Teamsters Employers v. Gorman Bros Ready

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-2029
Teamsters & Employers Welfare Trust of Illinois,
Plaintiff-Appellant,
v.
Gorman Brothers Ready Mix,
Defendant-Appellee,
Appeal from the United States District Court
for the Central District of Illinois.
No. 99-3059--Richard Mills, Judge.
Argued December 4, 2001--Decided March 19, 2002
Before Bauer, Posner, and Easterbrook,
Circuit Judges.
Posner, Circuit Judge. A multiemployer
welfare trust filed suit under ERISA in
1999 against the Gorman construction
company to recover some $200,000 in
delinquent contributions (including
interest and attorneys’ fees) for the
period 1993-1998. 29 U.S.C. sec. 1145.
After a bench trial, the district judge
held the suit barred by the doctrine of
laches and so entered judgment for the
company. 139 F. Supp. 2d 976 (C.D. Ill.
2001).
Gorman had signed a three-year
collective bargaining agreement with a
Teamsters local in 1991. The agreement
required Gorman to contribute to a
Teamsters welfare trust a specified
dollar amount weekly (rising from $63 in
the first year of the agreement to $105
in the last year of the latest successor
agreement) for any employee who drove a
ready-mix concrete truck during the week,
however small a fraction of his work week
the driving occupied. He might drive such
a truck for only an hour a week, yet
Gorman would have to contribute the same
dollar amount as if he’d spent his whole
work week in that activity. This was an
expensive proposition (imagine having to
make a $105 weekly contribution for a
$10-an-hour employee who worked one hour
a week), and Gorman failed to make the
required contributions, as was discovered
by an audit conducted by the plan during
the term of the collective bargaining
agreement. Dale Stewart, however, who was
both the head of the local union and the
chairman of the welfare trust, told Eric
Leonhardt (Gorman’s proprietor),
according to the latter, that as a favor
to him he had "made the audit go away."
The collective bargaining agreement was
renewed, with substantially the same
terms except for the amount of the
employer contributions, in 1994 and 1997.
In 1998 the trust conducted another
audit, again found that Gorman was not
making the required contributions, and
this time sued. Gorman admits that the
trust has made a prima facie case for the
recovery of the delinquent contributions,
but, as we said, the district judge
upheld the defense of laches.
"Laches," the corruption of an Old
French word (lasche) meaning "lax," in
law means culpable delay in suing.
Traditionally, suits in equity were not
subject to statutes of limitations, but
such a suit could be dismissed on the
basis of unreasonable, prejudicial delay
by the plaintiff. Piper Aircraft Corp. v.
Wag-Aero, Inc., 741 F.2d 925, 938-39 (7th
Cir. 1984) (concurring opinion). The
contrast is between rules and standards
as regulatory devices. A statute of
limitations cuts off the right to sue at
a fixed date after the plaintiff’s cause
of action accrued. Laches cuts off the
right to sue when the plaintiff has
delayed "too long" in suing. "Too long"
for this purpose means that the plaintiff
delayed inexcusably and the defendant was
harmed by the delay. Costello v. United
States, 365 U.S. 265, 282 (1961); United
States v. Administrative Enterprises,
Inc., 46 F.3d 670, 672 (7th Cir. 1995);
Herman v. City of Chicago, 870 F.2d 400,
401 (7th Cir. 1989); Whiting v. United
States, 231 F.3d 70, 75 (1st Cir. 2000);
Ivani Contracting Corp. v. City of New
York, 103 F.3d 257, 259 (2d Cir. 1997).
The parties agree that ERISA does not
contain a limitations periods for suits
against employers to recover
contributions owed to a multiemployer
plan. 29 U.S.C. sec. 1145. Closest is 29
U.S.C. sec. 1451(f), which does cover
suits by multiemployer plans, but only
suits for withdrawal liability, Jay
Conison, Employee Benefit Plans in a
Nutshell 19-20 (2d ed. 1998), which this
suit is not; Gorman has not withdrawn
from the Teamsters plan.
The usual practice when a federal
statute fails to specify a limitations
period for suits under it has been to
"borrow" a state’s analogous statute of
limitations, and that is what we and
other courts have done in the case of
ERISA suits for the recovery of
employers’ delinquent contributions.
