CHARLES RONALD NORGLE, Judge, United States District Court.
When the Chrysler Group filed for bankruptcy in 2009, the unintended consequences rippled across the country and befell local car dealership owners and their employees. In this case, the Trustees of the Automobile Mechanics Industry Welfare and Pension Funds of the International Association of Machinists and Aerospace Workers AFL-CIO, Local 710 (the "Trustees") are fighting to preserve the welfare and pension benefits promised to their union members. Before the Court is the Trustees' motion for summary judgment; for the following reasons, it is granted.
The entity Dodge of Naperville Inc. owned and operated a Chrysler Group car dealership in Naperville, Illinois. Dodge of Naperville was a subsidiary of Burke Automotive
Article 11 of the CBA addressed welfare contributions and required Dodge of Naperville to make weekly contributions to the Welfare Fund at a rate that escalated annually. After August 1, 2008, Dodge of Naperville was required to pay $215.00 "per week for each employee to the Welfare Fund." CBA at 23, Dkt. [65-5]. The CBA also obligated Dodge of Naperville "to sign any Participation Agreement required by the Welfare Fund" as long as the Participation Agreement was not inconsistent with the CBA.
Following the terms of Articles 11 and 12, Burke signed separate Participation Agreements with the Pension and Welfare Funds on behalf of Dodge of Naperville on September 22, 2005. The two Participation Agreements are each a single page in length — six paragraphs — and are written verbatim. The Participation Agreements reiterate that Dodge of Naperville must pay contributions as delineated in the CBA. The Participation Agreements incorporate the terms of Trust Agreements that initially formed the Welfare and Pension Funds back in the 1950's, and have been amended since. And, the last substantive paragraph of the Participation Agreements warn that if Dodge of Naperville does not provide the Trustees with a timely termination notice, Dodge of Naperville "shall be bound to the provisions of this Agreement for the period of the next Collective Bargaining Agreement and thereafter until proper notice is given but in no event less than three years unless terminated by the Trustees." Pension Fund Participation Agreement at ¶ 6, Dkt. [65-6]; Welfare Fund Participation Agreement at ¶ 6, Dkt. [65-7]. The Participation Agreements also informed Dodge of Naperville that "[t]he rate at which contributions are to be made during any renewed term shall be set by the Board of Trustees."
As part of the Chrysler Group's bankruptcy reorganization in 2009, Chrysler planned to close roughly twenty-five percent of its dealerships around the nation. Chrysler originally selected Burke Automotive Group's facility in Lisle for closure. In the end, however, Burke convinced the Chrysler Group to permit him to temporarily close his Dodge of Naperville facility for seventeen months to allow him to remodel the Naperville dealership. Burke promised to resume operations at the Naperville
Before the Naperville dealership closed, and well in advance of the sixty-day notice deadline, the Union mailed a letter dated April 30, 2009 to an agent of Dodge of Naperville notifying the dealership of its "wishes to terminate the existing labor agreement for the purpose of negotiating the terms of a new labor agreement." The Union's Termination Letter at 1., Ex. 6, Dkt. [66-1]. The letter noted that the CBA did not expire until July 31, 2009. The attorney for Dodge of Naperville responded to the Union by fax, and mail, that Dodge of Naperville also "desire[d] ... to terminate [the CBA] on July 31, 2009." The Employer's Termination Letter at 1, Ex. 9, Dkt. [66-1]. There is no evidence in the record that Dodge of Naperville, Burke Automotive Group, Burke, or an agent thereof, sent a termination notice to the Trustees.
On June 20, 2009, Dodge of Naperville shuttered its facility, but offered employment to the six Union mechanics at the Lisle location. However, a major distinction existed between the two facilities; the employees at the Lisle dealership were not members of a union. The Union mechanics' prospective employment at the Lisle facility was conditioned on their ending their Union membership and waiving their Union-negotiated wages and benefits. Two of the six mechanics rejected the offer of employment at the Lisle facility; the other four took the offer and began working at the Lisle facility.
