Benson v. Brower's Moving & Storage, Inc.

• Decision Date: 28 June 1990
• Docket Number: D,No. 1154,1154
• Citation: 907 F.2d 310
• Parties: 116 Lab.Cas. P 10,205, 12 Employee Benefits Ca 1849 C. Victor BENSON, Robert Corbett, Arthur Eisenberg, Jeffrey S. Morgan, James O'Connor as Trustees and Fiduciaries of the Teamsters Local 814 Pension, Annuity and Welfare Funds, Plaintiffs-Appellees, v. BROWER'S MOVING & STORAGE, INC., Defendant-Appellant. ocket 90-7001.
• Court: U.S. Court of Appeals — Second Circuit

Page 310

907 F.2d 310

116 Lab.Cas. P 10,205, 12 Employee Benefits Ca 1849

C. Victor BENSON, Robert Corbett, Arthur Eisenberg, Jeffrey

S. Morgan, James O'Connor as Trustees and

Fiduciaries of the Teamsters Local 814

Pension, Annuity and Welfare

Funds, Plaintiffs-Appellees, v. BROWER'S MOVING & STORAGE, INC., Defendant-Appellant.

No. 1154, Docket 90-7001.

United States Court of Appeals, Second Circuit.

Argued April 20, 1990.

Decided June 28, 1990.

Robert S. Nayberg (Martin H. Scher, Carle Place, N.Y., of counsel), for defendant-appellant.

Michael Barrett (Eugene S. Friedman, Jay P. Levy-Warren, Friedman & Levy-Warren, New York City, of counsel), for plaintiffs-appellees.

Before TIMBERS, MESKILL and PIERCE, Circuit Judges.

MESKILL, Circuit Judge:

In this appeal we consider the defenses available to an employer sued by a union pension fund for delinquent pension contributions. The individual plaintiffs are trustees of the Teamsters Local 814 Pension, Annuity and Welfare Funds (the Funds), which are multiemployer employee benefit plans within the meaning of the Employee Retirement Income Security Act of 1974 (ERISA). Defendant Brower's Moving & Storage, Inc. (Brower's) is an employer required by the terms of a collective bargaining agreement with Local 814, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers ("Local 814" or "the union"), to make contributions on behalf of Brower's employees to the Funds. The Funds brought this action against Brower's pursuant to section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. Sec. 185, and sections 502(a)(3) and 515 of ERISA, 29 U.S.C. Secs. 1132(a)(3), 1145, to recover delinquent contributions. Brower's maintained, inter alia, that it had no obligation to make the contributions because Local 814 had abandoned the collective bargaining agreement. The Funds moved for summary judgment before the United States District Court for the Eastern District of New York, Dearie, J. The district court granted the motion and ordered Brower's to make the delinquent contributions, holding that section 515 of ERISA precludes Brower's from raising the union's abandonment of the collective bargaining agreement as a defense against the Funds. See 726 F.Supp. 31 (E.D.N.Y.1989). The court entered judgment in favor of the Funds, and Brower's appeals.

We affirm.

BACKGROUND

The relevant facts are not in dispute. Brower's has been a party to a series of collective bargaining agreements with Local 814 since 1951. The two agreements relevant to this dispute covered the periods from April 1, 1983 through March 31, 1986, and from April 1, 1986 through March 31, 1989. Each agreement required Brower's to contribute to the Funds on a monthly basis to pay for pension, annuity and welfare benefits for employees covered by the agreements.

An audit conducted by the Funds in December 1987 revealed that Brower's had made no contributions from April 1983 through September 1987 for twelve employees covered by the agreements, resulting in a deficiency of $239,639.30. ¹ Brower's did pay union dues and make pension contributions during this period for two Brower's family members. Brower's refused to honor the Funds' requests for payment of the deficiency, and the Funds commenced this action in February 1988 to recover the unpaid contributions.

The Funds subsequently moved for summary judgment on the basis that the delinquencies were established and that ERISA section 515 precludes Brower's from asserting contract defenses in a benefit plan collection action. Brower's responded with a two-part defense. First, it contended that a valid collective bargaining agreement is a jurisdictional prerequisite to liability under section 515, and that the collective bargaining agreements with Local 814 were invalid and unenforceable because they had been "abandoned" by the union, i.e., Brower's had not complied with several terms of the agreements and the union had The district court granted the Funds' motion, holding that (1) abandonment amounts to a defense going to the enforceability of the contract, and contractual defenses available against a union may not be raised against a benefit plan by virtue of section 515 of ERISA, and (2) even if such defenses could be raised, a district court has jurisdiction to determine the validity of a collective bargaining agreement under LMRA section 301(a), 29 U.S.C. Sec. 185(a). The court then opined that the 1983-1986 contract is valid, but expressed no opinion on the 1986-1989 contract.

acquiesced in the noncompliance. Therefore, Brower's asserted, it had no liability to the Funds. Second, Brower's maintained that the district court had no jurisdiction to decide this preliminary question of the validity of the collective bargaining agreements, and therefore the action had to be dismissed.

