Dycom Industries v. Pension

Background

Dycom Industries, Inc. wholly owned Midtown Express, LLC, formerly known as Midtown Express, Inc., a wiring-installation contractor that later dissolved. Under union agreements, Midtown was required to contribute to the Pension, Hospitalization & Benefit Plan of the Electrical Industry, a multiemployer pension plan governed by the Employee Retirement Income Security Act (ERISA) and its withdrawal-liability provisions.

After Midtown dissolved and stopped contributing, the Fund assessed withdrawal liability against Midtown and Dycom on October 4, 2016. Dycom demanded arbitration and argued that Midtown had not withdrawn from the Fund because it qualified for ERISA’s building-and-construction-industry exemption. On March 23, 2022, the arbitrator ruled for the Fund, finding that Midtown’s work did not qualify for the exemption.

Dycom moved to vacate the award, meaning to set it aside. The Fund moved to confirm it, meaning to make the award enforceable as a judgment. Magistrate Judge Stewart D. Aaron issued a Report and Recommendation concluding that the award should be confirmed. Dycom objected to that recommendation.

Court’s Analysis

The court reviewed the legal conclusions challenged by Dycom without deference, while applying the statutory presumption that the arbitrator’s factual findings were correct unless rebutted by a clear preponderance of the evidence. The court also explained that arbitration awards generally receive strong deference, although the withdrawal-liability statute provides a specific review framework.

Dycom first argued that the recommendation was internally inconsistent. It pointed to the recommendation’s description of Midtown’s employees adding cable and related materials at buildings, while also concluding that the employees did not alter the buildings or structures. The court rejected this argument. It held that the recommendation accurately relied on authorities defining construction-industry work as combining materials and constituent parts on a building site to form, make, build, alter, or repair a structure.

The court also relied on the arbitrator’s factual findings that Midtown almost never worked on new-construction projects; mainly provided cable service in homes and apartment buildings that were already wired; and drilled holes, ran cable through existing buildings, and connected the cable to equipment for cable, television, Wi-Fi, and home-security services. The court found that these facts supported the conclusion that Midtown’s employees did not combine materials and constituent parts to form, make, or build a structure. The court therefore held that the construction exemption did not apply.

Dycom’s second objection argued that the Fund treated electrical contractors as performing construction work while treating cable contractors as not doing so. Dycom characterized this as unfair and argued that Congress did not intend the exemption to be applied in this manner. The court held that Dycom did not identify a legal defect in the arbitrator’s ruling or provide supporting legal authority for these arguments. Policy or fairness concerns, without a demonstrated legal infirmity, did not justify vacating the award.

Disposition

The court accepted and adopted Judge Aaron’s Report and Recommendation in its entirety. It denied Dycom’s motion to vacate and granted the Fund’s motion to confirm. The court confirmed the arbitration award, directed the clerk to terminate all pending motions, and closed the case.