Cent. States, Se. & Sw. Areas Pension Fund v. Standard Elec. Co.

• Decision Date: 18 February 2015
• Docket Number: 14 C 6163
• Citation: 87 F.Supp.3d 810
• Parties: Central States, Southeast and Southwest Areas Pension Fund and Arthur H. Bunte, Jr., as Trustee, Plaintiffs, v. Standard Electric Co., Defendant.
• Court: U.S. District Court — Northern District of Illinois

87 F.Supp.3d 810

Central States, Southeast and Southwest Areas Pension Fund and Arthur H. Bunte, Jr., as Trustee, Plaintiffs

v.Standard Electric Co., Defendant.

14 C 6163

United States District Court, N.D. Illinois, Eastern Division.

Signed February 18, 2015

Emily E. Gleason, Brad R. Berliner, Central States Funds, Albert M. Madden, Andrew James Herink, Central States Funds Law Department, Rosemont, IL, for Plaintiffs.

Afton L. Gauron, Hamilton Thies Lorch & Hagnell, LLP, Chicago, IL, Brian P. Swanson, Elizabeth L. Peters, Masud Labor Law Group, Robert C. Miller, Shinners & Cook, P.C., Saginaw, MI, for Defendant.

Memorandum Opinion and Order

Gary Feinerman, United States District Judge

For many years, Defendant Standard Electric Company's collective bargaining agreement (“CBA”) with International Brotherhood of Teamsters, Local Union No. 486—a non-party to this suit—required Standard to participate in a multiemployer pension plan administered by Plaintiff Central States, Southeast and Southwest Areas Pension Fund. In early April 2011, Standard and Local 486 agreed between themselves to revise their CBA and stop participating in the Central States pension plan, retroactive to March 31, 2011. In this suit under § 502 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132, Central States alleges that because the CBA had a year-to-year evergreen clause, and because Standard and Local 486 did not timely terminate the CBA by March 31, 2011, Standard was obligated to continue contributing to the pension fund through March 31, 2012. Doc. 1. (The other plaintiff, the Fund's trustee, will be ignored for ease of exposition.) The operative complaint seeks a judgment against Standard for its allegedly delinquent contributions from April 2011 through March 2012, plus interest and liquidated damages. Doc. 34. Standard has moved for summary judgment, Doc. 24, and Central States has moved for partial summary judgment as to liability, Doc. 35. Central States' motion is granted and Standard's motion is denied.

Background

When considering Central States' motion, the facts are viewed in the light most favorable to Standard, and when considering Standard's motion, the facts are considered in the light most favorable to Central States. SeeIn re United Air Lines, Inc., 453 F.3d 463, 468 (7th Cir.2006). Because the court will rule in favor of Central States, the following facts are set forth as favorably to Standard as the record and Local Rule 56.1 permit. See Hanners v. Trent, 674 F.3d 683, 691 (7th Cir.2012). That said, the pertinent facts are almost entirely undisputed, either by agreement or because the fact simply recites what a document states.

Standard is a commercial distributor of electrical supplies. Doc. 38 at ¶ 2. In 1978, Standard and Local 486 entered into a participation agreement with the Central States pension fund. Doc. 42 at ¶ 9. The participation agreement required Standard to contribute to the pension fund for the benefit of its employees “during the life of the current [CBA] between the parties and during all renewals and extensions thereof.” Id. at ¶ 10; Doc. 25–3 at p. 3, ¶ 7. The participation agreement further provided that “the obligation to make contributions to the Fund shall be terminated when and if such contributions are no longer required by a [CBA] between the parties.” Doc. 25–3 at p. 3, ¶ 7. The participation agreement bound Standard and Local 486 to Central States' Trust Agreement:

The Union [Local 486] and the Employer [Standard] agree to be bound by, and hereby assent to, all of the terms of the Trust Agreement creating said Central States, Southeast and Southwest Areas Pension Fund, all of the rules and regulations heretofore and hereafter adopted by the Trustees of said Trust Fund pursuant to said Trust Agreement, and all of the actions of the Trustees in administering such Trust Fund in accordance with the Trust Agreement and rules adopted.

Doc. 42 at ¶ 11; Doc. 25–3 at p. 3, ¶ 1.

Article III, § 7(a) of the Trust Agreement states: “An Employer is obliged to contribute to the Fund for the entire term of any collective bargaining agreement accepted by the Fund on the terms stated in that collective bargaining agreement....” Doc. 42 at ¶ 21 (emphasis added); Doc. 37–4 at 12. Article III, § 1 of the Trust Agreement addresses the circumstances under which Standard could relieve itself of its obligation to contribute to the pension fund once the CBA has terminated:

Except as provided in [inapplicable provisions], the obligation to make such contributions shall continue (and cannot be retroactively reduced or eliminated) after termination of the collective bargaining agreement until the date the Fund receives a) a signed contract that eliminates or reduces the duty to contribute to the Fund or b) written notification that the Employer has lawfully implemented a proposal to withdraw from the Fund or reduce its contributions at the above-specified address.

