United States District Court, D. Columbia.
October 17, 2014
JAMES BOLAND, et al., Plaintiffs,
WASCO, INC., et al., Defendants
For James Boland, Henry Kramer, Gerard Scarano, Timothy Driscoll, Gerald O'Malley, Eugene George, Robert Hoover, Matthew Aquiline, Gregory R. Hess, William Mcconnell, Charles Costella, John Trendell, Fred Kinateder, as Trustees of, and on behalf of, the BRICKLAYERS AND TROWEL TRADES INTERNATIONAL PENSION FUND, Plaintiffs: Charles Vincent Mehler, III, LEAD ATTORNEY, DICKSTEIN SHAPIRO LLP, Washington, DC.
For Wasco, Inc., Lovell's Masonry, Inc., Defendants: Daniel Z. Herbst, LEAD ATTORNEY, REED SMITH LLP, Washington, DC; Steven C. Douse, KING & BALLOW, Nashville, TN.
For Wasco, Inc., Lovell's Masonry, Inc., Counter Claimants: Steven C. Douse, KING & BALLOW, Nashville, TN.
For Matthew Aquiline, James Boland, Charles Costella, Timothy Driscoll, Eugene George, Gregory R. Hess, Robert Hoover, Fred Kinateder as Trustees of, and on behalf of, the BRICKLAYERS AND TROWEL TRADES INTERNATIONAL PENSION FUND, Henry Kramer, William Mcconnell, Gerald O'Malley, Gerard Scarano, John Trendell, Counter Defendants: Charles Vincent Mehler, III, LEAD ATTORNEY, DICKSTEIN SHAPIRO LLP, Washington, DC.
Re Document No.: 17
RUDOLPH CONTRERAS, United States District Judge.
Granting Plaintiffs' Motion for Judgment on the Pleadings
When a pension fund determines that an employer has withdrawn from a multiemployer pension plan covered by the Employee Retirement Income Security Act of 1974 (" ERISA" ) and notifies the employer accordingly, the employer is obligated to make withdrawal liability payments to the fund. Even when withdrawal liability is disputed, the employer must make interim payments under a " pay now, dispute later" rule. In this action, a pension fund's trustees (" Trustees" ) seek to recover interim payments from two employers. Before this Court now is the Trustees' motion for judgment on the pleadings. Having reviewed the parties' filings and the relevant authorities, this Court shall grant the Trustees' motion.
Defendants Wasco, Inc., and Lovell's Masonry, Inc. (collectively " WASCO" ), are building and construction companies that employ members of the Bricklayers & Trowel Trades International Union. See Answer & Countercl. ¶ 6, ECF No. 5. The Union and WASCO entered into collective bargaining agreements requiring WASCO to make pension contributions to the Bricklayers & Trowel Trades International Pension Fund (" IPF" ). See id. ¶ ¶ 7, 8. The IPF is a " multiemployer plan" governed by ERISA, as amended by the Multiemployer Pension Plan Amendments Act (" MPPAA" ). See Compl. ¶ 3, ECF No. 1 (citing 29 U.S.C. § 1002(3), (37)).
Congress enacted the MPPAA to ensure the financial integrity of multiemployer pension funds, whose solvency can be jeopardized when employers withdraw from those plans. See Joyce v. Clyde Sandoz Masonry, 871 F.2d 1119, 1120, 276 U.S. App.D.C. 379 (D.C. Cir. 1989). The MPPAA provides that when an employer withdraws from a multiemployer plan, the plan sponsor is authorized to calculate and collect " withdrawal liability" --the employer's share of the plan's unfunded vested benefits. 29 U.S.C. § § 1381(a), 1382, 1399(b). If a dispute arises over the amount or schedule of payments that the parties cannot resolve themselves, they must proceed to arbitration. See id. § § 1399(b)(2), 1401(a). Under the MPPAA's " pay now, dispute later" procedure, interim withdrawal liability payments " shall be payable" according to the plan sponsor's schedule " notwithstanding any request for review or appeal of determinations of the amount of such liability or of the schedule." Id. § 1399(c)(2); see also Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., Inc., 522 U.S. 192, 196-97, 118
S.Ct. 542, 139 L.Ed.2d 553 (1997). These interim payments " shall be made" until a final arbitral decision provides otherwise, 29 U.S.C. § 1401(d), and employers can recoup any overpayments with interest, 29 C.F.R. § 4219.31(d).
