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Board of Trustees v. Four-C-Aire, Inc.

United States District Court, E.D. Virginia, Alexandria Division

April 21, 2017

Board of Trustees, Sheet M Workers' National Pension Fund, et al., Plaintiffs,
Four-C-Aire, Inc., Defendant.


          Hon. Liam O'Grady Judge.

         This ERISA case comes before the Court on Defendant's motion to dismiss the Amended Complaint for failure to state a claim upon which relief can be granted. (Dkt. No. 20). The Amended Complaint seeks to recover for three separate categories of payments: (1) delinquent payments and audit fees from before January 2015; (2) delinquent payments and reporting violations after January 2015; and (3) an exit contribution. The parties fully briefed the matter, and the Court held oral argument on April 7, 20! 6. For the reasons that follow, the Court hereby GRANTS IN PART and DENIES IN PART the motion. Specifically, the Court DENIES the motion to dismiss for the delinquent contributions and reporting that accrued after January 2015. but GRANTS the motion to dismiss for all of Count II (seeking an exit contribution) and the portion of Count 1 that was previously adjudicated in this Court.

         I. BACKGROUND[1]

         There are six Plaintiffs in this case. They are the separate and individual Boards of Trustees of the Sheet M Workers' National Pension Fund ("NPF"), the International Training Institute for the Sheet M and Air Conditioning Industry ("ITI"), the National Energy Management Institute Committee ("NEMI"), the Sheet M Occupational Health Institute Trust Fund ("SMOHIT"), the Sheet M Workers'1 International Association Scholarship Fund ("Scholarship Fund"), and the national Stabilization Agreement for the Sheet M Industry Trust Fund ("SASMI") (collectively, the "Funds" or "Plaintiffs"). The Boards of Trustees are "fiduciaries" with respect to the Funds. See 29 U.S.C. § 1132(a)(3). As such, under ERISA, they are empowered to bring this action on behalf of the Funds. 29 U.S.C. § 1132(g)(2) The NPF, ITI. and SASMI are jointly trusteed trust funds created and maintained under LMRA and "multiemployer plans as defined by ERISA."

         Defendant is a New York corporation that qualifies as an employer within the meaning of 29 U.S.C. § 152(2) and Section 3(5) of ERISA, 29 U.S.C. § 1002(37). Until the date of its withdrawal from the Funds on or about May 1, 2016, Defendant employed individuals represented by Sheet M Workers International Association Local Union No. 58 (Local Union No. 58). At all times relevant to this action, Defendant was bound by a collective bargaining agreement (CBA) between the Central New York Sheet M Contractors' Association, Inc. and Local Union No. 58. This CBA included all addenda and is referred to as the "Labor Agreement." Under the terms of this Labor Agreement, Defendant was also obligated to abide by the terms of the Trust Agreements, including all amendments thereto ("Trust Documents").

         Under the terms of the Labor Agreement and Trust Agreements, Defendant was obligated to "submit monthly remittance reports and pay fringe benefit contributions to the Funds for all hours worked or paid on behalf of Defendant's covered employees." Am. Compl. ¶ 12. Under these Agreements, contributions are deemed delinquent if they are past the fifteenth day of the month.

         A. Procedural History

         The Funds previously filed suit against Defendant in this Court in case number 1:15-cv-105-LMB-JFA ("Prior Litigation"). The Prior Litigation sought to recover unpaid contributions from November and December 2014, among other things. On June 5, 2015, the case terminated in a default judgment against Defendant. (Prior Litigation, Diet. No. 19).

         Plaintiffs filed their original complaint in this case on December 29, 2016. On February 14, 2017, Defendant filed amotion to dismiss. (Dkt. No. 11). Pursuant to Federal Rule of Civil Procedure 15(a)(1)(B), Plaintiffs filed an amended complaint on February 27, 2017. (Dkt. No. 18). In light of Plaintiffs' Amended Complaint, Defendant's original motion to dismiss was denied as moot, and Defendant then filed the instant motion to dismiss (Dkt. No. 20).

         B. Alleged Delinquent Payments

         After the Prior Litigation, Plaintiffs conducted a payroll audit of Defendant for the work months of May 2014 through March 2015. The audit revealed that, for December 2014, Defendant owed $282.56 more than the Funds received through their default judgment award. The corresponding audit fees were $1, 600. Under the Funds' "Procedure for the Collection of Contributions, " Defendant is bound to pay the delinquency as well as the audit fee.

