Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Bakery & Confectionary Union and Industry International Pension Fund v. Born

United States Court of Appeals, Fourth Circuit

April 26, 2018

BAKERY & CONFECTIONARY UNION & INDUSTRY INTERNATIONAL PENSION FUND; TRUSTEES OF THE BAKERY AND CONFECTIONARY UNION AND INDUSTRY INTERNATIONAL PENSION FUND, Plaintiffs - Appellees,
v.
JUST BORN II, INCORPORATED, d/b/a Goldenberg Candy Company, Defendant-Appellant.

          Argued: January 24, 2018

          Appeal from the United States District Court for the District of Maryland, at Greenbelt. Deborah K. Chasanow, Senior District Judge. (8:16-cv-00793-DKC)

         ARGUED:

          David Boris Rivkin, BAKER & HOSTETLER, LLP, Washington, D.C., for Appellant.

          Julia Penny Clark, BREDHOFF & KAISER, P.L.L.C., Washington, D.C., for Appellees.

         ON BRIEF:

          Jay P. Krupin, Mark W. DeLaquil, Elizabeth A. Scully, Richard B. Raile, BAKER & HOSTETLER LLP, Washington, D.C., for Appellant.

          Andrew D. Roth, BREDHOFF & KAISER, P.L.L.C., Washington, D.C., for Appellees.

          Before AGEE, WYNN, and THACKER, Circuit Judges.

          AGEE, CIRCUIT JUDGE.

         Just Born II, Inc. ("Just Born"), a candy manufacturer, appeals the district court's judgment requiring it to pay delinquent contributions into the Bakery and Confectionary Union and Industry International Pension Fund (the "Pension Fund"), as well as interest, statutory damages, and attorneys' fees. It contends, first, that the district court misapplied the federal statute governing multiemployer pension funds in critical status and, second, that the court erred in holding that it had failed to plead adequately its affirmative defenses. For the reasons set out below, we affirm the judgment of the district court.

         I.

         Just Born and the Bakery, Confectionary and Tobacco Workers International Union, Local Union 6 (the "Union") were parties to a collective bargaining agreement (the "CBA") governing employment at Just Born's Philadelphia, Pennsylvania, confectionary plant from March 1, 2012, to February 28, 2015. The CBA required Just Born to contribute to the Pension Fund, which is an employee benefit plan and multiemployer pension fund governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461.[1] These contributions were to be "paid from the first day the employee begins working in a job classification covered by" the CBA. J.A. 27.

         While the CBA was still in effect, the Pension Fund's actuaries certified it to be in critical status, a designation based on statutory guidelines indicating the potential that the Pension Fund's assets and expected contributions would be insufficient to meet its projected future obligations. See 29 U.S.C. § 1085(b)(2). A critical-status designation triggers statutory safeguards, including the requirement that the plan sponsor "adopt and implement a rehabilitation plan" designed to return the plan to financial stability and bring it out of critical status. § 1085(a)(2)(A).[2] To accomplish this objective, the rehabilitation plan must adopt revised schedules of reduced benefits and increased contributions. See § 1085(e).

         As the plan sponsor, the Pension Fund's Board of Trustees developed a rehabilitation plan as required for multiemployer plans that are in critical status. In late 2012, Just Born and the Union selected a revised contribution schedule that, like the CBA, required Just Born to "contribute for every hour or portion of an hour, beginning on the first day of employment, that a person . . . works in a job classification that is covered by the" CBA. J.A. 60. In addition, the revised schedule required Just Born to increase its contributions to the Pension Fund by 5% each year. As a practical matter, because the CBA required Just Born to participate in the Pension Fund, the Fund's critical-status designation altered the nature of Just Born's obligations not only under its agreement with the Pension Fund, but also under its CBA with the Union.

         Just Born contributed to the Pension Fund under the revised schedule without incident until negotiations for a new CBA with the Union fell through. As part of the negotiations for a new agreement, Just Born demanded the new CBA not require it to contribute to the Pension Fund for newly hired employees. Citing concerns about the Pension Fund's solvency and management, Just Born proposed to contribute to a separate 401(k) plan for such new employees, but to continue contributing to the Pension Fund- which was still operating under the rehabilitation plan schedules-for existing employees.

