Opinion
Civil Action No. 1:21-cv-1122
2022-04-25
BOARD OF TRUSTEES, SHEET METAL WORKERS’ NATIONAL PENSION FUND, Plaintiff, v. Janet BISHOP, Defendant.
Diana Migliaccio Bardes, Mooney Green Saindon Murphy & Welch PC, Washington, DC, for Plaintiff. Janet Bishop, Pittsburgh, PA, Pro Se.
Diana Migliaccio Bardes, Mooney Green Saindon Murphy & Welch PC, Washington, DC, for Plaintiff.
Janet Bishop, Pittsburgh, PA, Pro Se.
ORDER
T. S. Ellis, III, United States District Judge
Congress, in enacting the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1101 et seq. , made unmistakably clear that an employer withdrawing from a qualifying benefits plan is subject to withdrawal liability, and that that this liability may be enforced by the plan administrator. Precisely this has occurred here: Plaintiff, the Board of Trustees of the Sheet Metal Workers’ National Pension Fund, has sued Defendant, the majority owner of Bishop Metals, Inc., for recovery of withdrawal liability. At issue now is Plaintiff's Motion for Summary Judgment (Dkt. 12), for which Plaintiff filed a brief and appeared for oral argument on March 11, 2022. Defendant, who has elected to proceed pro se in this action, did not file a response to Plaintiff's brief and failed to appear for the March 11 hearing. For reasons stated in this Order, Plaintiff's Motion must be granted. I.
Relevant statutory provisions governing withdrawal liability were added to the ERISA statutory framework by the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1381 –1461. For the sake of simplicity, this statutory scheme will be referred to as "ERISA" throughout this Order.
In accordance with Rule 56 of the Federal Rules of Civil Procedure, Plaintiff has prepared and presented a record for resolution of the Motion for Summary Judgment. Additionally, Plaintiff complied with Local Civil Rule 56 by setting forth a statement of undisputed material facts in separately numbered paragraphs. The following facts are drawn from the undisputed factual record in this matter.
• Plaintiff is an employee benefit trust fund located in Falls Church, Virginia.
• Defendant Janet Bishop is the president of Bishop Metals, Inc., a sheet metal fabrication business located in Pittsburgh, Pennsylvania. Defendant owns 80% of Bishop Metals.
• Defendant owns property at 428–430 Hays Avenue, Pittsburgh, Pennsylvania, 15210 (the "Hays Avenue Property"). Bishop Metals leased the Hays Avenue Property from Defendant and operated out of the property.
• Bishop Metals was a party to a series of collective bargaining agreements with the International Association of Sheet Metal, Air, Rail and Transportation Workers, Local Union No. 12 ("Local 12"). The most recent collective bargaining agreement ("CBA") between Bishop Metals and Local 12 was in effect from April 1, 2017 through March 31, 2020.
• The CBA required Bishop Metals to participate in an ERISA benefits plan sponsored and administered by Plaintiff. Specifically, Bishop Metals was obligated to submit remittance reports and fringe benefit contributions to Plaintiff each month. Plaintiff administered the plan within the Eastern District of Virginia.
• The CBA also required Bishop Metals to abide by the terms of the Trust Agreement governing Plaintiff.
• As of March 31, 2020, the CBA expired without a replacement agreement in place, and Bishop Metals's obligation to make benefit contributions ceased. At that time, Plaintiff determined that Bishop Metals underwent a "complete withdrawal" from an ERISA benefits plan as defined in ERISA, 29 U.S.C. § 1383.
• On June 2, 2020, Plaintiff submitted notice to Bishop Metals indicating that Bishop Metals owed withdrawal liability and setting forth a schedule of payments.
• Plaintiff's final calculation of Bishop Metals's withdrawal liability totaled $469,396.83.
• Bishop Metals did not request additional review of its calculated withdrawal liability within the 90 days
In her Answer to Plaintiff's Complaint, Defendant confirmed that she owned the Hays Avenue Property and leased it to Bishop Metals. See Dkt. 5 at p. 4.
Defendant's Answer asserts, without support, that "jurisdiction should [not] be in Virginia" and that this "lawsuit should be in Pittsburgh where [Defendant is] located." However, 29 U.S.C. § 1451(d) makes clear that an action seeking payment of withdrawal liability "may be brought in the district where the plan is administered," which is the Eastern District of Virginia in this case. Additionally, to the extent that Defendant sought to assert a defense of lack of personal jurisdiction, it is worth emphasizing that ERISA authorizes nationwide service of process. See Denny's, Inc. v. Cake , 364 F.3d 521, 524 (4th Cir. 2004).
prescribed by ERISA, or at any point thereafter.