Central States, Southeast & Southwest
Areas Pension Fund v. Jordan, 873 F.2d
149, 152, 154 (7th Cir. 1989); Felton v.
Unisource Corp., 940 F.2d 503, 511 (9th
Cir. 1991); see generally Doe v. Blue
Cross & Blue Shield United, 112 F.3d 869,
873 (7th Cir. 1997); Harrison v. Digital
Health Plan, 183 F.3d 1235, 1238 (11th
Cir. 1999) (per curiam); Adamson v.
Armco, Inc., 44 F.3d 650, 652 (8th Cir.
1995). We remarked in Doe that a borrowed
statute of limitations can be either
state or federal, but the parties to this
case do not argue for borrowing a federal
statute of limitations, and we note that
Trustees of Wyoming Laborers Health &
Welfare Plan v. Morgen & Oswood
Construction Co., 850 F.2d 613, 618-20
(10th Cir. 1988), a case similar to ours,
refused to borrow the six-month
limitations period in the National Labor
Relations Act. Instead it borrowed the
forum state’s 10-year statute of
limitations for suits on written
contracts; that was the type of suit the
court thought most like a suit for delin
quent contributions. The Illinois statute
of limitations that the district court
borrowed for use in this case is also ten
years. It is possible that some other
statute of limitations, state or federal,
would make a better fit with the nature
and purpose of a suit for delinquent
ERISA contributions, but we are not
called upon to decide that, as the
parties are not contending for a
different statute of limitations.
For purposes of this appeal, therefore,
it’s as if ERISA contained a (10-year)
statute of limitations; and this raises
the question (not discussed by the
parties) when if ever laches can be used
to shorten a statute of limitations. It
turns out that just as various tolling
doctrines can be used to lengthen the
period for suit specified in a statute of
limitations, so laches can be used to
contract it. Hutchinson v. Spanierman,
190 F.3d 815, 823 (7th Cir. 1999); Maksym
v. Loesch, 937 F.2d 1237, 1248 (7th Cir.
1991); Martin v. Consultants &
Administrators, Inc., 966 F.2d 1078,
1100-01 (7th Cir. 1992) (concurring
opinion). This is regardless of whether
the suit is at law or in equity, because,
as with many equitable defenses, the
defense of laches is equally available in
suits at law. Hot Wax, Inc. v. Turtle
Wax, Inc., 191 F.3d 813, 822 (7th Cir.
1999); A.C. Aukerman Co. v. R.L. Chaides
Construction Co., 960 F.2d 1020, 1029-30
(Fed. Cir. 1992) (en banc). We may assume
without having to decide that, as with
equitable tolling and (perhaps--the
question is unsettled) equitable
estoppel, the relevant doctrine of laches
is that of the state whose statute of
limitations is being borrowed. See
Shropshear v. Corporation Counsel, 275
F.3d 593, 596-98 (7th Cir. 2001).
We are mindful that some courts have
invoked a presumption against the use of
laches to shorten the statute of
limitations. E.g., Herman Miller, Inc. v.
Palazzetti Imports & Exports, Inc., 270
F.3d 298, 321 (6th Cir. 2001); United
States v. Rodriguez Aguirre, 264 F.3d
1195, 1207-08 (10th Cir. 2001); Lyons
Partnership v. Morris Costumes, Inc., 243
F.3d 789, 799 (4th Cir. 2001). One even
made the presumption conclusive, Ivani
Contracting Corp. v. City of New York,
supra, 103 F.3d at 259-61, on the odd
ground that abridging a statutory period
for suit by means of a judge-made
doctrine is in tension with the
separation of powers. When Congress fails
to enact a statute of limitations, a
court that borrows a state statute of
limitations but permits it to be abridged
by the doctrine of laches is not invading
congressional prerogatives. Ashley v.
Boyle’s Famous Corned Beef Co., 66 F.3d
164, 170 n. 4 (8th Cir. 1995) (en banc).
It is merely filling a legislative hole.
And none of the courts we’ve cited
questions the use of the judge-made
doctrines of equitable estoppel and
equitable tolling to lengthen the
statutory period--and laches, as the
Hutchinson, Maksym, and Martin opinions
cited above all point out (the majority
as well as the concurring opinion in
Martin, see 966 F.2d at 1090-91), is the
mirror image of equitable estoppel.
