PATTERN MAKERS'PENSION TR. v. Badger Pattern Works

• Decision Date: 22 July 1985
• Docket Number: No. 84 C 182.,84 C 182.
• Citation: 615 F. Supp. 792
• Parties: PATTERN MAKERS' PENSION TRUST FUND, Plaintiff, v. BADGER PATTERN WORKS, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

615 F. Supp. 792

PATTERN MAKERS' PENSION TRUST FUND, Plaintiff, v. BADGER PATTERN WORKS, INC., Defendant.

No. 84 C 182.

United States District Court, N.D. Illinois, E.D.

July 22, 1985.

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Jac Cotiguala, John Toomey, Arnold & Kadjan, Chicago, Ill., for plaintiff.

Gary A. Marsack, Larry R. Jakubowski, Lindner & Marsack, S.C., Milwaukee, Wis., for defendant.

MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

Pattern Makers' Pension Trust Fund ("Trust") has sued Badger Pattern Works, Inc. ("Badger") under Employee Retirement Income Security Act ("ERISA") § 502, 29 U.S.C. § 1132, and National Labor Relations Act as amended ("NLRA") § 301, 29 U.S.C. § 185, to recover pension fund contributions Badger allegedly owes Trust. Now Trust has filed a Fed.R.Civ.P. ("Rule") 56 motion for partial summary judgment, and Badger has responded with a motion for summary judgment as to the entire Complaint. For the reasons stated in this memorandum opinion and order, both motions are granted in part and denied in part.

Background¹

Badger is a manufacturer of wood, metal and plastic patterns used by foundries. For many years it has employed workers represented by the Pattern Makers' League of North America, Pattern Makers' Association of Milwaukee and Vicinity ("Union"). Under the terms of its 1980-83 collective bargaining agreement with Union (the "CBA"), Badger was obligated to make contributions to Trust's pension fund (the "Fund"), calculated on the basis of all hours worked by Badger employees at tasks historically performed by pattern makers. CBA ¶ 20.2 specified the hourly contribution rate and CBA ¶ 20.4 incorporated the terms of the Agreement and Declaration of Trust (the "Declaration") creating Trust.

Declaration Art. VI, § 1 sets out the basis for contributions to the Fund:

In order to effectuate the purposes hereof, each Employer shall contribute to the Fund the amount required by any written agreement as defined herein between the Union or the Trust and the Employer. The rate of contribution shall at all times be governed by the applicable written Agreement then in force and effect, together with any amendments, supplements or modifications thereto provided, however, that in the case of an Employer who is required to make contributions by reason of his being party to a written agreement other than a Collective Bargaining Agreement the amount of contribution shall be identical to the amount required by the Collective Bargaining Agreement in effect between the Employer Association and the Local Union having jurisdiction over the geographic area in which the covered Employees perform work. If no Employer Association exists within the geographical area then the rate of contribution shall be at the highest negotiated rate between the Union and the Employer existing in the geographical area within the jurisdiction of the Local Union, unless otherwise determined by the Trustees.

Declaration Art. I, § 1 defines "Employer" in part as one who:

(c) in writing adopts and agrees to be bound by the terms and provisions of this Declaration as the same may be amended or modified from time to time; or

(d) is a party to any written instrument which evidences an agreement to be bound by the provisions of this Declaration.

Under Declaration Art. I, § 2(e) the term "Employee" encompasses, in addition to persons covered by a collective bargaining agreement obliging the Employer to make contributions to the Fund:

any person who is not covered by a collective bargaining agreement but on whose behalf his Employer is otherwise obligated to make contributions to the Fund in accordance with the provisions of this Declaration who performs work which would be work performed by members of a bargaining unit recognized by the Employer or certified by the National Labor Relations Board if said persons' Employer were a party to any of the standard collective bargaining agreements by and between the Union and the Pattern Manufacturers' Association of Chicago and Vicinity.

Finally Declaration Art. I, § 11 defines the term "written agreement" as:

any agreement in writing which specifies the detailed basis on which contributions shall be made to the Fund together with any modifications, amendments or renewals thereof, including but not limited to collective bargaining agreements, memoranda of understanding which incorporate by reference collective bargaining agreements or this Declaration, report forms in accordance with which contributions are made and which obligate the Employer to the provisions of this Declaration, or any other agreement obligating the Employer signatory thereto to participate in or be bound by this Declaration and/or the Plan established pursuant hereto.

