Decided: June 29, 2015
The Fourth Circuit affirmed the judgment of the district court holding that (1) the district court had appropriate personal and subject matter jurisdiction, (2) venue was correct in Virginia, and (3) the defendant bound itself to make contributions to the Pension Fund.
This appeal stemmed from the district court’s dismissal of the defendant’s motions regarding a lack of personal jurisdiction and a change in venue. Additionally, the district granted the plaintiff’s motion for summary judgment. The Pension Fund (“Fund”) is a multiemployer pension benefit plan maintained under a collective bargaining agreement between the Associated Plumbing, Heating and Cooling Contractors of Jefferson County, Alabama and the affiliated local unions. The Fund is governed by the Employment Retirement Income Security Act of 1974 (“ERISA”). The defendants, Plumbing Services Inc. (“PSI”), are the Alabama corporations engaged as plumbing and pipefitting contractors. On April 8, 1998, PSI’s sole shareholder, Kenneth Julian, entered into a collective bargaining agreement requiring participating employers to make contributions to the Fund for each hour worked by their employees. PSI paid into the fund until March 10, 2011, when Julian decided PSI would stop contributing into the Fund. The Fund informed PSI and its successor entity, PSI Mechanical, Inc., that it owed “withdrawal liability” pursuant to 29 U.S.C. § 1381. This suit occurred after the defendants refused to pay the sum owed.
ERISA was enacted by Congress to promote the “soundness and stability of [employee benefit] plans” in the private industry sector. 29 U.S.C. § 1001(a). ERISA establishes the minimum standards required to protect employee and beneficiary interests. Id. The Multiemployer Pension Plan Amendments Act (“MPPAA”) was passed to further this goal by establishing withdrawal liability. See 29 U.S.C. §§ 1381, 1391. Withdrawal liability exists “to assign to the withdrawing employer a portion of the plan’s unfunded obligations in rough proportion of that employer’s relative participation in the plan over the last 5 to 10 years.” Borden, Inc. v. Bakery & Confectionary Union & Indus. Int’l Pension, 974 F.2d 528, 530 (4th Cir. 1992). Employers owe withdrawal liability when they make a complete or partial withdrawal from the pension plan. 29 U.S.C. § 1381 (a).
The defendants argued that since they were Alabama Corporations, they engaged in business exclusively in Alabama, and did not have sufficient minimum contacts with Virginia, personal jurisdiction was incorrect, and the suit should be dismissed because the correct forum was in the Northern District of Alabama. However, the Fourth Circuit determined that personal jurisdiction and venue was appropriate in the Eastern District of Virginia. The Fund is administered in Alexandria, Virginia, and any action brought under ERISA “may be brought in the district where the plan is administered.” 29 U.S.C. § 1132(e)(2). Furthermore, ERISA provides for nationwide service of process. Id. When a defendant has been validly served pursuant to a federal statute’s nationwide service provision, the district court has personal jurisdiction over the defendant as long as there is no violation of the Fifth Amendment. The Fourth Circuit determined that the defendants were unable to show an extreme inconvenience that would be necessary to constitute a violation of the Fifth Amendment.
Additionally, the defendants argued that the district court did not have appropriate subject matter jurisdiction because the plaintiff’s claim involves an unfair labor practice that should have been brought before the National Labor Relations Board. However, ERISA requires an employer that is under contract to make contributions to a retirement fund in accordance with the collective bargaining agreement. 29 U.S.C. § 1145. Section 1145 allows for the collection of delinquent contributions, including overdue withdrawal liability. Therefore, the Fourth Circuit determined that the district court plainly had subject matter jurisdiction.
Finally, the defendants argued that the grant of summary judgment to the Fund was inappropriate claiming the evidence produced by the Fund was insufficient. However, the Fund supported its motion by providing an affidavit from the administrator of the pension fund, correspondence between the fund and PSI documenting the assessment of withdrawal liability and PSI’s request for review, PSI’s admissions, and several other documents. The Fourth Circuit determined that the evidence presented was more than enough to shift the burden to produce evidence showing a genuine issue for trial to the defendants. Further, the Fourth Circuit held that PSI was an employer subject to ERISA’s arbitration requirement because the Letter of Assent was sufficient to bind PSI to make contributions to the Fund in accordance to the terms of the collective bargaining agreement. Since PSI failed to timely demand arbitration, all the Fund needed to win summary judgment was that it presented PSI proper notice of the assessed withdrawal liability. Therefore, the district court’s grant of summary judgment was appropriate.
Austin T. Reed