This point turns out to be important in
this case, and so we’ll take a moment to
explain it. The doctrine of equitable
estoppel allows the plaintiff to extend
the statute of limitations if the
defendant has done something that made
the plaintiff reasonably believe that he
had more time to sue. E.g., LaBonte v.
United States, 233 F.3d 1049, 1053 (7th
Cir. 2000); Bomba v. W. L. Belvidere,
Inc., 579 F.2d 1067, 1071 (7th Cir.
1978); Wall v. Construction & General
Laborers’ Union, Local 230, 224 F.3d 168,
176 (2d Cir. 2000). One example is the
defendant’s promising not to interpose
the defense of the statute of
limitations, Athmer v. C.E.I. Equipment
Co., 121 F.3d 294, 296 (7th Cir. 1997);
Cada v. Baxter Healthcare Corp., 920 F.2d
446, 450-51 (7th Cir. 1990); another is
his concealing the cause of action from
the plaintiff, Santa Maria v. Pacific
Bell, 202 F.3d 1170, 1177 (9th Cir.
2000); Rhodes v. Guiberson Oil Tools
Division, 927 F.2d 876, 878-79 (5th Cir.
1991); Pruet Production Co. v. Ayles, 784
F.2d 1275, 1280 (5th Cir. 1986); a third
is promising to pay the plaintiff’s
claim, Bomba v. W. L. Belvidere, Inc.,
supra, 579 F.2d at 1071; McAllister v.
FDIC, 87 F.3d 762, 767 (5th Cir. 1996).
See generally Shropshear v. Corporation
Counsel, supra, 275 F.3d at 597-98.
Conversely, if a plaintiff does something
that reasonably induces the defendant to
believe he won’t be sued and the
defendant’s ability to defend himself
against the plaintiff’s suit is impaired
as a result, the plaintiff can be barred
by the defense of laches from suing.
Wauchope v. U.S. Dept. of State, 985 F.2d
1407, 1412 (9th Cir. 1993); TransWorld
Airlines, Inc. v. American Coupon
Exchange, Inc., 913 F.2d 676, 696 (9th
Cir. 1990); EEOC v. Alioto Fish Co., 623
F.2d 86, 88-89 (9th Cir. 1980); 1 Dan B.
Dobbs, Law of Remedies, sec. 2.4(4), p.
105 (2d ed. 1993). What is sauce for the
goose (the plaintiff seeking to extend
the statute of limitations) is sauce for
the gander (the defendant seeking to con
tract it).
Laches is thus a form of equitable
estoppel rather than a thing apart.
Maksym v. Loesch, supra, 937 F.2d at
1248; Thompson v. Board of County
Commissioners, 34 P.3d 278, 280 (Wyo.
2001); Callenders, Inc. v. Beckman, 814
P.2d 429, 434 (Idaho App. 1991); Central
Improvement Co. v. Cambria Steel Co., 210
Fed. 696, 713 (8th Cir. 1913) (per
curiam), aff’d under the name Kansas City
Southern Ry. v. Guardian Trust Co., 240
U.S. 166 (1916); 1 Dobbs, supra, sec.
2.4(4), p. 105. The only difference is
which party asserts it. That is not a ma
terial difference; the fact that laches
is asserted defensively by the employer
sued by the plan, whereas equitable
estoppel is used offensively to obtain
extra benefits, does not destroy the
symmetry between laches and equitable
estoppel. Failure to recover employer
contributions imposes the same cost on
the plan as being forced to pay
additional benefits in the same amount.
The symmetry is particularly marked in
this case because it isn’t really a case
of laches at all, at least in the
technical sense, though that is the term
the district judge used and the
terminology is supremely unimportant; for
if we are right that laches and equitable
estoppel are the same thing, it can’t
matter which term is used. The reason it
is not a case of laches, strictly
speaking, is that the Teamsters trust is
not suing to recover the delinquent
contributions identified in the first
audit. Gorman’s argument is not that the
second suit, the suit on the later
delinquencies, should have been filed
sooner, but that it shouldn’t have been
filed at all because the company was
misled by the disappearance of the first
audit. The company is really arguing that
the disappearance should estop the trust
to bring a suit for later-accruing
delinquencies, even if the suit is filed
immediately after those delinquencies
accrue. It’s the fact that the conduct
claimed to create an estoppel consists
mainly of delay that gives the defense a
laches flavor, since laches means delay.
