In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 04-2321

TRANSPERSONNEL, INC.,

Plaintiff-Appellee,

v.

ROADWAY EXPRESS, INC.,

a Delaware Corporation,

Defendant-Appellant.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 03 C 611—Amy J. St. Eve, Judge.

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ARGUED NOVEMBER 29, 2004—DECIDED AUGUST 29, 2005

____________

Before KANNE, EVANS, and SYKES, Circuit Judges.

SYKES, Circuit Judge. This is an action for declaratory

judgment pursuant to 28 U.S.C. § 2201 by Transpersonnel,

Inc., an employer of truck drivers, against Roadway Express, Inc., a motor carrier that leased drivers from

Transpersonnel. The two-count complaint sought judicial

declarations that: (1) Roadway was an “employer” of the

leased drivers for purposes of potential withdrawal liability

under a multiemployer pension plan governed by the

Employee Retirement Income Security Act (“ERISA”),

pursuant to the Multiemployer Pension Plan Amendments

Act of 1980 (“MPPAA”), 29 U.S.C. §§ 1381, et seq.; and (2)

Roadway was required to indemnify Transpersonnel for
2 No. 04-2321

potential future liability Transpersonnel may incur pursuant to the MPPAA. The district court granted summary

judgment in favor of Transpersonnel with respect to the

first question and declined to decide the second because it

was either premature or moot. We reverse.

I. Background

Transpersonnel employs truck drivers and Roadway is

a motor carrier. In 1986 the parties entered into a written agreement under which Roadway would lease drivers

employed by Transpersonnel for use in Roadway’s trucking

operation. At the time the lease was executed, Transpersonnel, in its capacity as the employer of the leased

drivers, was party to a collective bargaining agreement

(“CBA”) with the Teamsters Local Union No. 705. Under the

terms of the CBA, Transpersonnel was obligated to make

contributions to the Union’s pension fund on behalf of the

employees. Roadway was not a party to the CBA and had no

contractual relationship with Teamsters Local 705. The

lease agreement between Transpersonnel and Roadway

addressed the obligation to contribute to the pension fund

as follows:

[Transpersonnel] will have sole control and responsibility for and will be sole signatory under and connected

with all labor negotiations, grievances, collective

bargaining agreements and related items concerning

drivers furnished to [Roadway] under this Agreement.

. . . .

[Transpersonnel] will pay the drivers’ wages and

provide any of the benefits required by any applicable

bargaining agreement between [Transpersonnel] and

any authorized representative of any collective bargaining unit which may be in effect . . . .
No. 04-2321 3

. . . . 

[Roadway] agrees to reimburse [Transpersonnel], at

cost, for all applicable employee benefits, including . . .

pension fund contributions, and other similar items

paid to or on behalf of [Transpersonnel’s] employees

as a result of a union agreement obligation . . . .

In 1992 Roadway terminated the lease agreement, and

the parties apparently went their separate ways. At some

point after the lease agreement was terminated, Transpersonnel ceased making contributions to the pension fund,

although the record does not disclose the reason for the

discontinuation or precisely when payments stopped. Ten

years after the lease agreement was terminated, the

pension fund issued a demand on Transpersonnel for

partial withdrawal liability in the amount of $441,846.96,

pursuant to the MPPAA, 29 U.S.C. §§ 1381, 1382. Withdrawal liability is the amount owed a pension plan by

an employer which reduces or ceases its plan contributions prior to fully funding the liabilities of the plan

attributable to the employer. 29 U.S.C. §§ 1383, 1385. The

pension fund has made no claim against Roadway and has

never suggested that Roadway bears any withdrawal

liability under the MPPAA. Transpersonnel has denied

liability to the pension fund and requested arbitration

of the pension fund’s demand pursuant to 29 U.S.C.

§ 1401(a)(1). Arbitration has not yet taken place, and the

issues of whether Transpersonnel has incurred withdrawal

liability and, if so, the amount of that liability, have yet

to be determined.

