Trs. of the Plumbers & Pipefitters Nat'l Pension Fund v. Plumbing Servs., Inc.

• Decision Date: 29 June 2015
• Docket Number: No. 13–2403.,13–2403.
• Citation: 791 F.3d 436
• Parties: The TRUSTEES OF THE PLUMBERS AND PIPEFITTERS NATIONAL PENSION FUND, Plaintiff–Appellee, v. PLUMBING SERVICES, INC.; PSI Mechanical, Inc., Defendants–Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

791 F.3d 436

The TRUSTEES OF THE PLUMBERS AND PIPEFITTERS NATIONAL PENSION FUND, Plaintiff–Appellee

v.PLUMBING SERVICES, INC.; PSI Mechanical, Inc., Defendants–Appellants.

No. 13–2403.

United States Court of Appeals, Fourth Circuit.

Argued: Jan. 27, 2015.

Decided: June 29, 2015.

ARGUED:Gregory F. Yaghmai, Rutledge & Yaghmai, Birmingham, Alabama, for Appellants. Dinah S. Leventhal, O'Donoghue & O'Donoghue LLP, Washington, D.C., for Appellee. ON BRIEF:John R. Harney, O'Donoghue & O'Donoghue LLP, Washington, D.C., for Appellee.

Before MOTZ and DIAZ, Circuit Judges, and DAVIS, Senior Circuit Judge.

Opinion

Affirmed by published opinion. Judge DIAZ wrote the opinion, in which Judge MOTZ and Senior Judge DAVIS joined.

DIAZ, Circuit Judge:

For nearly thirteen years, Plumbing Services, Inc. (“PSI”) made contributions to the Plumbers and Pipefitters National Pension Fund (the “Fund”), a multiemployer pension benefit plan governed by the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. (2012). On March 10, 2011, however, PSI stopped contributing to the Fund. The Fund, in turn, informed PSI that it (and its successor entity, PSI Mechanical, Inc., collectively “Defendants”) owed “withdrawal liability” pursuant to 29 U.S.C. § 1381. When Defendants failed to pay the sum owed, the Fund filed suit.

Defendants moved to dismiss the action on the ground that the district court did not have personal jurisdiction over them. In the alternative, they sought a change in venue. The district court denied both motions. On the merits, Defendants claimed that PSI never agreed to be bound by an existing collective bargaining agreement requiring participating employers to make contributions to the Fund. The district court disagreed, and granted the Fund's motion for summary judgment. Because we find that (1) the district court had personal and subject matter jurisdiction, (2) venue was proper in Virginia, and (3) PSI bound itself to make contributions to the Fund, we affirm.

I.

A.

We begin by briefly setting out the relevant statutory framework. Congress enacted ERISA to promote the “soundness and stability of [employee benefit] plans” in private industry. 29 U.S.C. § 1001(a). Specifically, ERISA protects “the interests of employees and their beneficiaries” by establishing “minimum standards ... assuring the equitable character of such plans and their financial soundness.” Id. To further that end, Congress in 1980 passed the Multiemployer Pension Plan Amendments Act (the “MPPAA”). In part, the MPPAA

requires that an employer withdrawing from a multiemployer pension plan pay a fixed and certain debt to the pension plan. This withdrawal liability is the employer's proportionate share of the plan's “unfunded vested benefits,” calculated as the difference between the present value of vested benefits and the current value of the plan's assets.

Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 725, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984) (citing 29 U.S.C. §§ 1381, 1391 ). The purpose of assessing withdrawal liability is “to assign to the withdrawing employer a portion of the plan's unfunded obligations in rough proportion to that employer's relative participation in the plan over the last 5 to 10 years.” Borden, Inc. v. Bakery & Confectionery Union & Indus. Int'l Pension, 974 F.2d 528, 530 (4th Cir.1992).

An employer owes withdrawal liability when it makes a complete or partial withdrawal from a pension plan. 29 U.S.C. § 1381(a). In the building and construction industry, a complete withdrawal occurs when: (1) “an employer ceases to have an obligation to contribute under the plan, and” (2) the employer “continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required.” 29 U.S.C. § 1383(b)(2). ERISA treats all trades or businesses that are under common control as a single employer. 29 U.S.C. § 1301(b)(1).¹

An employer who disputes an assessment of withdrawal liability may file an objection with the plan sponsor. 29 U.S.C. § 1399(b)(2)(A). “After a reasonable review of any matter raised,” the plan sponsor must notify the employer of (1) its decision, (2) the basis for its decision, and (3) “the reason for any change in the determination of the employer's liability or schedule of liability payments.” Id. § 1399(b)(2)(B).

