United States District Court, D. Maryland
BAKERY AND CONFECTIONERY UNION AND INDUSTRIAL INTERNATIONAL PENSION FUND, et al.
JUST BORN II, INC.
DEBORAH K. CHASANOW United States District Judge
pending and ready for resolution in this breach of contract
case are: (1) a motion for judgment on the pleadings filed by
Plaintiffs Bakery and Confectionery Union and Industrial
International Pension Fund (the “Fund”) and the
trustees of the Fund (the “Trustees”) (ECF No.
24); and (2) a cross-motion for judgment on the pleadings by
Defendant Just Born II, Inc. (“Defendant”) (ECF
No. 25). The issues have been briefed, and the court now
rules, no hearing being deemed necessary. Local Rule 105.6.
For the following reasons, Plaintiffs' motion will be
granted in part and denied in part, and Defendant's
cross-motion will be denied.
are a trust fund established and maintained pursuant to 29
U.S.C § 186(c)(5), and the Trustees who administer it
(together, “Plaintiffs”). (ECF No. 1 ¶¶
4 & 5). The Fund provides retirement benefits to eligible
employees of participating employers and qualifies under the
Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. §§ 1001,
et seq., as both an employee benefit plan,
see Id. § 1002(2), (3), and a multiemployer
pension plan, see Id. § 1002(37). (ECF No. 1
¶ 4). Defendant is a candy manufacturer that was a party
to a series of collective bargaining agreements with the
Bakery, Confectionery and Tobacco Workers International
Union, Local Union 6 (the “Union”). (Id.
¶ 10). The most recent collective bargaining agreement
(the “CBA”) between Defendant and the Union was
effective from March 1, 2012, through February 28, 2015.
(Id.). Article 22 of the CBA stated that
shall be paid [to Plaintiff] from the first day the employee
begins working in a job classification covered by the [CBA],
and shall be paid on behalf of all employees in covered job
classifications - there are no exceptions for employees who
are not members of the Union, temporary, seasonal, or
part-time employees, for leased employees, or for any other
type of employee.
(ECF No. 1-2, at 17).
2012, during the term of the CBA, the Fund's actuary
certified that the Fund was in “critical” status.
(ECF No. 1 ¶ 15). Under ERISA, multiemployer plans can
be certified as being in “endangered” or
“critical” status based on the present and
projected value of the plan, its projected costs and benefits
payable, and other potential funding deficiencies.
See 29 U.S.C. § 1085(b). When a plan is in
critical status, ERISA requires the plan sponsor to
“adopt and implement a rehabilitation plan”
designed to improve the fund's fiscal health.
Id. § 1085(a)(2), (e). The Trustees developed a
rehabilitation plan with revised benefit and contribution
schedules and proposed two revised options to the Union and
Defendant. (ECF Nos. 1 ¶ 16; 1-3). On December 28, 2012,
the Union and Defendant selected one of the revised schedules
and signed a “PPA Schedule Election Form.” (ECF
Nos. 1 ¶ 17; 1-4). The revised schedule proposal and the
PPA Schedule Election Form both included language similar to
the CBA that bound Defendant to make payments for all work
done by employees in a job classification covered by the CBA.
(See ECF Nos. 1-3, at 7; 1-4, at 2-3).
the CBA expired on February 28, 2015, Defendant and the Union
agreed to a short-term extension of the CBA until April 30,
2015, and the two sides began bargaining for a new agreement.
(ECF Nos. 1 ¶ 18; 1-5). During negotiations, Defendant
demanded that any new agreement relieve it from the
obligation to make contributions to the Fund on behalf of
newly hired employees. (ECF No. 1 ¶ 19). In its
cross-motion, Defendant explains that it had developed
serious concerns about the management of the Fund and that it
no longer believed that participation in the Fund was in its
employees' best interest. (ECF No. 25-1, at 11). The
Union refused to accept Defendant's terms, and,
eventually, Defendant declared that negotiations were at an
impasse. (ECF No. 1 ¶ 20). Under federal labor law, when
an impasse in bargaining is reached in good faith, bargaining
can be suspended and the employer can make unilateral
changes, so long as the terms it applies are not
substantially different from those terms it last proposed in
negotiations. See McClatchy Newspapers, Inc., 321
NLRB 1386, 1996 WL 506086, at *6 (2000). Defendant thus
unilaterally implemented its “best offer, ” under
which it would continue to contribute to the Fund on behalf
of then-current employees and would contribute to an
unrelated 401(k) retirement plan on behalf of subsequently
hired employees. (ECF No. 1 ¶ 20). Defendant has not
made contributions to the Fund for newly hired employees
since declaring impasse and implementing its best offer.
(Id. ¶ 22).
March 17, 2016, Plaintiffs filed the instant suit under 29
U.S.C. § 1145, which gives a multiemployer plan the
right to sue an employer for delinquent contributions.
Plaintiffs allege that Defendant's failure to make
payments to the Fund on behalf of new employees is a breach
of its obligation under 29 U.S.C. § 1085(e)(3)(C)(ii)
(the “Provision”). The Provision was passed as
part of the Pension Protection Act (“PPA”), which
amended ERISA law to give multiemployer pension funds that
are at risk of failing authority to make the changes
necessary to prevent insolvency. The Provision mandates that,
even after a collective bargaining agreement expires, a plan
sponsor like the Trustees must impose the contribution
schedule previously in place under that agreement when
certain criteria are met. In full it states:
(I) a collective bargaining agreement providing for
contributions under a multiemployer plan in accordance with a
schedule provided by the plan sponsor pursuant to a
rehabilitation plan (or imposed under subparagraph (C)(i))
expires while the plan is still in critical status, and
(II) after receiving one or more updated schedules from the
plan sponsor under subparagraph (B)(ii), the bargaining
parties with respect to such agreement fail to adopt a
contribution schedule with terms consistent with the updated
rehabilitation plan and a schedule from the plan sponsor,
then the contribution schedule applicable under the expired
collective bargaining agreement, as updated and in effect on
the date the collective bargaining agreement expires, shall
be implemented by the plan sponsor beginning on the date
specified in clause (iii) [180 days after the date on which
the collective bargaining agreement expires].
Id. The primary dispute in this case derives from
the parties' interpretations of the Provision. Defendant
also raised nine affirmative defenses in its answer. (ECF No.
9-1, at 15-16). Plaintiffs filed the pending motion for
judgment on the pleadings on June 24, 2016. (ECF No. 24).
Defendant filed a cross-motion for judgment on the pleadings
in its favor on August 15. (ECF No. 25). Plaintiffs responded
to that motion, and Defendant replied. (ECF Nos. 26; 27).