The Board of Trustees v. ILA Local 1740, AFL-CIO

Court of Appeals for the First Circuit·Decided August 22, 2024·No. 22-1872·Unpublished

Opinion

Not for Publication in West's Federal Reporter

United States Court of Appeals For the First Circuit

Nos. 22-1591; 22-1872

THE BOARD OF TRUSTEES, in its capacity as trustees and fiduciaries of the ILA PRSSA PENSION FUND,

Plaintiff, Appellee,

v.

ILA LOCAL 1740, AFL-CIO, an Unincorporated Labor Organization, Defendant, Appellant,

JOHN DOES 1 THROUGH 10, inclusive, Defendants.

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

[Hon. Silvia Carreño-Coll, U.S. District Judge]

Before

Montecalvo, Lipez, and Thompson, Circuit Judges.

Carlos R. Paula, with whom Jaime E. Picó-Rodríguez and Labor Counsels, LLC were on brief, for appellant.

Clarissa A. Kang, with whom Dylan D. Rudolph, Catherine L.

Reagan, Trucker Huss, APC, Enrique J. Mendoza Mendez, and Mendoza Law Offices were on brief, for appellee.

August 22, 2024

THOMPSON, Circuit Judge. The International Longshoremen's Association ("ILA") is the largest labor union of maritime workers in North America. This appeal asks us to consider whether two of its Puerto Rico labor union affiliates, Appellant ILA Local 1740 ("Local 1740") and ILA Local 1575 ("Local 1575"), merged in August 2015 following their execution of a Merger Agreement. Appellee, the Board of Trustees of the ILA PRSSA Pension Fund (the "Board") says yes, the merger happened and sued Local 1740, as the surviving ILA entity, for the collection of outstanding financial obligations it says Local 1575 owed to the ILA PRSSA Pension Fund (the "Pension Fund"), an ERISA pension benefit plan that the Board manages. Responding to cross motions for summary judgment, the district court sided with the Board and awarded it damages and attorney's fees. Now, before us, Local 1740 insists that the district court got it all wrong chiefly because it erroneously found that the merger occurred after incorrectly refusing to consider relevant extrinsic evidence, and after failing to find the record replete with genuine issues of disputed material fact relevant to the hotly contested merger controversy. Writing just for the parties, we assume their familiarity with the facts, procedural history, and arguments presented -- which we reference only as needed to give the gist behind why we find ourselves affirming the judgment below for substantially the same reasons offered by the district judge.

HOW WE GOT HERE1

In March 2015, a (metaphorical) storm was brewing at the Port of San Juan (the "Port") in San Juan, Puerto Rico. There, Horizon Lines, LLC ("Horizon"), a stevedoring company,2 ceased its operations at the Port. At the time of the shutdown, Horizon was the exclusive employer of workers belonging to Local 1575. The result was bedlam: All Local 1575 members lost their jobs. And, in the wake of Horizon's departure another stevedoring company, Luis A. Ayala Colon Sucrs., Inc. ("Ayala"), expanded its operations and took over Horizon's former piers. Union strife ensued3 because Local 1575 members believed they were contractually entitled to continue working their old docks. But Ayala already had existing contracts with other ILA chapters, specifically Locals 1901, 1902, and 1740, similarly operating at the Port. Seeking to calm the tempest and simplify the organizational structures, ILA -- pursuant to a provision within its Constitution -- decided to exercise its authority and merge the four ILA Locals operating at

1 We draw the relevant facts presented herein from the parties' statements of undisputed facts.

2 For the less initiated, stevedoring simply refers to the process of loading and unloading ships in port. Stevedore, Merriam-Webster, https://www.merriam-webster.com/dictionary/stevedor ing (last visited August 6, 2024) [perma.cc/X9PV-T8L3].

3 For example, Ayala filed National Labor Relations Board ("NLRB") charges against Local 1575 for "picketing the facilities of [Ayala], the Employer, and blocking all ingress and egress to and from the facilities of the Employer at its Piers E and F."

the Port into one consolidated local. ILA made this decision after "finding that a merger [was] in the best interests of all the union members involved." It then designated Local 1740 to be the last man standing. Following that decision, authorized representatives of the four Locals executed a Merger Agreement that, by its terms, purportedly became effective August 1, 2015.

Of import to the dispute here is the Pension Fund, a multiemployer benefit plan established in 1973, and maintained under the Employee Retirement Income Security Act of 1974 ("ERISA") and the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), which provides pension, retirement, and other related benefits to its participants. The Trust Agreement is administered by the Board and ERISA sets forth its fiduciary duties. Those responsibilities include collecting liabilities owed to the Pension Fund from participating employers. Local 1575, which prior to the merger had been a participating plan employer, owed the Pension Fund delinquent pension contributions as well as withdrawal liability payments4 because of a mass withdrawal of

4 UnderERISA, the federal statute regulating employee benefit plans, an employer that has assumed an obligation to contribute to and subsequently withdraws in whole or in part from a multiemployer pension plan is liable for its allocable share of any underfunding. See 29 U.S.C. § 1381. The liability amount is calculated based on a formula set forth in 29 U.S.C. § 1381 entitled "Withdrawal liability established; criteria and definitions."

employers from the Pension Fund5 following Horizon's cessation of operations at the Port. Unlike Local 1575, Local 1740, the remaining ILA-merged entity at the Port, was not an employer to the Pension Fund at issue here.

After sending multiple notices and demands for payment to Local 1740, all of which went unanswered, the Board filed suit in August 2018 seeking to collect Local 1575's delinquent financial obligations to the Pension Fund from Local 1740, contending it had assumed Local 1575's liabilities when the unions merged and was therefore contractually liable for Local 1575's preexisting debt obligations.6 During the summary judgment proceedings below, Local 1740 advanced several arguments as to why it was not liable to the Pension Fund. However, as most pertinent to our ensuing discussion, Local 1740 primarily argued that the merger between it and Local 1575 was never effectuated because the Merger Agreement contained several conditions precedent that Local 1575 had to fulfill to complete the merger, none of which had been done.

5 Those withdrawing from the Pension Fund were Horizon Lines of Puerto Rico (due to Horizon shutting down its Port operations), ILA Local 1575 AFL-CIO, ILA New York AFL-CIO (ITF Inspector ILA), ILA-PRSSA Welfare Fund, and ILA-PRSSA Pension Fund.

6 In its complaint, the Board filed two claims against all defendants: (1) withdrawal liability under ERISA § 4201, 29 U.S.C. § 1381; and (2) delinquent contributions under ERISA § 515, 29 U.S.C. § 1145.

The district court rejected the breadth of Local 1740's arguments and entered partial summary judgment for the Board on its liability claims. See Bd. of Trs. v. ILA Loc. 1740, AFL-CIO, Civ. No. 18–1598, 2022 WL 2117771 (D.P.R. June 13, 2022). Later, the court issued judgment in favor of the Board and awarded it: (1) $15,485.88 on its delinquent contribution claim; (2) $1,025,308.72 on its withdrawal liability claim; (3) $634,715.60 in attorney's fees; and (4) $5,215.79 in costs. See Bd. of Trs. v. ILA Loc. 1740, AFL-CIO, Civ. No. 18–1598, 2022 WL 4591843 (D.P.R. Sept. 30, 2022). Unpleased with those outcomes, Local 1740 appealed, and here we are.7 DISCUSSION

A. Summary Judgment

Broadly, Local 1740 asks us to let it off the hook for Local 1575's delinquent contributions and withdrawal liability to the Pension Fund. And in doing so, Local 1740 rehashes here the barrage of arguments it made below about why the Board was not entitled to summary judgment.

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