Board of Trustees, Sheet v. Courtad Const. Systems

• Decision Date: 18 July 2006
• Docket Number: Civil Action No. 06cv44.
• Citation: 439 F.Supp.2d 574
• Court: U.S. District Court — Eastern District of Virginia
• Parties: BOARD OF TRUSTEES, SHEET METAL WORKERS' NATIONAL PENSION FUND, Plaintiff, v. COURTAD CONSTRUCTION SYSTEMS, INC., Defendant.

439 F.Supp.2d 574

BOARD OF TRUSTEES, SHEET METAL WORKERS' NATIONAL PENSION FUND, Plaintiff, v. COURTAD CONSTRUCTION SYSTEMS, INC., Defendant.

Civil Action No. 06cv44.

United States District Court, E.D. Virginia, Alexandria Division.

July 18, 2006.

Martin P. Hogan, Gromfine & Taylor PC, Alexandria, VA, for Plaintiff.

Gregory J. Ossi, Venable LLP, Vienna, VA, for Defendant.

MEMORANDUM OPINION

ELLIS, District Judge.

This is an ERISA¹ dispute between an employer and a plan trustee over whether the employer is obligated to continue to make contributions to the plan given its claim that the qualifying installation work is now done by subcontractors, not by its workers. The plan trustee disputes whether the qualifying work is being accomplished by the employer's workers and contends that this dispute must be submitted to arbitration and that the employer must make interim payments pending the outcome of the arbitration.

At issue on summary judgment, therefore, are the following questions:

1. Should the dispute over whether the employer's workers have resumed doing the qualifying installation work be submitted to arbitration or decided on this summary judgment record?

2. Is the employer required to make interim payments to the plan pending the outcome of the arbitration or litigation?

I.²

Plaintiff, the Board of Trustees of the Sheet Metal Workers' National Pension Fund (the Board), is a fiduciary with respect to a jointly administered multiemployer pension plan (the Plan) under ERISA, 29 U.S.C. § 1002(37). Defendant, Courtad Construction Systems, Inc. (Courtad), was a signatory to a collective bargaining agreement (CBA) with Local Union No. 33 (Local 33) of the Sheet Metal Workers' International Association.

From May 1999 until April 2004, Courtad made pension contribution payments to the Plan on behalf of its sheet metal field installation employees in accordance with the CBA. Courtad ceased making contribution payments to the Plan at the end of April 2004 when the CBA expired. Thereafter, in June 2004, the Board determined that Courtad employees had continued or resumed performing the qualifying sheet metal installation work after the CBA expired. This, in the Board's view, meant that Courtad had effected a "complete withdrawal" as defined in § 4203 of MPPAA,³ 29 U.S.C. § 1383(b)⁴ thereby triggering Courtad's obligation to resume making payments to the Plan. Under the MPPAA, an employer withdrawing from a multiemployer pension plan incurs what is termed "withdrawal liability" in the form of a fixed and certain debt to the pension plan. Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California, 508 U.S. 602, 609, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993).⁵ Courtad responded to the Board in August 2004, explaining that it had not participated in any sheet metal installation projects since the expiration of the CBA, and thus the Board had no basis for issuing the withdrawal assessment. At this point in time, the Board accepted Courtad's contention that it had not generated any revenue from sheet metal installation projects since February 2004. Accordingly, the Board agreed in October 2004 to rescind the withdrawal liability assessment.

Yet, the matter did not end here. A few months later business representatives for Local 33 began to receive reports and other information from their members that Courtad had resumed the type of sheet metal field installation work covered by the CBA, thereby arguably triggering the MPPAA requirement to make pension contributions. Local 33 informed the Board of these reports and provided the Board with verifying documentation. Acting on this information, the Board, on July 7, 2005, notified Courtad that it had reassessed Courtad's withdrawal liability, and concluded that Courtad had completely withdrawn from the Plan and thus owed the Plan withdrawal liability of $141,580.54, payable in quarterly installments of $11,044.17. Yet again, Courtad disputed the Board's withdrawal liability assessment. This time, however, Courtad did not deny that it was involved in sheet metal installation projects, but contended that it had no obligation to resume payments to the Plan because all the installation work was performed not by Courtad, but by Courtad's subcontractors. In support of this view, Courtad notes that the CBA did not require contributions to the Board for the work of subcontractors and therefore, because Courtad has not resumed work for which contributions were previously required under the CBA, no withdrawal has occurred.