• Bishop Metals failed to make its first withdrawal liability payment pursuant to the schedule submitted by Plaintiff, which was due on August 1, 2020. Plaintiff sent Bishop Metals a delinquency notice on August 26, 2020, stating that Bishop Metals had 60 days to cure the delinquency, or it would be deemed to be in default. See 29 U.S.C. § 1399(c)(5).
• On October 22, 2020, after Bishop Metals communicated its intent to enter into a new CBA with Local 12, Plaintiff and Bishop Metals agreed to toll the sixty-day deadline to cure the withdrawal liability delinquency. Under the October 22 agreement, tolling would cease if Bishop Metals and Local 12 failed to agree to a new CBA.
• On January 5, 2021, Plaintiff received notice that Bishop Metals and Local 12 had reached an impasse and negotiations had come to an end with the parties unable to agree to a new CBA.
• Under the terms of the tolling agreement between Plaintiff and Bishop Metals, the 60-day period for Bishop Metals to cure the withdrawal liability delinquency expired 14 calendar days after January 1, 2021, i.e. January 15, 2021.
• Since January 2021, Bishop Metals has not cured the delinquency stemming from the August 26, 2020 notice or made any other payments towards the withdrawal liability assessed by Plaintiff.
• The Trust Agreement provides that a withdrawn employer must pay interest at a rate of 0.0205%, compounding daily, in the event of default. The interest accrued through February 25, 2022 totals $41,351.89.
• The Trust Agreement further permits Plaintiff to recover liquidated damages in the amount of 20% of the unpaid withdrawal liability. In this case, the liquidated damages total 20% of $469,396.83, or $93,879.37.
Under ERISA, once an employer receives notice of its total calculated withdrawal liability and a schedule of payments, the employer has 90 days to request further review or to identify any inaccuracies in the determination of its liability. See 29 U.S.C. § 1399(b)(2)(A).
II.
The well-settled standard for summary judgment does not require extensive elaboration here. Summary judgment is appropriate when there is "no genuine issue as to any material fact" and based on those undisputed facts the moving party "is entitled to judgment as a matter of law." Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). To serve as a bar to summary judgment, a fact must be "material," which means that the disputed fact "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Importantly, at the summary judgment stage, courts must "view the evidence in the light most favorable to ... the non-movant." Dennis v. Columbia Colleton Med. Ctr., Inc. , 290 F.3d 639, 645 (4th Cir. 2002).
The questions presented by Plaintiffs Motion for Summary Judgment are: (1) whether Plaintiff is entitled to collect withdrawal liability from Bishop Metals and (2) if so, whether Defendant is jointly and severally liable for Bishop Metals's withdrawal liability. A.
With respect to the first question, the undisputed factual record clearly compels the conclusion that Plaintiff is entitled to collect withdrawal liability from Bishop Metals pursuant to ERISA, as amended by the MPPAA, 29 U.S.C. §§ 1381 – 1461. As an initial matter, ERISA specifies that an employer undertakes a "complete withdrawal" from a plan when the employer "ceases to have an obligation to contribute" to the plan. 29 U.S.C. § 1383(a). In this case, the CBA between Local 12 and Bishop Metals obligated Bishop Metals to submit fringe benefit contributions to Plaintiff each month, and that obligation ceased when the CBA expired on March 31, 2020, without a replacement agreement in place. Accordingly, there is no doubt Bishop Metals effected a complete withdrawal from the relevant benefits plan as of March 31, 2020.
Defendant could argue that, as a sheet metal fabricator, Bishop Metals qualifies as a member of the "building and construction industry." 29 U.S.C. § 1383(b)(2). Under ERISA, employers in that industry completely withdraw from a plan only when: (i) the employer's obligation to contribute to a plan ceases and (ii) the employer "continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required." Id. However, even assuming § 1383(b)(2) governs the analysis, there is no doubt that Bishop Metals completely withdrew from the plan when its obligation to make contributions ceased on March 31, 2021. Nothing in the record indicates that Bishop Metals thereafter ceased performing the same sheet metal work governed by the CBA. Indeed, the evidence indicates that Bishop Metals continued work in the same field through at least the end of 2021, when it attempted to negotiate a new CBA with Local 12, a sheet metal workers’ union.
