on Plaintiffs’ search of county records, Plaintiffs learned that, on June 2, 1997, Greg sold the South
Curtis Road property to the Accetta Family Limited Partnership for $792,500. (Id., § 31).

Tidmarsh requested an estimate of Harvey’s withdrawal liability from Central States for the
years 1993 through 1996, (Plaint.’s 56.1(a)(3) Statement 32). A review of Harvey’s financial
records showed that, in the years 1992 and 1993, Harvey experienced reduced revenues and incurred
substantial losses. (Id., J 33).

On December 19, 2002, based on their belief that Harvey and all other trades or businesses
under common control, including Mars, constituted a single employer within the meaning of ERISA,
Plaintiffs sent a notice and demand for payment of withdrawal liability to Mars. The notice and
attached invoice notified Mars that it was required to discharge its liability in monthly payments of
$23,505.12, with the first payment due on January 1, 2003. (Plaint.’s 56.1(a)(3) Statement 4] 34 -
35). Mars has failed to make any withdrawal liability payments to Central States. (Id., 9 39).

On or about March 24, 2003, Mars initiated arbitration on Plaintiffs’ withdrawal liability
assessment against Mars in accordance with Section 4221 of ERISA, 29 U.S.C. § 1401. The
arbitration proceeding is currently pending. (Plaint.’s 56.1(a)(3) Statement § 38). The pre-trial
conference for the arbitration was scheduled for May 15, 2003. The arbitration is presently
scheduled for October 1 - 2, 2003. (Id., § 42; Def.’s Response {] 42).

Plaintiffs filed this action, on February 10, 2003, to collect interim withdrawal liability
payments that were due from Mars because, prior to a Stock Purchase Agreement whose principal
purpose was to evade or avoid withdrawal liability, Mars was under common control with Harvey,
an employer which had effected a complete withdrawal from the pension fund pursuant to

29 U.S.C. § 1383,



The “pay now, arbitrate later” interim payment rule has a narrow exception. The court has
discretion to decline the order of interim payments if: (1) the fund’s claim is frivolous and (2)
making the interim payments would irreparably harm the employer. See Trustees of the Chicago
Truck Drivers, Helpers & Warehouse Workers Union Pension Fund y. Rentar Indus., Inc., 951 F.2d
152, 154-55 (7th Cir. 1991) (Rentar); Robbins y. McNicholas Transp. Co., 819 F.2d 682, 685 (7th
Cir. 1987). The employer must make an affirmative showing that the plan’s claim has no merit, i.e.,
no arguable basis in law or fact. See Rentar, 951 F.2d at 155; Central States, Southeast & Southwest
Areas Pension Fund y. Manning Motor Express, 125 F. Supp. 2d 1113, 1115 (N.D. Ill. 2000). The
court may only excuse interim payments if “the arbitrator is almost certain to rule for the employer.”
See Trustees of the Chicago Truck Drivers, Helpers & Warehouse Workers Union Pension Fund v.
Central Transport, Inc., 935 F.2d 114, 119 (7th Cir. 1991).

In the instant case, it is undisputed that the interim withdrawal liability payments requirement
of ERISA is applicable. Mars relies on the narrow exception to the requirement of such interim
payments in an attempt to avoid such payments pending arbitration. Specifically, Mars argues that
Plaintiffs have failed to demonstrate their claim for withdrawal liability against Mars has merit.
Mars does not argue, and presents no evidence whatsoever, that making the interim payments would
irreparably harm Mars. Accordingly, Mars has failed to demonstrate that the narrow exception to
interim withdrawal liability payments is applicable. See Rentar, 951 F.2d at 155.