         The Union would not agree to those terms, and, as a result, Just Born declared a good-faith impasse. Relying on the principle from federal labor law that permits an employer to act upon a good-faith impasse, Just Born unilaterally implemented the terms of its last, best offer to the Union. See AMF Bowling Co. v. NLRB, 63 F.3d 1293, 1299 (4th Cir. 1995) ("When the parties are thus without a collective bargaining agreement, having made good faith efforts to reach one, the employer may impose its own terms and conditions of employment unilaterally."). Thus, while it continued to contribute to the Pension Fund under the rehabilitation plan for existing employees, Just Born contributed nothing to the Fund for newly hired employees. Instead, Just Born contributed to a separate 401(k) plan for any employee who began working after November 2, 2015.

         The Pension Fund[3] filed a complaint in the United States District Court for the District of Maryland seeking to compel Just Born to contribute to it under the rehabilitation plan for all employees, including any new hires. It alleged that 29 U.S.C. § 1085(e)(3)(C)(ii) (governing subsequent contributions schedules for plans in critical status) (the "Provision"), coupled with the terms of the expired CBA and the agreed-to rehabilitation plan's revised schedules, required Just Born to continue making contributions for all employees, including those individuals hired after it declared an impasse.

         In its amended answer, Just Born denied the applicability of the Provision and raised several affirmative defenses. Relevant to this appeal, Just Born contended that, once the CBA expired and the impasse occurred, it was not a "bargaining party" as defined by 29 U.S.C. § 1085(j)(1) and, thus, that the Provision did not apply to it. Further, Just Born asserted a series of affirmative defenses: fraudulent and fraudulently induced material misrepresentation; fraudulent and intentional material misrepresentation; unjust enrichment; unclean hands; and an unspecified defense of "legally defective and unlawfully imposed" critical-status determination, rehabilitation plan, and revised schedule. These defenses all centered on the theory that the Pension Fund defrauded and deceived Just Born into accepting the critical-status designation and its consequences.[4]

         The Pension Fund moved for judgment on the pleadings on the issue of liability, and Just Born filed a cross-motion for judgment on the pleadings as to the entire case.

         The district court held in favor of the Pension Fund, concluding that Just Born was liable for contributions to the Pension Fund for its newly hired employees. See generally Bakery & Confectionary Union & Indus. Int'l Pension Fund v. Just Born II, Inc., Civil Action No. DKC 16-0793, 2017 WL 511911 (D. Md. Feb. 8, 2017). Relying on a plain reading of the Provision, the district court concluded it requires bargaining parties to an expired collective bargaining agreement to continue making payments consistent with the previously adopted rehabilitation plan and schedule. The court rejected Just Born's contention that the term "bargaining part[y]" did not apply to it because the company was no longer a party to an operative collective bargaining agreement. Under the district court's reading of the Provision, because Just Born "still was a bargaining party with respect to the expired" CBA, the statute applied to Just Born. Id. at *4. Consequently, the court concluded that unless Just Born could prove an affirmative defense, it would be liable to the Pension Fund for the delinquent contributions and associated costs.

         Turning to the affirmative defenses, the district court held that Just Born had failed to plead any of them with the particularity required for fraud-based allegations under Federal Rule of Civil Procedure 9(b).[5] First, the court observed that each defense was "dependent on [the Pension Fund] having fraudulently or intentionally misrepresented the Fund being in critical status as required or authorized by ERISA." Id. at *9 (internal alteration and quotation marks omitted). Second, it concluded that Just Born did not plead "the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby." Id. at *10. And, although Just Born generally alleged that the Pension Fund's actuary "departed from 'sound actuarial principles' in evaluating the financial health of the Fund, " id., the district court noted that it was

unclear whether [Just Born was] accusing the actuary of fraud by way of its certification or accusing the Trustees on the theory that they fraudulently induced [Just Born] to agree to a contribution schedule under the rehabilitation plan when they knew that the ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.