United States District Court, N.D. Illinois, Eastern Division
Trustees of the Suburban Teamsters of Northern Illinois Pension Fund, Plaintiffs,
The E Company, et al., Defendants.
MEMORANDUM OPINION & ORDER
Honorable Thomas M. Durkin United States District Judge
Trustees of the Suburban Teamsters of Northern Illinois
Pension Fund (“the Fund”) sued defendants The E
Company, T & W Edmier Corp., Edmier Corp., K. Edmier
& Sons, LLC, Thomas W. Edmier, William Edmier, The
William Edmier Trust, Lake Street Realty, Inc., and E & E
Equipment & Leasing, Inc. (“defendants”) to
collect liability incurred under the Employee Retirement
Income Security Act of 1974 (“ERISA”) after The E
Company and T & W Edmier withdrew from the Fund. The Fund
seeks to hold all defendants-a group of closely-held entities
and their owners-jointly and severally liable for The E
Company and T & W Edmier's withdrawal liability.
before the Court is the Fund's motion for summary
judgment. R. 47. For the reasons that follow, the Court
grants the Fund's motion.
judgment is appropriate “if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986). The Court
considers the entire evidentiary record and must view all of
the evidence and draw all reasonable inferences from that
evidence in the light most favorable to the nonmovant.
Ball v. Kotter, 723 F.3d 813, 821 (7th Cir. 2013).
To defeat summary judgment, a nonmovant must produce more
than “a mere scintilla of evidence” and come
forward with “specific facts showing that there is a
genuine issue for trial.” Harris N.A. v.
Hershey, 711 F.3d 794, 798 (7th Cir. 2013). Ultimately,
summary judgment is warranted only if a reasonable jury could
not return a verdict for the nonmovant. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
well-established that “[w]hen an employer participates
in a multiemployer pension plan and then withdraws, ”
not only can federal courts enter judgment against the
employer for withdrawal liability, but they can “impose
liability on owners and related businesses.” Cent.
States Se. & Sw. Areas Pension Fund v. Messina
Prod., LLC, 706 F.3d 874, 877 (7th Cir. 2013). As shown
below, based on straightforward application of ERISA
principles, withdrawing employers The E Company and T & W
Edmier's liability assessment is due and owing, and they
have waived any defenses to that assessment by failing to
arbitrate. Less straightforward is the issue of whether the
other defendants are jointly and severally liable for that
withdrawal liability. The Court first addresses the
withdrawing employer defendants' liability, followed by
the other defendants' joint and several liability.
Liability of Withdrawing Employers
“as amended by the Multiemployer Pension Plan
Amendments Act of 1980 (MPPAA), establishes withdrawal
liability for employers leaving a multiemployer pension
plan.” Indiana Elec. Workers Pension Benefit Fund
v. ManWeb Servs., Inc., 2018 WL 1250471, at *1 (7th Cir.
Mar. 12, 2018). “[A] complete withdrawal from a
multiemployer plan occurs when an employer (1) permanently
ceases to have an obligation to contribute under the plan, or
(2) permanently ceases all covered operations under the
plan.” 29 U.S.C. § 1383.
T & W Edmier, a construction company, signed a collective
bargaining agreement with the Fund, which The E Company
adopted in a joint and several liability agreement. R. 72
(Ds' Resp. to Ps' L.R. 56.1 Statement) ¶¶
7-8, 36- 37. Both T & W Edmier and The E Company stopped
making contributions to the Fund and closed operations in
2014. Id. ¶ 23. These facts constitute a
ERISA, an employer who completely withdraws “is liable
to the plan in the amount determined . . . to be the
withdrawal liability.” 29 U.S.C. § 1381. If the
employer does not pay, the plan can declare a default, and
after giving notice of default, accelerate the full amount of
withdrawal liability. 29 U.S.C. § 1399(c)(5).
Fund assessed withdrawal liability of $640, 900 against The E
Company and T & W Edmier. R. 72 ¶¶ 21, 46. The
Fund sent The E Company and T & W Edmier a notice of
withdrawal liability on April 30, 2015, a past due notice on
August 17, 2015, and a default notice and acceleration on
November 12, 2015. Id. ¶¶ 41, 42, 44, 45.
The companies never made any liability payments, responded to
the notices, raised any defense, or requested arbitration
during the time permitted by ERISA, 29 U.S.C. § 1401.
Id. ¶¶ 46-47.
W Edmier and The E Company claim they “were unable to
pay due to the involuntary dissolution of T & W Edmier
Corp. and The E Company, ” and that they stopped
operating well before receiving the notice of withdrawal
liability. R. 71 at 5. But ERISA is clear that such a dispute
must be arbitrated. See 29 U.S.C. § 1401(a)(1)
(“Any dispute between an employer and the plan sponsor
of a multiemployer plan concerning a determination made under
sections 1381 through 1399 [including withdrawal liability
determinations under § 1399] of this title shall be
resolved through arbitration.”); Robbins v. Admiral
Merchants Motor Freight, Inc., 846 F.2d 1054, 1057 (7th
Cir. 1988) (“[v]ery simply, § 1401(a)(1) requires
arbitration of any dispute regarding a determination made
under §§ 1381-1399”).
to arbitrate means that “the plan can then immediately
file suit, ” as it has in this case, “to collect
the entire amount of withdrawal liability, and in that
proceeding the employer will have forfeited any defenses it
could have presented to the arbitrator.” Nat'l
Shopmen Pension Fund v. DISA Indus., Inc., 653 F.3d 573,
579 (7th Cir. 2011) (citing 29 U.S.C. § 1401(b)(1));
accord Cent. States S.E. & S.W. Areas Pension Fund v.
Slotky, 956 F.2d 1369, 1372 (7th Cir. 1992)
(“fail[ure] to request arbitration” means
“the amount of withdrawal liability assessed by the
plan becomes due and owing and the plan can . . . sue to
collect it”). Because The E Company and T & W
Edmier failed to arbitrate, the $640, 900 withdrawal
liability assessment is “due and owing”
(Slotky, 956 F.2d at 1372), and defenses that could
have been raised in arbitration are waived (Nat'l
Shopmen, 653 F.3d at 579).
Joint and Several Liability of Other Defendants
only the withdrawing employer” incurs withdrawal
liability. Messina, 706 F.3d at 878. “Congress
also provided that all ‘trades or businesses' under
‘common control' with the withdrawing employer are
treated as a single entity for purposes of assessing and
collecting withdrawal liability. Each trade or business found
to be under common control is jointly and severally liable
for any withdrawal liability of any other.”
Id. (quoting 29 U.S.C. § 1301(b)(1)). This is
commonly referred to as “the controlled group
provision.” Slotky, 956 F.2d at 1372. The
purpose of this provision is “to prevent businesses
from shirking their ERISA obligations by fractionalizing
operations into many separate entities.”
Messina, 706 F.3d at 878.
Fund maintains that all defendants are part of a controlled
group, and that they have waived any ability to challenge
controlled group membership by failing to arbitrate.
Defendants dispute that they are part of a controlled group,
and cite older, out-of-circuit case law for the proposition
that failure to arbitrate is not an absolute, ...