Stevens Eng'rs & Constructors, Inc. v. Iron Workers Local 17 Pension Fund
| Decision Date | 24 August 2016 |
| Docket Number | CASE NO. 1:15 CV 1967,CASE NO. 1:15 CV 1965 |
| Court | U.S. District Court — Northern District of Ohio |
| Parties | STEVENS ENGINEERS & CONSTRUCTORS, INC., Plaintiff, v. IRON WORKERS LOCAL 17 PENSION FUND, et al., Defendants. |
This matter is before the Court on the Complaint of Plaintiff Stevens Engineers & Constructors, Inc, ("Stevens") to enforce the Arbitration Award of Arbitrator John E. Sands in Case No. 1:15 CV 1965, and the corresponding Complaint of Defendants Iron Workers Local 17 Pension Fund (the "Pension Fund" or "Fund") and its Board of Trustees ("Trustees") in Case No. 1:15 CV 1967, to vacate or modify the Arbitrator's Award.1
Plaintiff Stevens filed its Complaint for Judgment to Enforce Arbitration Award against the Pension Fund and its Trustees on September 23, 2015. (15 CV 1965, Doc.1) Later that same day, the Pension Fund and its Trustees filed a Complaint against Stevens seeking to Vacate or Modify the Arbitration Award. (15 CV 1967, Doc. 1) The actions were consolidated and have proceeded under the lower case number.
This action arises from the assessment of withdrawal liability by the Trustees of the Pension Fund against Stevens under the construction industry withdrawal liability provisions of ERISA § 4203(b), 29 U.S.C. § 1383(b), and the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA") The MPPAA requires a contributing employer that withdraws from a multiemployer pension plan to pay its proportional share of the plan's unfunded vested benefits calculated in accordance with MPPAA's terms as of the end of the plan year preceding the plan year of withdrawal. In the construction industry, a complete withdrawal occurs under 29 U.S.C. § 1383(b) when an employer that ceases to have an obligation to contribute under the plan and:
Stevens is a construction industry employer who, between approximately 1985 and 2013, was bound to a series of collective bargaining agreements ("CBA's") with the Iron Workers Union Local 17 and was thus obligated to make, and did make, contributions to the Pension Fund when performing iron work covered by Local 17 CBA's. Stevens did not renew the Local 17 CBA when it expired on April 20, 2013 and its obligation to contribute to the Pension Fundceased.
In September 2013 Stevens received a contract to complete the demolition, removal, replacement, upgrade and installation of new equipment for the #4 Seamless Mill Expansion Project at the U.S. Steel Lorain Mill ("No. 4 Seamless"). Stevens held the pre-job conference for the No. 4 Seamless job with representatives from all the crafts involved on October 29, 2013. Three days later Timothy McCarthy, the business manager of Local 17 Iron Workers Union, sent a letter to Stevens objecting to the assignment of certain work he believed was ironworker work to the millwrights and expressing the Union's intent to invoke the NMA dispute procedures. After Stevens replied to that letter with its explanation for the assignments, the Union took no further action to dispute the assignment.
Approximately one week after receiving Stevens' response to Local 17's complaint about the assignments, on November 13, 2013, the Trustees of the Pension Fund, led by Timothy McCarthy, now acting as the Chairman of the Fund's Board of Trustees, determined that Stevens had assigned ironworker work of the type for which Stevens had been required to contribute to the Pension Fund before the Local 17 CBA was terminated to others, including millwrights. The Trustees voted to assess withdrawal liability against Stevens in the amount of $5,065,017. Stevens requested that the Trustees review the assessment of withdrawal liability. The Trustees considered the request and declined to change their position. Thereafter, Stevens demanded arbitration of the dispute and the parties selected Arbitrator John Sands to hear the case.3
The case proceeded to arbitration which consisted of four days of testimony, where both sides had full opportunity to adduce evidence, cross examine each other's witnesses, and to make argument in support of their respective positions. Following the hearings, each side submitted a post-hearing brief and a reply brief. The issue as framed by Arbitrator Sands is "whether the Fund correctly assessed withdrawal liability arising out of a construction industry craft jurisdictional dispute."
Arbitrator Sands issued his Opinion and Award on August 25, 2015, finding that the Pension Fund's assessment of withdrawal liability against Stevens and its denial of Steven's request for review were unreasonable and clearly erroneous and ordering the Fund to refund Steven's interim withdrawal liability payments with interest from the dates paid.
Arbitrator Sands made the following Findings of Fact:
Parties
1. The Pension Fund is a defined benefit multiemployer pension plan within the meaning of ERISA. The Fund was jointly established by the Steel and Iron Contractors Association and Iron Workers Local Union No. 17 ("Local17") in 1965 under the Taft-Hartley Act. The Fund is 40% funded with a funding deficit of more than $170 million. It is classified as a "Red Zone" orcritically underfunded pension plan according to the provisions of the 2008 Pension Protection Act. Because the Fund is critically underfunded, the potential withdrawal liability for its contributing employers has become substantial.
2. Stevens Engineers & Constructors Inc. f/k/a Stevens Painton Corporation ("Stevens") is an employer in the building and construction industry. Stevens was founded in 1970 by the merger of Stevens Corporation and Painton Corporation. Stevens is a heavy industrial construction outfit involved in power, steel, automotive, and chemical work and employs approximately 165 full-time employees. Stevens also employs anywhere from several hundred to nearly one thousand union employees at any given time due to the nature of construction work.
3. Through a series of Assent of Participation Agreements, Stevens was successively bound to collective bargaining agreements with Local 17, the last of which expired midnight on April 30, 2013. Stevens did not renew the Local 17 contract.
4. Stevens is also bound to collective bargaining agreements with the Laborers, Carpenters/Millwrights, Operating Engineers, Boilermakers, Cement Finishers, and Teamsters unions in the geographic jurisdictions where Stevens operates. These various unions each claim craft jurisdiction that overlaps with the craft jurisdiction the Iron Workers claim for its members. Particularly at issue here is the overlapping jurisdiction of the Iron Workers and Millwrights.
5. These are the Iron Workers' relevant collective bargaining agreement provisions that establish its jurisdiction in both geographical and craft terms:
TERRITORY
6. That Agreement's Preamble provides, in relevant part:
This Agreement is entered into by collective bargaining . . . to prevent waste, unnecessary and avoidable delays, and expenses . . . that stable conditions may prevail in the building industry and building costs may be as low as possible, consistent with fair wages and conditions, and further, the establishment of the necessary procedures by which these ends may be accomplished.
7. Stevens is also party to the Northeast Ohio Carpenters' Agreement, which sets terms and conditions of employment for Millwrights. Its craft jurisdiction provision covering Millwrights overlaps many of the areas and functions claimed by Iron Workers. These are some relevant terms of that Agreement:
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