Pending arbitration, Transpersonnel filed a two-count

complaint seeking declaratory judgments that Roadway was

an “employer” of the personnel at issue for purposes of

potential withdrawal liability under the MPPAA and that

Roadway was contractually obligated to reimburse

Transpersonnel for any withdrawal liability that may
4 No. 04-2321

1 Although 29 U.S.C. § 1401(a)(1) specifies that “[a]ny dispute

between an employer and the plan sponsor of a multiemployer

plan . . . shall be resolved through arbitration,” the threshold

question of whether a company is an “employer” may be submitted

to a court prior to arbitration. See Banner Indus. v. Cent. States

Pension Fund, 875 F.2d 1285, 1293 (7th Cir.), cert. denied, 493

U.S. 1003 (1989); see also Rheem Mfg. Co. v. Cent. States SE & SW

Areas Pension Fund, 63 F.3d 703, 705-06 (8th Cir. 1995); Bd. of

Tr. of Trucking Employees of North Jersey Welfare Fund,

Inc.–Pension Fund v. Centra, 983 F.2d 495, 501 (3rd Cir. 1992);

Mason & Dixon Tank Lines, Inc. v. Cent. States Pension Fund, 852

F.2d 156, 167 (6th Cir. 1988). “Since only an ‘employer’ is required

to arbitrate, the district court may address this threshold question

before arbitration.” Mason & Dixon Tank Lines, 852 F.2d at 167.

possibly be assessed by an arbitrator at a later date.1

The parties filed cross-motions for summary judgment,

and the district court granted Transpersonnel’s motion with

respect to its claim in Count I that Roadway was

an employer of the leased drivers for purposes of the

MPPAA. The district court held that Transpersonnel and

Roadway were “joint employers” for purposes of withdrawal

liability under the MPPAA by virtue of Roadway’s obligation under the lease agreement to reimburse

Transpersonnel for contributions required of Transpersonnel under its CBAs with the Teamsters.

With respect to Count II of the complaint, the district

court held that the claim was premature and would not

ripen until an arbitrator had determined whether a withdrawal for purposes of the MPPAA had occurred and the

amount, if any, of Transpersonnel’s withdrawal liability.

The court also held that even if the issue were ripe for

adjudication, it need not address the merits because its

conclusion that Roadway was an MPPAA “employer” had

provided Transpersonnel all the relief it was seeking—namely, a declaration effectively compelling Roadway
No. 04-2321 5

2 The parties have not raised the dismissal of Count II on appeal,

and therefore we do not address it further.

to participate in the arbitration. Accordingly, the district

court held in the alternative that Count II was moot.2

II. Discussion

We review the district court’s award of summary judgment de novo. Hildebrandt v. Ill. Dep’t of Natural Res., 347

F.3d 1014, 1024 (7th Cir. 2003). The issue presented is

whether Roadway’s relationship with the leased drivers, the

obligations of which were defined by its written lease

agreement with Transpersonnel, brings Roadway within the

ambit of an “employer” as that term is used in the MPPAA.

As mentioned briefly above, the MPPAA imposes liability on

an employer withdrawing from a multiemployer pension

plan in order to ensure that the withdrawing employer does

not leave a plan with vested pension obligations that are

only partially funded. Cent. States, SE & SW Areas Pension

Fund v. Bomar Nat’l, Inc., 253 F.3d 1011, 1014 (7th Cir.

2001). The concept of withdrawal liability attempts to avoid

a situation in which the financial burden of funding vested

pension benefits is shifted onto other employers participating in the multiemployer plan and, ultimately, to the

Pension Benefit Guaranty Corporation. Id. The pertinent

portion of the MPPAA provides: “If an employer withdraws

from a multiemployer plan in a complete withdrawal or a

partial withdrawal, then the employer is liable to the plan

in the amount determined under this part to be the withdrawal liability.” 29 U.S.C. § 1381(a).

The MPPAA itself does not define the word “employer,”

but this court has done so, adopting a definition consistent

with that used in other circuits. In Central States, SE & SW

Areas Pension Fund v. Central Transport, Inc. (“Central

Transport”), we held that an “employer” under the MPPAA
6 No. 04-2321

is “a person who is obligated to contribute to a plan either

as a direct employer or in the interest of an employer of the

plan’s participants.” 85 F.3d 1282, 1287 (7th Cir. 1996)

(emphasis added) (quoting Seaway Port Authority v.

Duluth-Superior ILA Marine Ass’n Restated Pension Plan,

920 F.2d 503, 507 (8th Cir. 1990), cert. denied, 501 U.S.

1218 (1991)). See also Carriers Container Council, Inc. v.