         Defendant also failed to make contributions during the months of January through April 2016. From February to April 2016, Defendant failed to submit monthly reports as well. Plaintiffs estimate that Defendant owes at least $9, 734.40 in contributions for the time period of January through April 2016.

         Moreover, Defendant's contributions for the months of January 2015 to September 2015 were delinquent when paid. Plaintiffs assert that all of these delinquent payments amount to a violation of Section 515 of ERISA. As such, Plaintiffs seek the following remedies for these delinquent contributions: (1) interest at the rate of 0.0233% per day; (2) if not interest, then liquidated damages equal to 20% of the delinquent contributions; (3) attorneys' fees; (4) late fees amounting to the greater of 10% of the delinquent contributions or $50.00.

         C, Alleged Exit Contribution

         Article V, Section 6(a) of the Sheet M Workers' National Pension Fund Trust Document ("NPF Trust Document") imposes an "exit contribution" on any employer who (1) ceased to have an obligation to contribute to the NPF Trust, and (2) had an event of withdrawal under Title IV of ERISA as a result of the cessation of its obligation to contribute, but was not required to pay withdrawal liability. Am. Compl. ¶ 39. Under this provision, the employer shall pay the exit contribution so long as a new CBA is not executed after its CBA expires. Id. ¶ 40. The amount of the exit contribution is equal to the amount of the employer's contributions for a 36-month period prior to the month in which the employer ceased to have an obligation to contribute to the fund. It is due no later than the twentieth day of the month following the Fund's demand for an exit contribution. Id. ¶ 42. Plaintiffs allege that "an Employer's failure to make an Exit Contribution constitutes a delinquency and is treated in the same manner as any other delinquent contribution." Id. ¶43.

         On October 15, 2015, the NPF Trust Document "was amended" to include the following language:

By agreeing to contribute, continuing to contribute, or continuing to be obligated to contribute, to the Fund, each Employer agrees to pay an Exit Contribution in accordance with this Section 6. The Employer's obligation to pay an Exit Contribution under this Section 6 is independent of the Employer's collective bargaining agreement and continues to apply after the termination of the collective bargaining agreement (notwithstanding any language to the contrary in the collective bargaining agreement).

Id. ¶ 44 (quoting NPF Trust Document Art. V. § 6(b)). Because the Labor Agreement expressly incorporated the Trust Document, Plaintiffs allege that Defendant was bound to the terms of the amendment, which on its face survived the termination of the Labor Agreement.

         Defendant's Labor Agreement expired on April 30, 2016. On August 5, 2016, the NPF Trust assessed an exit contribution against Defendant and demanded payment by September 20, 2016. Based on the contribution history, the amount of the exit contribution was $97, 601.01. To date, Defendant has not made this payment.

         Accordingly, Plaintiffs seek the following remedies for the delinquent exit contribution: (1) interest at the rate of 0.0233% per day (at least $3, 506.02); (2) an amount equal to the greater of interest calculated at the above rate or liquidated damages equal to 20% of the delinquent contributions (at least $19, 520.02); and (3) attorneys' fees.


         In considering a motion to dismiss, the Court accepts as true all of the factual allegations contained in the complaint, construing them in the light most favorable to the plaintiff. United States ex rel Oberg v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131, 136 (4th Cir. 2014). To defeat the motion, the Plaintiff must allege enough allegations of fact "to state a claim for relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). In tins regard, bald legal assertions without factual support need not be accepted. Id. Indeed, the Court may not rely on mere "labels and conclusions" or the Complaint's "formulaic recitation of the elements of a given cause of action in deciding the motion. Id. at 555. In conducting its analysis, die Court may take judicial notice of matters of public record and may also consider documents attached to the complaint, "as well as those attached to the motion to dismiss, so long as they are integral to the complaint and authentic." Sec'y of State For Defence v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007).


         There are two counts alleged in the amended complaint: Count I alleges delinquent contributions, and Count II alleges liability for an exit contribution imposed by the NPF Trust. Both of these Counts allegedly arise under § 515 of ERISA, which provides:

Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.

29 U.S.C. § 1145. The relevant enforcement provisions are contained in 29 U.S.C. § 1132, which allows for specific remedies in claims brought by die fiduciaries of eligible plans. See 29 U.S.C. ยง ...

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