United States District Court, District of Columbia
SERVICE EMPLOYEES INTERNATIONAL UNION NATIONAL INDUSTRY PENSION FUND, et al., Plaintiffs,
SCIENTIFIC AND COMMERCIAL SYSTEMS CORPORATION, et al., Defendants.
E. Boasberg United States District Judge
past five years, Plaintiff Service Employees International
Union's National Industry Pension Fund has been chasing
down Defendant Scientific Commercial Systems Corporation,
requesting that it pay its arrears. It all started when SCSC
began janitorial work as a subcontractor to Tessada &
Associates, Inc., then a contractor with the National
Aeronautics and Space Administration. In that role, Defendant
hired the Union's members and was contractually obligated
to contribute to the Fund's pension plan. Whatever
space-age glamour might have existed all came to an end when
Tessada's own circumstances forced it to terminate SCSC,
an action that in turn caused SCSC to cancel its Union
contract. From then on, the Fund hounded SCSC for statutory
payments due upon withdrawal from a pension plan. That dogged
pursuit has now reached federal court in the form of the
Fund's suit against SCSC.
Fund now seeks summary judgment for its still-outstanding
withdrawal liability. Discarding each of SCSC's defenses,
the Court will grant the Motion.
Court's prior Opinion in this case offers a brief primer
on this pension-plan drama. See Serv. Emps. Int'l
Union Nat'l Indus. Pension Fund v. Sci. & Commercial
Sys. Corp., No. 13-1705, 2015 WL 4078006, at *1-2
(D.D.C. July 2, 2015). For purposes of this Motion, the Court
draws from the parties' renditions of the facts - largely
undisputed - drawing all reasonable inferences in SCSC's
2009, NASA awarded a work contract to Tessada, which
subcontracted with SCSC to perform certain tasks, namely
janitorial and other support services at the Ames Research
Center in California. See ECF No. 53
(Defendant's Statement of Facts), ¶ 2; ECF No. 52,
Exh. 7 (Contracting Officer Decision). Defendant then hired
Union members, signing on to a series of
collective-bargaining agreements with SEIU. See
DSOF, ¶ 3; ECF No. 47, Exh. 2 (Collective-Bargaining
Agreements). As part of its obligations under those CBAs,
SCSC contributed to Union members' pensions by making
payments to the Fund. See DSOF, ¶ 4.
relationship fell apart in November 2011 when Tessada -
apparently because of its own funding issues - terminated
Defendant. See DSOF, ¶ 5; ECF No. 8 (SCSC
Answer), ¶ 66. From then on, Tessada took over the NASA
contract's janitorial duties by hiring as its own
SCSC's former employees. See DSOF, ¶ 5;
Contracting Officer Decision at 3 (“All employees that
had worked for [SCSC] were hired by Tessada . . . .”).
Tessada also continued Fund payments for those employees.
See DSOF, ¶ 5; ECF No. 52, Exh. 9 (Union
12, 2012, the Fund notified SCSC that by way of its
termination it had incurred a “complete
withdrawal” from the pension plan. See DSOF,
¶ 7; ECF No. 47, Exh. 6 (Withdrawal Notice). That notice
informed Defendant that under the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et
seq., as amended by The Multiemployer Pension
Plan Amendments Act of 1980 (MPPAA), 29 U.S.C. § 1381
et seq., it owed Plaintiff “withdrawal
liability” of $1, 117, 162.72. See Withdrawal
Notice. Displeased with this hefty assessment, on July 15,
2012, SCSC sent a letter to the Fund requesting review of the
details of those withdrawal payments. See DSOF,
¶ 8. In the course of that letter, Defendant
acknowledged that “as a result of an illegal contract
termination . . . we are immediately obligated to pay
withdrawal assessments in excess of one million dollars,
” but also advised the Fund that it was pursuing a
contract claim against Tessada and for that purpose needed a
ninety-day “hiatus” on any payments. See
ECF No. 47, Exh. 7 (Request for Review) at 1-2.
