In the
United States Court of Appeals
For the Seventh Circuit

Nos.   00-3648 and 00-3870

Operating Engineers Local 139 Health
Benefit Fund, et al.,

Plaintiffs-Appellants, Cross-Appellees,

v.

Gustafson Construction Corporation,

Defendant-Appellee, Cross-Appellant.

Appeals from the United States District Court
for the Eastern District of Wisconsin.
No. 96 C 956--Thomas J. Curran, Judge.

Argued June 6, 2001--Decided July 20, 2001



  Before Fairchild, Bauer, and Posner,
Circuit Judges.

  Posner, Circuit Judge. The plaintiffs in
this suit under ERISA and section 301 of
the Taft-Hartley Act are nine
multiemployer pension and welfare funds
established pursuant to collective
bargaining agreements. The funds are com
plaining about delinquent contributions
by a small Wisconsin construction
company, between 1993 and 1998, and they
appeal from a grant of summary judgment
largely in the defendant’s favor. The
cross-appeal, which complains that the
attorneys’ fees awarded by the district
court were excessive in view of the
plaintiffs’ lack of success on the
merits, is premature on the view we take
of the plaintiffs’ appeal. There are some
differences in the issues raised by the
different funds, but for the sake of
simplicity, and without affecting the
legal analysis, we’ll be able with one
exception to confine our discussion to
the fund related to the laborers’ union.

  The defendant failed to make
contributions during the four-year period
covered by the complaint on the schedule
set forth in its collective bargaining
agreement with the union. This much is
conceded, but the district court
permitted the defendant to offset against
the fund’s claim the amount by which the
contributions sought by the fund exceeded
the level of employer contributions
specified in the 1991 collective
bargaining contract. Although that
contract expired in 1993, it contained an
"evergreen" clause: if neither party
terminated the contract, it would be
renewed automatically. The union
negotiated with other employers a
successor contract increasing the amount
of the required employer contributions,
and submitted the new contract to the
defendant too, but for unexplained
reasons the defendant never signed it.
Nevertheless the union billed the
defendant for contributions at the new,
higher rates specified in the successor
contract--and the defendant paid, without
a murmur (albeit often late), throughout
the period embraced by the suit. It
claims to have paid by mistake, having,
it argues, by virtue of the evergreen
clause no contractual obligation to
contribute to the fund at any rate higher
than that specified in the 1991 contract;
and therefore it was entitled to the
offset that the district court allowed
it.

  This is wrong on two grounds. The first
is that the defendant’s conduct in paying
the higher rates uncomplainingly shows
that it acquiesced in a modification of
the 1991 contract, accepting at least so
much of the successor contract that the
union had tendered to it as established a
new schedule of employer contributions to
the fund. Nothing in the law of contracts
requires that a contract, whether
original or modified, must be signed to
be enforceable. The contract needn’t be
in writing; if it is in writing, it
needn’t be signed, provided there’s other
evidence of acceptance, for example (a
very pertinent example) by performance,
In re Vic Supply Co., Inc., 

,
932 (7th Cir. 2000); and if the contract
is within the statute of frauds, a
memorandum of the essential terms, signed
by the party sought to be held to the
contract, will suffice to make it
enforceable. E.g., Consolidation
Services, Inc. v. KeyBank National Ass’n,

, 819-20 (7th Cir. 1999). No
statute of frauds defense is raised here-
-doubtless because the fund’s partial
performance, in paying benefits in
accordance with the new schedule, took
any contractual modification pursuant to
which they were paid out of the scope of
the statute of frauds. E.g., C.L. Maddox,
Inc. v. Coalfield Services, Inc., 

, 79 (7th Cir. 1995); compare Connor v.
Commissioner, 

, 741 (7th Cir.
2000). And this would mean, under general
common law principles, that all that was
required to make a modification of the
defendant’s obligations enforceable was
that it be supported by consideration,
Contempo Design, Inc. v. Chicago & N.E.
Ill. District Council of Carpenters, 

, 550 (7th Cir. 2000) (en banc);
United States v. Stump Home Specialties
Mfg., Inc., 

, 1121-22 (7th
Cir. 1990), and that acceptance of the
modification be manifested with
sufficient definiteness to enable a judge
or jury to conclude with reasonable
confidence that, yes, it was accepted.
Autotrol Corp. v. Continental Water
Systems Corp., 

, 692 (7th
Cir. 1990).