Mobile Steamship Ass’n-Int’l Longshoremen’s Ass’n, AFLCIO Pension Plan & Trust, 896 F.2d 1330, 1343 (11th Cir.),

cert. denied, 498 U.S. 926 (1990); Korea Shipping Corp. v.

N.Y. Shipping Ass’n-Int’l Longshoremen’s Ass’n Pension

Trust Fund, 880 F.2d 1531, 1537 (2nd Cir. 1989).

We emphasized in Central Transport that “[t]he appropriate inquiry is whether the alleged employer had an obligation to contribute [to the pension fund] as well as the

nature of that obligation.” 85 F.3d at 1287. The “obligation

to contribute” is created by contract: “[T]he nature of the

obligation to contribute [is] contractual, and therefore

the party ‘who is signatory to a contract creating the

obligation to contribute is the employer for purposes of

establishing withdrawal liability.’ ” Id. (quoting Rheem Mfg.

Co. v. Cent. States, SE & SW Areas Pension Fund, 63 F.3d

703, 707 (8th Cir. 1995)).

The import of the decision in Central Transport is

clear—an “employer” for purposes of MPPAA liability is

an entity that has assumed a contractual obligation to make

contributions to a pension fund. In explaining this conclusion, the Central Transport panel drew heavily on the

Eighth Circuit’s decision in Rheem, a case involving a fact

pattern very similar to that presented here. In Rheem, the

plaintiff leased fifteen truck drivers from a lessor that was

signatory to a CBA, establishing the lessor’s obligation to

contribute to a pension fund on behalf of the leased drivers.

When the lessor withdrew from the pension fund, the fund

asserted that the plaintiff lessee, by virtue of its lease

agreement, was a “joint employer” for purposes of liability
No. 04-2321 7

under the MPPAA. The Eighth Circuit rejected the pension

fund’s position, holding that it was the lessor, and not the

plaintiff lessee, that “was contractually bound to make

pension contributions,” and that it was the lessor, not the

lessee, that had “signed the collective bargaining agreement

creating the obligation to contribute to [the pension fund].”

Rheem, 63 F.3d at 707. The Eighth Circuit concluded that

the pension fund’s attempt to impose liability on the lessee

failed because there was “no document that could create a

contractual obligation for Rheem to contribute to [the

fund].” Id.

Transpersonnel contends that Central Transport and

Rheem are distinguishable because here there is a provision

in the lease agreement requiring Roadway as lessee to

reimburse the lessor/employer Transpersonnnel for the

latter’s contributions to the drivers’ pension fund. The

district court relied upon Roadway’s reimbursement

obligation to conclude that Roadway was a “joint employer”

for purposes of the MPPAA.

In our view, however, Roadway’s reimbursement obligation does not take this case outside the core holdings of

Central Transport and Rheem. Stated differently, the

obligation to reimburse for contributions made by another

is not the equivalent of an obligation to contribute in the

first instance, and this distinction is important for purposes

of Central Transport’s definition of “employer” under the

MPPAA.

It is undisputed in this case that Roadway had no agreement whatsoever with the Union and no contractual

obligation to make contributions to the pension fund. In

its lease agreement with Transpersonnel, Roadway agreed

to reimburse Transpersonnel for whatever pension plan

contributions Transpersonnel made for the employees in

question pursuant to its own contractual obligation to

the Union. More specifically, the lease agreement states

that Roadway “agrees to reimburse Lessor, at cost, for
8 No. 04-2321

3 The lease agreement provides that “Lessor will have sole control

and responsibility for . . . collective bargaining agreements and

related items concerning drivers furnished to Lessee under this

Agreement.” 

all . . . pension fund contributions . . . paid . . . on behalf of

Lessor’s employees as a result of a union agreement obligation.” By its terms, this obligation of reimbursement does

not arise until after a contribution has been made, and

extends only to amounts actually contributed. If

Transpersonnel made pension fund contributions that

were too small, or omitted contributions, the pension

fund could not look to Roadway for the balance as Roadway

was only contractually obligated to reimburse Transpersonnel for the actual amounts Transpersonnel contributed. Roadway would have no obligation to make up the

difference because it was not contractually obligated to

contribute to the pension fund in the first place. Central

States, 85 F.3d at 1287.