Since laches and equitable estoppel are
interchangeable--or, if not, since this
is actually a case of the latter rather
than of the former--the question arises
whether equitable estoppel can ever be a
defense to a suit by a multiemployer plan
for delinquent contributions. Clearly not
when it is invoked on the basis of words
or acts by one of the employers in an
effort to wrest larger benefits for the
plaintiff participant or beneficiary than
the terms of the plan allow. Central
States, Southeast & Southwest Areas
Pension Fund v. Gerber Truck Service,
Inc., 870 F.2d 1148, 1153 (7th Cir. 1989)
(en banc); Black v. TIC Investment Corp.,
900 F.2d 112, 115 (7th Cir. 1990); Bakery
& Confectionery Union & Industry
International Pension Fund v. Ralph’s
Grocery Co., 118 F.3d 1018, 1027 (4th
Cir. 1997); Benson v. Brower’s Moving &
Storage, Inc., 907 F.2d 310, 313-14 (2d
Cir. 1990). If equitable estoppel were
successfully interposed in such a case,
the employer would potentially be
imposing uncompensated costs on the other
employers belonging to the plan. However,
as assumed in Illinois Conference of
Teamsters & Employers Welfare Fund v.
Mrowicki, 44 F.3d 451, 462-64 (7th Cir.
1994), and Trustees of Wyoming Laborers
Health & Welfare Plan v. Morgen & Oswood
Construction Co., supra, 850 F.2d at 624,
a different conclusion could be reached
in a case such as this, where estoppel is
sought on the basis of words or conduct
by a responsible official of the plan
itself. True, estoppel can’t be used to
allow oral representations to expand the
terms of an ERISA plan, Bowerman v. Wal-
Mart Stores, Inc., 226 F.3d 574, 586 (7th
Cir. 2000); Downs v. World Color Press,
214 F.3d 802, 805-06 (7th Cir. 2000), but
the Teamsters trust has not pointed to
any plan language that the invocation of
laches, on the basis of Stewart’s alleged
assurances or otherwise, would violate.
We have held that equitable estoppel can
be used to toll the statute of
limitations in a suit against an ERISA
plan for benefits, Doe v. Blue Cross &
Blue Shield United, supra, 112 F.3d at
876-77, and that is similar to what the
district court did in this case. Gorman’s
defense fails not because ERISA bars such
a defense, but because its elements have
not been proved.
We can clear away some underbrush by
noting the absence of any suggestion that
Stewart, by promising to make the first
audit "go away" (if that is what he said-
-it is Leonhardt’s word against his and
the district judge did not decide which
one was telling the truth), was trying to
hurt Gorman--to trick it into thinking it
would never have to pay the contributions
called for by its collective bargaining
agreements with Stewart’s local. It could
not be to the plan’s advantage to pull
such a trick; there is no contention that
the interest payable on delinquent
contributions makes a plan better off if
it has to sue to recover such
contributions than if it received the
contributions as they came due. At worst
Stewart was careless if he promised to
forgive delinquent contributions due
under the 1991 collective bargaining
agreement; the question is whether his
carelessness made Leonhardt reasonably
believe that delinquent contributions
under future collective bargaining
agreements were likewise forgiven.
That Leonhardt’s belief had to be
reasonable is worth stressing, for
certainly when laches is predicated on
careless rather than deliberate conduct
by the plaintiff (in the latter case it
is canonically referred to as
"acquiescence" rather than laches, Piper
Aircraft Corp. v. Wag-Aero, Inc., supra,
741 F.2d at 933, illustrating the legal
profession’s occupational hazard of
multiplying distinctions unnecessarily),
the defendant’s fault is relevant. Rozen
v. District of Columbia, 702 F.2d 1202,
1204 (D.C. Cir. 1983) (per curiam);
Bernard v. Gulf Oil Co., 596 F.2d 1249,
1257-58 (5th Cir. 1979), 619 F.2d 459,
463 (5th Cir. 1980) (en banc), aff’d on
other grounds, 452 U.S. 89 (1981). While
not a defense to intentional misconduct,
the victim’s fault is a defense (full or
partial) to unintentional misconduct.
