Pace Indus. Union-Mgmt. Pension Fund v. Troy Rubber Engraving Co.

• Decision Date: 02 August 2011
• Docket Number: No. 3:10–cv–00350.,3:10–cv–00350.
• Parties: PACE INDUSTRY UNION–MANAGEMENT PENSION FUND and its Trustees: Stan Johnson, Gary Beevers, John Geenen, James Kidder, Ron Hackney, Dale Olson, Tim Sudela, and Lisa Silverman, Plaintiffs, v. TROY RUBBER ENGRAVING COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Tennessee

52 Employee Benefits Cas. 1415
805 F.Supp.2d 451

PACE INDUSTRY UNION–MANAGEMENT PENSION FUND and its Trustees: Stan Johnson, Gary Beevers, John Geenen, James Kidder, Ron Hackney, Dale Olson, Tim Sudela, and Lisa Silverman, Plaintiffs,
v.
TROY RUBBER ENGRAVING COMPANY, Defendant.

No. 3:10–cv–00350.

United States District Court,M.D. Tennessee,Nashville Division.

Aug. 2, 2011.

[805 F.Supp.2d 453]

Sarah G. Naji, Slevin & Hart, P.C., Washington, DC, William Michael Hamilton, Provost, Umphrey Law Firm, LLP, Nashville, TN, for Plaintiffs.

John David Schwalb, Williams & Schwalb, Franklin, TN, for Defendant.

ORDER JOHN T. NIXON, Senior District Judge.

Pending before the Court is Plaintiffs PACE Industry Union–Management Pension Fund and its Trustees (collectively, “Plaintiffs”) Motion for Summary Judgment (“Plaintiffs' Motion”) (Doc. No. 28), which was filed along with a Statement of Undisputed Fact (Doc. No. 29) and a supportive Memorandum (Doc. No. 32). Also pending is Defendant Troy Rubber Engraving Company's (“Defendant”) Cross–Motion for Summary Judgment (“Defendant's Motion”) (Doc. No. 35), which was filed with a Statement of Facts (Doc. No. 35–3) and a supportive Memorandum (Doc. No. 36). Defendant filed a Response to Plaintiffs' Statement of Undisputed Fact (Doc. No. 37), and Plaintiffs filed a Memorandum in Opposition to Defendant's Motion (Doc. No. 41) and a Response to Defendant's Statement of Facts (Doc. No. 42).

For the reasons stated below, Plaintiffs' Motion is GRANTED in part and Defendant's Motion is DENIED.

I. Backgrounda. Factual Background¹

Under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq., PACE Industry Union–Management Pension Fund (“the Fund”) is a multiemployer pension plan as defined in § 1002(37)(A), and the Fund's Trustees are its fiduciaries as defined in § 1002(21). The Fund is administered in Nashville, Tennessee. Defendant is a corporation organized under the laws of the State of New Jersey, and Defendant's primary place of business is also in New Jersey. This action is brought under provisions of ERISA, 29 U.S.C. § 1132, and the Labor Management Relations Act (LMRA), 29 U.S.C. § 185, and in it Plaintiffs seek to recover contributions that they allege Defendant owes (and has not timely paid) to the Fund.

Defendant entered into one or more Collective Bargaining Agreements (CBAs) with Local 1–107 of PACE International Union, pursuant to which Defendant was to contribute to the Fund on behalf of its employees who were covered by the CBAs. Defendant was also a signatory to Standard Forms of Agreement for Participation in the Fund (“Participation Agreements”). The most recent Participation Agreement was dated April 1, 2002, and stated that Defendant was bound by the terms and provisions of the Fund's Amended and Restated Agreement and Declaration of Trust (“Trust Agreement”) and any amendments to it. (Doc. No. 30–4 at 3.) The Participation Agreements, Trust Agreement, and amendments contain a variety

[805 F.Supp.2d 454]

of provisions dictating relations between Plaintiffs and Defendant, including provisions regarding Defendant's potential withdrawal from participation in the Fund and any liability to the Fund created by the withdrawal. The most recent amendment required that any dispute regarding withdrawal liability must be resolved in arbitration initiated and conducted in accordance with Pension Benefit Guaranty Corporation (“PBGC”) regulations codified at 29 C.F.R. Pt. 4221. Among other things, these provisions include requirements that the employer must provide a notice of arbitration and statement disputing withdrawal liability to the plan sponsor (along with the demand for withdrawal liability, a copy of the request for review, and any response), and that the parties must select an arbitrator and notify him or her of being selected. 29 C.F.R. §§ 4221.3(d), 4221.4(a).

At some time in 2002, Defendant and Local 1–107 came to an agreement that Defendant would be allowed to withdraw from the CBA in place at the time because the company was downsizing, moving to a smaller building, and laying off all of its union employees. Because of the agreement, Defendant made its last payment to the Fund by a check dated October 31, 2002, and made no further payments. This effected a “complete withdrawal” from the Fund as defined by § 1383. Defendant asserts that its operations and income have shrunk considerably since 2002.