Courtad notified the Board of its disagreement with the withdrawal assessment in a timely manner, and on November 21, 2005, requested arbitration to resolve the dispute pursuant to 29 U.S.C. § 1401(a). Although it complied with the MPPAA's requirement to provide notice and seek arbitration of the issues, Courtad has not complied with the MPPAA requirement under 29 U.S.C. § 1399(c)(2) to make interim withdrawal liability payments while arbitration is pending. Accordingly, the Board filed this suit to compel interim payment. Pursuant to a scheduling order, the parties proceeded to complete discovery on the issues presented by the Board's complaint. The Board, taking the view that the obligation to make interim payments is a question of law, has filed a motion for summary judgment, whereas Courtad believes that the underlying complete withdrawal assessment dispute can be resolved judicially on the basis of the summary judgment record. Now ripe for disposition on motion for summary judgment are, first, the question whether the dispute should be resolved on the basis of the summary judgment record without requiring arbitration, and second, assuming arbitration is required, whether Courtad must make withdrawal liability payments pending the outcome of arbitration.

II.

Analysis of the arbitration question properly begins with the MPPAA's provisions governing arbitration. To begin with, the MPPAA provides that where a plan sponsor, here the Board, determines that an employer has withdrawn, it must ascertain the prescribed amount of the employer's withdrawal liability and the prescribed payment schedule. 29 U.S.C. §§ 1382, 1399(b)(1). The specific withdrawal liability calculations are made pursuant to 29 U.S.C. § 1391. Once the plan sponsor has made the withdrawal assessment, it must notify the employer and demand payment. If the employer objects after the notice and the parties cannot resolve the dispute on their own, the MPPAA requires that, "any dispute between an employer and plan sponsor of a multiemployer plan concerning a determination made under sections 1381 to 1399 of this title shall be resolved through arbitration." 29 U.S.C. § 1401(a) (emphasis added). Arbitration, therefore, is statutorily mandated where, as here, the parties dispute a complete withdrawal assessment.⁶

Yet, this does not end the analysis as Courtad argues that district courts may resolve MPPAA disputes of this nature without resorting to arbitration where, as Courtad claims is true here, the factual record is fully developed and no material facts remain disputed. All that remains, in Courtad's view, is a question of contract interpretation, namely whether, under the CBA, a complete withdrawal occurs when an employer resumes or continues performing the qualifying work through the use of subcontractors.

This argument is factually and legally infirm. To begin, the current record is not complete with respect to the Board's factual support for the withdrawal assessment. This is so because the issue raised in this suit is not the propriety of the Board's withdrawal determination, as this issue must be arbitrated, but only whether interim payments are required, pending the outcome of arbitration. Thus, the Board is under no obligation here to submit all of its evidence to support the withdrawal assessment because that matter must be arbitrated and because the sole remedy sought in this suit is a judgment on the question of interim payments. The Board correctly viewed this suit as limited to the interim payments requirement with the propriety of its complete withdrawal determination to be resolved in the arbitration. This view finds support in Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California, 508 U.S. 602, 609, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993), where the Supreme Court ruled that the plan sponsor is not obligated to conduct an exhaustive factual investigation prior to the arbitration proceeding. As the Supreme Court put it, withdrawal determination is "an assessment not an adjudication." Id. The Supreme Court went on to emphasize that:

The [plan sponsors] are not required to hold a hearing, to examine witnesses, or to adjudicate the disputes of contending parties on matters of fact or law . . . [T]he first adjudication is the proceeding that occurs before the arbitrator, not the trustees' initial determination of liability.

Id.

In sum, then, the current record in this case, contrary to Courtad's contention, is neither factually complete on the merits of the Board's complete withdrawal determination, nor should it be so, given that this suit focuses not on the propriety of that determination, but on whether Courtad has a mandatory duty to make interim payments pending completion of the arbitration. To hold otherwise would allow parties to make an end run around the MPPAA's arbitration requirement.

Courtad's argument also lacks legal support. Although there is no circuit authority directly on point, there is authority that points persuasively to the conclusion that this matter must be submitted to arbitration. First, the Fourth Circuit has held that while the MPPAA's compulsory arbitration requirement is not a jurisdictional bar, it should be enforced except in exceptional circumstances, none of which exists here. See McDonald v. Centra, Inc., 946 F.2d 1059, 1063 (4th...