In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 02-2604

NESTLE HOLDINGS, INC. and

NESTLE TRANSPORTATION COMPANY,

Plaintiffs-Appellants,

v.

CENTRAL STATES, SOUTHEAST AND

SOUTHWEST AREAS PENSION FUND,

Defendant-Appellee.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 01 C 5081—Elaine E. Bucklo, Judge.

____________

ARGUED APRIL 3, 2003—DECIDED SEPTEMBER 5, 2003

____________

Before CUDAHY, MANION, and KANNE, Circuit Judges.

MANION, Circuit Judge. Nestle Holdings, Inc. and Nestle

Transportation Company brought a motion to modify and

partially vacate an arbitration award entered against it in

favor of Central States, Southeast and Southwest Areas

Pension Fund, stemming from the company’s alleged failure

to make required contributions to the Fund. The district

court held that the company transferred union work to

non-union employees and therefore incurred partial

withdrawal liability under the Multi-Employer Pension Plan

Amendment Act. Nestle appeals and we affirm.
2 No.02-2604

I.

Nestle S.A., though its subsidiaries Nestle Holdings, Inc.

and Nestle Transportation Company (collectively “Nestle”),

transports its products throughout the country via a vast

transportation network. That network is composed of

independent common carrier truckers, owner-operator

drivers and employee drivers. In mid-1995 Nestle utilized

approximately 275 owner-operator drivers to transport

goods. All of these drivers were independent contractors. In

addition, it employed approximately 215 drivers, some of

whom were represented by various local unions (also

referred to as Fund drivers). Of the drivers relevant to this

case, eight of the employee drivers were represented by

Teamsters Local Union No. 460, and worked out of the

Nestle shipping terminal in St. Joseph, Missouri, and three

of the employee drivers were represented by Teamsters

Local Union No. 695, and worked out of the Nestle terminal

in Oconomowoc, Wisconsin. The collective bargaining

agreements (CBAs) with both local unions required Nestle

to make contributions to a multi-employer pension plan, the

Central States, Southeast and Southwest Areas Pension

Fund (the “Fund”).

The Nestle transportation network was split into local

lanes and over-the-road lanes. Three of the St. Joseph terminal Fund drivers drove local lanes as did one of the

Oconomowoc drivers. These local lanes were in practice

operated exclusively by the Fund drivers, although the

CBAs in effect at either terminal did not specifically describe

the work required of the union members. The over-the-road

lanes were routes over which trucks would transport Nestle

products between two or more geographic locations. The

other seven Fund drivers drove over-the-road lanes, along

with non-union employee drivers (or non-Fund employee
No. 02-2604 3

drivers), owner-operator drivers and common carriers. All

classes of drivers drove over-the-road lanes on an essentially randomly selected basis depending on factors such as

the availability or location of the driver or his hours driven

under government regulations. In the fall of 1995, Nestle

reached an agreement with the local unions to close the two

trucking terminals in Oconomowoc and St. Joseph for

business reasons. The Fund drivers at those locations were

let go, even though Nestle’s need for truckers who were

located near those terminals did not end entirely. The

arbitrator specifically noted that Nestle continued to assign

work originating in the St. Joseph area after the closures to

at least one non-Fund employee driver who resided in the

St. Joseph area, and therefore was near the same location as

the terminated Fund drivers.

After the terminal closures, the local runs in St. Joseph and

Oconomowoc were performed exclusively by independent

common carriers. The over-the-road lanes that originated at

those locales, however, were distributed amongst all

remaining classes of drivers. Nestle continued to assign the

over-the-road trucking lanes in the same manner it had

before and using the same criteria of driver availability,

driver location, and number of hours driven to determine

particular long-distance lane assignments. The only difference is that after the terminal closure, the seven Fund

drivers who previously drove the over-the-road lanes were

not in the available pool from which a driver would be

selected. For example, Nestle’s records showed that Fund

drivers drove the Oconomowoc to Waverly, Iowa, lane in

the second quarter of 1995, but non-Fund employee drivers

drove this lane during the first quarter of 1996. Similarly,

Fund drivers drove the St. Joseph to DeKalb, Illinois, route

in the second quarter of 1995. However, after September

1995, of course, no Fund drivers made these runs. Nevertheless, despite this reduction in the available workforce, the
4 No.02-2604

1 The Fund notes that on at least two occasions in its communications with the Fund, Nestle stated it had “transferred” work

formerly performed by drivers covered by collective bargaining

agreements requiring contributions to the Fund. In 1996, for

example, Nestle’s in-house counsel checked the “yes” box in

answer to the question whether the work had been transferred in

its Statements of Business Affairs sent to the Fund. However, as

the district court correctly noted, these admissions were not the

basis of the arbitrator’s decision. Nor are the admissions necessarily dispositive of the legal issue of liability. More importantly,

(continued...)

non-Fund employee drivers did not increase their workload

through 1996, primarily because Nestle lost a shipping

contract in the region. 

