Stevens Engineers & Constructors, Inc. v. Local 17 Iron Workers Pension Fund

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit I.O.P. 32.1(b)

File Name: 17a0280p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

STEVENS ENGINEERS & CONSTRUCTORS, INC., ┐

Plaintiff-Appellee, │

│

> Nos. 16-4098/4099

v. │

│

│

LOCAL 17 IRON WORKERS PENSION FUND; LOCAL 17 │

IRON WORKERS PENSION FUND BOARD OF TRUSTEES, │

Defendants-Appellants. │

┘

Appeal from the United States District Court

for the Northern District of Ohio at Cleveland.

Nos. 1:15-cv-01965; 1:15-cv-01967—Donald C. Nugent, District Judge.

Argued: October 3, 2017

Decided and Filed: December 13, 2017

Before: CLAY, ROGERS, and SUTTON, Circuit Judges.

_________________

COUNSEL

ARGUED: Richard L. Stoper, Jr., GOLDSTEIN GRAGEL LLC, Cleveland, Ohio, for

Appellants. Daniel A. Richards, WESTON HURD LLP, Cleveland, Ohio, for Appellee.

ON BRIEF: Richard L. Stoper, Jr., Susan L. Gragel, GOLDSTEIN GRAGEL LLC, Cleveland,

Ohio, for Appellants. Daniel A. Richards, Morris L. Hawk, WESTON HURD LLP, Cleveland,

Ohio, Jeanne V. Gordon, Amy M. Wojnarwsky, CAVITCH, FAMILO & DURKIN CO., L.P.A.,

Cleveland, Ohio, for Appellee.

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_________________

OPINION

_________________

ROGERS, Circuit Judge. Under the Multiemployer Pension Plan Amendments Act, part

of ERISA, a construction industry employer who withdraws from a multiemployer pension plan

owes liability to that plan if the employer conducts work “in the jurisdiction of the collective

bargaining agreement of the type for which contributions were previously required.” 29 U.S.C.

§ 1383(b)(2)(B)(i). In accordance with this provision, the Trustees of the Iron Workers Local 17

Pension Fund assessed pension liability against Stevens Engineers & Constructors, claiming that

Stevens’s activities on a certain construction project involved such work within the jurisdiction

of their previous collective bargaining agreement. As an arbitrator and the district court below

found, however, Stevens did not owe pension liability to the Local 17 Pension Fund, because the

work identified by Local 17 did not fall within the jurisdiction of the relevant collective

bargaining agreement, and did not otherwise require contributions by Stevens. The collective

bargaining agreement instead allowed Stevens to assign jobs like the ones at issue to other trade

unions, and a job did not trigger pension liability to the Local 17 Pension Fund if, as here, it was

properly assigned to a different union. Local 17 offers additional arguments as to why Stevens

owed withdrawal liability, but these are also unavailing.

I.

In 1980, Congress passed the Multiemployer Pension Plan Amendments Act (MPPAA),

which modified and extended the coverage of ERISA. Pub. L. 96–364, 94 Stat. 1208 (1980).

ERISA had allowed collective bargaining agreements for employers in large, fragmented

industries like construction to collect employer contributions for a single centralized

industrywide pension fund, rather than for individual plans for each employer. See 29 U.S.C.

§ 1301(a)(3). To avoid incentives for employers to flee when a multiemployer plan became

underfunded, the MPPAA imposed a provision for withdrawal liability, under which an

employer leaving an industry or a plan would be responsible for paying additional contributions

to that plan at the time of their exit. 29 U.S.C. § 1381. An employer subject to withdrawal

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liability owes a proportionate share of the unfunded amount of the plan, determined on the date

of exit from the plan. 29 U.S.C. § 1391.

The MPPAA also provides that a plan’s sponsor, often an entity supported by the local

union, is normally responsible for calculating withdrawal liability, pursuant to the collective

bargaining agreement’s terms. 29 U.S.C. § 1382. Where an employer and a plan disagree about

the existence or extent of such withdrawal liability, the MPPAA also imposes a scheme for

resolution of disputes, primarily through arbitration. 29 U.S.C. § 1401. The MPPAA states that,

in civil actions to enforce an assessment of withdrawal liability, “there shall be a presumption,

rebuttable only by a clear preponderance of the evidence, that the findings of fact made by the

arbitrator were correct.” Id. § 1401(c).1

Although withdrawal liability attaches to most types of employers, a special withdrawal

scheme— the one at issue in this case—covers the construction industry. 29 U.S.C. § 1383(b).

