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Quad/Graphics/Graphics, Inc. v. GCIU-Employer Retirement Fund

United States District Court, E.D. Wisconsin

September 20, 2016



          LYNN ADELMAN District Judge

         Quad/Graphics, Inc. (“Quad”) filed this action against the GCIU-Employer Retirement Fund (“the Fund”). Before me now is the Fund's motion to dismiss and its alternative motion to transfer venue to the Central District of California.

         I. BACKGROUND

         This case involves the Multiemployer Pension Plan Amendments Act (“MPPAA”), which is an amendment to the Employee Retirement Income Security Act (“ERISA”). As its name suggests, the MPPAA governs multiemployer pension plans, which are plans that accept contributions from multiple employers and are usually maintained to fulfill the terms of collective bargaining agreements. See Concrete Pipe and Prods. of Cal., Inc. v. Constr. Laborers Pension Trust for So. Cal., 508 U.S. 602, 605 (1993). The contributions of employers participating in the plans are pooled in a general fund available to pay any benefit obligation of the plan. Id. To receive benefits, an employee need not work for one employer for any particular continuous period. Id. at 605-06. Because service credit is portable, employees of an employer participating in the plan may receive credit for any work done for any participating employer. Id. at 606. An employee obtains a vested right to benefits upon retirement after accruing a certain length of service for participating employers. Id.

         In 1980, Congress enacted the MPPAA to strengthen ERISA's protections for multiemployer plans. One aspect of the MPPAA is its requirement that an employer pay “withdrawal liability” when withdrawing from a multiemployer plan. The purpose of this requirement is to ensure that the financial burden of the vested pension benefits of the withdrawing employer's employees will not be shifted to the other employers in the plan and, ultimately, to the Pension Benefit Guaranty Corporation, which insures such benefits. Central States, Southeast and Southwest Areas Pension Fund v. Slotky, 956 F.2d 1369, 1371 (7th Cir. 1992).

         The MPPAA provides a procedure for calculating and assessing withdrawal liability. Concrete Pipe, 508 U.S. at 609. For purposes of this case, it is not necessary to understand how withdrawal liability is calculated, other than to note that such liability is calculated by the pension plan's actuary and that the amount of the employer's liability will vary depending on the year in which the employer withdraws from the plan and on whether its withdrawal was “partial” or “complete.” Id.; 29 U.S.C. §§ 1383 & 1385.

         Once an employer withdraws from a plan, the plan must notify the employer of the amount of its withdrawal liability, furnish the employer with a schedule for paying that liability, and demand that the employer make payments in accordance with the schedule. See 29 U.S.C. § 1399(b)(1); Concrete Pipe, 508 U.S. at 610. If the employer disputes the plan's calculation of its withdrawal liability, it must follow the procedures specified in the MPPAA for challenging the calculation. Under these procedures, the employer and the plan must first attempt conciliation. 29 U.S.C. § 1399(b)(2); Slotky, 956 F.2d at 1371-72. If that fails, a party may demand arbitration. 29 U.S.C. § 1401(a)(1). Following arbitration, a party may obtain judicial review of the arbitrator's decision through an action in the district court to enforce, vacate, or modify the arbitrator's award. 29 U.S.C. § 1401(b)(2).

         Importantly, the MPPAA provides that once a plan notifies an employer of its withdrawal liability and makes a demand for payment, the employer must immediately begin making payments in accordance with the schedule established by the plan, even if the employer disputes the plan's assessment and initiates arbitration. 29 U.S.C. §§ 1399(c)(2) & 1401(d). These payments are known as “interim payments, ” and the requirement to make them is sometimes described as being part of a “pay now, dispute later” scheme. See Central States, Southeast and Southwest Areas Pension Fund v. Bomar Nat'l, Inc., 253 F.3d 1011, 1015 (7th Cir. 2001). If an employer fails to make interim payments, the plan can bring a collection action against the employer in federal court. See 29 U.S.C. § 1451; Trs. of Chicago Truck Drivers, Helpers and Warehouse Workers Union Pension Fund v. Cent. Transp., Inc., 935 F.2d 114, 116 (7th Cir. 1991).

