Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_18-cv-06824/USCOURTS-cand-5_18-cv-06824-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1451 E.R.I.S.A.

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

BOARD OF TRUSTEES OF THE PACIFIC 

COAST ROOFERS PENSION PLAN et al.,

Plaintiffs,

v.

PETERSEN-DEAN, INC. dba 

PETERSENDEAN, et al.

Defendants.

Case No. 18-cv-06824-NC

ORDER GRANTING 

PLAINTIFFS’ MOTION FOR 

SUMMARY JUDGMENT

Re: Dkt. No. 52

In this lawsuit, plaintiffs Board of Trustees of the Pacific Coast Roofers Pension 

Plan and the Pacific Coast Roofers Pension Plan allege that defendants Petersen-Dean, Inc. 

and other related corporations (collectively, “Petersen-Dean”) are required to pay the Plan 

a significant sum as a result of Petersen-Dean’s withdrawal from the multiemployer 

pension plan. See generally, Dkt. No. 1. Petersen-Dean concede that under existing Ninth 

Circuit law, they are generally required to pay the amount in dispute while arbitrating its 

challenge to its withdrawal liability. Dkt. No. 62 at 4. Petersen-Dean, however, requests 

that the Court follow and expand on the “equitable exception” to the general “pay now, 

dispute later” rule recognized by the Fifth and Seventh Circuits. Id. at 4–5. No authority 

exists for Petersen-Dean’s requested expansion of the equitable exception, however, and 

the Court accordingly GRANTS the Plan’s motion for summary judgment.

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I. Background

A. Factual Background1

The Pacific Coast Roofers Pension Plan is an employee benefit plan and 

multiemployer plan as defined under ERISA. See Dkt. No. 54 (“Sargent Decl.”) ¶ 2. That 

plan is administered by plaintiff Board of Trustees. Id. ¶ 3. Petersen-Dean, Inc. and 

various other related employers were signatories to various collective bargaining 

agreements that required them to make benefit contributions to the Plan. Id. ¶ 5.

By March 2017, Petersen-Dean ceased to have an obligation to contribute to the 

Plan. Id. ¶ 6. Pursuant to ERISA § 4203, 29 U.S.C. § 1383, the Plan’s third-party 

administrator determined that Petersen-Dean had completely withdrawn from the Plan, 

making Petersen-Dean liable to the Plan for withdrawal liability. Id. The Plan’s actuary 

then calculated Petersen-Dean’s withdrawal liability, based on Petersen-Dean’s partial 

withdrawals in 2014, 2015, and 2016, and a complete withdrawal in 2017. Id. ¶ 7. Under 

the Plan’s assessment of Petersen-Dean’s withdrawal liability, Petersen-Dean was required 

to make a lump sum payment totaling $5,344,325. Id., Ex. A.

On July 17, 2017, the Plan’s third-party administrator sent Petersen-Dean a notice 

of withdrawal liability. Id. ¶ 8; see also Dkt. No. 53 (“Minser Decl.”), Ex. A. In response, 

Petersen-Dean requested reconsideration of the Plan’s assessment of withdrawal liability 

and demanded arbitration. See id., Ex. F. That arbitration remains pending and PetersenDean has not made any withdrawal liability payments. See id. ¶¶ 4, 7; see also id., Ex. C.

Petersen-Dean asserts that they are currently in financial distress and that they are 

exploring options to avoid “the most extreme measures available.” See Dkt. No. 63 

(“Milionis Decl.”) ¶¶ 2, 3. As such, Petersen-Dean argues that entry of judgment against 

them would place them in a financially untenable situation and reduce the likelihood of the 

Plan’s recovery. Id. ¶ 4.

B. Procedural History

The Plan filed their complaint on November 9, 2018, against Petersen-Dean 

1 The following facts are undisputed except where indicated.

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alleging claims for payment of withdrawal liability under ERISA, 29 U.S.C. § 1381, and 

failure to provide required information under ERISA, 29 U.S.C. § 1399(a). See Dkt. No. 1 

¶¶ 37–56. The Plan filed their instant motion for summary judgment on March 30, 2020. 