Under this arrangement, construction industry employers are not subject to withdrawal liability if

they completely withdraw from “work in the jurisdiction of the collective bargaining agreement

of the type for which contributions were previously required.” Id. § 1383(b)(2)(B)(i). The Ninth

Circuit has explained that this provision exists because “the construction industry as a whole

does not necessarily shrink when a contributing contractor leaves the industry; employees are

often dispatched to another contributing contractor.” H.C. Elliott, Inc. v. Carpenters Pension Tr.

Fund for N. California, 859 F.2d 808, 811 (9th Cir. 1988). On these premises, the withdrawal of

an employer from work within the jurisdiction of a collective bargaining agreement “do[es] not

pose an undue threat to a plan as long as contributions are made for whatever work is done in the

area.” Id. at 812 (quoting H.R. Rep. No. 96–869, 96th Cong., 2d Sess, pt. 1, at 75). At the same

time, “[t]he withdrawal of any employer from the plan does decrease the base, however, if the

employer stays in the industry but goes non-union and ceases making payments to the plan.” Id.

In those latter circumstances, the MPPAA provides that an employer must pay a proportional

share of the unfunded amount in the plan, determined based on the employer’s share of

1

The MPPAA does not contain any provision establishing the standard of review for conclusions of law.

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contributions for work prior to withdrawal, rather than after withdrawal. 29 U.S.C.

§ 1391(b)(1)(A).

The Iron Workers Local 17 Pension Fund (Fund) is a multiemployer pension plan subject

to the MPPAA. It provides pensions for members of the International Association of Bridge,

Structural, Ornamental and Reinforcing Iron Workers Local Union No. 17 (Local 17). The

Board of Trustees of the Iron Workers Local 17 Pension Fund oversees and administers the

Fund. The Fund is severely underfunded, with a deficit of over $170 million. An employer that

withdraws from the Fund and cannot avail itself of the construction industry exception thus faces

significant liability.

Stevens Engineers & Constructors (Stevens) is a company in the building and

construction industry. Stevens specializes in heavy industrial construction, and at any given time

generally employs several hundred union workers in a variety of trades. Between 1985 and April

2013, Stevens was a party to a series of collective bargaining agreements (CBAs) with Local 17,

pursuant to which Stevens paid into the Fund. Like all previous CBAs, the final CBA between

Stevens and Local 17 contained a statement of the jurisdiction establishing where the CBA

applied. Article I of the CBA defined “craft jurisdiction,” the ironworker work covered by the

CBA, as the “unloading, handling, fabrication, re-fabrication, erection, and dismantling of

structural, ornamental, reinforcing steel, metals, plastic, [and] composite and engineered

materials.” Article II of the CBA defined the “territory” of the CBA as a geographic range

covering various counties in Northern Ohio. Jobs within the craft jurisdiction and the geographic

jurisdiction of the CBA required payment by Stevens into the Fund, and Stevens made payments

when so required.

The CBA between Stevens and Local 17 contained an additional qualifier. The craft

jurisdiction section stated that the jurisdiction of the CBA was “subject to . . . Agreements,

national in scope between the International and other International Unions covering work

jurisdiction and [the] allocation and division of work.” The CBA included this section because

the jurisdiction claimed by craft unions in the construction industry can often overlap, and so

unions have enacted various agreements allowing work divisions among crafts. Where work is

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assigned to one union through an assignment agreement, it is not within the domain of another

union, and thus not subject to employer pension liability to that other union.

One work assignment agreement incorporated into the CBA was the National

Maintenance Agreement (NMA). The NMA is a longstanding arrangement covering various

craft unions, including ironworkers and millwrights, in construction projects, and directing which

unions receive which work. The NMA provides that, where multiple unions can claim the same

work, employers must conduct a pre-job conference to assign work on a project. Once a job is

assigned through a pre-job conference, it belongs to the assigned craft union. Where a dispute

continues following a pre-job conference, the NMA provides for a neutral umpire to resolve the

dispute. If not challenged under the NMA, a task stands as assigned, and does not fall within the

purview of any other union.