Assuming arguemndo that Mars did argue and presented evidence demonstrating making the
interim payments would irreparably harm Mars, the exception still fails to apply because Mars has
failed to demonstrate that it is almost certain that it would prevail before the arbitrator. While Mars

may ultimately prevail before the arbitrator, the allegations and facts set forth above show an


(Id., 117). Plaintiffs also leamed that, in 1993, Mars was formed for the explicit purpose of making
asset purchases and managing property. At that time, Mars purchased property on South Curtis Road
for a purchase price of $475,000, with $100,000 down payment and the remaining financed by a
loan. (Id., 19; Def.’s Response to 19). Plaintiffs also learned that the South Curtis Road property
was sold in 1997; however, Tidmarsh could not recall the exact name of the purchaser nor the
purchase price on August 2, 1998. (Id., § 20).

On July 11, 2000, Plaintiffs served their first set of interrogatories and first request for
production of documents on Harvey. (Plaint.’s 56.1(a)(3) Statement {J 21-22). In Harvey’s answer
to Plaintiffs’ first request for production of documents forwarded by Harvey in its answer to the
request for production of documents, received on September 22, 2000, it was revealed that Tidmarsh
received $213,650 in compensation for the sale of Mars to her son. (Id., 23).

On March 12, 2001, Plaintiffs served their second set of interrogatories and second request
for production of documents on Harvey. (Plaint.’s 56.1(a)(3) Statement ff] 24 - 25). Plaintiffs
received the responses to the second set of discovery requests on April 26, 2001. (Id., | 26).

On October 24, 2001, Plaintiffs served their third set of interrogatories and third request for
production of documents on Harvey. (Plaint.’s 56.1(a)(3) Statement {J 27-28). In this set of
discovery requests, Plaintiffs inquired as to the circumstances surrounding the 1997 sale by Greg of
the property held by Mars. (Id., 29). By letter dated January 9, 2002, Harvey’s counsel informed
Plaintiffs that the third set of discovery requests were beyond the area of relevant inquiry and were,
therefore, unanswered. Harvey also indicated that the period for discovery was complete and that

Plaintiffs would need leave of court prior to forwarding any additional requests. (Id., 30). Based


Mars seeks an order dismissing Plaintiffs’ Amended Complaint because it is barred by the
doctrine of laches or, in the alternative, an order staying the arbitration proceedings pending
adjudication by this Court of Plaintiffs’ claim against Mars.

Mars first contends that the instant suit should be dismissed under the doctrine of laches.
Failure to bring an action in a timely manner, also known as the doctrine of laches, is an affirmative
defense. See Fed. R. Civ. P. 8(c). However, challenges and defenses to a withdrawal liability
assessment are required to be brought in arbitration. See Girouz Bros. Transp., Inc. v. New England
Teamsters Pension Fund, 73 F.3d 1, 3-4 (1st Cir. 1996); Vaughn v. Sexton, 975 F.2d 498, 502 (8th
Cir. 1992); Chicago Truck Drivers, Helpers & Warehouse Workers Union v. Gateco, Inc., 1993 WL
210539 (June 11, 1993). Accordingly, Mars’ affirmative defense must be presented in the pending
arbitration, and dismissal of the instant suit for interim withdrawal liability is denied.

Mars next contends that this Court should decide the merits of Plaintiffs’claim for withdrawal
liability, instead of the arbitrator, because Plaintiffs have waived their statutory right to arbitrate by
refusing to sign a joint submission to arbitrate. Mars’ argument is without merit.

Mars concedes that it initiated arbitration in March 2003 in regards to Plaintiffs’ withdrawal
liability assessment against Mars in accordance with Section 4221 of ERISA, 29 U.S.C. § 1401.
Furthermore, that arbitration proceeding is currently pending and is scheduled for October 1 - 2,
2003.

Lastly, Mars seeks to have the Court stay any attempts by Plaintiffs to invoke the acceleration
provisions of ERISA. However, Plaintiffs have not invoked the acceleration provisions of ERISA.

Accordingly, any stay would be premature.


arguable basis for Plaintiffs’ position, Accordingly, the narrow exception would not apply; and
summary judgment in favor of Plaintiffs is granted.

