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Laborers' Pension Fund v. W.R. Weis Co., Inc.

United States Court of Appeals, Seventh Circuit

January 8, 2018

Laborers' Pension Fund and James S. Jorgensen, Plaintiffs-Appellants/Cross-Appellees,
v.
W.R. Weis Company, Inc., Defendant-Appellee/Cross-Appellant.

          Argued January 12, 2017

         Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 15 C 07867 - Edmond E. Chang, Judge.

          Before Bauer, Sykes, and Hamilton, Circuit Judges.

          SYKES, CIRCUIT JUDGE.

         The Laborers' Pension Fund administers the pension fund for the Laborers' International Union of North America. W.R. Weis Company, a Chicago-area stonework firm, was required by a collective-bargaining agreement to contribute to the Fund for each hour worked by members of the Laborers' Union. The company complied with this obligation for many years. Over time, however, the firm transitioned to using more highly skilled marble setters and finishers on its jobs, so it gradually stopped hiring members of the Laborers' Union and ceased paying into the Fund. In 2012 the Weis Company terminated its collective-bargaining agreement with the Laborers' Union.

         The Fund, a multiemployer pension plan governed by ERISA and the Multiemployer Pension Plan Amendment Act ("MPPAA"), served notice that the Weis Company owed more than $600, 000 in withdrawal liability for ceasing to contribute to the Fund. The company paid the assessment but challenged it via arbitration, invoking an exemption for the building and construction industry. See 29 U.S.C. § 1383(b). The arbitrator agreed with the company, and a district judge confirmed the award but denied the Weis Company's motion for attorney's fees.

         Both sides appealed. The Fund seeks de novo review of the arbitrator's award, raising a legal argument about the language and purpose of the § 1383(b) exemption. The Weis Company responds that the deferential clear-error standard applies because the parties treated their dispute as entirely factual, as did the arbitrator. The Weis Company is right: the Fund waived its statutory-interpretation argument by failing to raise it in the arbitration. And because the Fund has not meaningfully challenged the arbitrator's factual determinations, which easily survive clear-error review in any event, we affirm the judgment. Finally, we reject the cross-appeal because the judge did not abuse his discretion in denying the Weis Company's motion for attorney's fees.

         I. Background

         The Weis Company does stone work in public, commercial, and private buildings in the Chicago area and is involved in all stages of the construction process. The company is a union employer and has been since its founding in 1991. As relevant here, it was party to two collective-bargaining agreements, one with the International Union of Bricklayers and Allied Craftsmen and one with the Laborers' Union. By longstanding trade custom and practice, laborers assist bricklayers at construction sites. They mix mortar, unload the building material, erect scaffolding, work fork-lifts, handle the stone before the bricklayers install it, and clear debris. The Weis Company exclusively employed bricklayers and laborers on a one-to-one basis for more than a decade.

         In 2002 the bricklayers' union merged with the marble masons' union, which meant that the Weis Company could now hire marble masons, also known as setters, if it wished. Just as laborers assist bricklayers, marble finishers assist marble setters. The duties of a marble finisher overlap in part with those of a laborer-both can unload trucks, shake out stone, prepare marble pieces, and clear debris. But finishers can also cut, polish, grout, caulk, drill holes, apply epoxy, and patch stones. In other words, finishers are more versatile and more highly skilled than laborers. And the marble masons' collective-bargaining agreement-binding on the Weis Company after the unions merged-required that an employer hire one finisher for each setter on a job.

         In 2003 the Weis Company won a contract to install an intricate marble interior in a Chicago building. In accordance with its practice at the time, the company employed brick- layers and laborers to do the job. The customer rejected the work, however, and the Weis Company had to hire marble setters and finishers to redo it. Thereafter the company began hiring marble setters and finishers in addition to bricklayers and laborers. In 2009 the company completely stopped hiring bricklayers (and their attendant laborers) and began relying solely on marble setters (and their attendant finishers). In 2012 the Weis Company formally terminated its collective-bargaining agreement with the Laborers' Union.

         Under the terms of that agreement, the Weis Company made pension contributions to the Fund of $8.57 per hour "for each hour worked by all Employees covered by this Agreement." While the agreement was in effect, the Weis Company consistently made these payments to the Fund for the hours worked by laborers in its employ. The company made similar payments to the bricklayers' pension fund for the hours worked by bricklayers, marble setters, and marble finishers in accordance with the terms of its collective-bargaining agreement with that union. When the company stopped hiring laborers in 2009, however, it stopped making payments to the Laborers' Fund. The Fund continued to send the Weis Company monthly contribution reminders, but the company returned them without payment with an explanatory "No Work" notation written across the face of the document.

         During this period, the Fund twice audited the company to confirm its compliance with any required contributions. The Fund's 2011 audit covered the years 2007-2011. The company provided the auditor copies of all its contributions to the Fund as well as its contributions to other union pension funds. The audit concluded that the company had "complied with its fringe benefit contribution requirements/' acknowledging that it hadn't paid a penny to the Fund since 2009 when it stopped hiring laborers and transitioned to using setters and finishers exclusively. The Fund later completed a second audit of the company for the years 2011-2012. Again the audit determined that the company "complied with its obligations to the Union and its related Funds/' even though the company hadn't contributed anything during the relevant period.

         The Weis Company formally terminated its collective-bargaining agreement with the Laborers' Union in 2012. In December of that year, the Fund informed the company that it owed additional contributions under ERISA and the MPPAA for withdrawing from the multiemployer plan. The Fund initially assessed an estimated withdrawal liability of $488, 780.33, calculated from the time the company terminated its collective-bargaining agreement with the Laborers' Union. The Weis Company submitted a request for review under ERISA, arguing that it was entitled to an exemption from withdrawal liability under the MPPAA for employers in the building and construction industry. The exemption provides that for employers in these trades, withdrawal liability occurs only if the employer "ceases to have an obligation to contribute under the plan" but "continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required." 29 U.S.C. ยง 1383(b)(2). In its request for review, the Weis ...


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