Fund obliged. See ECF No. 47 (Plaintiff's
Statement of Facts), ¶ 10. By August 2012, however,
SCSC's breach-of-contract action had stalled, as a
district court in Virginia granted summary judgment in
Tessada's favor. See Sci. & Commercial Sys. Corp.
v. Tessada Assocs., Inc., No. 11-1278, 2012 WL 3866497
(E.D. Va. Aug. 30, 2012), aff'd, 542 F.
App'x 239 (4th Cir. 2013) (per curiam).
Defendant tried a different tack. In November 2012, it told
Plaintiff that under the McNamara-O'Hara Service Contract
Act of 1965 (SCA), 41 U.S.C. §§ 6701-6707,
Tessada should have sought an “equitable
adjustment” to its contract - i.e., obtained
additional compensation from NASA commensurate with the
withdrawal assessment - and then used that money to pay off
SCSC's debt. See DSOF, ¶ 10; ECF No. 52,
Exh. 5 (Nov. 1, 2012, Email from SCSC to Fund). The Fund
disagreed. It responded by email in December 2012, letting
SCSC know that it “remains liable for its complete
withdrawal” and that liability could not be shifted to
Tessada under the SCA. See ECF No. 47, Exh. 9 (Dec.
17, 2012, Email from Fund to SCSC) (reasoning that
“Fund cannot enforce the SCA” and “benefits
protected by the [Act] likely do not include withdrawal
liability”). Per an attachment, Defendant's revised
payment schedule would start in January 2013. See
ECF No. 47, Exh. 8 (Revised Withdrawal Notice).
missed that payment, and a few weeks later Plaintiff notified
SCSC that it would be in default if no payment was made
within sixty days. See ECF No. 47, Exh. 12
(Delinquency Notice). To date, SCSC has not paid.
See PSOF, ¶ 19; DSOF, ¶¶ 21-22.
to end its payment truffle hunt, the Fund (and its Trustees)
filed the present action against SCSC in November 2013 to
claim the owed withdrawal liability. SCSC answered,
counterclaimed against the Fund, and cross-claimed against
Tessada. On the cross-claims, Defendant sought
“declaratory judgment and equitable relief to declare
that [Tessada] is liable to Plaintiff for any withdrawal
liability assessed against SCSC and liable to indemnify SCSC
for the same.” SCSC Answer, ¶ 105.
Tessada entered the action, the parties agreed to stay the
proceedings. See ECF No. 10 (Joint Motion for Stay).
As SCSC had hoped, Tessada availed itself of the SCA to seek
an equitable adjustment from NASA around July 2013.
See Contracting Officer Decision at 1. In April
2014, however, a NASA contracting officer denied this
request, explaining that “[t]he withdrawal liability
that Tessada . . . is trying to pass on to the Government has
nothing to do with [its] cost of compliance with the terms of
the CBA.” Id. at 2. In other words, NASA would
not pay Tessada extra money (to then be paid to SCSC) when
there was no extra cost to Tessada in performing on
the contract. The company nonetheless appealed that decision
to the Armed Services Board of Contract Appeals. See
ECF No. 52, Exh. 8 (ASBCA Notice of Docketing).
November 2014, SCSC and Tessada assured this Court that the
ASBCA had let them know “a decision was imminent and
would be rendered within the next 60 days.” ECF No. 21
(SCSC & Tessada's Joint Status Report). Heeding this
timeline, the Court lifted the stay so that the case could
proceed if no ASBCA decision was issued by March 12, 2015.
See Minute Order (Jan. 26, 2015).
March rolled around without an ASBCA ruling, the parties
wasted no time. Tessada answered, with cross-claims against
Defendant and a request to stay Plaintiff's
withdrawal-liability collection. See ECF No. 24
(Tessada Answer), ¶ 92. As for the Fund, it immediately
moved to dismiss SCSC's counterclaims against it, arguing
that an employer was required to request arbitration before
challenging the withdrawal determination in court.
See ECF No. 22 (Motion to Dismiss) at 4-5. In
denying the motion, the Court acknowledged that, even if this
were the case, because the “arbitrate-first rule”
can be waived, “it is ultimately the Fund's
responsibility to prove that SCSC failed to ...