E.g., FDIC v. W.R. Grace & Co., 877 F.2d
614, 618-19 (7th Cir. 1989); Gilchrist
Timber Co. v. ITT Rayonier, Inc., 95 F.3d
1033, 1036 (11th Cir. 1996) (per curiam).
As a matter of fact, the particular
fault that consists in being unreasonable
in relying on a promise or other words
(or conduct) of an opposing party is a
defense in all estoppel cases, e.g.,
Office & Professional Employees
International Union, Local No. 471 v.
Brownsville General Hospital, 186 F.3d
326, 335-36 (3d Cir. 1999); Linkous v.
United States, 142 F.3d 271, 278 (5th
Cir. 1998), including all cases of
laches, Martin v. Consultants &
Administrators, Inc., supra, 966 F.2d at
1090-91; Bennett v. Tucker, 827 F.2d 63,
69 (7th Cir. 1987), whether the conduct
giving rise to the claim of estoppel or
laches is intentional or accidental.
Innumerable decisions establish this
proposition for ordinary cases of
equitable estoppel, as distinct from the
amphibian we have here. E.g., LaBonte v.
United States, 233 F.3d 1049, 1053 (7th
Cir. 2000); Ashafa v. City of Chicago,
146 F.3d 459, 463 (7th Cir. 1998); Santa
Maria v. Pacific Bell, 202 F.3d 1170,
1173 (9th Cir. 2000); Office &
Professional Employees International
Union, Local No. 471 v. Brownsville
General Hospital, supra, 186 F.3d at 335-
36.
The reasoning behind these decisions is
that a statement no reasonable person
would have relied on was probably not
intended to mislead--and probably didn’t
mislead. AMPAT/Midwest, Inc. v. Illinois
Tool Works Inc., 896 F.2d 1035, 1041-43
(7th Cir. 1990). As we have explained in
the related context of fraud, the victim
of a fraud "cannot close his eyes to a
risk that is obvious, even if he does not
himself perceive the risk. Although not
required to expend a substantial effort
to protect himself (as a tort victim in a
regime of contributory negligence will
often be required to do), the potential
victim of a fraud may not ignore a
manifest danger. That is recklessness. It
differs by only a shade, if that, from
intentional conduct--the conscious
assumption of risk that defeats liability
under the first aspect of the duty of
reasonable reliance as we conceive it.
The requirement of not being reckless
serves in the law of fraud not only to
define a duty, but also to disambiguate
evidentiary ambiguities concerning the
very existence of the fraud. If the
victim acted recklessly in the face of
the alleged fraud, it is difficult to
believe that he was actually deceived; he
may simply regret having assumed a risk
that has turned out badly. The
requirement of justifiable reliance
backstops the jury’s determination of
actual reliance." Id. at 1042 (citations
omitted).
In contrast, reliance is not an element
of equitable tolling at all, see
Singletary v. Continental Illinois
National Bank & Trust Co., 9 F.3d 1236,
1241 (7th Cir. 1993); Stitt v. Williams,
919 F.2d 516, 522 (9th Cir. 1990), the
distinct doctrine that permits the
statute of limitations to be extended in
cases where, without fault by the
defendant, the plaintiff is unable by the
exercise of due diligence to obtain the
information that he needs in order to be
able to sue within the statutory period.
The basis for the extension is not the
plaintiff’s reliance on words or actions
of the defendant, so the issue of
reasonable reliance does not even arise.