In April 2013, Stevens terminated its collective bargaining agreement with Local 17 and

announced its intention not to directly employ any ironworkers on any future projects. Instead,

where a Stevens project required ironworkers, Stevens would hire subcontractors to complete

that work. As a result, Stevens ceased making contributions to the Fund. Stevens has not

directly hired ironworkers since the termination of the CBA.

In September 2013, Stevens won a contract to renovate and install new equipment at the

U.S. Steel No. 4 Seamless plant in Lorain County, Ohio, an area within the geographic

jurisdiction of the previous Local 17 CBA. In accordance with the NMA, Stevens held a pre-job

conference, at which Stevens announced that millwrights and not ironworkers would perform

demolition and power rigging tasks for the No. 4 Seamless project. Power rigging involves the

movement, handling, and removal of certain mechanical devices on construction sites. In

previous jobs, Stevens had often assigned power rigging tasks to ironworkers, but in others,

Stevens had chosen millwrights to do that work. Other employers subject to the NMA also

assign rigging work to craft unions other than ironworkers.

Three days after the pre-job conference, a representative of Local 17 contacted Stevens to

object to the job assignments. Local 17 protested Stevens’s assignments as inconsistent with

another inter-union agreement, the 1971 Ironworker Millwright Rigging Agreement, stating that

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ironworkers would have priority in power rigging work. The 1971 rigging agreement had been

abrogated by the millwrights in 2005 and was no longer in force, but some construction

employers continued to make assignments consistent with that agreement’s terms. Stevens

responded that it would not change the assignments on the No. 4 seamless site. The next step in

the NMA process required Local 17 to submit its claims for dispute resolution; however, the

union did not pursue the dispute further. The Trustees of the Fund did not participate in this

process.

During Stevens’s work at No. 4 Seamless, two irregularities occurred. One night in

November 2013, laborers working for Stevens installed a three- to four-square-foot area of rebar

on the site. In the pre-job conference, Stevens had assigned rebar installation exclusively to

ironworkers. The next morning, when a Stevens manager discovered that the laborers had

installed this rebar, the Stevens manager stated that the laborers had not been authorized to

complete the task, apologized to the ironworkers, and stated that only ironworkers were

permitted to do that work. Similarly, in January 2014, a subcontractor informed Stevens that

millwrights were installing iron grating and handrails, despite Stevens’s assignment of that work

to ironworkers. Stevens immediately ordered the millwrights to cease that work. The total

amount of ironworker activities wrongly performed by other crafts amounted to twenty hours, or

less than two-tenths of one percent of all ironworker work.

On November 13, 2013, about two weeks after the pre-job conference, the Fund Board of

Trustees passed a resolution holding that Stevens was performing work for which Stevens had

previously used ironworkers, namely the demolition and power rigging work. In consequence,

the Trustees voted to impose withdrawal liability on Stevens. The Fund used the abrogated

1971 Rigging Agreement as the basis for its assessment that it was entitled to payment for the

work done by Stevens. The Fund presented Stevens with a demand for $5,056,017, the amount

of the withdrawal liability it calculated Stevens owed. Stevens requested that the Trustees

review their own determination, pursuant to an ERISA provision allowing employers the right to

such reviews. See 29 U.S.C. § 1399(b)(2)(A). After hearing evidence from Stevens, the

Trustees reconfirmed their own jurisdiction over Stevens.

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Stevens moved to submit the claims to arbitration, pursuant to ERISA’s mandatory-

arbitration clause. See 29 U.S.C. § 1401(a)(1). During the discovery phase of the arbitration, the

Fund learned of two additional activities by Stevens that it counted as irregularities. Prior to the

pre-job conference, millwrights employed by Stevens had moved machinery at the No. 4

Seamless site. Likewise, laborers employed by Stevens had drilled a few holes for rebar on the

site. The Fund had not known about these activities when it imposed withdrawal liability on

Stevens, and the activities did not serve as a basis for its determination that Stevens had

performed work subjecting Stevens to withdrawal liability.

