Line Construction Be v. Allied Electrical Contractors

In the
United States Court of Appeals
For the Seventh Circuit
No. 09-1546
L INE C ONSTRUCTION B ENEFIT F UND,
Plaintiff-Appellee,
v.
A LLIED E LECTRICAL C ONTRACTORS, INC.,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 07 C 0950—Rebecca R. Pallmeyer, Judge.
A RGUED S EPTEMBER 21, 2009—D ECIDED JANUARY 8, 2010
Before C UDAHY, W OOD , and T INDER, Circuit Judges.
W OOD , Circuit Judge. Line Construction Benefit Fund
(“Lineco”) is a multiemployer employee welfare fund
that receives contributions from employers pursuant to
collective bargaining agreements (“CBAs”) negotiated
between employers and unions. The Southeastern Line
Constructors Chapter of the National Electrical Contractors
Association (“NECA”) and the International Brotherhood
2 No. 09-1546
of Electrical Workers, Local Union 474 (“the Union”)
operate under such agreements, which require partici-
pating employers to pay into the fund for all covered
employees. Sometimes, when so many different entities
are involved in an arrangement, all of the “T’s” are not
crossed as clearly as they might be. Essentially, that kind
of problem is what gave rise to this lawsuit.
The question before us is the extent to which Allied
Electrical Contractors, Inc. (“Allied”), a Tennessee
electrical contractor and a member of NECA since 2002,
is obliged to contribute to Lineco. Allied was not an
original signatory to the 2005 CBA between NECA and
the Union; it did not execute a formal letter of consent
until December 7, 2006. Allied argues that this means
that it was not bound by the CBA until that date. But
Allied’s argument treats as irrelevant the fact that its
course of conduct—making payments precisely in accor-
dance with the 2005 CBA from the start—demonstrates
its assent to that agreement. We conclude, as the district
court did, that Allied is liable for the deficiencies at
issue here.
I
Lineco is a multiemployer welfare fund administered
in accordance with section 302(c)(5) of the Labor Man-
agement Relations Act (“LMRA”) and the Employee
Retirement Income Security Act of 1974 (“ERISA”).
Allied began making payments to Lineco for Union
employee benefits in 1993. In 2005, the Southeastern
Line Constructors Chapter of NECA and the Union
No. 09-1546 3
entered into a CBA, which among other things set forth
the terms under which Lineco would receive con-
tributions pursuant to a trust agreement that established
the fund. The 2005 CBA changed the hourly contribution
rate from $4.50 per hour (set by an earlier CBA) to $4.75
per hour for the work of covered employees. The 2005
CBA included a clause making it applicable to “all firms
who sign a letter of consent to be bound by the terms
of this agreement.” The CBA took effect on December 1,
2005.
In keeping with the 2005 CBA, Allied began making
contributions at $4.75 per hour in December 2005. It
continued to do so until July 2006, when it missed a
payment. Allied did not make a contribution for
August either. In October of 2006, the Union barred
Allied President Michael Eskridge from a NECA-Union
negotiating session, because Allied had not signed a
letter of consent under the CBA. On December 7, 2006,
Allied executed a form letter of consent. Yet Allied failed
to make the contributions that it acknowledged were
due for December 2006, January 2007, and February 2007.
In March 2007, Allied resumed payments as required
by the CBA.
When the missing funds were not forthcoming, Lineco
brought suit in the United States District Court for the
Northern District of Illinois. Citing the CBA and the
Trust Agreement, Lineco alleged that Allied owes it a
total of $138,605.25, representing the delinquent contribu-
tions for July, August, and December 2006, and Jan-
uary and February 2007. Allied moved to dismiss Lineco’s
4 No. 09-1546
action for lack of standing or, in the alternative, for partial
summary judgment; Lineco responded with a cross-
motion for summary judgment. On November 26, 2008,
the district court dismissed Allied’s motion and granted
Lineco’s cross-motion for summary judgment. Later, on
January 29, 2009, it entered judgment requiring Allied
to pay Lineco $200,816.36, the amount of the delinquent
payments plus interest, statutory liquidated damages,
attorneys’ fees, and costs. Allied appeals, arguing that
Lineco is not authorized to sue under section 502(e)
of ERISA, 29 U.S.C. § 1132(e), and that Allied was not
bound by the CBA until it executed the letter of consent.
II
Allied has asserted throughout this action that Lineco
lacks standing to bring suit under 29 U.S.C. § 1132(e).
What Allied means, however, is that Lineco lacks a right
of action. In order to evaluate this argument, we must
look to the statute. The obligation of employers to make
contributions in accordance with the terms of a
collectively-bargained agreement is found in section 1145.
The parties authorized to bring suit under the statute
are described in section 1132(a), (e); proper plaintiffs
include participants, beneficiaries, or fiduciaries of a
plan. This court has held that multiemployer plans are
fiduciaries for the purposes of section 1132(e). Auto. Mechs.
