TRUS. OF GLAZIERS LOCAL 963 PENSION v. Walker & Laberge Co.

Decision Date16 October 1985
Docket NumberCiv. No. Y-84-4291.
Citation619 F. Supp. 1402
CourtU.S. District Court — District of Maryland
PartiesTRUSTEES OF the GLAZIERS LOCAL 963 PENSION, WELFARE, AND APPRENTICE FUNDS v. WALKER AND LABERGE COMPANY, INC.

Joseph P. Boyle, Rockville, Md., and James R. O'Connell, Rockville, Md., for plaintiff.

James C. Praley, Glen Burnie, Md., for defendant.

MEMORANDUM

JOSEPH H. YOUNG, District Judge.

This case was brought by the trustees of the Glazier Local 963 Pension, Welfare, and Apprentice Funds pursuant to Sections 502 and 515 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1132 and 1145, as amended by the Multiemployer Pension Plan Amendments Act (MPPAA), 29 U.S.C. §§ 1132(g) and 1145, and § 301 of the Labor Management Relations Act, 29 U.S.C. § 185. Plaintiff trustees seek payment for any unpaid contributions, interest, liquidated damages, costs, and attorneys' fees from defendant Walker and LaBerge Company because of defendant's failure to make timely contributions to the employee funds.

Plaintiffs contend that the defendant is required, under the terms of the collective bargaining agreement executed by the union and defendant, to make timely contributions to the employee benefit funds in accordance with the terms of the respective trust agreements to which the collective bargaining agreement refers. Plaintiffs also assert that they are entitled, by statute and contract, to liquidated damages, interest, and attorneys' fees for all late contributions to the employee funds.

Defendant concedes that it is required to make timely contributions to the plaintiffs' trust funds under the collective bargaining agreement and that the statutory provisions to which plaintiffs refer are remedial in nature and are intended to relieve pension plans from the burden of collection proceedings by imposing additional sanctions on employers who fail to make their required contributions. (Defendant's Memorandum, p. 2 (citing 29 U.S.C. § 1132(g)). However, defendant contends that there is an important distinction between unpaid contributions and late contributions that are paid prior to the commencement of suit. (Defendant's Memo., p. 2 (citing Bennett v. Machine Metals Co., Inc., 591 F.Supp. 600, 605 (E.D.Pa.1984).

Plaintiff argues that all late contributions are subject to the mandatory provisions of § 1132. Defendant contests this construction of the federal pension laws and contends instead that the sanctions provided for in § 1132 apply only to contributions that remain unpaid at the time suit is commenced for their collection. Defendant argues further that plaintiffs are entitled only to interest on delinquent payments paid prior to suit.

I. APPLICABLE LAW

Sections 1132 and 1145 of 29 U.S.C. govern the enforcement of employer contributions to employee pension and welfare trust funds. Section 1145 provides in pertinent part:

Every employer who is obligated to make contributions to a multi-employer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.

Section 1132(g)(2) also provides that:

In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan —
(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of —
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent (or such higher percentage as may be permitted under Federal or State law) of the amount determined by the court under subparagraph (A),
(D) reasonable attorney's fees and costs of the action, to be paid by the defendant, and
(E) such other legal or equitable relief as the court deems appropriate.

These provisions of the MPPAA amended ERISA to provide specific remedies for the enforcement of federal pension laws and the collective bargaining and trust agreements executed pursuant to these laws. In commenting on the changes in ERISA's enforcement provisions, the Senate Committee on Labor and Human Resources noted that:

Delinquencies of Employers making required contributions are a serious problem for most multi-employer plans. Failure of employers to make promised contributions in a timely fashion imposes a variety of costs on plans. While contributions remain unpaid, the plan loses the benefit of investment income that could have been received and invested on time. Moreover, additional administrative costs are incurred in detecting and collecting delinquencies. Attorneys fees and other legal costs arise in connection with collection efforts.
These costs detract from the ability of plans to formulate or meet funding standards and adversely affect the financial health of plans. Participants and beneficiaries of plans as well as employers who honor their obligation to contribute in a timely fashion bear the heavy cost of delinquencies in the form of lower benefits and higher contribution rates.... The intent of this section is to promote prompt payment of contributions and assist plans in recovering the cost incurred in connection with delinquencies.

Senate Committee on Labor and Human Resources (Staff), 96th Congress, 2d Sess., S. 1076, The Multiemployer Pension Plan Amendments of 1980: Summary and Analysis Consideration (Comm.Print (1980) at 43-44).

Similar sentiments were expressed in the House on H.R. 3904, which contained identical language as S. 1076 concerning double interest, liquidated damages, costs and attorneys' fees. Representative Thompson stated in a floor debate that:

It is intended that the specific provisions of this section concerning interest and liquidated damages are not limitations on the amounts otherwise set forth in collective bargaining agreements or plan documents; they constitute a minimum, not a maximum. For example, we understand that there are multiemployer plans which currently provide, in the event of the employer contribution delinquency, for the payment of interest and liquidated damages which are in excess of the provisions of this section. Such practice will not be affected by the provisions of this section which directs a court to award unpaid contributions, interest, liquidated damages which are in excess of the provisions of this section. Such practice will not be affected by the provisions of this section which directs a court to award unpaid contributions, interest, liquidated damages, reasonable attorney's fees, and costs as well as where the plan does not sufficiently address such items.

Central States, Southeast and Southwest Areas Pension Fund v. Alco Express Co., 522 F.Supp. 919, 928 (E.D.Mich.1981) (quoting 126 Cong.Rec.H. 7899 (daily ed. August 26, 1980)). There can be little doubt that Congress intended to strengthen the enforcement provisions of federal pension law to protect the integrity and insure the continued viability of multiemployer employee benefit plans by relieving the plans of the burden of collection proceedings. Central States, 522 F.Supp. at 928. Therefore, § 1132(g)(2) was enacted to provide stiffer sanctions against employers who fail to make contributions to the employee benefit plans specified in the various collective bargaining and trust agreements to which they are parties.

The employee benefit plans which are the subject of this litigation, are established and maintained pursuant to the Trust Agreements and Declarations of Trust incorporated by specific reference in Articles VIII (Apprenticeship), X (Health and Welfare Fund), and XI (Pension Fund) of the collective bargaining agreement executed by the union and employers. These trust agreements govern the operation of the employee plans, the timing of employer contributions to the plans, and the penalties for late payments to the plans. Both the employers and the union have designated representatives as trustees for the various plans.

The trust agreements for the plans involved in this case provide that:

Insofar as payments by the individual Employer to the Fund are concerned, time is of the essence. Regular and prompt payment of amounts due by individual Employers to this Fund is essential for the maintenance of the Fund, and it would be extremely difficult, if not impracticable, to fix the actual expense and damage to the Fund and to the program provided by the Fund which will result from the failure of an individual Employer to make such monthly payments in full within the time period. Therefore, payments, together with the completed reporting forms, are due on the tenth (10th) day following the end of each calendar month. Where an Employer is in default for ten (10) working days in filing any report and making any
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