In December 2011, the IPF determined that WASCO had withdrawn from the fund and notified WASCO of its withdrawal liability under the MPPAA. See Answer & Countercl. ¶ 9. After making the first twelve monthly interim payments, WASCO ceased paying. The IPF made further demands upon WASCO to no avail. See id. ¶ ¶ 12-14.
On behalf of the IPF, the Trustees filed the instant action against WASCO, seeking outstanding interim payments, interest, liquidated damages, attorney's fees, and costs. See Compl. 5-6. WASCO admitted nearly all of the Trustees' factual allegations but claimed that WASCO had no legal obligation to make interim payments " in this case," during the pendency of arbitration. See Answer & Countercl. ¶ ¶ 15, 16. WASCO raised three defenses: (1) that the Trustees' demand for " inflated" interim payments violated the Labor Management Relations Act (" LMRA" ), id. ¶ ¶ 20-21, (2) that, given the LMRA violation, the Trustees have unclean hands, id. ¶ 22-23, and (3) that mandating the interim payments would cause WASCO " irreparable injury" due to its " precarious financial position," id. ¶ 24. WASCO also asserted three counterclaims, but this Court dismissed those counterclaims on the Trustees' motion. See Mem. Op. Granting Pls.' Mot. Dismiss Countercls., ECF No. 14.
The Trustees now move for judgment on the pleadings, claiming that WASCO has admitted all relevant facts, and that this Court's order dismissing the counterclaims forecloses WASCO's LMRA and unclean hands defenses. Mem. Supp. Pls.' Mot. J. Pleadings 2-6, ECF No. 17-1. The Trustees further contend that WASCO's " irreparable injury" defense would contravene the text and purpose of the MPPAA and this Court's precedents. Id. at 6-10. In response, WASCO does not press its LMRA and unclean hands defenses, but maintains its request that this Court--sitting as a " court of equity" --reject the Trustees' demand for interim payments in order to prevent irreparable injury. Defs.' Resp. Pls.' Mot. J. Pleadings 5, ECF No. 18.
A. Legal Standard
A party moving for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure must demonstrate that no material fact is in dispute and that it is entitled to judgment as a matter of law. See Fed.R.Civ.P. 12(c); Haynesworth v. Miller, 820 F.2d 1245, 1249 n.11, 261 U.S. App.D.C. 66 (D.C. Cir.1987), overruled on other grounds by Hartman v. Moore, 547 U.S. 250, 126 S.Ct. 1695, 164 L.Ed.2d 441 (2006). The court must accept the non-movant's allegations as true, and draw all reasonable inferences in the non-movant's favor. See Mpoy v. Rhee, 758 F.3d 285, 287, 411 U.S. App.D.C. 94 (D.C. Cir. 2014); Haynesworth, 820 F.2d at 1249 n.11.
B. Equitable " Irreparable Injury" Exception
WASCO asks this Court to exercise its equitable power to suspend WASCO's obligation under the MPPAA to make interim payments, 29 U.S.C. § 1399(c)(2), on the grounds that it would suffer irreparable injury otherwise. The Trustees also request an equitable remedy, in the form of an order compelling WASCO to make outstanding interim payments. See Compl. 6. This Court concludes that the plain text of the MPPAA forecloses an equitable " irreparable injury" exception and that the Trustees are therefore entitled to interim payments.