After hearing four days of testimony, the arbitrator found that Stevens was not subject to

withdrawal liability. The arbitrator concluded that Stevens had not conducted “work in the

jurisdiction of the collective bargaining agreement” because Stevens had assigned power rigging

and demolition tasks to the millwrights through the NMA. Although recognizing that the Fund’s

assessment of liability enjoyed a presumption of correctness, the arbitrator found that this

presumption did not require liability against Stevens here, because the Fund’s conclusion was

clearly erroneous. The arbitrator also found that Stevens was not liable for the rebar installation

and the millwrights’ installation of iron grating, but did not discuss the laborers’ drilling holes

for rebar and unloading equipment, although it had heard evidence on these latter issues.

Following the arbitrator’s award, Stevens brought a civil action against the Fund and the

Trustees to enforce the arbitrator’s award, and that same day the Fund and Trustees brought an

action against Stevens seeking to vacate the award. The district court consolidated both actions

into the current case. After motions, the district court granted Stevens’s request to enforce the

arbitrator’s award, concluding like the arbitrator that Stevens had assigned the challenged tasks

through the NMA, and so they were not within the Fund’s jurisdiction. The district court further

rejected the Fund’s argument that the Fund should not be bound by Local 17’s failure to object to

the NMA-provided assignment, and found that the Fund could not independently assess

withdrawal liability on Stevens outside of the context of the CBA.

The Fund now appeals.

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II.

Stevens did not owe withdrawal liability to the Fund because the power rigging work it

assigned to the millwrights through the NMA was not work within the jurisdiction of the Local

17 CBA, and did not otherwise require contributions by Stevens. Under the MPPAA, a

construction industry employer owes withdrawal liability only when it either “continues to

perform work in the jurisdiction of the collective bargaining agreement of the type for which

contributions were previously required” or “resumes such work within 5 years . . . .” 29 U.S.C.

§ 1383(b)(2). Here, however, the power rigging work was not work within the jurisdiction of the

CBA because the CBA permitted Stevens to assign this work to another union. The previous

CBA between Stevens and Local 17 incorporated “[a]greements, national in scope between the

International and other International Unions covering work jurisdiction and allocation and

division of work,” and it is not contested that the NMA is one such incorporated agreement. The

NMA, in turn, provided that where a job is assigned through a pre-job conference, it belongs

exclusively to the union to which it is assigned. The Fund therefore could not use the power

rigging work as a basis for assessing withdrawal liability here, because the job’s assignment to

the millwrights in the pre-job conference meant it was within the jurisdiction of the millwrights

rather than the ironworkers. The work thus did not trigger the “perform[ance] . . . in the

jurisdiction of the collective bargaining agreement” requirement for 29 U.S.C. § 1383(b)(2) to

apply.

This court has never addressed the precise meaning of “jurisdiction” under 29 U.S.C.

§ 1383(b)(2). The conclusion that withdrawal liability is defined by the jurisdictional provisions

of the relevant collective bargaining agreement is, however, consistent with other courts’

approaches to this issue. For example, the Ninth Circuit has held that an employer who

withdrew from the construction industry but continued to own a part of a joint venture of a

construction project did not owe withdrawal liability under Section 1383(b)(2) for that

ownership, because the employer’s CBA when in force would not have required contributions

for that ownership. Carpenters Pension Tr. Fund for N. California v. Underground Constr. Co.,

31 F.3d 776, 780 (9th Cir. 1994). Similarly, the Seventh Circuit has stated in a general analysis

of pension liability that, where no other legal duty exists, an employer’s “obligation to contribute

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is tied exclusively to the . . . CBA.” Michels Corp. v. Cent. States, Se., & Sw. Areas Pension

Fund, 800 F.3d 411, 418 (7th Cir. 2015). Other circuits have also confirmed that a work-

assignment process can direct pension contributions to the union to whom the work was

assigned. For example, the Eighth Circuit held that a jurisdictional provision like the one here,

where work could be assigned to multiple unions, meant that a pension fund of a non-assigned

union was “not entitled to contributions for work assigned to members of a competing union

within the jurisdiction of that union.” Carpenters Fringe Benefit Funds of Ill. v. McKenzie

Eng’g, 217 F.3d 578, 585 (8th Cir. 2000).