After the Fund drivers were terminated, the Fund assessed Nestle almost $1.3 million in Employee Retirement

Income Security Act (“ERISA”) partial withdrawal liability

pursuant to the Multi-Employer Pension Plan Amendment

Act (“MPPAA”), 29 U.S.C. § 1385(b)(2)(A)(i). The Fund

assessed this fee because it determined that Nestle was still

liable for contributions to the Fund on behalf of these

drivers because it transferred their work to non-Fund

employee drivers. Nestle subsequently submitted a request

for review to the Fund, asserting that it did not transfer the

Fund drivers’ work and therefore was not liable for partial

withdrawal liability because the Fund-covered operations

out of Oconomowoc and St. Joseph effectively ceased upon

the terminals’ closings, as evinced by the reduction in

workload. Nestle also asserted that the work which was

continued from the St. Joseph and Oconomowoc locales was

not the same work formerly performed by the Fund drivers.

The Fund upheld the withdrawal liability assessment, and

Nestle submitted its demand for arbitration in November

1997.1

 On June 1, 2001, the arbitrator issued his opinion,
No. 02-2604 5

1 (...continued)

because we find that Nestle did transfer such work so as to incur

liability for other reasons, we need not address the issue on this

appeal.

finding that Nestle had effected a partial withdrawal from

the plan by transferring work to non-Fund employee

drivers. Nestle appealed the decision to the district court

which affirmed the arbitrator’s decision. Nestle Holdings Inc.

v. Central States, Southeast and Southwest Pension Fund, 204 F.

Supp. 2d 1113 (N.D. Ill. 2002). The district court held that

Nestle “transferred” union transportation work to non-Fund

drivers when the work was reassigned after closure of the

company’s transportation terminals, and thus partial

withdrawal liability for contributions to a union pension

fund was properly imposed upon the company. The district

court reasoned that the work was assigned in the same way

before and after the closures, and was not essentially

different in character. Nestle appeals.

II.

The question in this case is whether the covered unionized

work that Teamster drivers formerly did for Nestle out of St.

Joseph and Oconomowoc has been “transferred” within the

meaning of ERISA as amended by the MPPAA. See 29 U.S.C.

§ 1385(b)(2)(A)(i). This was the sole provision relied on by

the Fund in assessing a partial withdrawal liability on

Nestle. The MPPAA requires a company that withdraws

from a multi-employer pension plan covered by ERISA to

pay “withdrawal liability,” which is intended to cover that

company’s share of the unfunded vested benefits that exist

when the company withdraws. 29 U.S.C. §§ 1381, 1385,

1391. Withdrawal liability may be assessed if the employer
6 No.02-2604

2 Even though Nestle terminated all union drivers associated

with Locals 460 and 695, this case involves only partial withdrawal liability because Nestle, to this day, still makes contributions to the Fund on behalf of other employees not involved in

this appeal.

3 Both the arbitrator and the district court concluded that there

was no question that Nestle did not “continue” to perform work

in the jurisdictions of the Local 460 and Local 695 CBAs because

Nestle closed the St. Joseph and Oconomowoc terminals and the

CBAs defined their jurisdictions as work performed by drivers

domiciled at those terminals. This conclusion necessarily implies

that any work done on the same lanes as previously used by the

Fund drivers occurred from a different location, because terminals which previously defined the location of the work were

closed. 

makes a complete withdrawal from an ERISA plan, 29

U.S.C. § 1383, or, as in this case, if there is a partial withdrawal under § 1385.2

 In defining partial withdrawal

liability, § 1385(b)(2)(A)(i) states:

(2)(A) There is a partial cessation of the employer’s

contribution obligation for the plan year if, during such

year—

(i) the employer permanently ceases to have an obligation to contribute under one or more but fewer than all

collective bargaining agreements under which the employer has been obligated to contribute under the plan

but continues to perform work in the jurisdiction of

the collective bargaining agreement (CBA) of the type

for which contributions were previously required3

 or

transfers such work to another location . . . . (Emphasis

added.)

