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

• Decision Date: 04 December 1989
• Docket Number: No. CV 88-0470.,CV 88-0470.
• Parties: 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, v. BROWER'S MOVING & STORAGE, INC., Defendant.
• Court: U.S. District Court — Eastern District of New York

726 F. Supp. 31

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, v. BROWER'S MOVING & STORAGE, INC., Defendant.

No. CV 88-0470.

United States District Court, E.D. New York.

December 4, 1989.

Michael Barrett, Friedman, Levy-Warren & Moss, New York City, for plaintiffs.

Robert S. Nayberg, Law Office of Martin H. Scher, Carle Place, N.Y., for defendant.

MEMORANDUM AND ORDER

DEARIE, District Judge.

This action was brought under Section 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1145 and Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, to collect contributions allegedly due and owing to employee benefit trust funds under a collective bargaining agreement concededly entered into between an employer and a union. Defendant employer challenges the enforceability of the collective bargaining agreement. Plaintiff moves for summary judgment on the ground that the delinquencies are established and that the employer's contract defenses are not assertable in a trust fund collection action. As explained below, the motion for summary judgment is granted.

FACTS

The Local 814 Pension, Annuity and Welfare Funds ("the Funds") are multi-employer employee benefit plans within the meaning of sections 3(3) and (3)(37) of ERISA, 29 U.S.C. § 1002(3) and (37). The Funds were established pursuant to the terms of various collective bargaining agreements between Teamsters Local 814 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers ("the Union") and various employers, including defendant Brower's Moving & Storage, Inc. ("Brower's"), a New York corporation with its principal place of business in Port Washington, New York. The Funds are administered by two employer-designated trustees, two union trustees, and a court-appointed trustee in accordance with the terms of the collective bargaining agreements and the Funds' Agreement and Declaration of Trust ("Declaration").

It is undisputed that Brower's and the Union signed a series of collective bargaining agreements. The one which covers the period relevant to this action, April 1, 1983 through March 31, 1986, (the "agreement") was signed by Clifford W. Brower, an authorized agent of Brower's. The agreement by its terms requires Brower's to contribute to the Funds on a monthly basis on behalf of each covered employee of Brower's, based on the number of hours for which such employees were paid.

The agreement authorizes the Trustees of the Funds to take all actions necessary to effectuate the Funds' purposes, which include auditing employers to determine whether the required contributions have been made.¹ An audit of Brower's books on December 21, 1987 revealed that for the period April, 1983 through September, 1987, Brower's failed to contribute to the Funds on behalf of twelve of its employees for whom the collective bargaining agreement required contributions. The Funds have documented the deficiency, calculated pursuant to the terms of the agreement, in the amount of $239,693.30. On or about January 14, 1988, the Funds' office manager sent a notice of Audit Delinquency to Brower's, demanding payment of the unpaid contributions plus interest and liquidated damages in accordance with the agreement and the Declaration of Trust.² Upon Brower's failure to reply to the notice, the Funds initiated this action.

Brower's does not concede the amount of the deficiency, although it does readily acknowledge that over a period of time it "has not abided by the terms" of the agreement. Brower's principal argument is that although it has failed to comply with numerous terms of the agreement, the Union has essentially ignored the noncompliance.³ According to Brower's, (i) such failure to police the agreement amounts to abandonment, (ii) an abandoned agreement is invalid and unenforceable, and (iii) absent an enforceable collective bargaining agreement, Brower's has no obligation to contribute to the Funds. Brower's related argument is that the validity of the agreement is a subject within the exclusive jurisdiction of the National Labor Relations Board and that this Court therefore lacks jurisdiction over this entire action.

DISCUSSION

Section 515 of ERISA, 29 U.S.C. § 1145, provides that

every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collective bargaining 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.