The conclusion that withdrawal liability does not accrue from a task outside the

jurisdiction of a collective bargaining agreement is also consistent with this circuit’s more

general precedents on the MPPAA. We have stated that the MPPAA should be constructed

strictly according to its text rather than through definitions “constructed in the dim light of

common-law inference.” Cent. States, Se. & Sw. Areas Pension Fund v. Int’l Comfort Prods.,

LLC, 585 F.3d 281, 286 (6th Cir. 2009). Applying that principle here means applying the

construction industry exception to withdrawal liability as it exists in the MPPAA, and the

MPPAA provides that withdrawal liability only attaches to work “in the jurisdiction of the

collective bargaining agreement of the type for which contributions were previously required.”

29 U.S.C. § 1383(b). The straightforward interpretation of that text offers no grounds on which

the Fund can assess withdrawal liability, because the Fund does not show that the CBA required

contributions for work within the jurisdiction of another union.

To be sure, we have also acknowledged that the MPPAA expresses a general policy in

favor of making employers who withdraw from an underfunded fund pay into it. See Findlay

Truck Line, Inc. v. Cent. States, Se. & Sw. Areas Pension Fund, 726 F.3d 738, 743 (6th Cir.

2013). We did not say, however, that this policy extends to finding liability where it would not

otherwise exist. Where, as here, the MPPAA expressly limits the situations in which

contributions are required, the specific provisions of the text control over the looser general

principles also embodied in the MPPAA.

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Indeed, interpreting the “jurisdiction” triggering withdrawal liability under 29 U.S.C.

§ 1383(b)(2)(B)(i) to be the jurisdiction established by a collective bargaining agreement is more

consistent with the specific policy behind withdrawal liability, and the particular rationale for the

construction industry exception. As the Ninth Circuit has explained, the MPPAA imposes

withdrawal liability to avert the scenario in which “the employer stays in the industry but goes

non-union and ceases making payments to the plan.” H.C. Elliott, Inc., 859 F.2d at 811. That

incentive to gain the benefit of work without the detriment of pension liability does not exist,

however, where an employer takes on a job that would not have required pension payments.

Before its withdrawal from the CBA, Stevens would not have owed contribution liability to

Local 17 for work properly assigned to another union through the NMA. It therefore causes no

imbalance for Stevens to owe no liability for such work properly assigned after withdrawal

either.

The Fund raises a series of objections to reading Section 1383(b) as not permitting

withdrawal liability where a previous CBA would not have imposed it, but the Fund’s

contentions all fail. First, the Fund proposes an alternative interpretation of Section 1383(b) in

which “jurisdiction” means only “geographic jurisdiction,” but this argument is meritless. An

opinion of the Second Circuit confirms that the jurisdictional clause of a CBA like the one at

issue here covers both “the Union’s defined trade and geographical jurisdiction.” Cleveland

Wrecking Co. v. Iron Workers Local 40, 136 F.3d 884, 886 (2d Cir. 1997). The Fund points out

that another portion of the MPPAA uses the term “craft and area jurisdiction” as opposed to just

“jurisdiction,” see 29 U.S.C. § 1388(d)(1), but the principle that the greater includes the lesser

means that the broad term “jurisdiction” can and does include the narrower variation “craft and

area jurisdiction.”

The Fund likewise states that interpreting “jurisdiction” to mean craft rather than

geographic jurisdiction produces an apparently absurd result of imposing liability where an

employer works in a different state. But nothing says “jurisdiction” must apply to only one of

craft or geography, and the natural reading is that it applies to both. In other words, the

MPPAA’s provisions for withdrawal liability mean exactly what they say: an employer owes

withdrawal liability for work that would have mandated contributions pursuant to ERISA if the

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CBA were still in force. 29 U.S.C. § 1383(b). This clarity means that, notwithstanding the

Fund’s suggestion, resort to the MPPAA’s legislative history is unnecessary because the text is

clear. See Mohamad v. Palestinian Auth., 566 U.S. 449, 458 (2012).