For the foregoing reasons, Mars’ Motion for Summary Judgment or Partial Summary
Judgment and a Stay of Certain Proceedings are denied. Plaintiffs’ Motion for Summary Judgment
is granted. Plaintiffs are directed to submit proof of the claimed amount of the interim payments,
plus any interest, liquidated damages and fees and costs Plaintiffs seek, on or before
August 28, 2003. Defendant is directed to respond to Plaintiffs’ submission concerning the

judgment amount on or before September 11, 2003. The case is set for status on October 22, 2003

}
/3 2003 YW Vin.
9h W. DARRAH
Inited States District Judge

at 9:00 a.m.

Dated: in 4



Minuze Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge John W, Darrah Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 02 C 9295 DATE 8/13/2003
CASE CENTRAL STATES vs. MARS LEASING COMPANY
TITLE

[In the following box (a) indicate the party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.]

MOTION:

DOCKET ENTRY:

(e0) Oo Filed motion of [ use listing in “Motion” box above.]

{2) Oo Brief in support of motion due

(3) Oo Answer brief to motion due___. Reply to answer briefdue____.

(4) a Ruling/Hearingon___setfor__at

(5) o Status hearing[held/continued to] (set for/re-set for]on___setfor__—_at

(6) ica} Pretrial conference[held/continued to] [set for/re-set for]on__—_—setfor__—sat_—

(7) im Trial(set for/re-set for]on__—_aat

(8) Oo [Bench/Jury trial] [Hearing] held/continued to_____at

(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
COFRCP4(m) Local Rule 41.1 COFRCP41(a)\(1) COFRCP41(a)(2).

ao ff [Other docket entry] Status hearing held and continued to 10/22/03 at 9:00 a.m. Enter

Memorandum Opinion And Order. Mars’ motion for summary judgment or partial summary judgment
and a stay of certain proceedings are denied. Plaintiffs’ motion for summary judgment is granted.
Plaintiffs are directed to submit proof of the claimed amount of the interim payments, plus any interest,
liquidated damages and fees and costs plaintiffs seek, on or before 8/28/03. Defendant is directed to
respond to plaintiffs’ submission concerning the judgment amount on or before 9/11/03.

(lj) [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required, number of notices

Notices mailed by judge's staff, AU 18 2003

Notified counsel by telephone. datz docketed

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Plaintiffs have moved for summary judgment, seeking an order that Mars make the interim
payments due to Plaintiffs while the arbitration is pending.

Summary judgment is proper if “the pleadings, depositions, answers to interrogatories, and
admissions on file, together with affidavits, if any, show that there is no genuine issue as to any
material fact.” Fed. R. Civ, P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
All the evidence and the reasonable inferences that may be drawn from the evidence are viewed in
the light most favorable to the nonmovant. Miller v. American Family Mut. Ins. Co., 203 F.3d 997,
1003 (7th Cir. 2000). Summary judgment may be granted when no “reasonable jury could return a
verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Specific rules have been prescribed by Congress for resolving disputes between pension
funds and employers over withdrawal liability. The parties must submit the issue to arbitration,
29 U.S.C. § 1401; and the employer must make interim payments pending an arbitration ruling,
29 U.S.C. § 1399(c)(2). Accordingly, the general rule under ERISA is “pay now, arbitrate later”.
See Central States, Southeast and Southwest Areas Pension Fund v. Nitehawk Express, Inc., 223
F.3d 483, 496 (7th Cir. 2000). If the employer refuses to make the interim payments, the plan may
file a civil action in federal court to collect the interim payments. 29 U.S.C. § 1451(a)(1).
Furthermore, the statute provides that “any failure of the employer to make any withdrawal liability
payment within the time prescribed shall be treated in the same manner as a delinquent contribution.”
29 U.S.C. § 1451(b). The statute also provides that, in any action by a plan to enforce an employer’s
delinquent contributions, “the court shall award the plan” reasonable attorney’s fees, costs, and

liquidated damages if the action results in a “judgment in favor of the plan”. 29 U.S.C. § 1132(g)(2).


