Kane, Jr. v. National Farm Wholesale Fruit & Vegetable Corp.

Background

The trustees of the United Teamster Fund and United Teamster Pension Fund “A” sued National Farm Wholesale Fruit & Vegetable Corp. for unpaid partial withdrawal liability under the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA). The Fund is an employee benefit plan, and National Farm was required under a collective bargaining agreement to make pension contributions.

On December 6, 2016, the Fund notified National Farm that it owed $1,633,682 in partial withdrawal liability and set a payment schedule covering 73 quarters. National Farm made the first quarterly payment and, on January 31, 2017, asked the Fund to review its records because National Farm believed the liability had been calculated incorrectly. The opinion states that the Fund never responded to that request, although the Fund disputed whether it had responded.

National Farm submitted a demand for arbitration to the American Arbitration Association in May 2017. It did not pay the filing fee required to begin the arbitration, and the arbitration organization closed the proceeding in September 2017 after notifying National Farm’s counsel that the fee had to be paid. National Farm then stopped making payments under the schedule. The Fund filed this lawsuit in December 2017.

National Farm submitted a second arbitration demand in January 2018. The court stayed the lawsuit while the arbitrator considered the Fund’s motion to dismiss that proceeding. In June 2018, the arbitrator dismissed the second arbitration, finding that National Farm had not properly initiated the first arbitration because it had not paid the required filing fee and that the second arbitration was too late. On April 12, 2019, the court confirmed the arbitration award.

Legal standard

The Fund sought summary judgment. Summary judgment is appropriate when the record shows no genuine dispute over a fact that could affect the outcome and the moving party is entitled to judgment under the law. In an MPPAA collection case, the Fund had to show that National Farm was an employer covered by the statute, received notice of the withdrawal liability assessment, and failed to initiate arbitration as required.

Court’s analysis

National Farm made one principal argument: because it had asked the Fund to review the assessment and the Fund had not sent the response described in 29 U.S.C. § 1399(b)(2)(B), a required condition for bringing the collection lawsuit had not occurred. National Farm therefore argued that the action should be dismissed.

The court rejected that argument. Under 29 U.S.C. § 1401(a)(1), an arbitration proceeding may be initiated within the applicable period measured from the earlier of the Fund’s response to the employer’s objections or 120 days after the employer’s request for review. Because National Farm’s request was made on January 31, 2017, the court concluded that National Farm had a 60-day period beginning around May 31, 2017 to initiate arbitration. The statute did not make the Fund’s response a prerequisite to the Fund’s lawsuit.

The court also relied on National Farm’s own conduct. Even without receiving the Fund’s response, National Farm attempted to begin arbitration in May 2017. But it failed to pay the filing fee needed to start that proceeding. The court stated that National Farm’s failure to timely commence arbitration prevented it from contesting the assessed liability and was a self-inflicted result. The court also rejected National Farm’s reliance on a case discussing circumstances in which an MPPAA dispute need not first be submitted to an arbitrator.

Disposition

The court granted the Fund’s motion for summary judgment. It directed the Clerk of Court to close the motion at docket number 26 and enter judgment in favor of the Fund.