See Dkt. No. 52. All parties have consented to the jurisdiction of a magistrate judge. See 

Dkt. Nos. 5, 21 at 8.

II. Legal Standard

Under Federal Rules of Civil Procedure 56(a), a court “shall grant summary 

judgment if the movant shows that there is no genuine dispute as to any material fact and 

the movant is entitled to judgment as a matter of law.” Under Rule 56, the moving party 

bears the initial burden to demonstrate the absence of a genuine issue of material fact. 

Once the moving party meets its burden, then the non-moving party must cite “particular 

parts of materials in the record” showing that there is a genuine issue for trial. Fed. R. Civ. 

P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). A “genuine issue” exists if a 

reasonable jury could find for the non-moving party. E.g., Open Text v. Box, Inc., No. 13-

cv-04910-JD, 2015 WL 428365, at *1 (N.D. Cal. Jan. 30, 2015). On summary judgment, 

the Court does not make credibility determinations or weigh conflicting evidence, as these 

determinations are left to the trier of fact at trial. Bator v. State of Hawaii, 39 F.3d 1021, 

1026 (9th Cir. 1994).

III. Discussion

The sole issues in this case are whether the Court should adopt an equitable 

exception to the “pay now, dispute later” rule for withdrawal liability under ERISA and, if 

so, whether the Court should expand that exception to allow Petersen-Dean to avoid 

making payments even where the Plan’s claim is not frivolous. Petersen-Dean does not 

oppose the Plan’s calculation of the amount of withdrawal liability. See Dkt. No. 62.

Under ERISA and its later amendment through the Multiemployer Pension Plan 

Amendments Act (“MPPAA”), employers who withdraw from a multiemployer pension 

plan are required to “fund a proportionate share of the fund’s ‘unfunded vested benefit 

liability.’” Bd. of Trustees v. Thompson Bldg. Materials, Inc., 749 F.3d 1396, 1399 (9th 

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Cir. 1984) (citing 29 U.S.C. § 1381). The plan’s trustees are required “to determine the 

employer’s allocable share of the unfunded vested benefit liability and to collect the 

amounts due.” Id. (citing 29 U.S.C. § 1382). Disputes arising between the plan and the 

employer must be resolved through arbitration. Id. (citing 29 U.S.C. § 1401(a)).

ERISA further provides that “[p]ayments shall be made by an employer in 

accordance with the determinations made under this part until the arbitrator issues a final 

decision with respect to the determination submitted for arbitration . . . .” 29 U.S.C. 

§ 1401(d). An employer that fails to pay while the arbitration is pending is considered 

delinquent in making required plan contributions. Id. If the arbitrator ultimately 

determines that the employer overpaid its withdrawal liability, the plan must return the 

overpayment with interest. See 29 C.F.R. § 4219.31(d).

In Trustees of Plumbers & Pipefitters Nat. Pension Fund v. Mar-Len, Inc., 30 F.3d 

621 (5th Cir. 1994) and Trustees of Chicago Truck Drivers, Helpers & Warehouse 

Workers Union (Indep.) Pension Fund v. Central Transportation, Inc., 935 F.3d 114 (7th 

Cir. 1991), the Fifth and Seventh Circuits, respectively, adopted an equitable exception to 

the “pay now, dispute later” rule in § 1401(d).

The genesis of this exception is found in the Seventh Circuit’s decision in Robbins 

v. McNichols Transportation Co., 819 F.2d 682 (7th Cir. 1987). There, the Seventh 

Circuit concluded that district courts “have a measure of discretion whether or not to use 

injunctive power to compel interim payments” while arbitration is pending. McNichols, 

819 F.2d at 685. The court reasoned that although Congress “provided that interim 

payments are to be made[,] [i]t has not expressly required courts to use injunctive powers 

to compel the payments in every case.” Id. Thus, the Seventh Circuit concluded that 

courts have some “degree of discretion [to] alleviate[] concern that there be unnecessarily 

harsh and unintended results.” Id. at 686. Before a district court can excuse interim 

payments, however, it must “consider[] the employer’s probability of success before the 

arbitrator, and the gravity of any economic hardship caused by payment of installments 

while awaiting decision . . . .” Id. at 685.