This is a case of first impression as no federal court has

before addressed the meaning of “transfers” as used in
No. 02-2604 7

4 The Fund maintains that, contrary to Nestle’s representations,

this case is neither a case of first impression, nor a dispute regarding the meaning of the word “transfer.” Rather, the Fund

contends, this case presents a factual dispute that the arbitrator

resolved in favor of the Fund. While it is true that the arbitrator

did have to make several findings of fact, it is also true those

findings were only meaningful in the context of ERISA. The district court appropriately exercised plenary jurisdiction over the

meaning of the word “transfer” insofar as ERISA is concerned,

and so shall we. Central States, Southeast and Southwest Areas

Pension Fund v. Midwest Motor Exp., Inc., 181 F.3d 799, 804 (7th

Cir. 1999).

5 Nestle incorrectly argues that “such work” refers to “work in

the jurisdiction of the collective bargaining agreement,” as defined by the domicile of the affected drivers. However, this

phrase in the statute specifically modifies the “continues” portion

of the statute. See § 1385(b)(2)(A)(i). The phrase “transfer such

work to another location” implies that work will not be performed out of the same jurisdiction of the collective bargaining

agreement. If the statute were read in accordance with Nestle’s

contention, then the second clause of the statute would be

(continued...)

§ 1385(b)(2)(A)(i).4 The basic rule in statutory interpretation

is that plain statutory language governs. Olander v.

Bucyrus-Erie Co., 187 F.3d 599, 604 (7th Cir. 1999); see also

Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204,

209 (2002) (stating that courts must interpret ERISA strictly,

according to the plain meaning of the language actually

used in the statute). The verb “transfers” as used in its plain

sense means: “to convey [something] from one person,

place, or situation to another.” Webster’s Ninth New

Collegiate Dictionary 1253 (1990). The statute uses the

phrase “transfers such work to another location” where

“such work applies to ‘work . . . of the type for which contributions were previously required.’ ”5

 Therefore, if prior to
8 No.02-2604

5 (...continued)

rendered meaningless.

6 Nestle does not contest the amount, $1,257,598.41, assessed for

partial withdrawal liability. 

7 Those lanes that were assigned to independent owner/

operators and common carriers after the closures are not the

subject of this appeal. A Pension Benefit Guaranty Corporation

(“PBGC”), the agency delegated the authority to administer the

MPPAA, Opinion Letter 87-17 (Aug. 13, 1986), Def. Ex. 3, states

that work formerly done by pension fund covered employees but

taken up by third parties is not “transfer[red] . . . to another

location within the meaning of [§ 1385(b)(2)(A)(i)],” because the

law covers situations where “work of the same type is continued

by the employer but for which contributions to a plan . . . are no

longer required.” The PBGC understood “work of the same type”

to mean in part work done “at another of its own locations.”

Therefore for the transfer of work to another location or employee to be a precondition to a partial withdrawal, the transfer

must be to other employees and not to any third parties such as

owner/operator drivers or third-party contractors. For example,

(continued...)

the closures union employees were performing work for

which contributions were required, and which was then

conveyed to and performed by non-Fund employee drivers

at another location after the closures, then Nestle would be

liable under the statute.6

Nestle argues that, as a matter of law, the company did

not transfer the work of its Fund drivers domiciled at the St.

Joseph and Oconomowoc terminals to its drivers for whom

it owed no contributions to the Fund domiciled elsewhere.

Primarily the company contends that after the closure of the

St. Joseph and Oconomowoc terminals, its non-Fund

employee drivers did the same work they had been doing

before the terminal closures and less of it.

7

 Nestle argues that
No. 02-2604 9

7 (...continued)

after the closures, the local lanes were no longer driven by Nestle

employees; that work was being done by third-party outsiders,

and so, under ERISA, it did not create partial withdrawal liability. Both the arbitrator and district court agreed with this

argument, and appropriately so. See Trustees of Iron Workers Local

473 Pension Trust v. Allied Products Corp., 872 F.2d 208, 210 n. 2

(7th Cir. 1989) (“The PBGC’s views are entitled to deference because of its responsibility to enforce Title IV of ERISA, 29 U.S.C.