The Fund also expresses concern that a reading of “in the jurisdiction of the collective

bargaining agreement” as covering whatever area a CBA establishes as its own jurisdiction

makes redundant the second part of Section 1383(b)’s requirement: “of the type for which

contributions were previously required.” In fact, these two parts work in conjunction. The

limitation “of the type for which contributions were previously required” establishes that an

employer does not owe withdrawal liability for actions previously covered by a CBA but not

generative of pension liability. Cf. Carpenters Pension Tr. Fund, 31 F.3d at 780 (demonstrating

such a scenario). Reading both parts in conjunction fulfills, rather than frustrates, the MPPAA’s

scheme. It ensures that employers will not owe liability for actions after withdrawal that would

not have generated liability before.

The Fund also identifies the fact that Stevens, while subject to the CBA, had previously

employed ironworkers to do rigging work, as purportedly showing that this rigging work was

within the ironworkers’ jurisdiction. This argument ignores the point that under the CBA and the

NMA, Stevens had the right to assign a job to various unions, and only incurred pension liability

to a craft union when a task was so assigned. Knowing that, in the past, Stevens had exercised

an option it possessed does not rebut the point that Stevens was not prohibited from assigning

jobs to other unions in the future. The Fund finally objects that, even after the abrogation of the

rigging agreement, area practice favored the assignment of rigging work to ironworkers, and

thus Stevens would have owed liability for rigging work when the CBA was in force. Extrinsic

evidence like area practice does not overcome clear contract language, however. Tackett v.

M & G Polymers USA, LLC, 811 F.3d 204, 208 (6th Cir. 2016). Because this CBA through the

incorporated NMA expressly provides flexibility for Stevens to make rigging assignments, a

survey of area practice is unnecessary to determine that Stevens could exercise a right that it

possessed by the terms of the contract.

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III.

Although only Local 17 and not the Fund was a party to the CBA and capable of

challenging work assignments under the NMA, that assignment is binding on the Fund, because

the Fund did not have an independent right to assess liability based on a task assigned to another

union through the NMA.2 The Fund points out that, in some ERISA areas, pension funds are not

necessarily bound by the failures of relevant unions to assert a fund’s claims, and argues that it

should be permitted to pursue claims against Stevens. Here, however, Local 17’s action through

the NMA was a necessary prerequisite to create obligation to contribute to the Fund, and so the

Fund could not assess liability based on work never falling within its jurisdiction. The Fund’s

arguments that there was no forfeiture of its independent powers to assess liability thus fail,

because no such independent powers existed in this context.

Under the MPPAA’s standards for withdrawal liability, a plan sponsor may only assess

withdrawal liability on a construction employer who resumes or “perform[s] work in the

jurisdiction of the collective bargaining agreement of the type for which contributions were

previously required.” 29 U.S.C. § 1383(b)(2)(B)(i). As discussed above, the jurisdiction of the

collective bargaining agreement in this case incorporated the NMA, under which a craft union

lacks jurisdiction over jobs properly assigned to another union pursuant to that agreement. Here,

as both the arbitrator and the district court found, Local 17 did not have jurisdiction over rigging

work because Stevens assigned that work to millwrights rather than ironworkers. The NMA

process was exclusive and final. As a result, both the arbitrator and district court correctly

concluded that the Fund did not have the power to retroactively determine that Stevens’s work

was within the jurisdiction of Local 17 based only on the Fund’s own authority, because that

decision was precluded by the NMA.

The Fund nevertheless seeks the right to decide what tasks belonged to Local 17,

regardless of NMA assignment, but the Fund lacks any such power to overturn the NMA’s

2

To be clear: the Fund does not raise the issue of whether it did or should have possessed an independent

standing, separate from that of Local 17, to challenge work assignment through the NMA process. Rather, the Fund

argues that it has the independent authority to subsequently assess liability on Stevens, regardless of rights

established via NMA assignment. We thus leave for another day the question of a pension fund’s independent

standing to intervene in a process like the NMA.

