Central States, Southeast and Southwest Areas Pension Fund and Howard McDougal v. Schilli Corporation

420 F.3d 663, 35 Employee Benefits Cas. (BNA) 2617, 177 L.R.R.M. (BNA) 3158, 2005 U.S. App. LEXIS 18029, 2005 WL 2008224
CourtCourt of Appeals for the Seventh Circuit
DecidedAugust 23, 2005
Docket04-4217
StatusPublished
Cited by19 cases

This text of 420 F.3d 663 (Central States, Southeast and Southwest Areas Pension Fund and Howard McDougal v. Schilli Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Central States, Southeast and Southwest Areas Pension Fund and Howard McDougal v. Schilli Corporation, 420 F.3d 663, 35 Employee Benefits Cas. (BNA) 2617, 177 L.R.R.M. (BNA) 3158, 2005 U.S. App. LEXIS 18029, 2005 WL 2008224 (7th Cir. 2005).

Opinion

FLAUM, Chief Judge.

The Multiemployer Pension Plan Amendments Act (“MPPAA”), Pub.L. 96-364, 94 Stat. 1208 (Sept. 26, 1980), imposes liability on employers who withdraw from multiemployer plans governed by the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001-1461. Central States, Southeast and Southwest Areas Pension Fund (“Central States”) is a multiemployer plan governed by ERISA. Schilli Corporation is an employer who participated in the plan until the late 1990s. Central States assessed Schilli liability for allegedly withdrawing from the plan in part in 1997. Schilli paid Central States the assessment under protest, and the parties later submitted their dispute to arbitration. The arbitrator concluded that Schilli had not withdrawn from the plan in 1997 and ordered Central States to refund the assessment. Central States then filed this action under 29 U.S.C. § 1401(b)(2) to vacate the arbitrator’s award. On cross-motions for summary judgment, the district court affirmed the arbitrator’s award. Central States appeals and, for the reasons stated herein, we affirm.

I. Background

Schilli is the parent corporation of three wholly-owned subsidiaries. One of those subsidiaries, Truck Transport, is a motor carrier providing regulated, for-hire transportation services. In 1997, it operated out of a terminal in Batesville, Arkansas, where its employees were represented by the International Brotherhood of Teamsters Local Union No. 878 (“Local 878”). Truck Transport and Local 878 had negotiated a series of consecutive collective bargaining agreements (“CBAs”) that obligated Truck Transport to contribute specified amounts to Central States’ pension fund on behalf of all employees in the Batesville bargaining unit. The most recent of those CBAs extended from July 10, 1994 through January 10,1998.

In addition to the CBAs, on May 31, 1987, Truck Transport and Local 878 signed a separate document entitled “Participation Agreement.” The Participation Agreement obligates Truck Transport to contribute to Central States a set amount per week “for its bargaining unit Employees pursuant to the terms of the collective bargaining agreement.” The parties to the document “agree to be bound by ... all of the terms of the Trust Agreement(s) creating” Central States. It provides, moreover:

This Agreement shall continue in full force and effect until such time as the *666 Employer notifies the Fund(s) by certified mail (with a copy to the Local Union) that the Employer is no longer under a legal duty to make contributions to the Fund(s). The Employer shall set forth in the required written notice to the Fund(s) the specific basis upon which the Employer is relying in terminating his obligation to make contributions to the Fund(s). The Employer expressly agrees and hereby acknowledges by the signing of this Agreement that its obligation to make contributions to the Fund(s) shall continue until the above-mentioned written notice is received by the Fund(s) and the Trustees acknowledge the Employer’s termination in writing.

Central States bills participating employers on a monthly basis for their contributions to the pension fund. It requires that employers sign a form with the following language when they submit their monthly contributions:

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.

Truck Transport signed and submitted these monthly certification clauses along with each payment it made to Central States.

In November 1997, employees at the Batesville terminal filed a petition with the National Labor Relations Board (“NLRB”) under 29 U.S.C. § 159(c)(l)(A)(ii), asserting that Local 878 no longer represented a majority of the workers in the Batesville bargaining unit. The NLRB then held an election, and a majority of the employees voted to decertify the union as their representative. On November 21, 1997, the NLRB confirmed the election results and announced that Local 878 no longer served as the exclusive bargaining representative of the Batesville employees.

Following the election, Truck Transport conducted business as usual. Many of its employees kept their same jobs fulfilling their same duties. In December 1997 and January 1998, Truck Transport submitted its monthly contributions accompanied by signed certification clauses on behalf of its employees. At no time during 1997 did Truck Transport notify Central States of the decertification or contend that it had been relieved of its duty to contribute to the fund.

In January 1998, Truck Transport lost its largest customer to a competitor. The substantial drop in business forced Truck Transport to close the Batesville terminal on January 10, 1998. It ceased contributing to Central States on that date. Although Central States was aware of the terminal’s closing soon thereafter, it did not learn of Local 878’s decertification until March 1998.

The MPPAA requires that, upon an employer’s withdrawal from a multiemployer plan, the plan determine the amount of withdrawal liability due under a statutory formula, notify the employer of the amount of liability, and collect that amount from the employer. 29 U.S.C. § 1382. After some initial confusion about the timing of the events in question, Central States judged that Truck Transport had withdrawn from the fund in 1997. It determined that Schilli’s other two subsidiaries, which also had been contributing to the fund, withdrew in 1998. Because all businesses under common control are treated as a single entity when assessing withdrawal liability, see § 1301(b)(1), Central States concluded that Schilli had partially *667 withdrawn in 1997 and completely withdrawn in 1998. It demanded payment accordingly. § 1399(b)(1)(B).

Although Schilli contested Central States’ assessment, it paid the demanded sum. See § 1399(c)(2) (requiring prompt payment to the plan “notwithstanding any request for review or appeal”). After the parties failed to resolve their disagreement informally, they submitted the dispute to arbitration as required by the Act. See § 1401(a). In determining the timing of Truck Transport’s withdrawal, the arbitrator noted that, for present purposes, an employer withdraws from a plan only when it ceases to have an obligation to contribute. The arbitrator found that the Participation Agreement bound Truck Transport to contribute to the fund until it complied with the agreement’s notice provision, and that Truck Transport had not given the prescribed notice in 1997. Thus, it held that Truck Transport had not withdrawn in 1997 and that Schilli could not be assessed partial withdrawal liability for that year.

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Bluebook (online)
420 F.3d 663, 35 Employee Benefits Cas. (BNA) 2617, 177 L.R.R.M. (BNA) 3158, 2005 U.S. App. LEXIS 18029, 2005 WL 2008224, Counsel Stack Legal Research, https://law.counselstack.com/opinion/central-states-southeast-and-southwest-areas-pension-fund-and-howard-ca7-2005.