United States District Court, D. Minnesota
MATT UTECHT and KENT DIXON, Trustees of the Minneapolis Retail Meat Cutters and Food Handlers Pension Plan, Plaintiffs,
DIAMOND LAKE, INC., Defendant.
R. Cefalu and Bryan J. Morben, for plaintiffs.
E. Krause, for defendant.
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS'
MOTION FOR SUMMARY JUDGMENT
R. TUNHEIM CHIEF JUDGE
trustees of the Minneapolis Retail Meat Cutters and Food
Handlers Pension Plan (“the Plan”) brought this
Employee Retirement Income Security Act (“ERISA”)
case against Diamond Lake, Inc. (“Diamond Lake”),
a Minneapolis supermarket that withdrew from the Plan when it
went out of business in 2013. The Plan brings this action for
collection, alleging that Diamond Lake defaulted on
withdrawal liability payments that the Plan properly
determined and scheduled under ERISA. Now before the Court is
the Plan's Motion for Summary Judgment. The Plan argues
that Diamond Lake waived its right to contest liability by
failing to demand arbitration within the timeframe required
by the statute. Diamond Lake responds that it was not
required to do so because the Plan never completed the
determination process. In keeping with the plain language of
ERISA, the Court will find that the Plan's failure to
respond to Diamond Lake's letter requesting review did
not excuse Diamond Lake from the arbitration demand deadline.
Diamond Lake also requests equitable relief, which the Court
will decline to grant. Because Diamond Lake does not contest
the other elements required for the Plan to prevail in this
action, the Court will grant the Plan's Motion for
Plan is a multiemployer benefit plan administered in
accordance with ERISA. (Compl. ¶ 1, Jan. 19, 2016,
Docket No. 1.) Diamond Lake is a Minnesota corporation that
operated Sullivan's SuperValu for nearly 30 years until
going out of business in 2013. (Decl. of John H. Sullivan,
III (“Sullivan Decl.”) ¶¶ 1-2, May 18,
2017, Docket No. 37.) When Diamond Lake was in business, it
made contributions to the Plan on behalf of employees who
were members of United Food & Commercial Workers Union
District Local 653. (Id. ¶¶ 3, 6). On
January 25, 2013, after laying off those employees, it sold
its remaining non-cash assets and made its final
contributions to the Plan. (Id. ¶¶ 4,
6-7.) This was a “complete withdrawal” under
ERISA. See 29 U.S.C. § 1383(a).
22, 2013, the Plan sent Diamond Lake a letter stating that
its withdrawal liability (calculated using the ERISA
statutory formula) was $588, 361. (Sullivan Decl. ¶ 8;
Decl. of David E. Krause (“Krause Decl.”)
¶¶ 2-3, Ex. A. at 1, May 18, 2017, Docket No. 38.)
The letter explained that Diamond Lake had the right to
request review of the Plan's calculations within 90 days,
though it was required to begin payment either way. (Krause
Decl. ¶ 2, Ex. A at 2.) On August 26, Diamond Lake
responded with a letter from counsel contending that it was
not subject to withdrawal liability because ERISA limits such
liability to a percentage of a company's liquidation
value, which for Diamond Lake was negative. (Sullivan Decl.
¶ 10; Krause Decl. ¶ 4, Ex. B at 1-2.) The letter
stated that it was sent “pursuant to 29 U.S.C. §
1399(b)(2)(A), ” the statutory provision allowing an
employer to request review, identify an inaccuracy, or
furnish additional relevant information. (Krause Decl.
¶¶ 4-5, Ex. B. at 1-2.) The letter did not
explicitly request review, but stated that “Diamond
Lake is submitting the information in this letter for the
Trustee's consideration in determining whether Diamond
Lake has any withdrawal liability to the Plan.” (Krause
Decl. ¶ 4, Ex. B. at 1.) Diamond Lake received no
response. (Krause Decl. ¶¶ 4, 6-7, Ex. B. at 1-2.)
the Plan's schedule, Diamond Lake's first payment was
due on September 23, 2013. (Aff. of Bryan J. Morben
(“Morben Aff.”) ¶ 2, Ex. A at 4-5, Apr. 27,
2017, Docket No. 33.) Diamond Lake did not make that payment,
or any others. (Id. at 5.) On January 23, 2015, the
Plan notified Diamond Lake that it would be in default if it
did not cure its failure to pay within 60 days. (Aff. of
Susan Knoblauch (“Knoblauch Aff.”) ¶¶
8-9, Ex. 2 at 1, Apr. 29, 2016, Docket No. 15.) The Plan
filed this action a year later, serving Diamond Lake via the
Minnesota Secretary of State. (Compl.; Summons, Jan. 29,
2016, Docket No. 4.) Diamond Lake did not respond, and the
Clerk entered default. (Clerk's Entry of Default, Mar.
