Riverstone Grp., Inc. v. Midwest Operating Eng'rs Fringe Benefit Funds

• Decision Date: 04 May 2022
• Docket Number: 21-1794
• Citation: 33 F.4th 424
• Parties: RIVERSTONE GROUP, INC., Plaintiff/Counter Defendant-Appellee, v. MIDWEST OPERATING ENGINEERS FRINGE BENEFIT FUNDS, Defendant/Counter Plaintiff-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

33 F.4th 424

RIVERSTONE GROUP, INC., Plaintiff/Counter Defendant-Appellee,

v.MIDWEST OPERATING ENGINEERS FRINGE BENEFIT FUNDS, Defendant/Counter Plaintiff-Appellant.

No. 21-1794

United States Court of Appeals, Seventh Circuit.

Argued December 6, 2021

Decided May 4, 2022

Arthur W. Eggers, Carmen C. Green, Attorneys, Califf & Harper, PC, Moline, IL, James S. Zmuda, Attorney, Califf & Harper, Naperville, IL, for Plaintiff/Counter Defendant-Appellee.

Dale D. Pierson, Robert A. Paszta, Attorneys, IUOE Local 150 Legal Department, Countryside, IL, for Defendant/Counter Plaintiff-Appellant.

Before Ripple, Wood, and Kirsch, Circuit Judges.

Ripple, Circuit Judge.

RiverStone Group, Inc. ("RiverStone") filed this action seeking a declaratory judgment, see 28 U.S.C. § 2201, that it had no obligation to make contributions to the employees' pension fund on behalf of individuals hired after the collective bargaining agreement had expired. The defendant, Midwest Operating Engineers Fringe Benefit Funds ("the Funds"), filed a counterclaim, seeking an accounting and payment of the contributions that, in their view, RiverStone owed on behalf of these new employees. In due course, the parties filed cross-motions for summary judgment. The district court granted RiverStone's motion; it held that RiverStone did not have a contractual duty to contribute to the Funds on behalf of the new employees and that it lacked jurisdiction to evaluate noncontractual sources of liability, such as the National Labor Relations Act ("NLRA"). Therefore, the dispute fell within the exclusive jurisdiction of the National Labor Relations Board ("NLRB"). The Funds timely appealed.¹

Because we agree with the district court that this matter falls within the exclusive province of the NLRB, we affirm the decision of the district court.

IBACKGROUND

A.

RiverStone, a mining company, operates sand and stone quarries in three midwestern states. The International Union of Operating Engineers, Local 150 ("Local 150"), represented a bargaining unit of RiverStone employees. Under the collective bargaining agreement, RiverStone contributed to the Funds based upon hours worked by the members of the bargaining unit.

The collective bargaining agreement expired on May 1, 2016. No language in the agreement imposes on RiverStone an obligation to make contributions after the agreement's expiration. RiverStone and Local 150 tried unsuccessfully to negotiate a successor agreement but were unable to come to mutually acceptable terms. However, the parties did not reach an "impasse," as that term is employed in the federal labor law context.² After the agreement expired, RiverStone continued to contribute to the Funds on behalf of the members of the bargaining unit.

On March 20, 2018, Local 150 went on strike, claiming that RiverStone had committed unfair labor practices; the union also filed charges with the NLRB.³ At that point, RiverStone stopped making contributions to the Funds on behalf of the striking employees.

During the strike, RiverStone hired new employees.⁴ These new employees did the same work as that performed previously by striking employees, but RiverStone did not make contributions to the Funds on their behalf. In the summer of 2018, some striking employees began to make unconditional offers to return to work; as they did, they were reinstated and contributions on their behalf resumed.

B.⁵

1.

On February 12, 2019, the Funds asserted in an audit letter that RiverStone owed the Funds $243,882.40 in benefit contributions on behalf of the new employees. After receiving the letter, RiverStone filed this action in the district court, seeking a declaratory judgment that it did not owe the payments sought by the Funds. RiverStone asserted that the district court had subject matter jurisdiction under LMRA § 301(a) because "the parties' dispute involves a purported obligation arising from the [collective bargaining agreement]."⁶ It further asserted that there was no obligation "arising from the [collective bargaining agreement] that requires RiverStone to make contributions to the Fund on behalf of Permanent Replacements whose wages, hours, terms and conditions of employment do not arise from the [collective bargaining agreement]."⁷

The Funds filed a motion to dismiss, submitting that LMRA § 301 could not serve as a predicate for the district court's subject matter jurisdiction because the Funds are not a labor organization and because the complaint contained no allegation of a contract violation. They maintained that the district court's jurisdiction was preempted by the NLRA because RiverStone was, in essence, claiming that it had no obligation to negotiate with Local 150 about its refusal to contribute for new employees. Such a dispute, in the Funds' view, should have been brought before the NLRB, not the district court.

