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Service Employees International Union National Industry Pension Fund v. Castle Hill Healthcare Providers, LLC

United States District Court, District of Columbia

March 30, 2019



          Randolph D. Moss, United States District Judge.

         Plaintiffs Service Employees International Union National Industry Pension Fund, a multiemployer employee pension plan, and its Trustees (collectively the “Fund”) bring this action pursuant to the Employee Retirement Income Security Act of 1974 seeking, among other things, to collect unpaid contributions, interest, and liquidated damages from Defendant Castle Hill Healthcare Providers, LLC (“Castle Hill”). Dkt. 1 at 2 (Compl. ¶ 1). The dispute centers around whether Castle Hill complied with its obligations under ERISA, as amended by the Pension Protection Act of 2006 and the Multiemployer Pension Reform Act of 2014, and its 2010 collective bargaining agreement with the Service Employees International Union Local 1199 to make supplemental contributions to the Fund, which fell into “critical status” in 2009. The parties agree that supplemental contributions were required, but they disagree about the extent and nature of that obligation.

         The case is now before the Court on the Fund's motion for summary judgment. Dkt. 15. For the reasons explained below, the Court will grant the Fund's motion in part and will deny it in part without prejudice.

         I. BACKGROUND

         A. Statutory Background

         The Fund brings this case pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. “One type of pension plan regulated by ERISA is a multiemployer pension plan, in which multiple employers pool contributions into a single fund that pays benefits to covered retirees who spent a certain amount of time working for one or more of the contributing employers.” Trustees of Local 138 Pension Trust Fund v. F.W. Honerkamp Co., 692 F.3d 127, 129 (2d Cir. 2012) (hereinafter “F.W. Honerkamp”). Under the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), Pub. L. No. 96-364, 94 Stat. 1208, an employer that is required to make contributions to the fund pursuant to the terms of a multiemployer pension plan or a collective bargaining agreement is also required to do so as a matter of federal law. See 29 U.S.C. § 1145. This provision, in other words, “makes a federal obligation of an employer's contractual commitment to contribute to a multiemployer pension fund.” Flynn v. R.C. Tile, 353 F.3d 953, 958 (D.C. Cir. 2004).

         “By 2005, a confluence of economic circumstances . . . threatened ERISA's system for federally insuring multiemployer pension plans, ” F.W. Honerkamp, 692 F.3d at 130, and, in response, Congress enacted the Pension Protection Act of 2006 (“PPA”), Pub. L. No. 109-280, 120 Stat. 780. Among other things, the PPA requires that a multiemployer pension plan's actuary assess the financial health of the plan. 29 U.S.C. § 1085(b)(3)(A). If the plan fails to satisfy certain criteria, the actuary must certify the plan is in “endangered, ” “seriously endangered, ” or “critical status.” Id. § 1085(b)(1)-(2). If a plan is in critical status, the plan sponsor-here, the Fund-must “adopt and implement” a “rehabilitation plan, ” id. § 1085(a)(2), “not later than 240 days following the required date [of] the actuarial certification, ” id. § 1085(e)(1). After adopting a rehabilitation plan, the plan sponsor must “provide to the bargaining parties [one] or more schedules showing revised benefit structures, revised contribution structures, or both, which, if adopted, may reasonably be expected to enable the multiemployer plan to emerge from critical status.” Id. § 1085(e)(1)(B). One of the plan sponsor's proposed schedules, moreover, must “be designated as the default schedule, ” which “shall assume that there are no increases in contributions under the plan other than [those] necessary to emerge from critical status after future benefit accruals and other benefits . . . have been reduced to the maximum extent permitted by law.” Id. § 1085(e)(1).

         Although the bargaining parties may agree which schedule to adopt in their collective bargaining agreement, Congress also addressed how to proceed if the parties are unable to reach an agreement. Congress enacted the most recent iteration of these rules in the Multiemployer Pension Reform Act of 2014 (“MPRA”), Pub. L. No. 113-235, Div. O, 128 Stat. 2130, 2773- 2822. Under the law as it now stands, if a collective bargaining agreement is in place at the time a plan enters critical status and then expires, and the parties are unable to reach agreement on a contribution schedule, the employer will be required to make contributions pursuant to the default schedule. 29 U.S.C. § 1085(e)(3)(C)(i). In contrast, if a collective bargaining agreement that embodies an agreed-upon schedule adopted pursuant to a rehabilitation plan “expires while the plan is still in critical status, ” and the parties fail to reach agreement regarding a contribution schedule going forward, “then the contribution schedule applicable under the expired collective bargaining agreement, as updated and in effect on the date the collective bargain agreement expires, shall be implemented by the plan sponsor, ” id. § 1085(e)(3)(C)(ii), beginning on “the date which is 180 days afer the date on which the collective bargain agreement . . . expire[d], ” id. § 1085(e)(3)(C)(iii).