  These are general common law principles
that we’ve been reciting, however, and
the common law that the federal courts
have devised to govern disputes arising
out of collective bargaining contracts
and ERISA plans does not coincide at
every point with the general law. For
example, the rule whose vitality we
questioned in Autotrol, 

contractual clauses forbidding
modification other than by a signed
writing unenforceable is inapplicable to
collective bargaining contracts for the
reasons explained in Martinsville Nylon
Employees Council Corp. v. NLRB, 

, 1267-68 (D.C. Cir. 1992), and even
more clearly to ERISA plans. For while
the plan itself doesn’t have to be in
writing, James v. National Business
Systems, Inc., 

, 720 (7th
Cir. 1991); Jay Conison, Employee Benefit
Plans in a Nutshell 199 (2d ed. 1998);
but cf. Sandstrom v. Cultor Food Science,
Inc., 

, 797 (7th Cir. 2000)
(though if it is established by a
collective bargaining agreement the
employer’s required contributions must be
specified in a written agreement, 29
U.S.C. sec. 186(c)(5)(B), in order to
prevent diversion of pension fund moneys
to union officials, Arroyo v. United
States, 

, 425-26 (1959)),
modifications have to be in writing in
order to protect the plan’s financial
integrity. Downs v. World Color Press,

, 805 (7th Cir. 2000); Plumb
v. Fluid Pump Service, Inc., 

, 856 (7th Cir. 1997); Pohl v.
National Benefits Consultants, Inc., 

, 128 (7th Cir. 1992).

  This purpose implies, it is true, a
limitation to cases in which plan
participants or beneficiaries are seeking
larger benefits than the plan authorizes.
See Doe v. Blue Cross & Blue Shield
United of Wisconsin, 

, 875-76
(7th Cir. 1997); Pohl v. National
Benefits Consultants, 

, 956
F.2d at 128. And that is not the case
here. But this is of no moment, because
despite appearances the issue here is not
oral modification. The modified schedule
of required contributions appears in the
collective bargaining agreement that the
union tendered to the defendant--a
written agreement. That was an offer and
the question is whether the defendant
accepted the offer. Acceptance, as we
noted earlier, can be manifested by
conduct as well as by words. (For
pertinent examples, see Robbins v. Lynch,

, 332 (7th Cir. 1988); Brown
v. C. Volante Corp., 

, 354-55
(2d Cir. 1999); compare Firesheets v.
A.G. Building Specialist, Inc., 

, 731-32 (5th Cir. 1998).) It was
here. The overpayments that the defendant
made to the fund month after month after
month were not trivial--they averaged
$1,375 a month, 18.5 percent of the
average monthly remittance, and remember
that the defendant is a small company (it
hasn’t told us how small). It is unlikely
that the defendant, a corporation not a
hapless individual, simply failed to
notice that it was being billed for much
greater contributions to employee welfare
funds than called for in the 1991
contract.

  We add for what it’s worth (the parties
make nothing of the point) that the
monthly remittance reports accompanying
these payments contained a declaration
signed by the defendant that it "agree[d]
to be bound by all of the provisions
(including making payments) relating to
pension, health & welfare and vacation
funds, as contained in the Milwaukee area
multi-employer labor agreements covering
employees in the trade for which this
report is made, for our employees in such
trade, for the duration of such labor
agreements, and, further, agree[d] to be
bound by the applicable trust
agreements." Boilerplate it was, but it
was entitled to some weight, Brown v. C.
Volante 

, 194 F.3d at 354-55;
but cf. Firesheets v. A.G. Building
Specialists, 

, 134 F.3d at
732, and maybe a lot, as we suggested in
Moriarty v. Larry G. Lewis Funeral
Directors Ltd., 

, 775 (7th
Cir. 1998). People generally are held to
the agreements they sign and are not
permitted to fob them off as
"boilerplate" without invoking fraud,
unconscionability, or mutual mistake as a
ground for walking away from their
contract. Moriarty itself, however,
suggests that the language we have quoted
may be included on the remittance form
merely to "assure the Funds that the
contributions are lawful--for [as we
noted earlier in this opinion] no
employer may contribute to a union
pension plan without a ’written
agreement’ under sec. 302(c)(5)(B) of the
Labor-Management Relations Act, 29 U.S.C.
sec. 186(c) (5)(B)." 

