Bennett v. Machined Metals Co., Inc., Civ. A. No. 83-4080.

Decision Date01 August 1984
Docket NumberCiv. A. No. 83-4080.
Citation591 F. Supp. 600
PartiesJoseph BENNETT, Norbert Moffett, Remo F. Galli, Thomas J. Kiely, Jr., Joseph Milani, Theodore Morris, III, Theodore Andrezejcyk and Franklin Bullock, Trustees of Shopmen Iron Workers Welfare Plan (of Philadelphia and Vicinity) and Marvin Glickman, William L. Kern, Robert Reithmiller, Frank Spaniel, Norbert Moffett, Theodore Andrezejcyk, Franklin Bullock, and Harry Maniscalso, Trustees of Shopmen's Local Union No. 502 Pension Plan v. MACHINED METALS CO., INC.
CourtU.S. District Court — Eastern District of Pennsylvania

Robert M. Abramson, Abrams, Abramson & Tabb, Philadelphia, Pa., for plaintiffs.

Andrew B. Cantor, Wisler, Pearlstine, Talone, Craig & Garrity, Norristown, Pa., for defendant.


LUONGO, Chief Judge.

In this lawsuit, the trustees of the Shopmen Iron Workers Welfare Plan (Welfare Plan) and the trustees of the Shopmen's Local Union No. 502 Pension Plan (Pension Plan) seek interest, liquidated damages and counsel fees against defendant Machined Metals Co., Inc. on account of defendant's alleged failure to make timely contributions to the Plans. The Plans' trustees contend that payments for which defendant became liable during the months of August, 1982 through June, 1983 were not made when required by an applicable collective bargaining agreement. Plaintiffs seek relief under section 306(b)(2) of the Multiemployer Pension Plans Amendments Act, 29 U.S.C. § 1132(g)(2), and section 301 of the Labor Management Relations (Taft-Hartley) Act, 29 U.S.C. § 185.

On February 24, 1984, plaintiffs filed a motion for summary judgment, arguing that Machined Metals' admission of several delays in payment entitled the trustees to judgment as a matter of law. After consideration of defendant's response to the motion, I suggested at oral argument that the parties enter into a stipulation concerning the few issues of fact potentially open to dispute. The parties have taken my suggestion, and now, under Fed.R.Civ.P. 52(a), I make the following:

Findings of Fact

1. Plaintiffs in this action are the trustees of the Shopmen Iron Workers Welfare Plan, and the trustees of the Shopmen's Local Union No. 502 Pension Plan. Plaintiffs are fiduciaries with respect to the Plans, and are authorized to bring this action.1

2. Defendant is Machined Metals Co., Inc. Machined Metals is a corporation authorized to do business in Pennsylvania, with its principal place of business in Norristown, Pennsylvania.2

3. During the period August, 1982 to June, 1983 Machined Metals was party to a collective bargaining agreement with Shopmen's Local Union No. 502 of the International Association of Bridge, Structural and Ornamental Iron Workers.3

4. Under the terms of the collective agreement, Machined Metals was obligated to contribute $.80 (eighty cents) per hour of employment of covered employees to the Welfare Plan.4

5. Defendant was required to pay $.68 (sixty-eight cents) per hour of employment of covered employees to the Pension Plan.5 6. Contributions to the Welfare Plan and the Pension Plan were required to be remitted on the 15th (fifteenth) day of the month following the month in which said sums were accrued.6

7. Machined Metals failed to make timely contributions to both the Welfare Plan and the Pension Plan for the months August, 1982 through June, 1983.7

8. The following schedule accurately reflects the amount of payments owed by defendant to the Plans, the due dates specified by the collective agreement, and the dates on which payments were actually forwarded:8

                   Payments Accrued               Amount
                       During          Welfare Plan     Pension Plan         Due Date         Date Paid
                   August, 1982          $4,050.40       $3,442.84           09/15/82         11/04/82
                   September, 1982        3,225.00        2,741.25           10/15/82         11/15/82
                   October, 1982          1,761.20        1,497.02           11/15/82         11/24/82
                   November, 1982         1,664.40        1,414.74           12/15/82         01/07/83
                   December, 1982         2,029.80        1,725.33           01/15/83         01/27/83
                   January, 1983          2,640.60        2,244.51           02/15/83         03/23/83
                   February, 1983         2,000.00        1,700.00           03/15/83         04/07/83
                   March, 1983            1,684.60        1,431.91           04/15/83         05/23/83
                   April, 1983            1,611.60        1,369.86           05/15/83         06/27/83
                   May, 1983              1,626.60        1,382.61           06/15/83         08/02/83
                   June, 1983             2,095.20        1,780.92           07/15/83         08/24/83

