929 F.3d 135
4th Cir.2019Background
- Four-C-Aire, a signatory to a collective bargaining agreement (CBA) with Sheet Metal Workers Local 58, agreed in the CBA to be bound by the Fund’s Trust Documents (including future amendments).
- The CBA expired on April 30, 2016; Four-C-Aire did not sign a successor agreement but continued operating in the covered jurisdiction.
- The Fund’s Trust Documents (pre-Amendment) imposed an exit contribution when an employer ceased to have an obligation to contribute, triggered an ERISA withdrawal event, and was not subject to statutory withdrawal liability (de minimis rule applies).
- The Trust Documents were amended while the CBA was in effect to add an express clause that an employer’s obligation to pay an exit contribution is independent of and survives the CBA’s termination.
- The Fund demanded an exit contribution of ~$97,601.01; Four-C-Aire refused and the Fund sued under ERISA §§ 502 and 515 (29 U.S.C. §§ 1132, 1145). The district court dismissed; the Fourth Circuit reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Four-C-Aire remained liable for an exit contribution after the CBA expired | Fund: CBA incorporated Trust Documents and their Amendment, which plainly require exit contributions that survive CBA expiration; § 515 permits enforcement of plan/CBA terms as written | Four-C-Aire: CBA’s obligations ended at expiration; incorporation did not survive because evergreen clause didn’t list incorporation; Fund’s Amendment not properly incorporated/unenforceable | The Fourth Circuit: Fund plausibly alleged liability—Trust Documents (and Amendment) created an obligation that survived CBA expiration and § 515 permits enforcement; dismissal reversed |
| Whether the Fund may rely on the Trust Documents (including amendments) rather than only the CBA text | Fund: § 515 authorizes enforcement of plan terms and representations in the CBA, including incorporated plan documents and subsequent amendments | Four-C-Aire: Only explicit CBA language can extend obligations beyond expiration; secondary documents cannot impose post-expiration obligations absent explicit CBA survival language | Court: Section 515 and the incorporated Trust Documents govern; incorporated and amended plan terms can create post-expiration obligations enforceable against the employer |
| Whether the complaint inadequately pleaded that the Amendment was validly adopted and incorporated | Fund: Allegation that Trust Documents “were amended” is sufficient at motion-to-dismiss stage; validity of amendment is an affirmative defense for later factual development | Four-C-Aire: Complaint lacks allegations that Four-C-Aire knew of or consented to the Amendment or describing amendment procedures | Court: Allegations suffice to survive Rule 12(b)(6); challenges to amendment process are defenses, not grounds for dismissal without factual record |
| Whether the Amendment (or the incorporation clause) is unenforceable as an illusory promise because Fund retained unilateral amendment power | Fund: Enforcement of amendment is permissible under § 515; unilateral amendment claims raise factual defenses | Four-C-Aire: Clause giving Fund amendment power is limitless and therefore illusory/unenforceable | Court: At pleading stage, illusoriness is premature to decide; complaint adequately alleges a contractual obligation to pay exit contribution |
Key Cases Cited
- Bakery & Confectionary Union & Indus. Int’l Pension Fund v. Just Born II, Inc., 888 F.3d 696 (4th Cir. 2018) (describing multiemployer pension plan structure and operation)
- Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Trust Fund for S. Cal., 508 U.S. 602 (1993) (explaining benefits and risks of multiemployer plans)
- Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717 (1984) (discussing withdrawal liability and plan solvency risks)
- Laborers Health & Welfare Trust Fund for N. Cal. v. Advanced Lightweight Concrete Co., 484 U.S. 539 (1988) (confirming trustees may sue under § 515/ 29 U.S.C. § 1145)
- Bd. of Trustees v. Ralph’s Grocery Co., 118 F.3d 1018 (4th Cir. 1997) (holding § 515 allows plans to enforce plan/standard-clause terms and reject employer defenses based on contrary CBA provisions)
- M & G Polymers USA, LLC v. Tackett, 135 S. Ct. 926 (2015) (interpreting CBA language under ordinary contract principles; parties may expressly extend obligations beyond expiration)