Unite Here Retirement Fund v. City Of San Jose

Background

The dispute concerns withdrawal liability under the Employee Retirement Income Security Act (ERISA), as amended by the Multiemployer Pension Plan Amendments Act (MPPAA). The MPPAA requires an employer that withdraws from a multiemployer pension plan to pay the unfunded vested benefits attributable to its participation.

The City owned the Hayes Mansion hotel and conference center from at least 2003 through early 2019. It contracted with Dolce International/San Jose, LLC to manage and operate the facility. The management agreement required Dolce International to act on the City’s behalf, pay operating expenses including pension contributions, negotiate with labor unions, and comply with collective bargaining agreements.

Employees at the Hayes Mansion were covered by collective bargaining agreements that required contributions to the Unite Here multiemployer pension plan and its predecessor fund. The agreements were signed by an employee of Dolce International, but identified the signing business as “Dolce Hayes Mansion,” a fictitious business name. When the City sold the Hayes Mansion, the obligation to contribute to the pension plan ended, triggering withdrawal liability.

Legal standard and issue

Under the MPPAA, an “employer” for withdrawal-liability purposes is a person obligated to contribute to the plan, either directly or in the interest of an employer of the plan’s participants. The central issue was whether the City, Dolce International, or both were obligated to contribute under the collective bargaining agreement.

The parties filed three cross-motions for summary judgment. The City sought judgment that Dolce International was responsible. Dolce International sought judgment that it was not responsible. Unite Here sought judgment that Dolce International was responsible or, alternatively, that the City was responsible.

Court’s reasoning

The court rejected the City’s argument that only the entity that signed the collective bargaining agreement could be responsible. It held that an agent can obligate its principal under a collective bargaining agreement so that the principal may be responsible for withdrawal liability. The court also found no comparable state law removing that authority from Dolce International in this case.

The court held that Dolce International was the City’s agent. The management agreement required Dolce International to act on the City’s behalf and delegated broad authority over operating the Hayes Mansion, including authority related to labor negotiations and collective bargaining agreements.

The court further held that Dolce International acted within the scope of its authority when it signed the collective bargaining agreement on the City’s behalf. Although the agreement did not expressly authorize Dolce International to sign it, signing was an act impliedly authorized because it was incidental and pertinent to Dolce International’s express authority to negotiate with the unions and comply with collective bargaining agreements.

The court concluded that the City was bound by the collective bargaining agreement and therefore was an employer responsible for the withdrawal liability. The court then considered whether Dolce International was also bound. Because the City’s name did not appear on the agreements, and disclosure of only a fictitious business name was legally insufficient to identify the City as the principal, the court could not determine whether the City had been disclosed to the union in another way. Dolce International offered a declaration stating that its employee had informed the union about the agency relationship, but the court declined to consider that declaration because it was submitted for the first time with a reply and the other parties had no opportunity to respond.

Disposition

The court denied the City’s motion for summary judgment, denied Dolce International’s motion for summary judgment, and granted in part and denied in part Unite Here’s motion. Specifically, it granted summary judgment for Unite Here on its first claim against the City. It did not resolve Unite Here’s second claim against Dolce International on summary judgment because factual issues remained about whether Dolce International was also bound by the collective bargaining agreement and therefore was a joint employer for withdrawal-liability purposes.

The court also noted that it had not decided whether California’s rule concerning contracts involving undisclosed principals would eventually require Unite Here to choose between the City and Dolce International if both were later found responsible.