         B. Factual Background

         Service Employees International Union Local 1199 United Health Care Workers East (“SEIU”) has been the exclusive bargaining representative for two groups employed by Castle Hill: (1) certified nurse assistants and (2) dietary, housekeeping, and recreational aides. See Dkt. 15-2 at 2 (SUMF ¶¶ 3-4).[1] Since 1992, a series of collective bargaining agreements between Castle Hill and SEIU have defined the terms and conditions of employment, including pension rights, of members of those groups. Id. (SUMF ¶ 4). In 2002, Castle Hill and SEIU entered into a modified collective bargaining agreement that, among other changes, converted the previous pension plan to the current Fund, id., which is an “employee benefit plan” and “a multiemployer plan” under ERISA. Among other things, Castle Hill committed to comply with “the provisions of Agreement and Declaration of Trust (‘Trust Agreement') establishing the Fund, as it may from time to time be amended, and [with] all resolutions and rules adopted by the Trustees pursuant to the powers delegated to them by the” collective bargaining agreement, “including collections policies.” Dkt. 15-4 at 9 (2002 CBA). The Trust Agreement, in turn, authorizes the Fund to “establish such procedures, rules, and regulations . . . as shall be necessary to carry out the operation of the [Fund] and [to] effectuate the purpose thereof, ” Dkt. 15-6 at 6 (Trust Agreement), and, pursuant to this authority, the Fund adopted its Statement of Policy for Collection of Delinquent Contributions (“Collection Policy”), Dkt. 15-7 (Collection Policy).

         As relevant here, the Trust Agreement and Collection Policy required Castle Hill to submit monthly contributions and remittance reports detailing its regular payments to the Fund, including information on hours paid, excluding overtime, for all eligible full-time and part-time employees or non-regular employees who have been continuously employed for at least one year. Dkt. 15-2 at 3 (SUMF ¶ 10); Dkt. 15-4 at 9 (2002 CBA). In the event of delinquent contributions or reports from Castle Hill, the Trust Agreement authorizes the Trustees to take action against Castle Hill, including by demanding payment for interest, liquidated damages, and attorneys' fees. Dkt. 15-6 at 3 (Trust Agreement); Dkt. 15-7 at 9 (Collection Policy). In particular, the Collection Policy calls for the collection of interest on delinquent contributions at the rate of 10% per year, Dkt. 15-7 at 9 (Collection Policy), and liquidated damages equal to the amount of either the interest due or 20% of the delinquent contribution, whichever is greater, id. The Collection Policy specifies that any “obligations to pay interest, liquidated damages and fees chargeable under this policy are contractual in nature and independent of the provisions of ERISA Section 502(g).” Id. at 10.

         In 2009, the Fund fell into “critical status” as defined by the PPA, causing it to adopt and implement a rehabilitation plan. See 29 U.S.C. § 1085(a)(2). In November 2009, the Fund notified Castle Hill and others that it had entered critical status and that it had adopted a rehabilitation plan. Dkt. 15-9 at 2 (Rehabilitation Plan). Of particular relevance here, that notice explained that “[t]he Trustees are providing two schedules of contribution increases for the bargaining parties to consider-a Preferred Schedule and a Default Schedule.” Id. Under the Preferred Schedule, the bargaining parties could agree that Castle Hill would pay increased contributions in the amount of 10% of the underlying base contributions for 2010; 18.5% for 2011; 27.7% for 2012; 37.6% for 2013; 48.3% for 2014; 59.8% for 2015; 72.1% for 2016; 85.5% for 2017; and with escalating increases beyond 2017. Dkt. 15-9 at 14 (Rehabilitation Plan); Dkt. 15-10 at 5 (First Smith Decl. ¶ 21). Alternatively, under the Default Schedule, the parties could agree on rate increases of 21.3% for 2010; 33.7% for 2011; 47.4% for 2012; and 62.5% for years thereafter. Dkt. 15-9 at 14 (Rehabilitation Plan). As the notice further explained, “[i]f the bargaining [parties failed to] adopt a schedule and [to] provide notice of [their] agreement to the Fund . . . within 180 days of the termination of [their] last agreement, the . . . Trustees [would] impose the Default Schedule on” Castle Hill and SEIU. Id. at 12 (Rehabilitation Plan)