In deciding the motion to dismiss, the district court held that it had subject matter jurisdiction over the declaratory judgment action. It reasoned that LMRA § 301 permits a fund to sue an employer for breach of a collective bargaining agreement, and therefore the statute also permits an employer to bring a declaratory judgment action against a fund to determine its rights and obligations under such an agreement.⁸ The district court further held that the NLRB did not have exclusive jurisdiction over the dispute. Because the controversy involves a breach of a collective bargaining agreement, wrote the court, LMRA § 301 gave the court at least concurrent jurisdiction.

2.

Relying on ERISA § 515 and LMRA § 301, the Funds then filed a counterclaim, asserting a right to an audit and to payment of contributions from RiverStone to the Funds on behalf of the new employees. In due course, RiverStone moved for summary judgment on its declaratory judgment request and on the Funds' ERISA-based counterclaim. RiverStone raised labor law defenses, not relevant to this appeal, and submitted that because the collective bargaining agreement had expired, it had no obligation to contribute on behalf of the new employees.

In replying to RiverStone's motion for summary judgment, the Funds characterized the dispute as a simple ERISA case and maintained that RiverStone owed contributions for bargaining unit employees based on the hours they had worked and the wages they were paid. It also contended that, absent an impasse, RiverStone was required by NLRA § 8(a)(5) to maintain the status quo by making the disputed contributions. In the Funds' view, RiverStone's failure to make these contributions on behalf of the new employees, regardless of whether they were permanent replacements, altered the status quo.

The district court entered summary judgment for RiverStone. It acknowledged its authority to construe a collective bargaining agreement and further acknowledged that a collective bargaining agreement could serve as the predicate for ERISA liability. But, here, it continued, the collective bargaining agreement had expired and therefore could not serve as such a predicate. The sine qua non for liability under ERISA § 515, the court emphasized, is the existence of a valid written instrument binding the employer to make the payments. Although the district court had full authority to hear an ERISA case, it did not have jurisdiction to resolve claims of unpaid contributions when no contractual provision applied. Relying on Laborers Health & Welfare Trust Fund for Northern California v. Advanced Lightweight Concrete Co. , 484 U.S. 539, 548–49, 108 S.Ct. 830, 98 L.Ed.2d 936 (1988), the district court concluded that "[a]fter a [collective bargaining agreement] or other relevant agreement expires, an employer's obligation under ERISA to pay contributions pursuant to that agreement ceases."⁹ Without a contract, concluded the court, any failure to make payments "could only constitute a violation of NLRA § 8(a)(5),"¹⁰ which is under the NLRB's exclusive jurisdiction.

The court therefore determined that there could be no duty under ERISA without a contractual provision and declared that "RiverStone has no duty to make contributions to the Funds on behalf of the new employees pursuant to the [collective bargaining agreement] or the Trust Agreements."¹¹ Finally, the district court noted that, in their counterclaim, the Funds had sought relief under NLRA § 8(a)(5), but it ruled that such claims were within the exclusive purview of the NLRB.

IIDISCUSSION

A.

At this point in the litigation, the Funds maintain RiverStone's refusal to make payments to the Funds for the new employees violates the company's continuing obligation to maintain the status quo while the parties continue to negotiate a new agreement. See NLRB v. Katz , 369 U.S. 736, 743, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962). Given its authority to construe labor contracts in accordance with national labor policy grounded in the LMRA, see Textile Workers Union v. Lincoln Mills of Alabama , 353 U.S. 448, 456, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957), the district court should have viewed this obligation to maintain the status quo as federal labor policy and enforced it as an obligation of RiverStone. Relying on Lincoln Mills , the Funds submit that it was well within the permissible "range of judicial inventiveness" of the LMRA to apply the status quo preservation rule¹² derived from the NLRB's jurisprudence of unfair labor practices in the context of Section 301.¹³

In the alternative, the Funds submit that the district court should have assumed jurisdiction under Sections 502 and 515 of ERISA, 29 U.S.C. §§ 1132, 1145, because the Funds have an independent right to enforce the terms of the collective bargaining agreement relating to the funding of benefits. See Cent. States, Se. & Sw. Areas Pension Fund v. Gerber Truck Serv. , 870 F.2d 1148 (7th Cir. 1989) (en banc). The new employees were, emphasize the Funds, employees of RiverStone and performing bargaining unit work. Therefore, RiverStone was obligated to contribute to the Funds on their behalf.

RiverStone...