The liability created by section 515 may be enforeced by the trustees of a plan by bringing an action in federal district court pursuant to Section 502, 29 U.S.C. § 1132. Section 502(g), 29 U.S.C. § 1132(g), provides for the mandatory award of prejudgment interest, liquidated damages and attorneys fees to plans who prevail in collection actions against employers.⁴

The question presented in this case is whether the defense of abandonment of the collective bargaining agreement may be interposed by the employer in a Section 515 collection action. Although the question has not been addressed by our Court of Appeals, several other circuits have rejected the raising of various contract defenses in delinquent contribution cases under ERISA. See, e.g., Central States Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148 (7th Cir.1989); Bituminous Coal Operators' Association, Inc. v. Connors, 867 F.2d 625 (D.C.Cir.1989); Trustees of Colo. Statewide Ironworkers Fund v. A & P Steel, Inc., 812 F.2d 1518, 1522 (10th Cir.1987) (frustration of purpose defense rejected); Southwest Administrators, Inc. v. Rozay's Transfer, 791 F.2d 769, 773 (9th Cir.1986), cert. denied, 479 U.S. 1065, 107 S.Ct. 951, 93 L.Ed.2d 999 (1987) (trustees entitled by Section 515 to enforce the terms of an agreement even where agreement rescinded because employer fraudulently induced by union); Southern Calif. Retail Clerks Fund v. Bjorklund, 728 F.2d 1262 (9th Cir.1984) (fraud in the inducement defense rejected). See also Lewis v. Benedict Coal Corp., 361 U.S. 459, 80 S.Ct. 489, 4 L.Ed.2d 442 (1960) (defense of breach of contract rejected).

Representative of these cases is the reasoning of the District of Columbia Circuit in Connors. As that court explained, an employee benefit plan such as the one involved here is a third party beneficiary of the collective bargaining agreement between the employer and the union. Thus, under traditional contract law, the benefit plan would step into the shoes of the union (promisee) and therefore be subject to any claim or defense that the promisor (employee) would have against the union. A pension fund, however, "is `not a typical third party beneficiary' but, like Cinderella's stepsisters, it does not fit comfortably into the shoes of the promisee." 867 F.2d at 632 (citation omitted).

This misfit is no accident. Multiemployer employee benefit plans are something of the darlings of Congress. The legislative history of ERISA, and Section 515 in particular, has been extensively reviewed by numerous other courts, see Connors, 867 F.2d at 632-33, including the Supreme Court, see Laborers Health & Welfare Trust Fund v. Advanced Light-weight Concrete Co., 484 U.S. 539, 108 S.Ct. 830, 98 L.Ed.2d 936 (1988), and need not be repeated here. As all these courts have agreed, in Section 515 Congress "provided a statutory procedure intended to simplify the collection of pension contributions and to insulate the plan's entitlement to employer contributions from any potentially offsetting claims against the union." 867 F.2d at 632-33.

The Connors Court also expressly rejected the employer's suggestion that Section 515 created a duty to contribute that is merely coextensive with the contractual duty or that Section 515 collection actions could be defeated by contract defenses. 867 F.2d at 633-34. Employers are of course not required to create a pension plan, but once they execute a collective bargaining agreement that does create one there can be virtually no repudiation of the pension promise. The executed collective bargaining agreement contains a promise to contribute on which plans immediately rely, as they determine the level of benefits they promise to pay to employees based on the promised employer contributions. Federal pension law protects a plan's right to rely and enables its trustees to enforce the promise to contribute without participating in or awaiting the outcome of litigation between labor and management.

There can be no dispute that Congress intended to narrow substantially the scope of defenses available to employers in collection actions. Although Brower's defense — abandonment of the contract — has not been specifically addressed in any of the reported Section 515 cases, the consistent and unequivocal rejection of employers' assertion of comparable contract defenses compels only one result here. This Court concludes that Brower's may not assert in this action defenses going to the enforceability of the collective bargaining agreement between it and the Union.⁵ Brower's executed the agreement on which the Funds are entitled to, and indeed must, rely. In terms of Section 515, there can be no question that Brower's is obligated under the terms of the agreement to contribute to the Funds.

Defendant's two additional arguments are easily dismissed. Defendant argues that since the 1983-1986 collective bargaining agreement has by its own terms expired, the Funds can no longer sue for delinquent payments. Defendant relies on, but completely misreads, Laborers Health & Welfare Trust Fund v. Advanced Light Weight Concrete Co., 484 U.S. 539, 108 S.Ct. 830, 98 L.Ed.2d 936 (1988). That case held that Section 515 does not impose upon employers an obligation to contribute...