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Trustees of Suburban Teamsters Pension Fund v. The E Co.

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

March 21, 2018

Trustees of the Suburban Teamsters of Northern Illinois Pension Fund, Plaintiffs,
The E Company, et al., Defendants.


          Honorable Thomas M. Durkin United States District Judge

         Plaintiffs 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.

         Currently 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.[1]


         Summary 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).


         It is 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.

         A. Liability of Withdrawing Employers

         ERISA, “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.

         Defendant 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[2]) ¶¶ 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 complete withdrawal.

         Under 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).

         The 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.

         T & 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”).

         Failure 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).

         B. Joint and Several Liability of Other Defendants

         “Not 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.

         The 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, ...

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