Michels Corp. v. Central States, Southeast, & Southwest Areas Pension Fund

800 F.3d 411, 60 Employee Benefits Cas. (BNA) 2365, 204 L.R.R.M. (BNA) 3185, 2015 U.S. App. LEXIS 15636, 2015 WL 5138576
CourtCourt of Appeals for the Seventh Circuit
DecidedSeptember 2, 2015
Docket14-3726, 14-3737
StatusPublished
Cited by14 cases

This text of 800 F.3d 411 (Michels Corp. v. Central States, Southeast, & Southwest Areas Pension Fund) 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
Michels Corp. v. Central States, Southeast, & Southwest Areas Pension Fund, 800 F.3d 411, 60 Employee Benefits Cas. (BNA) 2365, 204 L.R.R.M. (BNA) 3185, 2015 U.S. App. LEXIS 15636, 2015 WL 5138576 (7th Cir. 2015).

Opinion

WOOD, Chief Judge.

This case raises a familiar problem for pension funds: when did an employer’s obligation to contribute to the fund end? That question turns on when the governing collective bargaining agreement (CBA) between a multi-employer group and a union terminated and how one should characterize a series of temporary “extensions” of the CBA. Several common issues are not before us: we are not concerned with withdrawal liability on the part of the employer; we are not concerned about any possible duty to arbitrate contested points; and in the end (despite considerable attention to the point in the briefs) the standard of review does not matter.

Cutting through the clutter, we conclude that the parties to the CBA in question terminated it in accordance with its terms effective January 81, 2011. Thereafter, the union and the employer group entered into a series of short-term agreements that had the effect of extending the CBA’s terms for the designated periods while the parties negotiated. The interim agreement that took effect on November 15, 2011, however, was different: it eliminated the employers’ duty to contribute to the pension fund and extended all other terms of the CBA. The district court held that this was not sufficient to end the employers’ duty to contribute and thus granted summary judgment for the pension fund. We reverse. The CBA imposing the duty to contribute had long since expired by November of 2011, and there was nothing to prevent the parties from agreeing to the new arrangement.

I

Michels Corporation is a pipeline construction company based in Brownsville, Wisconsin. It is a member of the Pipe Line Contractors Association (PLCA), a trade association that (among other things) negotiates collective bargaining agreements on behalf of its employer members with the relevant unions — in this case, the International Brotherhood of Teamsters (the Union). The Central States, Southeast, and Southwest Areas Pension Fund (the Fund) is a multiemployer pension plan. See 29 U.S.C. § 1000(2), (3), and (37). A board of trustees, half of whom are appointed by contributing employers and the other half by the unions representing the plan participants, runs the Fund.

In February 2006, the PLCA and the Union entered into a collective bargaining agreement known as the National Pipeline Agreement (the 2006 CBA). Article XV(C) of the 2006 CBA addressed the *414 duration of the agreement; it stated that “[t]he provisions of this Agreement shall continue in full force and effect until January 31, 2011, and thereafter from year to year unless terminated at the option of either party after sixty (60) days’ notice in writing to the other.” Schedule A of the 2006 CBA laid out the timing and amount of contributions that participating employers needed to make to the Fund. Schedule B of the 2006 CBA, called the National Pipeline Participation Agreement, spelled out the relationship among the employers, the Union, and the Fund. It included the following language:

NOW, THEREFORE, IT IS AGREED by and between the undersigned Employer and the [Union] that such Employer hereby subscribes to the various agreements and declarations of trust and policies and procedures of the particular funds into which such Employer will be required to make contributions pursuant to the National Pipe Line Agreement, and agrees to be bound thereby and to amendments made or to be made thereto; and authorizes the parties to such trust agreements to name the trustees and successor trusts, and to administer the trusts; and does hereby ratify and accept such trustees and the terms and conditions of said trusts as fully and as completely as if made by the undersigned Employer; provided, however that no amendments or provisions of said trust agreements shall bind the Employer for any financial obligations or dues delinquency determinations beyond that set forth in the National Pipe Line Agreement pursuant to which such contributions are made.

On August 9, 2010, in compliance with Article XV(C), the PLCA informed the Union that it intended to terminate the 2006 CBA on January 31, 2011, and begin negotiations for a new agreement. Just before the end of January, however, the parties signed a letter agreement extending the terms of the 2006 CBA for one month, to February 28, 2011. This proved to be the first of eight such extensions; the last one extended the 2006 CBA’s terms from September 1, 2011, to November 15, 2011. Consistently with the obligations in the 2006 CBA and the commitments in the letter agreements to continue operating under the 2006 CBA’s provisions, Michels continued to contribute to the Fund throughout those extensions.

The day before the eighth extension expired, the parties shifted course. They agreed that the employers would cease making contributions to the Fund as of November 15, 2011; that they would make comparable payments to an escrow fund until a fund “mutually acceptable to the Parties” was designated; and that they would otherwise extend the terms of the 2006 CBA until December 31, 2011. The pertinent language of the November 15, 2011, agreement, which figures prominently in this appeal, is as follows:

AMENDMENT TO AND EXTENSION OF COLLECTIVE BARGAINING AGREEMENT BETWEEN PIPE LINE CONTRACTORS ASSOCIATION AND THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS
WHEREAS, the current National Pipe Line Agreement (“CBA”) between the Pipe Line Contractors Association and ... the [Union], as previously extended, expires at midnight, November 15, 2011;
WHEREAS, the Parties have reached agreement that the PLCA may cease all contributions to the [Fund];
WHEREAS, agreement on certain other issues has not been reached;
WHEREAS, the Parties wish to give formal notice of this decision to [the *415 Fund] in order to preclude any contention by [the Fund] that one or more members of PLCA has an obligation to contribute to [the Fund] under the Agreement for any period after November 15, 2011;
NOW, THEREFORE, BE IT:

RESOLVED THAT, Section 1(a) of Article V of the CBA shall be amended to read as follows:

(a) ... [A]s of November 16, 2011, no Employer shall have an obligation to contribute to [the Fund]. The amount of those pension contributions, as well as the amount of all pension contributions on behalf of Travelers, shall be made to a plan or plans mutually acceptable to the Parties. Until the Parties agree upon a mutually acceptable plan or plans, all funds that would otherwise be remitted to [the Fund] shall be held in escrow.

On November 15, 2011, PLCA sent a copy of the November 15 agreement to the Union, which signed it. The next day, Michels sent a letter to the Fund notifying it that Michels was, pursuant to the November 15 agreement, terminating its contributions to the Fund effective immediately. The PLCA sent a similar letter the same day. Its letter added: “For obvious reasons, it is imperative that the termination date of each member’s contribution obligations be effective prior to December 31, 2011.

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800 F.3d 411, 60 Employee Benefits Cas. (BNA) 2365, 204 L.R.R.M. (BNA) 3185, 2015 U.S. App. LEXIS 15636, 2015 WL 5138576, Counsel Stack Legal Research, https://law.counselstack.com/opinion/michels-corp-v-central-states-southeast-southwest-areas-pension-fund-ca7-2015.