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outcomes. An inter-union dispute process like the NMA establishes the jurisdiction for pension

contribution claims, and must be challenged through its own procedures. The Eighth Circuit has

held, for instance, that a union pension fund was not entitled to collect contributions from a

project assigned to another union, since the assignment of that project had placed it outside the

bounds of the relevant union’s CBA. McKenzie, 217 F.3d at 585. On relatively similarly facts to

those here, the McKenzie court held that, unless challenged through the inter-union dispute

resolution process, “the Funds are not entitled to contributions for work assigned to members of

a competing union within the jurisdiction of that union.” Id. We have in turn cited McKenzie for

the proposition that a pension fund “should not be able to establish an entitlement to

contributions for work assigned to another union claiming jurisdiction over the work without

invoking procedures for resolving the jurisdictional work assignment issue.” Trs. of B.A.C.

Local 32 Ins. Fund v. Ohio Ceiling & Partition Co., No. 01–1396, 2002 WL 35018235, at *9

(6th Cir. Oct. 4, 2002). That conclusion is equally valid in this case.

The Fund tries to distinguish McKenzie on the basis that “McKenzie involved delinquent

contributions, not withdrawal liability.” If anything, this fact would appear to make McKenzie

more rather than less persuasive in this case. Under ERISA, delinquent contributions mean that

some liability has already accrued, and thus some entity has an entitlement to money, see

29 U.S.C. § 1145. By contrast, no entity has any right to withdrawal liability if no such liability

actually exists. McKenzie is thus applicable to the issues in this case.

In addition, the Fund cites precedents expressing the general point that a plan sponsor is

usually not bound by union conduct, but these cases are not relevant to this dispute. These

precedents show only that plan sponsors can exercise already-extant rights, but they do not

demonstrate any independent power to assess liability by a fund. For example, the Fund points

to the fact that the Supreme Court has held that a coal company could not withhold plan

contributions because the beneficiary union had gone on strike. Lewis v. Benedict Coal Corp.,

361 U.S. 459, 466 (1960). In that case, however, the coal company had pledged to pay the fund

a specific royalty per ton of coal produced, and had produced that amount of coal. Id. at 461–62,

466. Here, by contrast, the Fund’s claim did not involve an amount certainly accrued, but rather

a liability that never existed in the first place. Likewise, the Fund’s observation that ERISA

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requires payment from “[e]very employer who is obligated to make contributions to a

multiemployer plan under the terms of the plan” without reference to others’ defenses, see

29 U.S.C. §1145, only begs the question of whether Stevens was so obliged to make those

contributions here. If Stevens was not otherwise obliged to contribute, then Stevens did not

violate this prohibition against not paying required contributions by not contributing sums that

Stevens did not owe.

The Fund also identifies various precedents holding that plan sponsors are not subject to

estoppel or waiver based on union action, but those cases’ procedural rules do not answer the

point that substantive liability does not exist here. The Fund contends that Stevens should not

avoid withdrawal liability just because Local 17 did not challenge the assignment of work to

millwrights through the NMA. It is true that we have held in a deficient-contribution case that a

union’s failure to comply with terms in a CBA “cannot affect the [pension] Funds’ right to

collect contributions that are due and owing to the Funds.” Operating Eng’rs Local 324 Health

Care Plan v. G & W Const. Co., 783 F.3d 1045, 1053 (6th Cir. 2015). As G&W Construction

also states, however, this prohibition only applies to contributions that are “due and owing to the

Funds.” Id. The Fund identifies no precedent stating that a union’s failure to challenge work

assignments can allow a fund to collect contributions not otherwise owed to that fund.

Indeed, our precedents strongly emphasize the primacy of parties’ prior arrangements in

assessing when liability accrues, since “[f]unds are entitled to rely on the written terms of an

existing ERISA plan document or collective bargaining agreement.” Id. (citing Cent. States, Se.

& Sw. Areas Pension Fund v. Gerber Truck Serv., Inc., 870 F.2d 1148, 1153 (7th Cir. 1989)). In

this case, that prior arrangement stated that work assignments would stand as assigned through

the job-assignment process, and pension liability follow accordingly, unless challenged at the

time of assignment. Because the Fund did not accrue any rights to contribution from work

assigned to another craft through the NMA, or otherwise enjoy a right to challenge those

assignments, permitting re-assessment now would prove inconsistent with that obligation.