An employer dissatisfied with the plan sponsor's response must demand arbitration within a 60–day period after the earlier of the date of the plan sponsor's notification that it has rejected the employer's request for review, or 120 days after the employer's request for review. 29 U.S.C. § 1401(a). “[U]nlike the Federal Arbitration Act, the MPPAA treats an award issuing from such a § 1401 arbitration like an agency determination-the arbitrator decides the issues in the first instance but then the decision is subject to judicial review.” Bd. of Trs., Sheet Metal Workers' Nat'l Pension Fund v. BES Servs., Inc., 469 F.3d 369, 375 (4th Cir.2006).

If, however, the employer does not pursue arbitration, the amount assessed by the plan sponsor as withdrawal liability “shall be due and owing on the schedule set forth by the plan sponsor,” which may then “bring an action in a State or Federal court of competent jurisdiction for collection.” 29 U.S.C. § 1401(b)(1). In such a circumstance, an employer is deemed to have waived review of all issues concerning the determination of withdrawal liability. BES Servs., 469 F.3d at 375.

B.

The Fund is a multiemployer pension benefit plan maintained pursuant to a collective bargaining agreement between the Associated Plumbing, Heating and Cooling Contractors of Jefferson County, Alabama (the “Multiemployer Association”) and affiliated local unions of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada (the “Union”). Defendants are Alabama corporations engaged as plumbing and pipefitting contractors.

On April 8, 1998, Kenneth Julian–PSI's sole shareholder-agreed in writing (on behalf of PSI) “to be bound by provisions of the current labor Agreement executed and presently existing between” the Multiemployer Association and the Union. J.A. 448.² PSI further agreed to “make contributions to the ... Plumbers and Pipefitters National Pension Fund .... as provided for by the [labor] Agreements now existing and as hereafter.”Id.

The collective bargaining agreement then in effect, as well as all successor agreements, required participating employers to make contributions to the Fund for each hour worked by their employees. PSI began making contributions to the Fund in 1998, and continued to do so until March 10, 2011. On that date, PSI (through Julian) wrote to the Union stating that it wished “to abolish its working relationship with” the Union. J.A. 139.

Under the terms of the collective bargaining agreement, PSI's obligation to contribute to the Fund ended sixty days after tendering the March 10 letter. PSI went out of business sometime in the summer of 2011. Shortly before then, PSI Mechanical filed articles of incorporation.

Well over a year after PSI sent the March 10 letter, the Fund notified Julian that because PSI was “continuing to perform work of the type for which it was previously obligated to make contributions to the Fund” in the jurisdiction of the collective bargaining agreement, PSI had incurred withdrawal liability of $188,685. J.A. 345. Specifically, the Fund suspected that PSI and PSI Mechanical were trades or businesses under common control. In fact, Julian was the sole shareholder of both corporations.

The Fund gave PSI the option to pay the amount owed in one lump sum or in monthly installments. PSI objected and sought review of the imposition of withdrawal liability. The Fund in turn asked PSI to respond to a questionnaire so as to better enable the Fund to assess PSI's objection. PSI, however, refused to answer any questions related to PSI Mechanical, stating that it was “not privy to information necessary to answer” them. J.A. 368.

In the meantime, PSI was still required to make monthly payments on its withdrawal liability. See 29 U.S.C. § 1399(c)(2). Yet, PSI did not comply with its obligation. The Fund sent two late-payment notices to PSI and received no response to either. The Fund subsequently rejected PSI's objection to the imposition of withdrawal liability, declared PSI in default, and demanded payment of the entire sum of its withdrawal liability plus accrued interest. Defendants made no payments, nor did they demand arbitration.

C.

The Fund filed suit in the United States District Court for the Eastern District of Virginia against both PSI and PSI Mechanical, seeking to collect PSI's unpaid monthly withdrawal liability payments, along with interest, liquidated damages, and attorney's fees and costs.³ It also sought to compel Defendants to make future monthly payments when due. The Fund later amended its complaint to ask for the entire outstanding withdrawal liability.⁴

Defendants moved to dismiss the lawsuit for lack of personal jurisdiction, or alternatively, on forum non conveniens grounds. They argued that because PSI and PSI Mechanical are Alabama corporations engaged in business exclusively in Alabama, they do not have sufficient minimum contacts with Virginia for the exercise of personal jurisdiction. In the alternative, Defendants urged that the lawsuit be dismissed because there is an adequate alternative forum in the Northern District of Alabama.

The district court denied the motions. The court found it “pelucidly [sic] clear that there is personal jurisdiction.” J.A. 316. It noted that ERISA provides for nationwide service of process and permits lawsuits to be brought in the district where the plan is administered. As a result, the court's exercise of personal jurisdiction over Defendants comported with Fifth Amendment due process principles.

The district court construed Defendants' forum non...