Although this Court generally has discretion in granting equitable relief, the Supreme Court has cautioned that equitable discretion must not frustrate Congress's ends. In Albemarle Paper Co. v. Moody, the district court found that de facto segregation in the plaintiffs' workplace had deprived them of opportunities to advance into more skilled, higher-paying positions, in violation of Title VII of the Civil Rights Act of 1964. 422 U.S. 405, 409, 95 S.Ct. 2362, 45 L.Ed.2d 280 (1975). Nonetheless, the district court declined to award the equitable remedy of back pay, in part because there was " no evidence of bad faith." Id. at 410. In remanding to the district court, the Supreme Court held that lack of " bad faith" was not a " sufficient reason" for denying back pay. Id. at 422. The
Court reasoned that although equity " eschews mechanical rules" and " depends on flexibility," where " transcendant legislative purposes" are at stake, " what is required is the principled application of standards consistent with those purposes . . . ." Id. at 417 (citations omitted). To condition a back pay award on a showing of bad faith would " read the 'make whole' purpose right out of Title VII," which targeted the " consequences of employment practices, not simply the motivation." Id. at 422 (citations omitted).
Similarly, this Court concludes that the MPPAA's " transcendant legislative purposes" foreclose an equitable irreparable injury exception to the interim payment obligation. Id. at 417. The MPPAA mandates that interim withdrawal liability payments " shall be payable . . . notwithstanding any request for review or appeal of determinations of the amount of such liability or of the schedule." 29 U.S.C. § 1399(c)(2). In even clearer terms, the statute elsewhere provides that these interim payments " shall be made" until an arbitrator orders otherwise. Id. § 1401(d). Even WASCO concedes that under the statute, " there is ordinarily an obligation" to make interim payments. See Answer & Countercl. ¶ 16.
By requiring employers to make interim payments, Congress sought to " alleviate the risk that during the course of arbitration, an employer will become insolvent, and [that] the fund will not be able to collect in the event of a favorable award." Findlay Truck Line, Inc. v. Cent. States, Se. & Sw. Areas Pension Fund, 726 F.3d 738, 742 (6th Cir. 2013). By contrast, pension funds are " solvent, diversified, regulated institutions" that will generally be able to repay interim payments if a later arbitral decision so orders. Trustees of Chi. Truck Drivers, Helpers & Warehouse Workers Union (Indep.) Pension Fund v. Cent. Transport, Inc., 935 F.2d 114, 118-19 (7th Cir. 1991). Weighing the needs of employers and pension funds, Congress struck a balance that this Court declines to alter, at least on the facts of this case.
WASCO submits that Congress could not have intended employers to be forced into bankruptcy by frivolous demands for interim payments or by lengthy arbitral proceedings. Defs.' Resp. Pls.' Mot. J. Pleadings 5. This Court disagrees with this characterization of the MPPAA's design. Frivolous claims likely would not survive long in arbitration. In closer cases, arbitration might be more burdensome, but Congress determined that regardless of potential costs to employers, arbitration would serve as the initial forum for withdrawal liability disputes. See 29 U.S.C. § 1401(d). This Court " hesitate[s] to use an 'equitable' standard that causes the MPPAA to achieve the opposite of Congress'[s] aim." Cent. Transport,
935 F.2d at 119.
Moreover, recognizing an equitable " irreparable harm" exception would run afoul of the D.C. Circuit's reasoning in I.A.M. National Pension Fund Benefit Plan A v. Cooper Industries, Inc., 789 F.2d 21, 23-24, 252 U.S. App.D.C. 189 (D.C. Cir. 1986). In that case, the district court ordered an employer to make an overdue interim withdrawal liability payment, but indicated that it would determine whether the payment was correctly assessed in a subsequent final order. The employer appealed only from the initial order, and the D.C. Circuit held that the order was not appealable. Id. at 25. The court first concluded that the district court's order mandating interim payments was an interlocutory order granting injunctive relief. Id. at 23-24. But for such an order to be appealable under 28 U.S.C. § 1292(a)(1), the appellant must demonstrate that the order " might cause irreparable harm." Id. at 24. Using broad language, the court concluded that because Congress " showed no . . . solicitude for the cash flow problems of employers" in enacting the MPPAA, " no such [irreparable] harm flows from an order requiring [interim withdrawal liability] payments." Id. at 25 (emphasis added). By contrast, an order declining to require interim payments " is appealable because irreparable harm will result." Id. Because the D.C. Circuit's discussion of irreparable harm was central to its holding in I.A.M. that the district court's order was not appealable, this Court is persuaded that an equitable " irreparable injury" exception is unavailable to WASCO.