But here there had to be reliance and it
had to be reasonable. As to whether there
was reliance, we note that Leonhardt
testified that he didn’t understand the
"making the audit go away" comment that
he attributes to Stewart to mean that
there would never be a subsequent audit
under a subsequent collective bargaining
agreement. He also testified that Stewart
did not tell him he was making the
collective bargaining agreements go away;
never "indicate[d] that [Gorman] would be
immune from any future audits"; and never
told him "that [Gorman did] not have to
comply with the . . . collective
bargaining agreements." But even if, as
Gorman argues and we greatly doubt, the
inflection of Leonhardt’s testimony--his
tone of voice, the emphasis he placed on
particular words--might justify a finding
that the district judge never made that
Leonhardt somehow understood Stewart to
be promising that no future audits would
be conducted or efforts made to collect
delinquent contributions under future
collective bargaining agreements, it
would have been unreasonable for
Leonhardt to rely on such an
understanding as a basis for violating
the future collective bargaining
agreements. Leonhardt had no reason to
think Stewart authorized to modify a
collective bargaining agreement orally or
to waive orally the entitlements of the
welfare plan, let alone to do so in
advance of such an agreement’s coming
into effect. He had no reason to think
that Stewart could bind the other
trustees of the welfare plan, let alone
his or their successors. A reasonable
person in Leonhardt’s position, when
asked to sign the subsequent collective
bargaining agreements, would, at the very
least, have asked Stewart whether Gorman
would be bound by the provisions relating
to contributions to the plan. He did not
do so, or consult a lawyer, or take any
other step to determine whether he could
violate his contractual obligations with
impunity. He must have been gambling that
Stewart would be able to keep the
Teamsters trust off his back. An
unsuccessful gamble is not a form of
reasonable reliance.
The district judge made no finding on
whether Stewart promised to make the
first audit "go away" because he thought
the defense of laches made out by the
mere fact that the plan never claimed the
delinquent contributions identified by
that audit. To allow such a failure to
create an estoppel, however, would be to
equate Gorman to a person who thought
that because a store had failed to bill
him for an item that he had bought he
could go on buying there and never again
have to pay a bill. That would be a
textbook case of unreasonable reliance.
Gorman’s defense fails as a matter of
law. The judgment in its favor is
therefore reversed and the case remanded
to the district court to compute the
amount that Gorman owes the plan.
Reversed and Remanded.
Easterbrook, Circuit Judge, concurring in
the judgment. As my colleagues observe,
the parties to this case failed to
address some potentially important
issues: the nature and length of the
statute of limitations, whether laches
may be invoked to shorten that period,
and the source of law (state or federal)
used to determine the content of any
equitable principles that may be
applicable. The only serious debate was
whether the district court clearly erred
in finding that, when signing a
collective bargaining agreement in 1994,
Leonhardt relied on Stewart’s statement
several years earlier that he had made an
audit "go away." The district judge
answered "yes" after a trial, see 139 F.
Supp. 2d 976 (C.D. Ill. 2001). Like my
colleagues, I conclude that, if inking
the 1994 pact reflects reliance of any
kind, it was not reasonable for Leonhardt
to have thought that Stewart’s statement
relieved Gorman Brothers for all time of
the pension and welfare promises
contained in the written agreements--and
that, unless reliance is reasonable, it
does not provide a defense. That
conclusion, reached in the final three
paragraphs of my colleagues’ opinion,
makes it unnecessary for us to address
the many issues on which the parties’
briefs are silent. I am reluctant to join
an opinion that nonetheless ruminates
about them at length.
Choice of law is the first difficulty.
My colleagues assume that state law
supplies the period of limitations for
pension and welfare funds’ collection
suits under erisa and then discuss the
equitable doctrines that federal courts
apply to shorten or augment a statutory
period for suit. That’s an unstable
combination. If state law supplies the
period of limitations, then it also
supplies all related doctrines of tolling
and laches. So much is established for
other statutes, see Hardin v. Straub, 490
U.S. 536 (1989); Shropshear v. Chicago,
275 F.3d 593 (7th Cir. 2001), and I can’t
see any reason for doing things
differently here. The majority reserves
this question in light of the parties’
failure to address it, but Hardin and
similar cases illuminate the path. If
state law supplies the period of
limitations, we must ask how Illinois
handles a laches defense to the
enforcement of a written contract, not
how a federal court should deal with
laches as a matter of first principles.
Yet my colleagues’ opinion does not cite
any Illinois case or otherwise discuss
that state’s application of laches to
contract disputes.
Equitable modifications come from state
law, however, only if the statute of
limitations itself is supplied by state
law. Borrowing state statutes of
limitations is the norm when federal law
is silent, see North Star Steel Co. v.