On July 8, 2009, the Union filed a complaint against Dodge of Naperville and Burke Automotive with the National Labor Relations Board (the "Board"), alleging that the relocation of the Union mechanics from Naperville to Lisle violated the National Labor Relations Act (the "NLRA" or the "Act"). On August 2, 2010, the Administrative Law Judge ("ALJ") ruled in favor of the Union. The ALJ found that Dodge of Naperville and Burke Automotive Group "constitute a single employer for the purposes of the Act and are jointly and severally liable for the violations of the Act." ALJ Decision at 25, Dkt. [65-9]. The ALJ also found that the manner in which the Employer relocated the Union mechanics violated Sections 8(a)(1), (3) and (5) of the Act. As a remedy, the ALJ recommended to the Board that the Employer be ordered to "honor the terms of the most recent collective bargaining agreement[,]" negotiate a new contract with the Union, and "make the [Union mechanics] whole for any losses of wages, health insurance benefits, vacation pay, pension benefits, and other benefits they may have incurred as a result of the unilateral changes...."
On November 17, 2010, Dodge of Naperville and two of the Union mechanics filed a Complaint in federal court against the Trustees seeking injunctive and declaratory relief. The Trustees subsequently filed a Cross-claim against Dodge of Naperville and Burke Automotive Group. Dodge of Naperville then moved to dismiss the Cross-claim. The Court denied Dodge of Naperville's motion and entered a stay pending the final resolution of the ongoing litigation before the Board.
The Board reviewed the ALJ's decision and made technical changes to conform the ALJ's decision to the Board's standard remedial language. The changes required the monetary damages to be paid with interest compounded daily and distinguished the Board's rationale from that of the ALJ. But the Board relied on the ALJ's factual findings, did not change the ALJ's legal conclusions, and ultimately "adopt[ed] the recommended Order of the [ALJ] as modified...." NLRB Decision at 4, Dkt. [65-11]. The Board also ordered the Employer to "remit all payments to
The Employer appealed the Board's Order and argued before the U.S. Court of Appeals for the D.C. Circuit on May 8, 2015. For reasons explained in the detailed opinion issued on August 4, 2015, the D.C. Circuit found that "all of [the Employer]'s arguments must be rejected" and the court affirmed the Board's Order in its entirety. D.C. Cir. Opinion at 12, Dkt. [65-12],
After roundtrip litigation from Chicago to Washington D.C., the parties returned to the proceedings before this Court. On December 4, 2015, the Court lifted the stay. The next week the Trustees filed an Amended Counterclaim against Dodge of Naperville and a Third-Party Complaint against Burke Automotive Group. On February 19, 2016, the parties stipulated that Dodge of Naperville's Complaint filed in November 2010 would be dismissed with prejudice, and only the Trustees' claims against Dodge of Naperville and Burke Automotive Group would remain. The Trustees' remaining claims allege that Dodge of Naperville and Burke Automotive Group are jointly and severally liable for violating Section 515 of the Employee Retirement Income Security Act ("ERISA"),
"Summary judgment is appropriate when `the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'"
But before the nonmoving party "can benefit from a favorable view of evidence, [it] must first actually place evidence before the courts."
The Trustees seek pecuniary recovery from the Employer solely pursuant to ERISA, not the NLRA. Specifically, they contend that the Employer violated Section 515 of ERISA, 29 U.S.C. § 1145, and, therefore, the Employer owes damages according to Section 502, 29 U.S.C. § 1132. The Trustees seek judgment in the amount of $574,572.67. The amount sought is itemized as: (1) $98,637.00 for pension payments not paid on behalf of the Union mechanics during the period of June 24, 2009 through April 30, 2016; (2) $207,475.00 for welfare payments not paid on behalf of the Union mechanics during the same period; (3) $196,802.66 in interest
Section 515 compels employers "to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement." 29 U.S.C. § 1145. Section 502 allows a multiemployer plan to bring a civil action to seek redress for ERISA violations.
As an initial matter, the Court applies the doctrine of collateral estoppel (also commonly referred to as issue preclusion) to the issues already litigated before the ALJ, the Board, and the D.C. Circuit Court of Appeals. "Collateral estoppel prohibits relitigation of an issue of fact or law when the issue is actually litigated, determined by a final judgment and essential to the judgment of a prior tribunal."
However, the ALJ, the Board, and the D.C. Circuit did not examine the nature of the contractual relationship between the Trustees and the Employer, nor what penalty to impose for the breach. Nor should they have, because "the Board could not authorize a remedy under ERISA."
There is also a division of judicial labor provided by the NLRA and ERISA. The division tasks federal district courts with interpreting the terms of the litigants' contractual relationship, but it "does not confer jurisdiction on district courts to determine whether an employer's unilateral decision to refuse to make postcontract contributions constitutes a violation of the NLRA."