Doc. 42 at ¶ 23 (emphasis added); Doc. 37–4 at 10 (reproduced by Standard at Doc. 25–4 at 4).

In 2009, Standard and Local 486 entered into a successor CBA. Doc. 38 at ¶ 4. Article 42, § 1 of the 2009 CBA contained a year-to-year evergreen clause, providing that the 2009 CBA would terminate on March 31, 2011 only if Standard or Local 486 sent a cancellation or termination notice sixty days before that date; absent such a notice, the 2009 CBA would continue in force until March 31, 2012:

This Agreement shall be in full force and effect from April 1, 2009 to and including March 31, 2011, and shall continue in full force and effect from year to year thereafter unless written notice of desire to cancel or terminate the Agreement is served by either party upon the other at least sixty (60) days prior to the date of expiration.

Doc. 42 at ¶ 14; Doc. 25–2 at 6. Article 42, § 2 provided a mechanism for Standard and Local 486 to seek to amend the 2009 CBA rather than cancel it:

[W]here no such cancellation or termination notice is served and the parties desire to continue said Agreement but also desire to negotiate changes or revisions in this Agreement, either party may serve upon the other a notice at least sixty (60) days prior to March 31, 2011, or April 1st of any subsequent contract year, advising that such party desires to continue this Agreement but also desires to revise or change terms or conditions of such Agreement.

Doc. 42 at ¶ 14; Doc. 25–2 at 6.

On January 8, 2011—before the deadline set by Article 42, § 2—Local 486 sent a letter to Standard indicating its “desire to negotiate certain changes and modifications in the present” CBA. Doc. 42 at ¶ 15; Doc. 25–5 at 2. On April 10, 2011, Standard and Local 486 agreed to a revised CBA, which provided in pertinent part that they would stop participating in the Central States pension fund and instead would offer 401(k) retirement plans to Standard's employees. Doc. 38 at ¶¶ 11, 13. The next day, April 11, Standard sent Central States a letter stating: “Standard ... and [Local 486] have approved a [successor CBA] that terminates Standard['s] participation in the [pension fund] effective March 31, 2011.” Doc. 42 at ¶ 16; Doc. 25–8 at 2. Consistent with its letter, Standard stopped making payments to the Central States pension fund on or shortly after March 31, 2011. Doc. 38 at ¶ 15. (Although Standard's Local Rule 56.1(a)(3) statement asserts that it stopped paying contributions as of March 31, 2011, Doc. 25 at ¶ 15, its Local Rule 56.1(b)(3)(B) response to Central States' Local Rule 56.1(a)(3) statement asserts, without citing the record, that it paid contributions through April 10, 2011, Doc. 42 at ¶ 30. Given the disposition of the cross-motions for summary judgment, the court need not resolve that discrepancy right now.)

Discussion

This case turns on two questions. The first is whether the termination date of the 2009 CBA was ever March 31, 2012. If not—that is, if the termination date at all times was March 31, 2011—then Standard's April 11, 2011 letter to Central States likely would qualify under Article III, § 1 of the Trust Agreement as a “written notification that the Employer has lawfully implemented a proposal to withdraw from the Fund,” which in turn would limit Standard's contribution obligations to the period of time from the “termination of the collective bargaining agreement [March 31, 2011, on this view] until the date” Central States received the April 11 letter. Doc. 37–4 at 10. If, by contrast, the 2009 CBA at any point had a termination date of March 31, 2012, then a second question arises: Whether Standard and Local 486 could agree between themselves to retroactively terminate the 2009 CBA as of March 31, 2011—that is, to move the termination date from March 31, 2012 to March 31, 2011—not only as it pertains to their obligations to one another, but also to eliminate Standard's duty to contribute to the Central States pension fund as of the date Central States received the April 11, 2011 letter. The respective answers to these questions are “yes” and “no,” which results in the conclusion that Standard was required to contribute to the Central States pension fund through March 31, 2012.

With respect to the first question: As noted above, Article 42, § 1 of the CBA (the evergreen clause) provided that the CBA “shall be in full force and effect from April 1, 2009 to and including March 31, 2011, and shall continue in full force and effect from year to year thereafter unless written notice of desire to cancel or terminate the Agreement is served by either party upon the other at least sixty (60) days prior to the date of expiration.” Doc. 25–2 at 6 (emphases added). Standard concedes that neither it nor Local 486 sent a “written notice of desire to cancel or terminate the [CBA] ... at least sixty (60) days prior to the date of expiration” within the meaning of that provision. Instead, Standard argues that because Local 486's January 8, 2011 letter was a timely notice under ...