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

CENTRAL STATES, SOUTHEAST AND
SOUTHWEST AREAS PENSION FUND and
HOWARD McDOUGALL, trustee,
Plaintiffs, No. 02 C 9295
v. Judge John W. Darrah

MARS LEASING COMPANY, a Wisconsin
corporation,

Defendant.

we we ewe SS SS SSD

MEMORANDUM OPINION AND ORDER

Plaintiffs, Central States, Southeast and Southwest Areas Pension Fund (“Central States”)
and Howard McDovugall, filed suit against Defendant, Mars Leasing Company (“Mars”), pursuant
to the Employee Retirement Income Security Act of 1974 (“ERISA”), seeking collection of interim
withdrawal liability payments. Presently before the Court are Plaintiffs’ Motion for Summary
Judgment and Mars’ Motion for Summary Judgment or Partial Summary Judgment and a Stay of
Certain Proceedings.

Central States is a multi-employer pension plan within the meaning of Sections 3(37) and
4001(a)(3) of ERISA, 29 U.S.C. §§ 1002(37) and 1301(a)(3). Howard McDougall is a trustee and
fiduciary of Central States. (Def.’s 56.1(a)(3) Statement 1). Mars is a Wisconsin corporation. (Id.,
44). Harvey Service, Inc. (“Harvey”) is also a Wisconsin corporation. (Id., § 7).

Harvey was subject to a series of collective bargaining agreements, executed with various
local unions affiliated with the International Brotherhood of Teamsters, under which it was required

to make contributions to Central States on behalf of certain employees. (Def.’s 56.1(a)(3) Statement


118). Plaintiffs determined that as a result of a decline in Harvey's contributions to Central States,
Harvey effected a “partial withdrawal” from Central States on December 31, 1996, (Plaint.’s
56.1(a)(3) Statement ] 9). Plaintiffs determined that, as a result of this partial withdrawal, Harvey
incurred withdrawal liability in the amount of $498,642.70, as determined under Section 4201(b) of
ERISA. (Id., J 10).

On or about May 28, 1997, Harvey received a notice and demand for payment of withdrawal
liability issued by Central States in accordance with Sections 4202(2) and 4219(b)(1) of ERISA. The
notice and attached invoice notified Harvey that it was required to discharge its liability in monthly
payments of $23,505.12. (Plaint.’s 56. 1(a)(3) Statement | 1 1). On or about August 23, 1997,
Harvey received notice from Central States that its withdrawal liability payments were past due. (Id.,
{ 12). Harvey did not timely initiate arbitration pursuant to Section 4221(1) of ERISA; and
consequently, the amounts demanded by Central States are due and owing. (Id., 13).

Later that year, Plaintiffs filed suit against Harvey to collect the withdrawal liability, Central
States, Southeast and Southwest Areas Pension Fund, et al. y, Harvey Service, Inc., No. 97 7960
(N.D. Ill) (“Harvey lawsuit”). (Plaint.’s 56.1 (a)(3) Statement] 15). On February 11, 1998, Plaintiffs
obtained a default judgment against Harvey in the total amount of $688,331.74. (d., { 16).

During post-judgment discovery, Plaintiffs learned that prior to December 15, 1995, Mary
Tidmarsh (“Tidmarsh”) was the sole shareholder of both Harvey and Mars and that she was also
president of both Harvey and Mars. (Plaint.’s 56. 1(a)(3) Statement 18). The post-judgment citation
of Tidmarsh, taken in August 2, 1998, disclosed that, in 1995, Tidmarsh sold the stock of Mars to

her son, Greg Tidmarsh (“Greg”). Tidmarsh could not recall the exact purchase price of the stock.