event, merely because a payment
is made by mistake doesn’t give the payor
an automatic right to the return of the
payment, and so doesn’t conclude the
issue of offset. The payor’s rights are
governed by the principles of the law of
restitution. The propriety of the courts’
incorporating those principles into the
common law of ERISA cannot be doubted.
Central States, Southeast & Southwest
Areas Health & Welfare Fund v. Pathology
Laboratories of Arkansas, P.A., 

, 1254 (7th Cir. 1995); Luby v.
Teamsters Health, Welfare & Pension Trust
Funds, 

, 1186 (3d Cir.
1991). Most of the federal circuits, ours
included, have gone so far as to hold
that these principles allow suits by
employers for overpayments, even though
ERISA does not explicitly create such a
right of action, e.g., UIU Severance Pay
Trust Fund v. Local Union No. 18-U, 

, 512-13 (7th Cir. 1993); State
Street Bank & Trust Co. v. Denman Tire
Corp., 

, 89 (1st Cir. 2001);
Young America, Inc. v. Union Central Life
Ins. Co., 

, 548 (8th Cir.
1996); Jamail, Inc. v. Carpenters
District Council of Houston Pension &
Welfare Trusts, 

, 304-05 (5th
Cir. 1992); Plucinski v. I.A.M. National
Pension Fund, 

, 1057-58 (3d
Cir. 1989); contra, Dime Coal Co. v.
Combs, 

, 399 n. 7 (11th Cir.
1986), although it authorizes ERISA
plans, within a tight time limitation, to
return overpayments made as a consequence
of a factual or legal mistake. 29 U.S.C.
sec. 1103(c)(2)(A)(ii); Teamsters Local
639-Employers Health Trust v. Cassidy
Trucking, Inc., 

, 867 (4th
Cir. 1981). The existence of jurisdiction
over the claim for restitution is even
less problematic here, since it is
notadvanced as the basis for a lawsuit
but merely as an offset to the fund’s
claims, which are for penalties and
interest for delinquent contributions.
Indeed, the claim of restitution here
could easily be recharacterized as simply
a defense of mistake, occasionally
allowed in contract cases even when it is
unilateral. See, e.g., Lawyers Title Ins.
Corp. v. Dearborn Title Corp., 

, 1164-65 (7th Cir. 1997); Building
Service Employees Pension Trust v.
American Building Maintenance Co., 

, 578 (9th Cir. 1987); In re
Rigden, 

, 732 (9th Cir.
1986); Restatement (Second) of Contracts,
sec. 153(a) (1981). American Building
Maintenance was an ERISA case.

  But jurisdiction does not imply merit.
If restitution would be inequitable, as
where the payor obtained a benefit that
he intends to retain from the payment
that he made and now seeks to take back,
it is refused. (For the general
principle, see Invest Almaz v. Temple-
Inland Forest Products Corp., 

, 66 (1st Cir. 2001), and for its
application to claims based on
overpayments to ERISA funds, Construction
Industry Retirement Fund v. Kasper
Trucking, Inc., 

, 467 (7th
Cir. 1993); Central States, Southeast &
Southwest Areas Health & Welfare Fund v.
Pathology Laboratories of Arkansas, 

, 71 F.3d at 1254-55; cf. Teamsters
Local 639-Employers Health Trust v.
Cassidy Trucking, 

, 646 F.2d
at 867-68.) This is such a case. The
higher contributions required under the
successor contract were tied to higher
pension and welfare benefits for the
defendant’s employees. This was a benefit
to the defendant, since the greater the
pension and welfare benefits the
employees received, the less the
employees were likely to demand in the
way of wages. The market determines
compensation, which is the sum of wages
and fringe benefits, and so an increase
in one of these components will reduce
the pressure on the employer to increase
the other.