         The present case arises out of the Fund's assessments of withdrawal liability against Quad. On July 2, 2010, Quad acquired another company, World Color (USA), which was formally known as Quebecor World (USA) Inc. Collective bargaining agreements between GCIU and Quebecor required Quebecor to contribute to the Fund. However, after Quad acquired Quebecor, employees at Quad's facility in Versailles, Kentucky voted to decertify GCIU as their bargaining representative, and Quad stopped making contributions to the Fund. On March 13, 2012, the Fund sent Quad a notice of partial withdrawal liability for the Versailles facility, and also a separate notice of complete withdrawal liability for Quad's other facilities. The notices stated that the Versailles partial withdrawal occurred in 2010, and that the complete withdrawal of the remaining facilities occurred in 2011. On February 1, 2013, the Fund sent Quad a revised “notice and demand for payment” in which it assessed 2010 partial withdrawal liability for the Versailles facility at $93, 194, 558 (the “Versailles Assessment”) and 2011 complete withdrawal liability for Quad's remaining facilities at $27, 368, 656 (the “2011 Assessment”). See Compl. Ex. B. As required by the MPPAA, Quad began making interim payments on these assessments.

         Quad disputed both assessments. With respect to the Versailles Assessment, Quad argued that it continued to contribute to the Fund into 2011, and that therefore it did not partially withdraw in 2010. With respect to the 2011 Assessment, Quad agreed that it completely withdrew in 2011, but it disputed the Fund's calculation of the amount owed. Both of these disputes were submitted to arbitration.

         On May 18, 2015, the arbitrator issued an “interim award.” See Compl. Ex. C. In that award, the arbitrator stated that he agreed with Quad that the Versailles facility did not partially withdraw from the Fund until 2011, and that therefore Quad did not have partial withdrawal liability for 2010. The arbitrator ordered the Fund to rescind the Versailles Assessment. The arbitrator also ordered the Fund to “revise” the 2011 Assessment regarding Quad's complete withdrawal liability in a manner that was consistent with the arbitrator's conclusions in the interim award, which related to how payments for vacation benefits should be figured into the assessment. Id. at pp. 13-15.

         On September 9, 2015, Quad filed an action against the Fund in the Central District of California to enforce the arbitrator's award as it related to the Versailles Assessment. However, because the arbitrator had classified its award as interim rather than final, the Fund argued that the suit was premature. In addition to moving to dismiss the federal suit on this ground, the Fund asked the arbitrator to issue an order clarifying that the interim award was not final as to any issue. On October 27, 2015, the arbitrator granted the Fund's request and entered a “procedural order” in which he stated that the interim award was only tentative and was not final as to any issue that was subject to judicial review. See Fund's Request for Judicial Notice No. 1, ECF No. 18-1. The day after the arbitrator issued this order, Quad voluntarily dismissed the case it had filed in the Central District of California.

         Meanwhile, the Fund understood the arbitrator's interim award to require the Fund to immediately prepare a reassessment of Quad's 2011 complete withdrawal liability. In order to carry out its obligations under the order, on November 12, 2015, the Fund sent Quad a “request for information” that asked Quad to provide the fund with information about its vacation pay contributions. See Compl. Ex. F. The Fund claimed it had the authority to issue this request for information under 29 U.S.C. § 1399(a), which is part of the MPPAA.

         On November 16, 2015, the Fund filed a pleading in the arbitration entitled “Initial Revised Assessment of Quad/Graphics Inc.'s Withdrawal Liability.” See Compl. Ex. E. The pleading, which was signed by the Fund's lawyer, explained that the reassessment incorporated “the Arbitrator's finding that the Fund used an improper methodology for determining the date on which a facility's obligation to contribute to a plan ceases.” Id. The pleading stated that the revised assessment applies a “vacation deferral rule” consistently to all of the Quad facilities that have withdrawn. Id. The revised assessment provided that Quad incurred partial withdrawal liability in 2011 of $113, 075, 692 and complete withdrawal liability in 2012 of $94, 453, 492. The pleading concluded by stating that, in submitting the reassessment, the Fund was not accepting the arbitrator's finding that the original assessments were done in error or waiving any right to challenge the arbitrator's findings following the ...

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