Local 701 Welfare & Pension Funds v. Vanguard Car Rental
USA, Inc., 502 F.3d 740, 744-45 (7th Cir. 2007). We
reaffirm that holding today.
Section 1132(d)(1) establishes the legal status of
multiemployer plans for purposes of ERISA: “An
No. 09-1546 5
employee benefit plan may sue or be sued under this
title as an entity.” Section 1132(e), however, does not
mention plans as such in the list of authorized plaintiffs.
Instead, as we just noted, it grants a right of action to
“fiduciaries of a plan.” We must therefore determine
who is a fiduciary of a plan and whether a plan itself
may sue either as a fiduciary or on behalf of the fiducia-
ries. The first question is easy, because the statute ad-
dresses it. A person is a fiduciary “to the extent (i) he
exercises any discretionary authority or discretionary
control respecting management of such plan or exercises
any authority or control respecting management or dispo-
sition of its assets, (ii) he renders investment advice for
a fee or other compensation, direct or indirect, with
respect to any moneys or other property of such plan, or
has any authority or responsibility to do so, or (iii) he
has any discretionary authority or discretionary responsi-
bility in the administration of such plan.” 29 U.S.C.
§ 1002(21)(A).
Allied focuses on the second part of the inquiry and
asserts that a plan cannot be a fiduciary of itself. In our
view, however, this is too simplistic a view of a plan.
Any and all actions taken by a plan are done by the
administrators who act on its behalf—in other words, by
the fiduciaries who exercise discretionary authority or
control with respect to the management of a plan.
Accord Saramar Aluminum Co. v. Pension Plan, 782 F.2d 577,
580-81 (6th Cir. 1986). But see Local 159 v. Nor-Cal
Plumbing, Inc., 185 F.3d 978, 981-84 (9th Cir. 1999) (holding
that the court lacked subject-matter jurisdiction for a
suit by an ERISA plan under section 1132(a)(3)); Pressroom
6 No. 09-1546
Unions-Printers League Income Sec. Fund v. Cont’l Assurance
Co., 700 F.2d 889, 891-93 (2d Cir. 1983), cert. denied, 464
U.S. 845 (1983) (holding that the federal court lacked
subject-matter jurisdiction under section 1132(e) for a suit
brought by an ERISA plan). (The characterization of the
issue in these cases as a problem of subject-matter jurisdic-
tion is especially questionable in light of the Supreme
Court’s decision in Union Pac. R. Co. v. Bhd. of Locomotive
Eng’rs and Trainmen Gen. Comm. of Adjustment, 130 S. Ct.
584, 596-97 (2009), which underscores the difference be-
tween issues relating to subject-matter jurisdiction and
those relating to other claims-processing rules.)
Allied acknowledges that plans may sue under other
provisions of ERISA and the Multiemployer Pension Plan
Amendments Act of 1980 (“MPPAA”), such as 29 U.S.C.
§ 1381 (withdrawal liability) and 29 U.S.C. § 1109 (breach
of fiduciary duty). See, e.g., Peoria Union Stock Yards
Co. Retirement Plan v. Penn Mut. Life Ins. Co., 698 F.2d
320, 326 (7th Cir. 1983) (finding that a plan may bring
suit for breach of a fiduciary duty pursuant to 29 U.S.C.
§§ 1109(a), 1132(a)(2), (d)(1)). Allied notes that section
1109, for example, confers specific rights on plans (for
example, the right to require another “to make good to
such plan” for breach of a fiduciary duty) that are
absent from section 1145, which imposes the sub-
stantive obligation that Lineco seeks to enforce. But this
argument misapprehends the source of the right to sue
under these provisions. It is section 1132, rather than
sections 1109 and 1145, that grants to fiduciaries the
right to sue to enforce substantive rights. If a plan is a
No. 09-1546 7
fiduciary for the purposes of section 1132(a)(2) (enforcing
section 1109), then a plan is a fiduciary for the purposes
of section 1132(a)(3) (enforcing section 1145).
CBAs designate plans to collect ERISA contributions;
Congress has provided that plans can sue and be sued,
and that fiduciaries may enforce substantive rights,
including those at issue in this case. We see no reason
to deviate from our decision in Vanguard Car Rental, supra,
and thus we confirm that a multiemployer plan may
sue as a fiduciary under 29 U.S.C. § 1132(e).
III
We review decisions on cross motions for summary
judgment de novo. Rickher v. Home Depot, Inc., 535 F.3d 661,
664 (7th Cir. 2008). This case does not implicate any of
the issues concerning standard of review that have been
raised in recent cases involving denials of benefits. See
Metro. Life Ins. Co. v. Glenn,128 S.Ct. 2343 (2008); Fischer
v. Liberty Life Assur. Co. of Boston, 576 F.3d 369 (7th Cir.
2009); Krolnik v. Prudential Ins. Co. of America, 570 F.3d 841
(7th Cir. 2009). Our job instead is to interpret and apply
the governing agreements, which we approach de novo.
Allied concedes that it was required to make contribu-
tions for work done after it signed the letter of consent on
December 7, 2006. Our holding that Lineco is entitled to
bring suit to recover delinquent contributions under the
CBA is enough to establish that Allied must pay
Lineco for obligations incurred after that date—that is,
for most of December 2006 and all of January and
8 No. 09-1546
February 2007. Whether Allied also owes Lineco
for delinquent payments from July, August, and early
December 2006 requires additional analysis.
We begin with the question whether Allied was bound
by the CBA before December 7, 2006. “[A] signature to a
collective bargaining agreement is not a prerequisite to
finding an employer bound to that agreement.” Bricklayers
Local 21 of Ill. Apprenticeship & Training Program v. Banner
Restoration, 385 F.3d 761, 767 (7th Cir. 2004). Assent can
also be established through other evidence, including
most importantly conduct manifesting agreement, such
as “the payment of union wages, the remission of union
dues, the payment of fringe benefit contributions, the
existence of other agreements evidencing assent and the
submission of the employer to union jurisdiction, such
as that created by grievance procedures.” Id. at 766
(citing cases). (We note in passing that dues checkoffs are
permissible under the National Labor Relations Act only
if the employer is bound by a collective bargaining agree-
ment. See 29 U.S.C. § 186(c)(4); U.S. Can Co. v. NLRB,
984 F.2d 864, 869 (7th Cir. 1993). If Allied was collecting
union dues during this time period, that is strong
evidence that it was party to the CBA. Without a CBA,
such collections are illegal.)
According to a contribution table provided by Lineco,
Allied had made contributions to the fund since 1993. The
table also reveals that Allied’s payment rate jumped from
$4.50 per hour to $4.75 per hour—as required by the
2005 CBA—at the time when the new CBA took effect.
Allied continued to make contributions according to the
No. 09-1546 9
CBA except for the months at issue in this case. Allied’s
President, Michael Eskridge, admitted at his deposition
that the company issued contribution reports to Lineco
the “majority of months.” This undisputed course of
events manifests assent to the 2005 CBA.
In October 2006, the Union barred Eskridge from a
NECA-Union negotiation because Allied had not signed
a letter of consent. Allied believes that this incident
shows that the Union did not believe that Allied was
bound to the CBA: as Allied sees things, it was barred
from one benefit of the arrangement (a seat at the table),
and thus it should not incur any burdens. But this
incident was peripheral, at best, to the contribution
dispute. In fact, it suggests that Allied recognized its
interest in the CBA, and maybe even assumed that it
was a party through its NECA membership. When
Allied learned that it had not complied with a procedural
requirement, it remedied that omission with a form
letter shortly thereafter. Moreover, our holding in Central
States Pension Fund v. Gerber Truck Service, Inc., 870 F.2d
1148 (7th Cir. 1989) (en banc), demonstrates that even if
the Union had sent Allied a letter stating that it was
not covered by the CBA until it affixed an authorized
signature, such a letter would not be conclusive on an
ERISA plan.
Allied also argues that the CBA’s explicit requirement
of a letter of consent should preclude the court from
holding it bound by the agreement until it issued such a
letter. See Merrimen v. Paul F. Rost Electric, Inc., 861 F.2d 135
(6th Cir. 1988) (finding no obligation where the em-
10 No. 09-1546
ployer did not sign a letter of assent as required by the
CBA). We have not taken such a formalistic position.
Instead, we have held repeatedly that conduct
manifesting assent creates an obligation; a contrary rule
would ignore commercial realities and would create a
loophole for parties seeking to escape responsibilities
that they have acknowledged through their behavior.
The LMRA does not excuse Allied’s delinquencies
either. The LMRA provides that employers may not
make payments to employee benefit funds unless those
contributions are specified in a written agreement. 29
U.S.C. § 186(c)(5)(B). This court has read this require-
ment literally. As long as the agreement is written, it
does not have to be “a signed, unexpired collective bar-
gaining agreement between the parties,” see Gariup v.
Birchler Ceiling & Interior Co., 777 F.2d 370, 375 (7th Cir.
1985), or even a signed agreement at all. See Bricklayers,
385 F.3d at 770 (“[T]he existence of a ‘written agree-
ment,’ albeit an unsigned one, detailing the terms upon
which the fringe benefit contributions were to be made,
and [employer’s] payment of contributions in ac-
cordance with that agreement, effectively concludes
our inquiry.”). Here, the CBA serves as the written agree-
ment, and it is enough for the LMRA. (This actually may
be good news for Allied; otherwise all of its other con-
tributions under the 2005 CBA would have been im-
proper.) Therefore, Allied cannot use the LMRA to
escape its obligations incurred prior to December 7, 2006.
Lineco properly brought suit under ERISA and is
entitled to the delinquent contributions for July, August,
No. 09-1546 11
and December 2006, and January and February 2007.
The decision of the district court is A FFIRMED.
1-8-10