In a letter dated July 13, 2009, Plaintiffs notified Defendant that its complete withdrawal had triggered withdrawal liability to the Fund pursuant to § 1381(b). Plaintiffs calculated Defendant's total liability to be $216,775.00, payable in 240 monthly installments of $1,170.43 starting on October 1, 2009. Plaintiffs sent a second notice to Defendant on October 21, 2009, notifying Defendant that the first payment had not been received. Further, the letter stated that Defendant's failure to make the payment within sixty days of the receipt of this second letter would result, pursuant to § 1399(c)(5), in the entire withdrawal liability amount coming due. Pursuant to ERISA and the agreements between the parties, Plaintiffs also indicated they would be seeking interest on the missed payments and attorneys' fees in addition to the outstanding delinquency.

Defendant did not make the requested payments. It did, however, submit a letter to Plaintiffs, dated August 7, 2009, in which it requested review of Plaintiffs' liability assessment pursuant to § 1399(b)(2)(A). The letter emphasized that certain information regarding the liability calculation had not been provided to Defendant, that the resulting calculation might not be correct, and that Plaintiffs should provide Defendant with the information in question so Defendant could perform its own review. (Doc. No. 30–5.) Those reasons, listed under the heading “Request for Review,” were as follows:

a. You have provided no information with regard to the actuarial assumption for your withdrawal liability. As a consequence, we believe that the interest assumptions are incorrect and should not be utilized.

b. The withdrawal calculation may incorrectly apply to wrong dates since Troy Rubber Engraving Co. withdrew in either 2001 or 2002. Fund calculations using earlier years' withdrawal liabilities are incorrect.

c. No interest rate information is incorporated into the payment schedule.

d. You have not explained why you waited until 2009 when the Employer's withdrawal appears to have occurred in either 2001 or 2002.

( Id.) Plaintiffs, however, challenged the sufficiency of the request for review under

[805 F.Supp.2d 455]

§ 1399(b)(2)(A) in a letter dated November 10, 2009, on the basis that Defendant's request only expressed general disagreement with the calculation and did not identify a specific inaccuracy. The letter did not purport to constitute a review of the liability assessment, but it did provide some information Defendant requested regarding the bases of the calculation, which Plaintiffs aver more than satisfied their obligations under ERISA.

Defendant instituted arbitration on October 28, 2009, before the New Jersey State Board of Mediation (“the Board”) regarding the withdrawal liability assessment, about which Plaintiffs received a notice directly from the Board dated November 6, 2009. The Notice simply states that the dispute is in regards to “Management Pension Fund” and provides Plaintiffs a list of prospective arbitrators from which to make strikes in order for the Board to designate an arbitrator acceptable to the parties. (Doc. No. 30–6.) Subsequently, however, Plaintiffs sent Defendant a letter dated December 23, 2009, indicating that, pursuant to the Trust Agreement, arbitration must be initiated in accordance with the PBGC regulations, not before the Board. Further, the December 23 letter stated Plaintiffs' position that arbitration was inappropriate at that juncture because there must have been a proper request for review prior to the initiation of arbitration. No further steps were taken in the arbitration before the Board.

b. Procedural Background

Plaintiffs filed this action on April 6, 2010 (Doc. No. 1), and it was initially assigned to Senior Judge Robert Echols, who transferred the case to the undersigned on July 30, 2010 (Doc. No. 27).

Plaintiffs filed their Motion for Summary Judgment on November 15, 2010 (Doc. No. 28), along with a Statement of Undisputed Fact (Doc. No. 29), various supportive affidavits and documentation (Doc. Nos. 30 & 31), and a Memorandum in Support (Doc. No. 32). In an Order dated November 16, 2010, Magistrate Judge Knowles granted Defendant extra time to file a cross-motion for summary judgment (Doc. No. 34), and Defendant's Motion was filed on December 15, 2010 (Doc. No. 35). Defendant also filed a Memorandum in Support (Doc. No. 36), a Response to Plaintiffs' Statement of Undisputed Fact (Doc. No. 37), supportive declarations (Doc. Nos. 38 & 39), and Defendant's own Statement of Facts (Doc. No. 40). Finally, Plaintiffs filed their Response in Opposition to Defendant's Motion on January 6, 2011 (Doc. No. 41), as well as a Response to Defendant's Statement of Facts (Doc. No. 42).

Trial in this case was continued by an Order of this Court on June 6, 2011, pending the resolution of Plaintiffs' and Defendant's Motions. (Doc. No. 50.)

II. Legal Standard

Rule 56(a) of the Federal Rules of Civil Procedure provides in part that “the court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law.” The general thrust of the inquiry a court must perform in considering a motion for summary judgment is whether there is a need for trial, in that genuinely disputed factual matters must be put to the fact-finder because they might reasonably be resolved in either party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (198...