To defend against summary judgment, the Employer advances four arguments. First, the Employer relies heavily on
Second, the Employer argues that there is "conclusive evidence" that "the CBA was terminated," so "there can be no doubt that the CBA, as of July 31, 2009, was
Since the
Third, the Employer argues that the Participation Agreements are not binding or enforceable because the agreements depend on the CBA for their viability. The Employer cites no legal authority in support of this proposition. Instead, the Employer makes several quick and undeveloped assertions. For example, the Employer asserts that the Participation Agreements lack consideration and that Burke did not intend to be legally bound by the agreements when he signed them. But these assertions are without citation to any evidence in the record. On its own, the Employer's failure to cite any legal authority or to adequately develop its argument undermines the Employer's position.
The Employer's fourth and final argument returns to the notion that
The Court now returns to the two distinct questions that the Trustees must answer affirmatively to be entitled to judgment in their favor: (1) whether a contractual relationship existed; (2) and whether a violation occurred.
In the event that "the Employer fails to provide timely notice[,] the Employer shall be bound to the provisions of [Participation Agreements] for the period of the next Collective Bargaining Agreement and thereafter until proper notice is given but in no event less than three years unless terminated by the Trustees." Pension Fund Participation Agreement at ¶ 6, Dkt. [65-6]; Welfare Fund Participation Agreement at ¶ 6, Dkt. [65-7]. A new CBA between the Union and the Employer has not been signed; there is no evidence that the Employer provided "proper," much less any, termination notice to the Trustees; and there is no evidence that the Trustees terminated the Participation Agreements. Therefore, the Court finds that the Participation Agreements are still valid, and a contractual relationship exists between the Employer and the Trustees.
The determination that a violation occurred is conspectable. Pursuant to the Participation Agreements, the Employer "agree[d] to make contributions on behalf of eligible employees...." Pension Fund Participation Agreement at ¶ 1, Dkt. [65-6]; Welfare Fund Participation Agreement at ¶ 1, Dkt. [65-7]. The Employer admits that it has not made welfare and pension contributions to the Trustees on behalf the Union mechanics since October 2010.
Having decided that Dodge of Naperville and Burke Automotive Group are jointly and severally liable for violating ERISA, the calculation of damages under Section 502 must be determined. To establish the amount of damages, the Trustees' calculation depends on: (1) the CBA; (2) the Participation Agreements; (4) the Trust Agreements; (5) a Rehabilitation Plan provided by the Pension Funds' actuary; (6) a certification from Steven Bukovac, who is the administrator of the Trustees' Welfare and Pension Funds and is responsible, in large part, for calculating the amount of damages sought; (7) and an affidavit from the Trustees' attorney regarding fees.
As explained, the CBA required the Employer to contribute $215 and $89 per workweek, per employee to the Welfare and Pension Funds, respectively. In 2012, the Trustees adopted the Rehabilitation Plan, which changed the contribution rate owed to the Pension Fund from $89 to $104 per workweek, per employee. The Rehabilitation Plan took effect on January 1, 2014, and the pension contribution amount increases annually until December 31, 2024. The contribution amount in 2016, for example, is $155 per workweek, per employee.
The circumstances in this case, i.e., an increase in the contribution rate after the expiration of a CBA, are similar to
The Trustees have submitted evidence that the annual actuary report for the Pension Fund found: "As of January 1, 2012, the Plan is in critical status (Red Zone)." Actuarial Valuation Report at 2, Ex. H, Certification of Bukovac at 27, Dkt. [65-8]. Following the law promulgated in the Pension Protection Act of 2006, 26 U.S.C. § 432, the Trustees adopted a Rehabilitation Plan to aid in the financial stability of the Pension Fund. The Trustees were complying with Congressional mandates when they changed the contribution rates. By contrast, the Trustees' decision in
Finally, as the Trustees suggest, the Court orders Dodge of Naperville and Burke Automotive Group "to remit payroll records sufficient to determine the amount of contributions and resulting liquidated damages and interest owed for the period of May 1, 2016 through the date of the Judgment." Trustees' Mem. Supp. Mot. Summ. J. at 15, Dkt. [64]. Once the Trustees receive the updated payroll records and calculate the total amount of damages due under 29 U.S.C. § 1132, the Trustees may submit a proposed order to the Court for the entry of Judgment.
For the foregoing reasons, the Court hereby determines that Dodge of Naperville and Burke Automotive violated § 515 of ERISA and are jointly and severally liable to the Trustees for damages under § 502(g)(2). After calculating the updated amount of damages that are permitted by § 502(g)(2) and in accord with this Opinion, the Trustees may submit a proposed order to the Court for the entry of Judgment.