9. The president of defendant Machined Metals attempted to reach a compromise agreement regarding the first three delayed payments.9

10. The trustees never assented, however, to the proposed agreement.10

11. After the enactment of 29 U.S.C. § 1132(g)(2)(C)(ii), both the Welfare Plan and the Pension Plan were amended to authorize their respective trustees to seek an award of liquidated damages against employers that fail to make timely contributions. The Welfare Plan was amended to provide:

An employer who shall become delinquent in his contributions due to the Board of Trustees shall be liable for:
(i) The amount of the delinquency, plus
(ii) Reasonable attorney's fee in the sum of fifteen percent (15%) of the amount of the delinquency, plus
(iii) Costs incurred in maintaining a suit for collection of the delinquency, plus
(iv) The greater of interest at the then prevailing prime rate or liquidated damages of twenty percent (20%) of the delinquency.11

12. The Pension Plan amendment stated:

Liquidated Damages
Resolved; that Counsel amended12 the pension plan to provide for liquidated damages in collections of delinquencies as provided under the Act.

Delinquent employers shall be liable for:

(i) the amount of the delinquency, plus
(ii) reasonable attorney's fees, plus
(iii) the greater of interest at current rates and 20% of the delinquency e.g. in no instance more than 20% of the delinquency.13

13. Counsel for plaintiffs wrote two letters to defendant or its counsel in an effort to collect delinquent payments and additions thereto. In those letters, counsel referred to a collection fee, apparently separate from interest charges, as an amount calculated at a twenty percent (20%) per annum rate.14 The above-quoted amendments to the Plans, however, do not state that liquidated damages should be calculated on a per annum basis.

14. Neither Plan specified under section 1132(g)(2) of Title 29 a rate of interest to be charged against delinquent payments. Based on interest rates established pursuant to 26 U.S.C. § 6621, the parties have stipulated that interest shall be calculated at twenty percent (20%) per year for amounts outstanding from August, 1982 through December, 1982, and at sixteen percent (16%) per year for amounts in arrears thereafter.15


This case is somewhat unusual in that the parties have no dispute as to the defendant's obligation to make contributions to the Plans, or the amount of those obligations; at issue is the amount of damages resulting from defendant's delay in discharging debts which are now concededly satisfied. Resolution of this issue is governed by section 306(b) of the Multiemployer Pension Plans Amendments Act of 1980, 29 U.S.C. § 1132(g)(2),16 which states:

In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan —
(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of —
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent (or such higher percentage as may be permitted under Federal or State law) of the amount determined by the court under subparagraph (A),
(D) reasonable attorney's fees and costs of the action, to be paid by the defendant, and
(E) such other legal or equitable relief as the court deems appropriate.
For the purposes of this paragraph, interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under section 6621 of Title 26.

Section 1132(g)(2) provides the measure of recovery because Machined Metals' failure to make timely contributions to the Plans caused the employer to be in violation of MPPAA § 306(a), 29 U.S.C. § 1145, which states:

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 agreement.

After careful consideration of the parties' contentions, I conclude that plaintiffs are not entitled to an award of damages under 29 U.S.C. § 1132(g)(2)(A). Defendant made all payments required for the months August, 1982 through May, 1983 before the Plans commenced this suit, and the contribution for June, 1983 was forwarded two days after the filing of plaintiffs' complaint.17 Thus there are no "unpaid contributions" within the meaning of subparagraph (A).

Although there are no unpaid contributions currently outstanding, I conclude that plaintiffs are entitled, under section 1132(g)(2)(B) to an award of interest on delinquent contributions for the amount of time such payments were wrongfully withheld. Section 1132(g)(2) was enacted because of Congress' concern over costs incurred by multiemployer plans, such as lost revenue and collection and litigation expenses, as a result of employer delinquencies. See Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 87, 102 S.Ct. 851, 861, 70 L.Ed.2d 833. See also Senate Committee on Labor and Human Resources, S.1076The Multiemployer Pension...

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