Under ERISA, complete withdrawal gives rise to withdrawal liability, which 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." Trustees of the Plumbers & Pipefitters Nat. Pension Fund v. Plumbing Servs., Inc. , 791 F.3d 436, 440 (4th Cir. 2015) (quoting Pension Benefit Guar. Corp. v. R.A. Gray & Co. , 467 U.S. 717, 725, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984) ). To seek withdrawal liability after an employer's complete withdrawal, a plan sponsor must: (i) notify the employer of the employer's total calculated liability and a schedule of payments and (ii) demand payment. 29 U.S.C. § 1399(b)(1). Plaintiff complied with § 1399(b)(1), sending a letter to Bishop Metals in June 2020 which sought payment of withdrawal liability and set forth a payment schedule. Plaintiffs final calculation of Bishop Metals's liability totaled $469,396.83. Bishop Metals did not object to or seek further review of Plaintiff's withdrawal liability calculation within the ninety-day period required by 29 U.S.C. § 1399(b)(2)(A).
ERISA further specifies that, in the event of a "default" on withdrawal liability payments, "a plan sponsor may require immediate payment of the outstanding amount of an employer's withdrawal liability, plus accrued interest on the total outstanding liability." 29 U.S.C. § 1399(c)(5). The statute defines "default" as "the failure of an employer to make, when due, any payment under this section, if the failure is not cured within 60 days after the employer receives written notification from the plan sponsor of such failure." Id. In this regard, Bishop Metals failed to make its first scheduled payment on August 1, 2020, and Plaintiff sent notice of the delinquency on August 26, 2020. Bishop Metals failed to cure this delinquency within the sixty-day period set forth by § 1399(c)(5), which expired on January 15, 2021 as the result of a tolling agreement between Plaintiff and Defendant, and Defendant has not made any contributions to its withdrawal liability since that date. Accordingly, Plaintiff, as the plan sponsor, is entitled to seek payment of Bishop Metals's entire withdrawal debt due to Bishop Metals's uncured default.
Moreover, ERISA also permits Plaintiff to collect interest, liquidated damages, and reasonable attorney's fees. Importantly, 29 U.S.C. § 1451(b) specifies that, in any action seeking payment of withdrawal liability, a "failure to make any withdrawal liability payment within the time prescribed shall be treated in the same manner as a delinquent contribution." ERISA permits a plaintiff in an action involving delinquent contributions, and by extension unpaid withdrawal liability, to collect: (i) the unpaid sum, (ii) interest on the unpaid sum at the "the rate provided under the plan," (iii) an amount equal to the greater of the interest or "liquidated damages provided for under the plan in an amount not in excess of 20 percent," and (iv) reasonable attorney's fees. See 29 U.S.C. § 1132(g).
In this case, the terms of the relevant benefits plan, as contained in the Trust Agreement, specify that interest shall accrue at the rate of 0.0205%, compounding daily, in the event of default on withdrawal liability. Given this rate of interest, the total amount of interest accrued as of February 25, 2022 was $41,351.89. Additionally, the Trust Agreement sets the amount of liquidated damages at 20% of the unpaid withdrawal liability, or $93,879.37 in this case. Accordingly, under ERISA, Plaintiff is entitled to collect the sum of the unpaid withdrawal liability ($469,396.83), interest ($41,351.89), and liquidated damages ($93,879.37)—totaling $604,628.09—plus additional interest which accrues between February 25, 2022 and the satisfaction of the withdrawal liability, as well as reasonable attorney's fees.
To summarize, the undisputed factual record leaves no doubt that: (i) Bishop Metals effected a complete withdrawal from an ERISA benefits plan for which Plaintiff was the sponsor, (ii) Bishop Metals thereby incurred withdrawal liability totaling $469,396.83, a sum to which Bishop Metals did not object, (iii) Bishop Metals has defaulted on its withdrawal liability, entitling Plaintiff to seek immediate payment in full, and (iv) Plaintiff is entitled to collect a total of $604,628.09, plus any additional interest and reasonable attorney's fees.
B.
The analysis now appropriately turns to the question of whether Defendant may be held jointly and severally liable for Bishop Metals's withdrawal liability. In this regard, Plaintiff contends that Defendant is liable for Bishop Metals's liability owing to Defendant's landlord-tenant relationship with Bishop Metals.
Put simply, "ERISA treats all trades or businesses that are under common control as a single employer." Trustees of the Plumbers & Pipefitters Nat. Pension Fund v. Plumbing Servs., Inc. , 791 F.3d 436, 440 (4th Cir. 2015). Specifically, 29 U.S.C. § 1301(b)(1) states that "all employees of trades or businesses (whether or not incorporated) which are under common control shall be treated as employed by a single employer and all such trades and businesses as a single employer." As a result of this provision, each trade or business within a "control group is jointly and severally liable under ERISA for withdrawal liability." Teamsters Joint Council No. 83 v. Centra, Inc. , 947 F.2d 115, 120 (4th Cir. 1991). Under applicable regulations, "two or more businesses are under common control ... where the same five or fewer persons own a controlling interest in each [business]." Plumbing Servs., Inc. , 791 F.3d at 440 n. 1 (citing 26 C.F.R. § 1.414(c)–2(c) ).