§§ 1301, 1461 (which includes ERISA’s withdrawal liability

provisions)”); see also Penn Central Corp. v. Western Conference of

Teamsters Pension Trust Fund, 75 F.3d 529, 534 (9th Cir. 1996) (“We

are obligated to defer to the PBGC’s interpretation ‘[e]ven if

reasonable minds could differ as to the proper interpretation of

the statute.’ ”) (citation omitted).

because the company did not hire more (replacement) nonFund employee drivers, and its existing non-Fund employee

drivers actually drove fewer long distance lanes after the

closures than they had before, the company did not transfer

any work to non-Fund employee drivers. As both the

district court and the arbitrator noted, an essential element

to their argument is that the routes previously assigned to

union workers, which were unidentifiable prior to the

terminal closures, simply disappeared when the terminals

were closed. 

Nestle’s argument, however, fails to convince. Prior to the

closures, the work was assigned by Nestle on the basis of

efficiency, driver availability, location, and remaining

regulated hours of the drivers. Thus, the assignments were

not entirely random, but instead predicated on a valuation

linked to overall network efficiency. There was no set number or type of route that was performed by Fund drivers;

instead drivers were assigned to those routes for which they

were most qualified in terms of network efficiency. There-
10 No.02-2604

fore “such work” as defined by the statute, in this case,

means those routes which on the basis of efficiency, availability, location and remaining hours, would have been

assigned to a Fund driver. Admittedly this work, along with

the overall workload for the non-Fund employee drivers,

decreased following the closures. However, it cannot be said

that because the “terminals” closed in St. Joseph and

Oconomowoc, the work which would have been previously

assigned to the Fund employees completely disappeared. It

strains credulity to believe that all of the non-Fund employees at both terminals, who were previously determined to

be less qualified in terms of network efficiency to handle a

certain haul, would immediately become the more efficient

alternative after the terminal closures.

This conclusion still holds true even considering that the

“location” aspect of the efficiency analysis would have

changed after the terminal closures because the Fund

drivers would no longer have been domiciled at the terminals. For example, the arbitrator specifically noted that at

least one non-union driver who lived in or near St. Joseph,

but did not report to the St. Joseph terminal, continued to

drive in the lanes previously assigned to union members

after the closures. Prior to the closures, the arbitrator noted,

this driver shared the out-hauls from St. Joseph and therefore must have been periodically determined to be less

appropriate to handle certain loads. After the closures he,

along with all of the other non-Fund employee drivers on

the routes, would be selected to carry a load even if one of

the union members previously domiciled at the St. Joseph

or Oconomowoc terminal could have more efficiently

handled the work. Therefore, the work that would have

previously been handled by a Fund employee was transferred out of the jurisdiction of the terminated CBAs to the

non-Fund employee because they were performing work

that they would not have been previously assigned.
No. 02-2604 11

Nestle cautions the court against misreading the statute to

include a clause that would impose partial withdrawal

liability on an employer who continues work at another

location, as opposed to transfers work to another location.

See 29 U.S.C. §1385(b)(2)(A)(i). We are mindful of this

caution considering that the non-Fund employees were, in

fact, responsible for the same routes as the Fund employees

prior to, and after the terminal closures. Additionally, the

overall workload of the non-Fund employee drivers did not

increase when they assumed complete responsibility for

those routes. However, after the closures the non-Fund

employees did assume complete responsibility for all of the

hauls on the routes, even those hauls which a Fund driver

would have more appropriately handled. It was these hauls

which were conveyed to the non-Fund employee drivers,

and thus work was transferred to another location pursuant

to 29 U.S.C. §1385(b)(2)(A)(i). Nestle could have taken

several steps to reduce their liability under the statute.

When faced with a reduction in overall workload, Nestle

could have reduced its workforce across the board, including both Fund and non-Fund employee drivers, instead of

targeting only the union-represented drivers. This would

have been especially appropriate in this case considering

that Nestle could not identify beforehand which particular

hauls were handled by Fund and non-Fund employee

drivers. Or Nestle could have redefined the Fund drivers’

work responsibilities to identify their particular hauls or

lanes. For example, because four of the released Fund

drivers operated exclusively in local lanes, Nestle avoided

partial withdrawal liability upon their termination by

contracting with third-party common carriers to drive those

lanes. In either scenario, Nestle would not have been

assigning non-Fund employees work which would have

previously been assigned to Fund employees, thereby

incurring liability.
12 No.02-2604

III.

For the foregoing reasons, we AFFIRM the district court.

A true Copy:

Teste:

 _____________________________

Clerk of the United States Court of 

Appeals for the Seventh Circuit 

USCA-02-C-0072—9-5-03