  It is true that the record contains no
evidence that the higher contributions
demanded in the successor contract
resulted in greater benefits actually
received by the defendant’s employees,
but that is immaterial for two reasons.
The first is that most of the benefits
are in the nature of insurance or are
otherwise contingent or (as in the case
of pension benefits) deferred, so that
immediate receipt is not expected; and
insurance is not illusory just because
the insured event never occurs. Second,
had the defendant refused to contribute
at the new rate to the fund, the union
would undoubtedly have terminated the
(automatically renewed) 1991 collective
bargaining agreement, as it was entitled
to do, thus depriving the defendant’s
employees of any pension and welfare
benefits until the defendant knuckled
under and signed the successor contract.
By its apparent acquiescence in the
benefits provisions of that contract, the
defendant misled the union into thinking
that the defendant was content with the
new schedule of payments, and so the
union forewent its alternative remedy of
terminating coverage. The defendant’s
conduct precludes a claim for
restitution.

  We turn now to the funds’ claim, not for
the contributions that the defendant
never paid--the district court allowed
that claim though it whittled it down to
very little with the offset that it
erroneously granted--but for interest and
penalties on the delinquent
contributions. ERISA provides that in a
suit for contributions the fund is
entitled not only to the contributions
but also to interest on them at the
interest rate "provided under the plan"
plus an amount equal to the greater of
that interest or "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
[unpaid contributions]." 29 U.S.C. sec.
1132(g)(2). The laborers’ plan fixes the
interest rate at the legal maximum or 1.5
percent a month (not compounded, the
parties agree), whichever is lower. The
plan also provides for liquidated damages
of 20 percent. The other plans provide
only that a delinquent employer "shall be
assessed liquidated damages and interest
as determined by the Trustees," but the
trustees had fixed the interest rate at
1.5 percent a month also and liquidated
damages at 20 percent.

  Holding without explanation that the 1.5
percent rate was "illegal," the court
awarded interest to the fund at a 1
percent rate and required that the
interest be calculated on a daily rather
than, as sought by the fund, a monthly
basis. The significance of this
difference is that "calculated on a
monthly basis" means that the employer
would have to pay a full month’s interest
no matter how short the delinquency--it
might be only a day--whereas the
courtrequired the fund to prorate the
interest according to the number of days
of the delinquency. The court refused to
award any liquidated damages at all. Its
ground was that the fund had failed to
show that 20 percent of unpaid
contributions was a reasonable estimate
of the damages caused to the fund by
delay in payment, and therefore the so-
called liquidated damages were actually a
penalty and the common law does not
permit penalty clauses in contracts.

  The monthly calculation does seem a
little odd, as it means that once the
employer misses the due date of a
contribution by one day (or one minute,
for that matter), he might as well delay
until the last day of the month, since
his interest expense is no greater and so
he gets a month’s use of the money for
zero interest. On the other hand the
penalty for missing the due date by a day
or a few days is greatly reduced by daily
proration, which in the case of a delay
of one day reduces the interest he must
pay for being late from 1.5 percent (or 1
percent if the judge was right to cap the
interest at that rate) to 1/28th to
1/31st of that amount, depending on the
length of the month.

  How these effects balance out so far as
inducing prompt payment is not for us, or
the district court, to decide, and our
point in mentioning the different
incentives created by the two methods of
calculating interest is merely to confirm
that neither is so crazy that it can be
ruled out as arbitrary and capricious. We
think the plans must have intended to
leave details of this sort to the
discretion of the trustees. See British
Motor Car Distributors, Ltd. v. San
Francisco Automotive Industries Welfare
Fund, 

, 376 (9th Cir. 1989);
Teamster’s Local 348 Health & Welfare
Fund v. Kohn Beverage Co., 

,
321 (6th Cir. 1984). In fact we know it,
because the plans provide that the
trustees "shall have full power to
construe the provisions of this
Agreement, the terms used herein and the
by-laws and regulations issued
thereunder. Any such determination and
any such construction adopted by the
Trustees in good faith shall be binding
upon all of the parties hereto and the
Beneficiaries hereof. No matter
respecting the foregoing or any
difference arising thereunder or any
matter involved in or arising under this
Trust Agreement shall be subject to the
grievance or arbitration procedure
established in any collective bargaining
agreement between the Association and the
Union." And, further, "All questions or
controversies, of whatsoever character,
arising in any manner or between any
parties or persons in connection with the
Trust Fund or the operation thereof . . .
whether as to the construction of the
language or meaning of the by-laws, rules
and regulations adopted by the Trustees
or this instrument, or as to any writing,
decision, instrument or accounts in
connection with the operation of the
Trust Fund or otherwise, shall be
submitted to the Trustees . . . and the
decision of the Trustees . . . shall be
binding upon all persons dealing with the
Trust Fund." (This is the language of one
plan; the language of the others that
appear in the record is similar.) This
explicit grant of discretion brings into
play the principle of Herzberger v.
Standard Ins. Co., 

