Seventh Circuit Orders Refund of Withdrawal Liability to Employer Where CBA Did Not Require It to Make Pension Contributions

In Bulk Transp. Corp. v. Teamsters Union No. 142 Pension Fund, No. 23-1563, __F.4th__, 2024 WL 1230236 (7th Cir. Mar. 22, 2024), Bulk Transport challenged the district court’s grant of summary judgment to the Teamsters Union No. 142 Pension Fund in this dispute over $2.3 million in withdrawal liability. The Fund assessed withdrawal liability after Bulk Transport stopped making pension contributions for employees whose work was not covered by the governing collective-bargaining agreement (CBA). There was a main agreement called the Construction Agreement and a Steel Mill Addendum which applied to steel mill operation work only. Bulk Transport then landed a contract to haul commodities, referred to as LISCO work. Though the LISCO work was not covered by the CBA, Bulk Transport initially made the contributions in response to the Union threatening to strike if it did not. It used the wage rates and pension terms of the Addendum. When Bulk Transport lost the work, it no longer made pension contributions on behalf of the employees who formerly handled the work. The Fund assessed withdrawal liability, which Bulk Transport disputed but paid, and then demanded arbitration.

The arbitrator concluded that Bulk Transport adopted the Addendum by conduct and the Fund was entitled to the money. The district court agreed with the arbitrator’s ruling and denied Bulk Transport’s request for a refund.

The Seventh Circuit affirmed in part, reversed in part, and remanded. First, the court held that the Arbitrator’s determination that Bulk Transport had adopted by conduct an addendum to the parties’ CBA was a legal determination under 29 U.S.C. § 1401 that was reviewable in court. Second, the court held that under ERISA, Bulk Transport was not required to make contributions to the Fund on behalf of employees whose work was not covered by the CBA or the addendum. The court explained that the terms of pension contributions to multi-employer plans cannot be changed orally. “What’s needed is not adoption of the Addendum but an amendment to the Addendum. If amendment-by-conduct is possible, then multi-employer pension agreements need not be written after all, despite what sections 186(c)(5)(B) and 1145 say.” Lastly, the court held that the Fund and trustees were not entitled to attorneys’ fees and affirmed the district court’s decision on the fees. The court reversed the district court’s decision on the merits and remanded the case with instructions for the district court to order the Fund to repay the withdrawal liability.