some of Quad's employees were covered by a collective bargaining agreement that required Quad to make contributions to Defendant Graphic Communications Conference of the International Brotherhood of Teamsters National Pension Plan (“the Fund”), a defined-benefit pension plan that services the unionized printing industry. As World Color's successor, Quad is responsible for its liabilities, including money owed to the Fund as a penalty for partially withdrawing from the pension during a plan year. This case involves two such partial withdrawals: the first stems from the closure of four facilities, including one in Alden, Illinois (“the Alden partial withdrawal”) during the 2006-2007 plan year, and the other relates to a closure in Memphis, Tennessee, during either the 2008-2009 or 2009-2010 plan year (this distinction is at the heart of the parties' dispute). Defendant Fund assessed Quebecor $12.4 million for the Alden partial withdrawal shortly before Quebecor filed for bankruptcy in January 2008. Quebecor gradually slowed down operations at its Memphis plant throughout 2008, and the facility finally shuttered in April 2009, triggering another partial withdrawal liability (“the Memphis partial withdrawal”). By April 2011, Quad had shut down all of its remaining operations with employees covered by the Fund, causing a complete withdrawal.

         Under the Multiemployer Pension Plan Amendments Act (“MPPAA”), 29 U.S.C. §§ 1381-1461, an employer's withdrawal liability is roughly equal to its proportionate share of the plan's “unfunded vested benefits.” Where, as here, an employer has existing withdrawal liability, any additional liability that is assessed in a subsequent plan year must be reduced by the employer's pre-existing liability. The purpose of this reduction, or “credit, ” is to prevent employers from being double-charged. On December 15, 2011, Defendant assessed Quad $18, 255, 808 in withdrawal liability for the Memphis partial withdrawal and the complete withdrawal. That assessment gave Quad a partial credit for its Alden withdrawal liability, based on the fact that a portion of that liability would be discharged in bankruptcy (the exact amount is yet to be determined by the bankruptcy court). Quad moved to compel arbitration pursuant to § 4221 of the Employee Retirement Income Security Act (“ERISA”) on two issues: (1) On what date did the Memphis partial withdrawal occur? (The timing is important because of Quebecor's July 2009 bankruptcy order.) (2) How much credit should Quad receive for the Alden withdrawal liability?

         After a two-day hearing, the arbitrator's award (1) pegged April 30, 2010 as the date of the Memphis partial withdrawal and (2) determined that the Fund was required to reassess Quad's liability for that withdrawal, giving “100% credit for the Alden partial withdrawal liability.” Quad subsequently filed this suit seeking to enforce the first part of the arbitration award and vacate or modify the second part. The Fund filed a counterclaim, seeking the opposite: the Fund agrees with the arbitrator that April 30, 2010 is the date of the Memphis partial withdrawal, but believes that allowing Quad full credit for the Alden withdrawal is improper. For the reasons stated below, the court enforces the arbitration award in its entirety.

         BACKGROUND

         I. Factual history

         The arbitrator made detailed factual findings. Those findings are not disputed and are set forth here in full:

         Quebecor World (USA) was a commercial printing business that operated eight facilities in a number of different cities and states, including Alden and Memphis. The company employed workers, some of whom were covered by a collective bargaining agreement that required contributions to the Fund, a Taft-Hartley defined benefit pension plan. The Fund's plan year runs from May 1 through April 30.

         The Fund assessed withdrawal liability of $12.4 million against Quebecor for the partial withdrawals that occurred when four facilities, including Alden, ceased to operate in the 2006-2007 plan year. In January, 2008 Quebecor filed for Chapter 11 bankruptcy and on December 4, 2008, the Fund filed a proof of claim

. . . against the Debtor for withdrawal liability, jointly and severally, with other Quebecor World controlled companies as a result of the Debtor's partial withdrawal and a contingent claim in the event that the Quebecor World controlled group permanently cease to have an obligation to contribute to the Fund.
Quebecor continued to employ photoengravers and electrician/machinists at its Memphis facility into 2008 and it made contributions to the Fund on their behalf. The contributions were required by Article 24 of the 2007-2012 collective bargaining agreement between Quebecor and the GCC/IBT Local 223M, which stated:
Effective during the pay week following the execution of this Agreement, the Company shall increase the amount of money equal to eight (8%) of the straight time weekly wages earned by each Employee covered by the Agreement to eight and sixteen one hundredths (8.16%) percent, and remit same to the . . . Fund . . . The term “wages” as used herein shall mean all monies earned by an Employee including pay for skill or merit premiums, shift differentials, holidays, vacations, and any other straight time wages paid under this Agreement.

         In February, 2008, Quebecor shut down part of the Memphis facility and by November, 2008, it had made the decision to shut down the entire operation in 2009. This plan was communicated to the leadership of the GCC, including President George Tedeschi, who was also the co-chair of the Fund Board of Trustees.

         On December 17, 2008, Fund Counsel Peter Leff sent to Fund Administrator George Smetana proposed revisions in the Employer Withdrawal Notice and Program Manual that had been under discussion. Each document contained a myriad of small changes that Smetana testified had been suggested by counsel and others for clarification. Among the changes were the insertion of two commas in Section III. Identification of Withdrawal Liability, which now read:

5. An employer will be deemed to have partially withdrawn from the Fund if, on the last day of a plan year, there is a 70 percent or greater contribution decline for such plan year or there is a partial cessation the employer's contribution obligation.
(a) The Fund office shall identify when a partial withdrawal has occurred. . .
(b) The Fund office shall consult with Fund Legal Counsel if there is any question as to whether a partial withdrawal has occurred and an employer's specific withdrawal date. [underscoring added]

         The Program Manual was ultimately sent to participating employers with the notation that it was effective May 1, 2008.

         On March 3, 2009, Quebecor notified the 110 employees in Memphis, including six electricians, four machinists and nine photoengravers, as well as the Local 223M representative, that it expected to close the Memphis facility on April 16, 2009. Under the Worker Adjustment and Retraining Notification Act (WARN) (29 U.S.C. §2102(a)), companies with over 100 employees “shall not order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order.” Section 2014(a) mandates that employers who give less than the requisite notice shall be liable for the back pay and benefits for the balance of the sixty days. Quebecor's notice to the affected employees stated that they would be ...


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