, 331 (7th
Cir. 2000), that explicit grants of
discretion to plan administrators to
construe the plan are judicially
reviewable only for abuse of discretion,
which is to say deferentially.

  As for the district court’s action in
reducing the interest rate from 1.5 to 1
percent, there was no basis in law for
that ruling either. The court may have
been influenced by Wisconsin’s usury law,
which fixes 12 percent as the maximum
interest rate with various exceptions two
of which are applicable here--the
exception for corporations, Wis. Stat.
sec. 138.05(5); Sundseth v. Roadmaster
Body Corp., 

, 921 (Wis.
1976), and the exception for cases in
which a higher rate is authorized by
other statutes. Wis. Stat. sec.
138.05(1). ERISA, whose framers were
naturally concerned with the solvency of
ERISA funds if only because the
obligations of those funds to their
participants and beneficiaries are (up to
a point) insured by the federal
government, see 29 U.S.C. sec. 1302(a);
Artistic Carton Co. v. Paper Industry
Union-Management Pension Fund, 

, 1348 (7th Cir. 1992), is a statute
that, when interpreted in light of this
purpose and the fact that employers are
not consumers, clearly authorizes a
higher rate, namely the rate that the
parties agree to (here they agreed to
delegate the fixing of the rate to the
trustees of the fund). Cf. Iron Workers
District Council of Western New York &
Vicinity Welfare & Pension Funds v.
Hudson Steel Fabricators & Erectors,
Inc., 

, 1508 (2d Cir. 1995).
So the Wisconsin usury law is
inapplicable by its own terms, and we
therefore needn’t decide whether, if
applicable, it would be preempted by
ERISA. It might not be if--but probably
only if--the phrase "maximum rate
permitted by law" in the plan was
intended to incorporate the state’s usury
limit, as presumably the parties would be
free to do. That is not argued.

  As for applying the common law’s
doctrine making contract penalty clauses
unenforceable to liquidated-damages
provisions in ERISA plans, the doctrine
obviously is not intended to apply to
statutory penalties and if it did so
apply, it would be preempted. See Idaho
Plumbers & Pipefitters Health & Welfare
Fund v. United Mechanical Contractors,
Inc., 

, 216-17 (9th Cir.
1989); In re Michigan Carpenters Council
Health & Welfare Fund, 

, 390
(6th Cir. 1991). Not only because by
substituting a numerical limitation for
the nebulous inquiry required by the
common law ERISA has left little room for
the common law doctrine usefully to
occupy, but also and more important
because section 1132(g)(2) is a penalty
statute rather than a statute merely
regulating contract damages. Central
States, Southeast & Southwest Areas
Pension Fund v. Gerber Truck Service,
Inc., 

, 1156 (7th Cir. 1989)
(en banc); Central States, Southeast &
Southwest Areas Pension Fund v. Lady
Baltimore Foods, Inc., 

,
1341 (7th Cir. 1992). This is indicated
by its permitting ERISA plans to choose
between providing for liquidated damages
and providing for double interest, the
doubling being a penalty since it is
arbitrary and inflexible rather than
being an effort to estimate the likely
damages to a particular fund in
particular circumstances for particular
delays. The statute thus provides
alternative penalties, one of which is
liquidated damages up to 20 percent (or
even higher, if federal or state law
permits, 29 U.S.C. sec. 1132(g)(2)--
another indication that state common law
cannot be used to reduce the liquidated
damages below 20 percent). So the fund
was entitled to choose between double
interest, that is, 18 percent x 2 = 36
percent, and single interest plus
liquidated damages, 18 percent + 20
percent = 38 percent, and, naturally, it
chose the latter combination, as was its
right.