Nos. 16-4098/ Stevens Eng’rs & Constr. v. Local 17 Iron Workers, et al. Page 15

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IV.

In addition to its main argument on power rigging, the Fund points to tasks—drilling

holes for rebar and unloading machinery—completed by Stevens workers but not discovered by

the Fund before it assessed withdrawal liability on Stevens, and the Fund argues that these tasks

permit its assessment of withdrawal liability. The district court ruled questionably that the Fund

could not use after-acquired information to justify its imposition of withdrawal liability,3 but in

any event this information does not subject Stevens to liability to the Fund.

The Fund first points to the fact that it discovered that laborers employed by Stevens

drilled holes for rebar installation, but drilling holes in preparation for rebar installation was not

within the mandatory jurisdiction of the Local 17 CBA. The craft jurisdiction section of that

CBA claimed for the ironworkers the “unloading, handling, fabrication, re-fabrication, erection,

and dismantling of structural, ornamental, reinforcing steel, metals, plastic, composite and

engineered materials.” This list does not include the preparation of a site for metal installation

(as opposed to the installation itself), and there was evidence from the arbitration hearing that

drilling holes for rebar installation did not fall within the mandatory jurisdiction of the

ironworkers. The Fund objects that Stevens had assigned drilling work to ironworkers in the

past; however, prior practice does not suffice to form withdrawal liability unless the CBA

required the work to be assigned to the ironworkers, see 29 U.S.C. § 1383(b). The Fund thus

does not offer evidence that this drilling constituted work per se requiring contributions from

Stevens, as opposed to only requiring contributions if assigned to the ironworkers.

The Fund also identifies the fact that millwrights unloaded machinery from trucks as

work conducted within Local 17’s jurisdiction. The NMA, however, permitted assigning this

work to non-ironworkers. Because the unloading was assignable work through the NMA, it did

3

The relevant section of the MPPAA creates a presumption that “any determination made by a plan sponsor

under [the MPPAA] is presumed correct unless the party contesting the determination shows by a preponderance of

the evidence that the determination was unreasonable or clearly erroneous.” 29 U.S.C. § 1401(b)(3)(A). The

Supreme Court has held that this provision means that an arbitrator “is not only obliged to enquire into the

soundness of the sponsor’s determinations when they are challenged, but may receive new evidence in the course of

his review and adopt his own conclusions of fact.” Concrete Pipe & Prod. of Cal., Inc. v. Constr. Laborers Pension

Tr. for S. Cal., 508 U.S. 602, 623 (1993).

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not fall within Local 17’s jurisdiction unless granted to Local 17 through the NMA, which did

not happen here. It is true that this occurred before formal assignments at the pre-job conference.

Under the NMA, however, a craft union does not have any right to work assignable to another

union until after the union is assigned the work through a pre-job conference. Here, the

unloading was assignable, and the pre-job conference assigned this work to non-ironworkers.

Because Local 17 thus never had an exclusive claim to this work, it does not constitute work

imposing liability on Stevens, and the Fund could not use that work to justify withdrawal

liability.

V.

Finally, the various irregularities during the construction process do not lead to

withdrawal liability because Stevens was not responsible for them. The Fund identified two

instances in which Stevens employees or agents conducted work unquestionably within the duty

of ironworkers. In the first case, some carpenters or laborers installed a small portion of rebar on

the site. In the second, millwrights installed grating and handrails around a machine. In both

instances, however, Stevens did not order this work, was not aware of this work, and ordered it

terminated as soon as Stevens learned of it. Under Ohio law, the governing law here, an

employer is not responsible for those acts outside the scope of employment, and work is only in

the scope of a worker’s employment if it is conduct of the kind which he is employed to perform.

Groob v. KeyBank, 843 N.E.2d 1170, 1177 (Ohio 2006). Here, Stevens assigned ironworker

work exclusively to the ironworkers, and neither authorized nor condoned the non-ironworkers

performing that work. The district court thus did not err in finding that Stevens was not

responsible for work done outside Stevens’s control.

VI.

The judgment of the district court is affirmed.