United States District Court, N.D. California
CARPENTERS PENSION TRUST FUND FOR NORTHERN CALIFORNIA, Plaintiff,
KEITH WALKER, et al., Defendants.
ORDER ON MOTION FOR SUMMARY JUDGMENT Re: Dkt. No. 48
WILLIAM H. ORRICK, District Judge.
Defendant Keith Walker owned Rollie French, Inc. ("RFI") when it filed for bankruptcy in 2005. He also owned defendants Keith Walker Trust dated March 17, 1999, the Keith Walker Trust dated May 17, 1999, and the Real Estate Leasing Business operated by the Keith Walker Trust. After RFI terminated its collective bargaining agreements with plaintiff Carpenters Pension Trust Fund for Northern California (the "Pension Fund") in 2008, the Pension Fund notified RFI that it had been assessed with withdrawal liability in the amount of $1, 726, 467 for employees' benefits that had already vested under the Employment Retirement Income Security Act of 1974 ("ERISA"), as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1001-1461 (1982). RFI did not seek to arbitrate its obligations under ERISA. The issues I must decide on the Pension Fund's motion for summary judgment are whether the defendants waived all defenses by failing to initiate arbitration under ERISA's procedures and whether the defendants may be considered a "control group" under the statute. They did waive their defenses, they are a "control group, " and I will GRANT the Pension Fund's motion.
There are no material undisputed facts in this case. The Pension Fund is an employee benefit plan and a multiemployer plan as defined under ERISA that primarily covers employees in the building and construction industry. See 29 U.S.C. §§ 1002(2)(A), 1002(37)(A), 1132(d). Dkt. No. 1 ¶ 2. Defendant Keith Walker is an individual and the sole owner of RFI, a non-party to this action. RFI was an employer under sections 3(5) and 515 of ERISA, and was bound by collective bargaining agreements with the Pension Fund which required it to make contributions to the Pension Fund for covered work performed by its employees. See 29 U.S.C. §§ 1002(5), 1145; Rich Decl., Ex. 5; Compl. ¶¶ 5-8 (detailing agreements).
In December 2005, RFI filed for bankruptcy. Mason Decl., Ex A at 65:17-25. In 2008, RFI terminated its collective bargaining agreements with the Pension Fund and made contributions until June 30, 2008, when the termination became effective. Rich Decl., Ex 4. Resp. Nos. 39, 43.
When an employer withdraws from a multiemployer pension plan, such as the one administered by the Pension Fund, ERISA requires a withdrawing employer to compensate a pension plan for benefits that have already vested with the employees at the time of the employer's withdrawal, commonly referred to as "withdrawal liability." 29 U.S.C. § 1361 et seq. On December 7, 2009, the Pension Fund notified RFI that it had been assessed withdrawal liability in the amount of $1, 726, 467. Mason Decl., Ex. F. The Pension Fund advised RFI that it had the option of challenging the withdrawal liability by requesting review of the assessment or timely demanding arbitration. Id.
RFI responded in a letter dated December 9, 2009, stating that RFI owed no withdrawal liability payments because "RFI has not performed work in the jurisdiction of the collective bargaining agreement since February 1, 2006. Therefore, no withdrawal has yet occurred." Mason Decl., Ex. G. RFI did not request review or initiate arbitration. It has not made any withdrawal liability payments to date.
Keith Walker is the sole proprietor of defendant Keith Walker Trust, which owns and operates defendant Real Estate Leasing Business. At the time RFI terminated its collective bargaining agreements with the Pension Fund, Keith Walker was also the sole owner of two other companies: K&M Industries, Inc. ("K&M"), and D&B Engineered Applications, Inc. ("D&B"). Defendant Real Estate Leasing Business leased property to RFI and currently leases property to K&M. Rich Decl., Ex. 1 at 26:1-5, 30:18-25; Ex. 2 at 34:12-35:6.
Summary judgment on a claim or defense is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). In order to prevail, a party moving for summary judgment must show the absence of a genuine issue of material fact with respect to an essential element of the non-moving party's claim, or to a defense on which the non-moving party will bear the burden of persuasion at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this showing, the burden then shifts to the party opposing summary judgment to identify "specific facts showing there is a genuine issue for trial." Id. The party opposing summary judgment must then present affirmative evidence from which a jury could return a verdict in that party's favor. Anderson v. Liberty Lobby, 477 U.S. 242, 257 (1986).
On summary judgment, the Court draws all reasonable factual inferences in favor of the non-movant. Id. at 255. In deciding a motion for summary judgment, "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Id. However, conclusory and speculative testimony does not raise genuine issues of fact and is insufficient to defeat summary judgment. See Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979).
I. ERISA'S STATUTORY WITHDRAWAL LIABILITY SCHEME
Pension plans, including those like the Pension Fund here, are federally regulated pursuant to ERISA, 29 U.S.C. § 1001 et seq. The MPPAA, 29 U.S.C. §§ 1381-1453, amended ERISA "to allow plans to impose proportional liability on withdrawing employers for the unfunded vested benefit obligations of multiemployer plans." Carpenters Pension Trust Fund v. Underground Constr. Co., Inc., 31 F.3d 776, 778 (9th Cir. 1994). "Prior to the enactment of the MPPAA, employers could withdraw from pension plans without paying their share of the plans' unfunded vested benefit liability." Woodward Sand Co., Inc. v. W. Conf. Teamsters Pension Trust Fund, 789 F.2d 691, 694 (9th Cir. 1986) (citation omitted). "The employers could simply cease making pension contributions (e.g., by ceasing covered business) and avoid any responsibility for the actual, but unfunded, liabilities of the plans." ...