25, 2016, Docket No. 8.) When the Plan subsequently moved for
default judgment, Diamond Lake filed its Answer, and the
entry of default was vacated and set aside. (Pls.' Mot.
Default J., Apr. 29, 2016, Docket No. 11; Ans., May 27, 2016,
Docket No. 20; Order, June 1, 2016, Docket No. 21.) Ten
months later, the Plan filed the Motion for Summary Judgment
that is now before the Court. (Pls.' Mot. Summ. J., Apr.
27, 2017, Docket No. 30.)
STANDARD OF REVIEW
judgment is appropriate where there are no genuine issues of
material fact and the moving party can demonstrate that it is
entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).
A fact is material if it might affect the outcome of the
lawsuit, and a dispute is genuine if the evidence is such
that it could lead a reasonable jury to return a verdict for
either party. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). A court considering a motion for
summary judgment must view the facts in the light most
favorable to the non-moving party and give that party the
benefit of all reasonable inferences to be drawn from those
facts. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986). Summary judgment is
appropriate if the nonmoving party “fails to make a
showing sufficient to establish the existence of an element
essential to that party's case, and on which that party
will bear the burden of proof at trial.” Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986). “To
defeat a motion for summary judgment, a party may not rest
upon allegations, but must produce probative evidence
sufficient to demonstrate a genuine issue [of material fact]
for trial.” Davenport v. Univ. of Ark. Bd. of
Trs., 553 F.3d 1110, 1113 (8th Cir. 2009).
Employee Retirement Income Security Act (“ERISA”)
of 1974 “helped assure private-sector workers that they
would receive the pensions that their employers had promised
them.” Milwaukee Brewery Workers' Pension Plan
v. Joseph Schlitz Brewing Co., 513 U.S. 414, 416 (1995).
But the law's requirement that employers who had
withdrawn from an insolvent plan in the five years prior to
insolvency pay a fair share of the plan's underfunding
perversely incentivized employers to withdraw from
financially shaky plans. Id. The Multiemployer
Pension Plan Amendments Act (“MPPAA”) of 1980
sought to fix the problem by requiring employers that
withdraw from underfunded multiemployer pension plans to pay
withdrawal liability. Id. at 415-16.
the amended statute, withdrawal liability is created by an
employer's partial or complete withdrawal from a
multiemployer plan. 29 U.S.C. § 1381(a). Complete
withdrawal occurs when an employer permanently ceases to have
an obligation to contribute under the plan, or permanently
ceases all covered operations under the plan. Id.
§ 1383(a). Withdrawal liability is calculated according
to a statutory formula that considers the plan's total
underfunding, the employer's fair share, certain de
minimis reductions, and other limitations on liability.
See Id. §§ 1391, 1389, 1405.
soon as practicable” after withdrawal, the plan sponsor
is obligated to determine the employer's withdrawal
liability, notify the employer of the amount due, provide a
payment schedule, and demand payment in accordance with it.
Id. §§ 1399(b)(1), 1382. Within 90 days of
receiving this determination, the employer “may ask the
plan sponsor to review any specific matter” in the
determination and payment schedule, “identify any
inaccuracy, ” and “furnish any additional
relevant information to the plan sponsor.” Id.
§ 1399(b)(2)(A). “After a reasonable review of any
matter raised, the plan sponsor shall notify the employer
of” its decision, the basis for it, and the reason for
any changes. Id. § 1399(b)(2)(B).
separate section, the statute provides that disputes between
employers and plan sponsors “shall be resolved through
arbitration. Either party may initiate the arbitration
proceeding within a 60-day period after the
earlier of (A) the date of
notification to the employer under section
1399(b)(2)(B) of this title, or (B)
120 days after the date of the employer's
request under section 1399(b)(2)(A) of this
title.” Id. § 1401(a)(1) (emphases
added). The Eighth Circuit explains: “Either party may
initiate arbitration proceedings within 180 days of an
employer's timely request to the plan sponsor for a
review of the determination of amount due or
within 60 days of the plan sponsor's notification to the
employer of its decision after such review, whichever
is earlier.” Vaughn v. Sexton, 975
F.2d 498, 501 (8th Cir. 1992) (emphasis
neither party initiates arbitration, the statute provides
that the plan sponsor's determination and payment
schedule become final and allows the sponsor to bring a state
or federal court action for collection. 29 U.S.C. §
1401(b)(1). Any factual defenses that could have been raised
in arbitration are waived when the arbitration demand period
closes. Vaughn, 975 F.2d at 501-02. The strictness
of the ...