  The interest and liquidated-damages
provisions of ERISA apply, however, only
to contributions that are unpaid at the
date of suit (not the date of judgment,
as argued by the defendant). Northwest
Administrators, Inc. v. Albertson’s,
Inc., 

, 257 (9th Cir. 1996);
Iron Workers District Council of Western
New York & Vicinity Welfare & Pension
Funds v. Hudson Steel Fabricators &
Erectors, 

, 68 F.3d at 1506-
07; Carpenters & Joiners Welfare Fund v.
Gittleman Corp., 

, 478 (8th
Cir. 1988); contra, In re Michigan
Carpenters Council Health & Welfare 

, 933 F.2d at 388-89. Some of the
late contributions the defendant finally
paid before the suit was brought, but
their lateness violated the terms of the
plan, thus entitling the fund to enforce
the plan’s provisions imposing interest
and liquidated damages on delinquent
contributions. Since section 1132(g)(2)
is inapplicable to these claims, however,
they must be adjudicated under common
law--but federal common law, which
governs the interpretation of ERISA
plans, Franchise Tax Board v.
Construction Laborers Vacation Trust for
Southern California, 

, 24 n. 26
(1983); Central States, Southeast,
Southwest Areas Pension Fund v. Kroger
Co., 

, 911 (7th Cir. 2000)--
not Wisconsin common law. In re Michigan
Carpenters Council Health & Welfare 

, 933 F.2d at 390; Idaho Plumbers &
Pipefitters Health and Welfare Fund v.
United Mechanical Contractors, 

, 875 F.2d at 215-18.

  Carpenters & Joiners Welfare Fund v.
Gittleman 

, 857 F.2d at 478-
79, is contrary so far as liquidated
damages is concerned--it holds that
section 1132(g)(2) preempts liquidated
damages for late, but not that late,
contributions. We can’t see the sense of
that; the harm to the fund is not
affected by the happenstance of when suit
is brought in relation to the payment of
the delinquent contributions--though if
the Gittleman decision were correct it
would give the delinquents a strong
incentive to pay up when suit loomed!

  The federal common law of ERISA may
include a concept of unconscionability
that would entitle an employer to
complain if a fund’s trustees used the
power delegated to it by the plan to
establish a completely exorbitant
interest rate on delinquent
contributions. No case says that, but it
may be encompassed by the principle that
the trustees are not to act in an
arbitrary and capricious manner. However
that may be, 1.5 percent a month (or 18
percent a year) is not unconscionable--or
at least the defendant made no effort to
show that it was so exorbitant as to be
unconscionable in the circumstances, and
it is too late now for it to attempt to
do so. Indeed, it doesn’t even call it
"unconscionable," but merely
"oppressive," which has no legal
standing.

  And while the ban on contractual
penalties remains an established
principle of the law of contracts, it is
antiquated and should not be extended
into ERISA-land--though two courts have
done so already, see Idaho Plumbers &
Pipefitters Health & Welfare Fund v.
United Mechanical Contractors, 

, 875 F.2d at 217-18; In re Michigan
Carpenters Council Health & Welfare 

, 933 F.2d at 390, solely on the
basis of ambiguous legislative history.
It is easy to assign nonexploitive
reasons for contractual penalties and
hard to give convincing reasons why in
the absence of fraud or unconscionability
consenting adults that are, moreover,
substantial organizations rather than
mere consumers should be prohibited from
agreeing to such provisions. We have
sounded this note before and will not
elaborate on it. See Lawyers Title Ins.
Corp. v. Dearborn Title Corp., 

, 1160-61 (7th Cir. 1991); Lake River
Corp. v. Carborundum Co., 

,
1289 (7th Cir. 1985). Although it is
inapplicable to late contributions made
before the suit was filed, ERISA’s
penalties provision provides guidance to
what is a reasonable remedial scheme to
incorporate into an ERISA plan and
enforce in a suit to enforce the plan.

  To summarize, the funds are entitled to
relief in accordance with the analysis in
this opinion, and so the judgment must be
reversed and the case remanded. The
cross-appeal is dismissed because
attorneys’ fees will have to be
recomputed after the district court
determines the amount of money that the
defendant owes the plaintiffs.