In each of 1971 and 1974, at the same time Badger entered into new collective bargaining agreements with Union, it also entered into a Contributory Employers' Agreement ("CEA") with Trust. In each CEA Badger "agrees to be bound by and to comply with all of the terms and provisions of the Declaration." In addition each CEA provides:

Contributions to the Trust by the undersigned, as required by the Declaration, as amended, at the rates and in accordance with the Collective Bargaining Agreement applicable to the undersigned, as amended, modified, renewed or superseded, from time to time, shall commence as of the date required by said applicable Collective Bargaining Agreement and shall continue for the period therein provided and thereafter until written notice revoking this Agreement is given to the Trust.

With that contractual regime in place, Badger and Union entered into negotiations for an agreement to succeed the CBA, which was due to expire April 30, 1983. At the first bargaining session held February 16, 1983, Badger presented a proposed contract seeking wage and benefit concessions designed to assure Badger's effective competition in a difficult market (Def.Ex. 2, AA, BB). Similarly focused negotiations between Union and Badger continued into June despite the April 30 expiration of the CBA. Throughout those negotiations Badger proposed contributions to the Fund calculated at an hourly rate of $1.25 — the contribution rate Badger had been obligated to pay under the CBA since May 1, 1982 — for the duration of the agreement under negotiation.

Following a final bargaining session June 22, Badger President and sole shareholder Richard Blankenheim ("Blankenheim") sent a June 27 telegram to Union Business Manager Joe Grow ("Grow") (Def.Ex. F):

Based upon the status of our negotiations and the rejection of our final offer by the membership on June 11, 1983 Badger Pattern is constrained to implement the first year of its final offer.... Badger is constrained to take this action to protect its business interests and to improve its competitive posture within the industry. Implementation will become effective on June 28, 1983.

Next day (June 28) Union struck Badger. On June 29 Union filed charges with the NLRB, alleging Badger had implemented its final offer without having reached an impasse with Union. On August 16 the NLRB's regional director concluded impasse had been reached before June 27 and declined to pursue Union's charges. Union remains on strike against Badger.

In the weeks after the strike began, Badger hired permanent strike replacements. In addition a number of strikers crossed the picket line and returned to work. Badger made no contributions to the Fund based on the work done by the replacement workers, but it did continue to make contributions at the $1.25 rate reflecting work done by the returning strikers. Moreover Badger made some but not all contributions due on the work of pattern salesmen, on whose behalf it had historically made Fund contributions.

Contributions ceased altogether December 7, 1983 when Blankenheim wrote Grow that Badger proposed to withdraw, effective immediately, from participation in the Fund. That withdrawal was prompted by Blankenheim's attendance at a November 30 meeting of Trust's board of trustees (in his capacity as an employer trustee). Blankenheim had learned at the meeting that Badger might be accruing (1) withdrawal liability on account of the reduction in its contributions following June 28 and (2) liability for work done after June 28 not only by the returning strikers but by all Badger employees.

Blankenheim's December 7 letter also expressed a willingness to negotiate the proposed action in the course of efforts to resolve the split between Badger and Union, provided Union acted on or before December 15 to schedule a meeting. Union did not respond. On January 3, 1984 Badger's attorney wrote to Union referring to the December 7 letter and offering again to schedule a meeting. Such a meeting was held on January 9 but yielded no agreement. On January 17 Blankenheim wrote to Trust board chairman Eric Bergstrom (Pl.Ex. 13):

Effective December 7, 1983 Badger Pattern Works, Inc. has terminated its' sic participating in the Pattern Makers' Pension Fund.

The fund office is receiving a copy of this letter along with our contributions thru December 7, 1983.

Also, effective December 7, 1983 I have resigned as a trustee of the Pension Fund.

In the meantime Trust had initiated this lawsuit January 11, alleging jurisdiction under NLRA § 301 and ERISA § 502 and seeking (1) recovery of unpaid Fund contributions dating back to June 28, the date the strike began, and (2) equitable relief compelling Badger to make future contributions.

As the parties have framed the issues on the present motions, basically three questions are before this Court:

1. whether this Court has subject matter jurisdiction under either NLRA § 301 or ERISA § 502;

2. whether Badger is liable to Trust for contributions on all work performed between June 28, 1983 and January 20, 1984 by (a) strike replacements, (b) returning strikers and (c) salesmen; and

3. whether Badger remains obligated to make

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