On October 11, 1988, eight months after the Funds commenced this action, Local 814 filed an unfair labor practice charge against Brower's with the National Labor Relations Board ("NLRB" or "the Board"). The union alleged that Brower's had violated sections 8(a)(1) and 8(a)(5) of the National Labor Relations Act (NLRA), 29 U.S.C. Secs. 158(a)(1), 158(a)(5), by repudiating its 1986-1989 contract with the union. Specifically, the union asserted that Brower's had failed to make contributions to the Funds and had failed to comply with other contract terms regarding wages, holidays, vacations and union security. Brower's argued that no contract existed between it and the union, that even if a contract did exist, it had been abandoned by Local 814, and that if no abandonment had occurred, the union was estopped from enforcing the contract after failing to enforce any of the collective bargaining contracts with Brower's since 1951. The Administrative Law Judge (ALJ) who heard the case ruled in favor of Brower's, concluding that the 1986-1989 contract did not give rise to a presumption of majority status (a prerequisite to a section 8(a)(5) violation) because Brower's and the union had not maintained a true collective bargaining relationship over the years. Alternatively, the ALJ ruled that Local 814 had abandoned the contract by not enforcing its terms.

A three member panel of the NLRB disagreed, finding "that since 1951, the Union has been the designated exclusive collective-bargaining representative of the employees in the unit described in the complaint, which we find appropriate for collective bargaining, and that the Union has been recognized as such by [Brower's]." It further found "that the 1986-1989 contract is valid and gives rise to an irrebuttable presumption of majority status and that the Union has not abandoned its administration of the contract." Brower's Moving & Storage, 297 N.L.R.B. No. 28 (Nov. 8, 1989). The panel then found that, since April 11, 1988, Brower's had violated sections 8(a)(1) and 8(a)(5) of the NLRA, and ordered Brower's to comply with the collective bargaining agreement and to make restitution for past violations. The Board did not order relief for the period before April 11 because NLRA section 10(b), 29 U.S.C. Sec. 160(b), bars relief based on unfair labor practice charges filed more than six months after the occurrence. The NLRB's petition for enforcement of its order is currently pending before another panel of this Court.

The district court was aware of these administrative proceedings and the NLRB's decision, but regarded the NLRB's decision as irrelevant to the issue whether section 515 of ERISA permits Brower's to raise the validity of its collective bargaining agreements as a defense against the Funds.

DISCUSSION

On appeal, Brower's again argues that it has no liability to the Funds because no valid collective bargaining agreement exists. Specifically, Brower's raises the defenses of abandonment of contracts and lack of majority representation. We conclude that neither defense is available to Brower's.

We begin our analysis by noting that ERISA sections 502 and 515 clearly give a district court subject matter jurisdiction to

                hear an action brought by benefit plan trustees to enforce an employer's promise to make contributions.  See 29 U.S.C. Secs. 1132(e)(1), 1145;  see also Laborers Health and Welfare Trust Fund v. Advanced Lightweight Concrete Co., 484 U.S. 539, 547, 108 S.Ct. 830, 835, 98 L.Ed.2d 936 (1988) ("The liability created by Sec. 515 may be enforced by the trustees of a plan by bringing an action in federal district court pursuant to Sec. 502.").  Of course, the benefit plan must prove that the employer promised to contribute to the plan in order to succeed on its claim.  In this case, the Funds satisfied this requirement by producing collective bargaining agreements that Clifford Brower, the Secretary and Treasurer of Brower's, admittedly signed. 2   Viewed in this light, Brower's argument is that, as soon as an employer raises the defense of abandonment or lack of majority status, the district court is deprived of subject matter jurisdiction because it must defer to the NLRB on the question of the contract's validity.  Brower's thus raises the same cry as countless other employers across the country:  "Why must I contribute to a benefit plan when no 'real' collective bargaining agreement exists?"    The short answer, and the one we find dispositive, is that Congress intended to insulate benefit plans from exactly these defenses in adding section 515 to ERISA.  Accordingly, we need not reach Brower's second argument that the district court erred by not deferring to the ongoing NLRB proceedings on the question of validity
                

A. Enactment and Interpretation of Section 515

Section 515 provides:

Every 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...