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Bauwens v. Revcon Technology Group, Inc.

United States Court of Appeals, Seventh Circuit

August 13, 2019

Kenneth J. Bauwens, et al., Plaintiffs-Appellants,
v.
Revcon Technology Group, Inc., et al., Defendants-Appellees.

          Argued April 17, 2019

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. l:18-cv-00707 - Ronald A. Guzman, Judge.

          Before Manion, Sykes, and Brennan, Circuit Judges.

          BRENNAN, CIRCUIT JUDGE.

         Two companies set up a pension plan for their employees, then withdrew from it. This triggered federal requirements that the companies contribute to the plan. This withdrawal liability became the subject of a dance between the companies and the pension plan's trustees: defaults and lawsuits, followed by partial payments and dismissals of the lawsuits.

         The most recent lawsuit was dismissed as time-barred. On appeal the trustees ask us to create a federal common law mechanism which would allow them to decelerate the withdrawal liability they previously accelerated. This would, in turn, preserve the timeliness of their claim. We say "create" because the statute makes no mention of such a deceleration mechanism. We decline to do so, and agree the plan trustees' claim is time-barred.

         I.

         Plaintiffs serve as trustees of a pension plan for unionized electrical workers governed by the Employment Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (ERISA). Several decades ago, the unions set up the pension plan with defendants Revcon Technology Group and S & P Electric, two electrical contractors that share common ownership.[1] Revcon withdrew from the plan completely in 2003; S & P followed a year later. The Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), 29 U.S.C. § 1381 et seq., requires employers who withdraw from underfunded pension plans to pay a withdrawal liability, either in installments or a lump sum. In 2006, the plan's trustees notified the companies they owed $394, 788 in withdrawal liability and demanded payment in eighty quarterly payments of $3, 818, starting in October 2006.

         In 2008, after Revcon missed several payments, the trustees informed defendants of their defaults and demanded immediate payment. When Revcon still failed to pay after 60 days, the trustees accelerated the outstanding liability under 29 U.S.C. § 1399(c)(5) and filed suit in the Northern District of Illinois for the entire amount plus interest, totaling $521, 553. Before appearing in the case, Revcon offered to cure its defaults and resume making quarterly payments in exchange for the trustees' dismissal of the lawsuit. The trustees agreed and voluntarily dismissed the suit under Fed. R. CIV. P. 41(a).

         Revcon cured its defaults, made three more payments, then defaulted again in April 2009. The trustees again sued seeking the defaulted payments and the entire outstanding balance, now $492, 988. Revcon again promised to cure its defaults and resume making payments, and the trustees again voluntarily dismissed the suit under Fed. R. Crv. P. 41(a).

         The parties repeated this cycle of default, lawsuit, promise to cure, and voluntary dismissal three more times in 2011, 2013, and 2015. All the complaints were identical, except that the total withdrawal liability due changed as interest accrued and Revcon made certain payments. And each complaint referred to the debt acceleration in 2008, making no claim the acceleration was ever revoked. Finally, in 2018, after yet another default by Revcon, the trustees filed this case. The 2018 complaint differs from its five predecessors in that, instead of claiming the entire outstanding withdrawal liability, it claims only the delinquent payments (plus interest) that Revcon had missed since the last voluntary dismissal in 2015, $33, 239.98.

         Rather than repeat this cycle for a sixth time, Revcon moved to dismiss the case. Revcon argued claim preclusion applied because the five previous complaints demanded the entire withdrawal liability, which necessarily includes the defaulted payments currently at issue. The "two dismissal rule" of Fed.R.Civ.P. 41(a)(1)(B) therefore barred the trustees from raising any claims arising from the withdrawal liability.[2] By the same reasoning, Revcon argued, because the trustees first sought to collect the entire debt in 2008, the six-year statute of limitations expired in 2014.

         The trustees countered that they revoked the 2008 acceleration of the withdrawal liability when they voluntarily dismissed the 2008 Complaint. The trustees argued each of the subsequent dismissals had the same decelerating effect. The trustees claimed the two dismissal rule did not apply because all parties consented to the previous dismissals by stipulation in spirit (though, admittedly, they were dismissals by notice in form).

         The district court agreed with Revcon that this case was untimely filed. It noted that the trustees' 2009, 2011, 2013, and 2015 complaints all stated the withdrawal liability was accelerated in 2008, which belied the trustees' argument that acceleration had been revoked. Holding ...


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