To continue, although the Fourth Circuit has not yet addressed the issue, persuasive authority confirms that the "leasing of property to a withdrawing company under the common control of the property owner constitutes a ‘trade’ or ‘business’ within the meaning of § 1301(b)(1)." Cent. States, Se. & Sw. Areas Pension Fund v. Nagy , 714 F.3d 545, 550 (7th Cir. 2013) ; see also Bd. of Trustees, Sheet Metal Workers’ Nat. Pension Fund v. Delaware Valley Sign Corp. , 945 F. Supp. 2d 649, 653 (E.D. Va. 2013). As the Seventh Circuit has observed, § 1301(b)(1) serves to "prevent businesses from shirking their ERISA obligations by fractionalizing operations into many separate entities." Cent. States Se. & Sw. Areas Pension Fund v. Messina Products, LLC , 706 F.3d 874, 878 (7th Cir. 2013) (citation omitted). In Messina Products , an individual defendant held a controlling interest in a closely-held LLC, which was subject to withdrawal liability, and owned a parcel of land which he leased to the withdrawing LLC. The Seventh Circuit held that the landlord-owner qualified as a "trade or business" under § 1301(b)(1), and was therefore liable for the LLC's withdrawal liability, because the leasing activity was effectively "an extension of the business operations of ... the withdrawing employer, and was a means to fractionalize [the withdrawing employer's] assets." Id. at 883.
It is also worth noting that the Seventh Circuit concluded, persuasively, that leasing activity qualifies as a trade or business irrespective of whether the landlord-owner collects regular rent payments. In the event that the owner does collect rent from her business, the owner "profit[s] directly from the rent payments." Messina Products , 706 F.3d at 883. And in the event that the owner does not collect rent, she still gleans economic benefits from the arrangement, both through potential tax deductions and the fact that her business operates rent-free. Id.
The operative facts of this case are indistinguishable from those at issue in Messina Products . Here, as in Messina Products , Defendant held a controlling ownership interest in both Bishop Metals and the Hays Avenue Property, where Bishop Metals operated. Moreover, Defendant concedes that she leased the Hays Avenue Property to Bishop Metals. There is therefore no doubt that Bishop Metals and the leasing of the Hays Avenue Property were enterprises under common control, given that the same individual, Defendant, held controlling interests in each. Moreover, there is no doubt that Defendant's leasing of a commercial property to Bishop Metals constituted a "trade or business," under the persuasive rationale of Messina Products and other decisions. To hold otherwise would incentivize ERISA employers to fractionalize their assets, placing property outside the reach of parties entitled to collect withdrawal liability, which is the very conduct § 1301(b)(1) serves to combat.
Accordingly, the undisputed factual record in this case compels the conclusion that Defendant, as a landlord to Bishop Metals, qualifies as a trade or business under common control with Bishop Metals pursuant to 29 U.S.C. § 1301(b)(1). Thus, Defendant is jointly and severally liable for Bishop Metals's withdrawal liability, and summary judgment must be granted for Plaintiff.
III.
Accordingly, for reasons stated in this Order, It is hereby ORDERED that Plaintiff's uncontested Motion for Summary Judgment (Dkt. 12) is GRANTED.
It is further ORDERED that judgment is entered against Defendant and in favor of Plaintiff on Count I of the Complaint in the amount of $604,628.09, which consists of (i) $469,396.83 in ERISA withdrawal liability, (ii) $41,351.89 in interest as of February 25, 2022, and (iii) $93,879.37 in liquidated damages, as well as any additional interest that accrues at the rate of 0.0205%, compounding daily from February 25, 2022, on the outstanding withdrawal liability.
It is further ORDERED that, if Plaintiff seeks to collect reasonable attorney's fees, to which Plaintiff is entitled under 29 U.S.C. § 1132(g), Plaintiff must file an appropriate motion no later than Monday, May 9 at 5:00 p.m.
It is further ORDERED that disposition of any motion with respect to attorney's fees is REFERRED to Magistrate Judge Davis pursuant to 28 U.S.C. § 636 for all further proceedings and for preparation of a prompt report and recommendation.
The Clerk of Court is directed to enter Rule 58 judgment in favor of Plaintiff and against Defendant, and to place this matter among the ended causes.