Thomas, 515 U.S. 29 (1995), but that norm
comes with a proviso: "when a rule from
elsewhere in federal law clearly provides
a closer analogy than available state
statutes, and when the federal policies
at stake and the practicalities of
litigation make that rule a significantly
more appropriate vehicle for interstitial
lawmaking" then federal law supplies the
period of limitations. DelCostello v.
Teamsters, 462 U.S. 151, 172 (1983),
quoted and reaffirmed in North Star, 515
U.S. at 35. One court of appeals has
considered and rejected employers’
contentions that the six-month period
from the National Labor Relations Act is
the sort of "closer analogy" that should
be applied to erisa collection suits. See
Wyoming Laborers Health & Welfare Plan v.
Morgan & Oswood Construction Co., 850
F.2d 613 (10th Cir. 1988). I agree with
that conclusion: the nlra, which is not
concerned with debt collection suits, has
nothing on state law as a source of
limitations under erisa. But erisa itself
contains a statute of limitations
governing debt-collection suits by multi-
employer plans such as our plaintiff, the
Teamsters Welfare Trust. That statute is
sec.4301(f) of erisa (as added by the
Multi-Employer Pension Plan Amendments
Act of 1980), 29 U.S.C. sec.1451(f),
which reads:
An action under this section may not be
brought after the later of--
(1) 6 years after the date on which the
cause of action arose, or
(2) 3 years after the earliest date on
which the plaintiff acquired or should
have acquired actual knowledge of the
existence of such cause of action; except
that in the case of fraud or concealment,
such action may be brought not later than
6 years after the date of discovery of
the existence of such cause of action.
The reference to "this section" comprises
Subchapter III, Subtitle D--which is to
say, 29 U.S.C. sec.sec. 1361-1453--
because sec.1451(a) is the enforcement
mechanism for that subtitle, which deals
principally with liability by employers
that withdraw from multi-employer plans.
See Bay Area Laundry Fund v. Ferbar
Corp., 522 U.S. 192 (1997). Gorman
Brothers did not withdraw from the plan;
it simply failed to remit in full, so the
Trust’s suit is under 29 U.S.C. sec.1145
rather than sec.1451. Section 1145 does
not contain a rule comparable to
sec.1451(f). But this just poses, and
does not answer, the question whether the
rule of sec.1451(f) is a better fit than
a rule drawn from state law. No court of
appeals has discussed that question to
date.
DelCostello held that the nlra’s period
governs hybrid claims that employers
violated collective bargaining agreements
and that unions violated their duty of
fair representation in not preventing the
employers’ acts. These hybrid claims are
like the unfair labor practices to which
the nlra is addressed, the Court held, and
limitations rules drawn from state law
might complicate federal labor policy,
which is supposed to be administered
without regard to state law. Agency
Holding Corp. v. Malley-Duff &
Associates, Inc., 483 U.S. 143 (1987),
then held that civil actions under rico
are governed by the four-year period in
the Clayton Act, because many of rico’s
provisions have precursors in antitrust
law, and Lampf, Pleva, Lipkind, Prupis &
Petigrow v. Gilbertson, 501 U.S. 350(1991), followed up with a holding that
implied rights of action under the
federal securities laws must be pursued
within the time provided for the express
securities rights of action. In all three
of these cases a federal statute spoke to
the kind of claim under consideration.
Just so with collection suits under erisa
by multi-employer pension and welfare
plans. Section 1451(f) of erisa deals with
collection suits by multi-employer plans.
Why not use it for this collection suit
by a multi-employer plan? None of the
cases collected at slip op. 3 applying
state law to one or another claim under
erisa mentions sec.1451(f)--or for that
matter discusses the legal analysis of
Agency Holding or Lampf, Pleva, a serious
omission.
Section 1451(f) may be "a significantly
more appropriate vehicle for interstitial
lawmaking" for at least two additional
reasons. First, erisa contains a sweeping
preemption clause. 29 U.S.C. sec.1144(a).
When judges fill other gaps in erisa, they
use federal law, even if this means
inventing federal common law. See
Franchise Tax Board v. Construction
Laborers Vacation Trust, 463 U.S. 1, 24
n.26 (1983). In both respects erisa is
similar to labor law, which also has
strong preemption rules accompanied by
the creation of federal common law;
DelCostello deemed the preemption of
state substantive law a strong reason not
to obtain periods of limitations from
state law. Why, in a complex body of
federal pension law, should the statute
of limitations be the only bit of state
law? Statutes of limitations often are
tailored to the substantive rule; to
import a body of state limitations law
into a field from which all other state
tendrils have been excluded makes little
sense.
Second, sec.1451(f) solves the sort of
problem presented by a defense of laches.
The six-and-three structure of this rule,
like the three-and-one structure of the
statute used for securities-fraud claims,
is incompatible with equitable tolling.
See Lampf, Pleva, 501 U.S. at 363.
Subsection 1451(f)(2) supplies a limit of
three years from discovery, which
demonstrates that the six-year period in
sec.1451(f)(1) is a statute of repose;
equitable extensions are incompatible
with periods of repose, according to
Lampf, Pleva, and that message is driven
home by the special extension to six
years from discovery if fraud is
entailed. Courts could not allow for
additional equitable extensions without
displacing a legislative choice; and if
laches is just a mirror image of
equitable tolling, then abbreviating the
time on account of laches also is
inappropriate. This reinforces the
principle that courts may not on
equitable grounds decline to enforce the
terms of an erisa plan. See Bowerman v.
Wal-Mart Stores, Inc., 226 F.3d 574, 586
(7th Cir. 2000); Frahm v. Equitable Life
Assurance Society, 137 F.3d 955 (7th Cir.
1998). The parties failed to discuss the
language of this plan, but its text
permits the Trustees to collect
contributions that employers should have
made./* Any defense based on Stewart’s
oral representations would entail a
departure from that language. This makes
sec.1451(f), which knocks out any such
equitable defense, a significantly better
fit for erisa collection cases than is a
rule drawn from state law that may allow
equitable defenses. As we held in Central
States Pension Fund v. Gerber Truck
Service, Inc., 870 F.2d 1148 (7th Cir.
1989) (en banc), a multi-employer pension
or welfare trust is not just an ordinary
contract, and "ordinary" state contract
law that may prevent a plan from
enforcing its written terms accordingly
is a bad match.
One could imagine a contrary argument:
that sec.1451(f)’s limitation to suits
under Subchapter III, Subtitle D of erisa
reflects a legislative decision that some
unusual features of withdrawal-liability
actions require special rules,
inappropriate to other suits under
sec.1145 for delinquent contributions.
Both sec.1145 and sec.1451 were added to
erisa by the mppaa in 1980, but they were
put in different subchapters. Section
1145 went into a subchapter that had an
existing enforcement section (29 U.S.C.
sec.1132, which lacks a statute of
limitations), while Subchapter III,
Subtitle D was new and needed an
enforcement clause, which sec.1451
supplied. Under the circumstances, it
makes sense to understand the failure to
extend sec.1451(f) to other collection
suits by multi-employer trusts as an
oversight, perhaps reflecting an
assumption that sec.1132 provided one
already. I see no reason to impute to
Congress a decision that the six-and-
three rule would be inappropriate in any
way for other collection suits. Lampf,
Pleva shows that there is no rule against
applying a period of limitations in one
section to a claim under a different
section of the same statute; to the
contrary, in Lampf, Pleva the Court took
the existence of some limitations rules
in the Securities Exchange Act as a
reason to use federal rather than state
law when resolving claims under sections
that lacked their own periods of
limitations.
As I said at the outset, the parties did
not brief these matters. What I have
written therefore is provisional, and the
questions are open for the day when the
parties present them for decision. But at
least tentatively I am more attracted to
the position that federal law supplies
the period of limitations--and that
laches is no defense to collection--than
I am to a view that state law supplies
the period while judges have a free hand
to invent a common law of equitable
tolling and laches for erisa collection
suits.
FOOTNOTE
/* Section 4.5 gives the Trustees "power to demand,
collect and receive Employer payments and all
other money and property to which the Trustees
may be entitled. . . . They shall take such
steps, including the institution and prosecution
of, or the intervention in, such legal or
administrative proceedings as the Trustees in
their sole discretion determine to be in the best
interest of the Trust Fund for the purpose of
collecting such payments, money and property,
without prejudice, however, to the rights of the
Union to take whatever steps it deems necessary
and wishes to undertake for such purpose."