         In March 2010, Castle Hill and SEIU entered into a Memorandum of Agreement (“MOA”), extending their collective bargain agreement under specified terms from April 1, 2010 through March 31, 2014. Dkt. 15-5 at 2-7 (MOA). Consistent with the Fund's rehabilitation plan notice, the parties agreed to the increased contribution rates set forth in the Preferred Schedule for the annual periods running from April 1, 2010, 2011, and 2012 to March 31 of each of the following years.[2] Id. at 3 (MOA). Although the term of the MOA ran until March 31, 2014, with respect to the final year of that term, the MOA merely provided: “The parties agree to re-open the contract for the purpose of negotiating pension fund contributions on or about September 1, 2012 for it to be effective April 1, 2013.” Id. The parties met on multiple occasions in an effort to reach a new collective bargaining agreement after the expiration of the prior agreement, but they were unable to agree on new terms. Dkt. 17 at 5-6.

         The Fund has remained in critical status to the present. See Dkt. 15-8 (Critical Status Notice). According to the Fund, however, from “October 2014 through April 2017, [Castle Hill] has failed to remit certain contractually required reports and contributions and has failed to pay certain interest charges, liquidated damages, and supplemental contributions due under the PPA to the . . . Fund.” Dkt. 1 at 6-7 (Compl. ¶ 18). As a result, the Fund brought this suit in August, 2017, seeking a declaratory judgment that Castle Hill “is delinquent in remitting owed contributions, interest, liquidated damages, and PPA supplemental contributions . . . pursuant to the 2010 MOA, ” as well as “remittance reports for the months of May 2016, June 2016, and August 2016”, and an order requiring Castle Hill “to pay the corresponding outstanding contributions, interest, liquidated damages, and PPA supplemental contributions for these delinquent months” as well as “unpaid contributions, interest, liquidated damages, and PPA supplemental contributions for the period of October 2014 through April 2017.” Dkt. 1 at 9-10 (Compl.). The Fund also seeks a permanent injunction against Castle Hill, “requiring it to remit its reports and contributions to the Pension Fund in a timely manner.” Id. Asserting that no disputed issues of material fact stand between it and the relief it seeks, the Fund seeks summary judgment. Dkt. 15.


         A party is entitled to summary judgment under Federal Rule of Civil Procedure 56 if it can “show[] that there is no genuine dispute as to any material fact and [that she] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The party seeking summary judgment “bears the initial responsibility” of “identifying those portions” of the record that “demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is “material” if it could affect the substantive outcome of the litigation. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And a dispute is “genuine” if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See Scott v. Harris, 550 U.S. 372, 380 (2007). The Court must view the evidence in the light most favorable to the nonmoving party and must draw all reasonable inferences in that party's favor. See Talavera v. Shah, 638 F.3d 303, 308 (D.C. Cir. 2011).

         If the moving party carries this initial burden, the burden then shifts to the nonmoving party to show that sufficient evidence exists for a reasonable jury to find in the nonmoving party's favor with respect to the “element[s] essential to that party's case, and on which that party will bear the burden of proof at trial.” Id. (quoting Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006)). The nonmoving party's opposition, accordingly, must consist of more than unsupported allegations or denials, and must be supported by affidavits, declarations, or other competent evidence setting forth specific facts showing that there is a genuine issue for trial. See Fed. R. Civ. P. 56(c); Celotex, 477 U.S. at 324. That is, once the moving party carries its initial burden on summary judgment, the nonmoving party must provide evidence that would permit a reasonable jury to find in her favor. See Laningham v. U.S. Navy, 813 F.2d 1236, 1241 (D.C. Cir. 1987). If the nonmoving party's evidence is “merely colorable” or “not significantly probative, ” the Court should grant summary judgment. Liberty Lobby, 477 U.S. at 249-50.

         III. ANALYSIS

         Under Section 515 of ERISA, “[e]very employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.” 29 U.S.C. § 1145. Moreover, “[i]n any action” brought under ERISA by the trustees of a plan to enforce Section 515, “the court shall award the plan . . . the unpaid contributions, . . . interest on the unpaid contributions, . . . liquidated damages[, ] . . . reasonable attorney's fees and costs of the action[, ] and . . . such other legal or equitable relief as the court deems appropriate.” 29 U.S.C. § 1132(g). According to the Fund, this is such a case, and, as a result, it is entitled to $37, 193.87 in unpaid contributions because Castle Hill applied the incorrect supplemental contribution rates, along with $10, 865.65 in liquidated damages, $5, 280.73 in interest to date, and ...

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