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In Central Transportation, the Seventh Circuit clarified and narrowed McNichols

holding. There, the Seventh Circuit emphasized that the McNichols exception was “at 

most a recognition that if the fund’s claim is frivolous—if the arbitrator is almost certain to 

rule for the employer—then the plan is engaged in a ploy that a court may defeat.” Central 

Transp., 935 F.3d at 119. If a “plan’s claim is legitimate, however, the court should order 

the making of interim payments and leave the rest to the arbitrator.” Id. The Fifth Circuit 

followed the Seventh Circuit’s reasoning in Mar-Len, limiting the equitable exception to 

instances where the plan’s claim for withdrawal liability “is frivolous or not colorable.” 30 

F.3d at 626.

As out-of-circuit precedent, neither McNichols, Central Transportation, nor MarLen are binding on this Court. The Ninth Circuit has not directly addressed whether this 

exception exists and the Sixth Circuit has declined to follow McNichols and its progeny. 

See Findlay Truck Line, Inc. v. Central States, Southeast & Southwest Areas Pension 

Fund, 726 F.3d 738 (6th Cir. 2013) (“[C]ongressional intent, as well as the plain text of the 

MPPAA, discourages courts from making their own equitable exceptions to the 

MPPAA.”).

It is unnecessary, however, for the Court to predict whether the Ninth Circuit would 

adopt the McNichols exception because there is no support for Petersen-Dean’s suggested 

expansion of McNichols. Both the Fifth and Seventh Circuits have emphasized the 

narrowness of the equitable exception. In Mar-Len, the Fifth Circuit noted that 

“withdrawing employers are often financially troubled companies.” 30 F.3d at 626. Thus, 

“[d]eferring interim withdrawal liability payments may ultimately leave a pension fund 

with an obligation to the workers without a corresponding source of funds.” Id. Dropping 

the frivolousness requirement from the McNichols exception would effectively permit the 

exception to swallow the general rule and would undermine Congress’s intent in passing 

the MPPAA. Indeed, every court to consider whether an exception exists to the “pay now, 

dispute later” rule have suggested that the threshold for such an exception would be very 

high. See Findlay, 726 F.3d at 751 (collecting cases).

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Because Petersen-Dean does not argue that the Plan’s claims of withdrawal liability 

are frivolous or not colorable, Petersen-Dean must make interim payments of their 

withdrawal liability. In the alternative, Petersen-Dean suggests that the Court could 

decline to enter summary judgment and stay proceedings until settlement efforts are 

exhausted. See Dkt. No. 62 at 5. Petersen-Dean, however, has provided no support for 

this outcome. The Plan opposes any further delay for settlement purposes.

Because there is no support for Petersen-Dean’s suggested expansion of the 

McNichols exception and they do not otherwise oppose the Plan’s motion for summary 

judgment, the Court GRANTS the Plan’s motion for summary judgment.

IV. Conclusion

The Court GRANTS the Plan’s motion for summary judgment. No claims remain 

for further adjudication.

Two issues remain for the parties’ consideration. First, it appears that some

Defendants no longer exist and did not answer the complaint. See, e.g., Dkt. No. 11 at 2 

n.1. It is unclear whether the Court may enter judgment against those Defendants. 

Second, because the arbitration remains pending, it may be premature to enter judgment if 

the parties intend to seek enforcement of the arbitration. Accordingly, the Court ORDERS 

Plaintiffs to file a proposed judgment by May 19, 2020. The Court also ORDERS both 

parties to file responses as to these two issues by May 19, 2020.

Dated: May 12, 2020 _____________________________________

NATHANAEL M. COUSINS

United States Magistrate Judge

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