Moreover, under the terms of the lease agreement,

Transpersonnel retained sole responsibility for calculating the amounts it owed to the pension fund pursuant to its

CBA with the Union, and Transpersonnel was required to

make those payments with its own funds.3

 After the

calculations were made and payments contributed,

Transpersonnel could turn to Roadway for reimbursement

of amounts actually paid, but the lease agreement did not

permit Transpersonnel to bill Roadway for amounts owed

to the fund that had not previously been paid by

Transpersonnel pursuant to its contractual obligation to

contribute. There is nothing in the parties’ contract that

would have permitted Roadway to dispute the amounts paid

into the fund by Transpersonnel, to make its own calculation of the amount owed, to request a refund of erroneously

large payments, to have any input into the terms of the

CBA, or, most importantly, to make any payments directly
No. 04-2321 9

4 This case is distinguishable from Korea Shipping Corp. v.

NYSA-ILA Pension Trust Fund, 880 F.2d 1531, 1539 (2nd Cir.

1989), which involved cargo shippers that were contractually

obligated to make pension fund contributions but whose contributions were processed through the New York Shipping

Association (“NYSA”) for “immediate transmittal” to the New

York Shipping Association–International Longshoremen’s

Association Pension Fund. The Second Circuit held that under

these circumstances the NYSA was merely a “conduit” for the

shipper’s contractually required pension contributions. Id. Here,

Transpersonnel had the sole and complete contribution obligation and can hardly be characterized as a mere “conduit.”

to the pension fund at all.

Accordingly, we find no merit to Transpersonnel’s suggestion that it was “merely a conduit” through which pension

plan payments passed from Roadway to the fund.4

 The

terms of the lease agreement establish that Transpersonnel

was the sole entity “contractually bound to make pension

contributions” for purposes of “employer” status under the

MPPAA. Rheem, 63 F.3d at 707. Simply put, nothing in the

reimbursement provision of the lease agreement imposes a

contractual obligation upon Roadway to make contributions

to the pension fund.

The district court cited Central Transport but did not

apply it, concluding that the case did not answer the

question of whether “more than one entity may qualify as

an ‘employer’ under the MPPAA.” But the definition of

“employer” adopted in Central Transport is one of general

application and does not turn on whether only one—or more

than one—putative MPPAA “employer” is asserted. Indeed,

Rheem—cited at length and with approval in Central

Transport—specifically addressed whether more than one

entity may qualify as an employer under the MPPAA.

As we have noted, at issue in Rheem was whether the

lessor and lessee of truck drivers could be considered “joint
10 No. 04-2321

5 The cases cited by the district court were Am. Stevedoring Corp.

v. Burlington Indus., Inc., No. 85 C 4180, 1985 WL 5057 (N.D. Ill.

Dec. 19, 1985); Cent. Pa. Teamster’s Pension Fund v. Serv. Group,

Inc., 645 F. Supp. 996 (E.D. Pa. 1985); and Schaffer v. Eagle

Indus., Inc., 726 F. Supp. 113 (E.D. Pa. 1989).

(continued...)

employers” for purposes of MPPAA withdrawal liability—exactly the same question presented here. See Rheem,

63 F.3d at 705. In Central Transport, this court was

faced with the question of whether to disregard the corporate form of the contractual obligor as a means to ascertain the “true employer” and avoid a potentially fraudulent

arrangement involving insolvent, alter ego

shell corporations. Central Transport, 85 F.3d at 1287.

We characterized the possibility of fraud as constituting

an exception to the general rule established in Rheem,

and held that in the absence of fraud allegations, an entity not contractually obligated to make contributions to

a pension fund would not be considered an “employer”

for purposes of withdrawal liability under the MPPAA. Id.

In Rheem there was no occasion to “look behind the contractual obligor” because there were no allegations that the

relationship between the lessor and lessee was a “sham” or

a “potentially fraudulent arrangement.” Rheem, 63 F.3d at

707 n.5. The same is true here.

The district court found support for its conclusion that

Roadway was an MPPAA “employer” in the holdings of

three district court cases, each of which predate our decision in Central Transport and the Eighth Circuit’s

decision in Rheem. To the extent that these cases apply

a definition of an MPPAA “employer” that differs from

that adopted by this court in Central Transport, they

are inconsistent with currently applicable circuit precedent and, in any event, are not controlling here.5
No. 04-2321 11

5 (...continued)

USCA-02-C-0072—8-29-05

Accordingly, for the foregoing reasons, the judgment of

the district court is REVERSED and the case is REMANDED for

further proceedings consistent with this opinion.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit