Call Henry, Inc. v. United States
125 Fed. Cl. 282
Fed. Cl.2016Background
- Call Henry, Inc. (CHI) held a multiyear services contract with NASA to provide maintenance/testing at a NASA center; the contract incorporated the economic provisions (wages and fringes) of a predecessor collective bargaining agreement (Teamsters Local 416).
- The contract included the SCA wage/fringe clauses and a price-adjustment clause (FAR 52.222-43) that could reimburse CHI for increases in wages/fringe benefits required by applicable wage determinations.
- CHI’s workforce decertified the Teamsters in 2012; CHI was deemed to have withdrawn from the Teamsters’ multiemployer pension plan and was assessed withdrawal liability under the MPPAA (originally ~$3.3M, later recalculated to ~$1.686M).
- CHI submitted a certified claim to NASA seeking reimbursement for withdrawal liability and related arbitration costs; NASA denied the claim and CHI sued in the Court of Federal Claims for breach of contract seeking about $1.9M.
- NASA moved to dismiss under RCFC 12(b)(6), arguing withdrawal liability is a statutory obligation (MPPAA/ERISA), not a contract fringe benefit, and that the United States is not an “employer” liable for withdrawal liability.
- The court held the reimbursement obligation in the contract does not extend to statutory withdrawal liability and that NASA is not an ‘‘employer’’ for withdrawal-liability purposes; it granted NASA’s motion to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contract obligated NASA to reimburse CHI for withdrawal liability | The incorporated CBA economic provisions + FAR price-adjustment clause required NASA to reimburse CHI for increased pension-related costs, including withdrawal liability | The contract only reimburses increases in wages/fringe benefits as defined by the SCA and FAR; withdrawal liability is not a contractual fringe | Court: Reimbursement obligation does not extend to withdrawal liability; contract did not obligate NASA to pay MPPAA withdrawal liability |
| Whether withdrawal liability qualifies as a "fringe benefit" under the SCA | CHI: withdrawal liability is an increased pension cost/fringe and thus reimbursable | NASA: withdrawal liability is imposed by MPPAA/ERISA and is expressly excluded from SCA "fringe benefit" treatment | Court: Withdrawal liability is statutory (MPPAA/ERISA), not an SCA fringe; 29 C.F.R. §4.171(c) excludes such benefits |
| Whether the United States (NASA) is an "employer" for ERISA/MPPAA withdrawal-liability purposes | CHI: NASA’s reimbursement practice and incorporation of CBA economic terms make NASA a contributing obligor / employer liable for withdrawal liability | NASA: Federal government is excluded from ERISA’s employer definition for Title I; reimbursement obligation differs from a direct contribution obligation under Title IV | Court: NASA is not an employer/contributing obligor for withdrawal-liability purposes; reimbursement ≠ contractual contribution |
| Whether NASA’s failure to pay withdrawal liability constituted breach of contract | CHI: failure to reimburse withdrawal liability breached the contract's price-adjustment/reimbursement obligations | NASA: no contractual duty to pay withdrawal liability; thus no breach | Court: No breach — withdrawal liability not covered by contract and NASA not an employer liable under ERISA/MPPAA |
Key Cases Cited
- K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., 714 F.3d 1277 (Fed. Cir.) (pleading standard discussion)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (motion-to-dismiss factual-allegation principles)
- Korea Shipping Corp. v. New York Shipping Ass'n-Int'l Longshoremen's Ass'n Pension Trust Fund, 880 F.2d 1531 (2d Cir.) (contributing-obligor standard for employer status)
- Transpersonnel, Inc. v. Roadway Express, Inc., 422 F.3d 456 (7th Cir.) (distinguishing reimbursement obligations from contribution obligations)
- Seaway Port Authority v. Duluth-Superior ILA Marine Ass'n Restated Pension Plan, 920 F.2d 503 (8th Cir.) (treatment of signatory/contributing employers)