Alternatively, even if the MPPAA were to permit discretionary suspension of interim payments to prevent irreparable injury, this Court would not
exercise such discretion here. The Second Circuit is the only circuit permitting a finding of " irreparable injury," standing alone, to excuse an employer from interim payments. See T.I.M.E.-DC, Inc. v. N.Y. State Teamsters Conference Pension & Ret. Fund, 580 F.Supp. 621 (N.D.N.Y. 1984), aff'd, 735 F.2d 60 (2d Cir. 1984) (per curiam). In T.I.M.E.-DC, the district court, whose reasoning was summarily affirmed on appeal, relied on evidence that the employer lost equity, customers, and employees, and ultimately concluded that the employer's " operations would not survive the [pension fund's] pursuit of withdrawal liability." Id. at 631. The court concluded that the " specter of business failure" was " a distinct likelihood" and, " on the facts of this case," granted a preliminary injunction barring the fund from demanding interim payments. Id. at 632. Here, by contrast, WASCO has offered nothing but an allegation of its " precarious financial position." Answer & Countercl. ¶ 24. Such a vague allegation, even assumed to be true, does not support an inference of any non-speculative, imminent, or severe harm sufficient to constitute irreparable injury in this context. Cf. Giroux Bros. Transp., Inc. v. New England Teamsters & Trucking Indus. Pension Fund, 73 F.3d 1, 5 (1st Cir. 1996) (explaining that if equitable exception existed, it " would require no less than the threat of imminent insolvency" (internal quotation marks and citation omitted)); Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115, 120 (4th Cir. 1991) (surveying cases and concluding that " burden of qualifying for this [irreparable injury] exception . . . is extremely high" ).
Nor could WASCO seek refuge in the Fifth Circuit's approach, even if this Circuit were to adopt it. See Trustees of the Plumbers & Pipefitters Nat'l Pension Fund v. MAR-LEN, Inc., 30 F.3d 621 (5th Cir. 1994). In MAR-LEN, the Fifth Circuit panel articulated a two-step inquiry: If the court finds that a demand for interim payments is " frivolous" or " not colorable," then it can exercise " a narrow measure of discretion to excuse payments . . . ." Id. at 626. Here, however, WASCO has not alleged that the Trustees' demand is " frivolous" or " not colorable." To the contrary, WASCO admits that the IPF determined a withdrawal occurred and that it notified WASCO as required by the MPPAA. See Answer & Countercl. ¶ ¶ 9-11. WASCO even appears to concede that it owes some amount of withdrawal liability; it alleges only that the IPF's " withdrawal liability calculations were inflated " by certain amounts. See Answer & Countercl. ¶ 38 (emphasis added). To the extent that
WASCO contests a portion of its calculated withdrawal liability, this dispute ultimately concerns the " amount of" such liability. 29 U.S.C. § 1399(c)(2). This question is for the arbitrator to decide; in the meantime, interim withdrawal liability payments " shall be made" by WASCO. Id. § 1401(d); see also Mem. Op. Granting Pls.' Mot. Dismiss Countercl. 13-16.
For the foregoing reasons, the Trustees' motion for judgment on the pleadings is GRANTED. An order consistent with this Memorandum Opinion will be separately issued, directing the Trustees to file with this Court within thirty (30) days an updated statement of all monies owed by WASCO and of any relief it otherwise seeks, and directing WASCO to respond within thirty (30) days thereafter. This Court will base its subsequent final order on these additional filings.
Granting Plaintiffs' Motion for Judgment on the Pleadings
For the reasons stated in the Court's Memorandum Opinion separately issued this 17th day of October, 2014, Plaintiffs' motion for judgment on the pleadings (ECF No. 17) is GRANTED. It is hereby:
ORDERED that Plaintiffs shall file with this Court within thirty (30) days, on or before November 17, 2014, an updated statement of all monies owed by Defendants Wasco, Inc., and Lovell's Masonry, Inc., and of any relief otherwise sought; and it is
FURTHER ORDERED that Defendants shall file with this Court their response to Plaintiffs' statement on or before December 17, 2014.