Court Opinion

ID: 6330934
Source: CourtListenerOpinion
Date Created: 2022-04-13 17:00:21.786889+00
Date Added: 2024-06-11T09:23:06.906558
License: Public Domain

PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                 _______________

                      No. 20-3286
                    _______________

  J. SUPOR & SON TRUCKING & RIGGING CO., INC.,
                                  Appellant

                             v.

     TRUCKING EMPLOYEES OF NORTH JERSEY
      WELFARE FUND; TEAMSTERS LOCAL 560

                    _______________

      On Appeal from the United States District Court
              for the District of New Jersey
                 (D.C. No. 2:17-cv-13416)
      U.S. District Judge: Honorable Kevin McNulty
                     _______________

               Argued: November 17, 2021

    Before: CHAGARES, Chief Judge, and BIBAS and
               FUENTES, Circuit Judges

                   (Filed: April 5, 2022)
                    _______________

Othiamba N. Lovelace                           [ARGUED]
Ronald L. Tobia
TOBIA & LOVELACE LLC
5 Sicomac Road
Suite 177
North Haledon, NJ 07508

   Counsel for Appellant

David W. New                                      [ARGUED]
DAVID W. NEW, P.C.
P.O. Box 447
Rutherford, NJ 07070

   Counsel for Appellees
                    _______________

                 OPINION OF THE COURT
                     _______________

BIBAS, Circuit Judge.
    When judges read statutes, we start with the plain meaning
of the text, often turning to dictionaries. But we do not end
there. Sometimes, another reading of the text is not only
plausible, but better. That is true here.
   A contractor sued a pension fund. Under a federal law, the
parties must arbitrate if the contractor is an “employer.” A fair
reading of the statute says that it is. Though that reading does
not follow the dictionary definition of “employer,” it draws
from another part of the statute and preserves the statutory
plan. Plus, it aligns with three decades of unanimous case law
from our sister circuits. So the parties must arbitrate.

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                       I. BACKGROUND
   A. The law
   A truck driver may have many employers over time. If only
one employer funded a driver’s pension, his retirement benefits
would not reflect his whole career. So trucking unions often
bargain with multiple employers to fund a single pension plan:
a multiemployer plan.
    Multiemployer plans are regulated by ERISA (the
Employee Retirement Income Security Act of 1974). 29 U.S.C.
§ 1001 et seq. But when Congress first passed ERISA, it
overestimated the stability of these plans. Multiemployer
pension plans were vulnerable to free riders who withdrew
early, sticking remaining employers with a much higher bill.
Id. § 1001a(a), (4)(A). Remaining employers either had to foot
that bill or slash pensioners’ benefits. Id.
    To solve the problem, Congress passed the Multiemployer
Pension Plan Amendments Act of 1980 (the MPPAA), which
amended ERISA. 29 U.S.C. § 1381 et seq. Under the MPPAA,
employers who pull out early must pay a “withdrawal liability”
based on those “unfunded vested benefits.” Id. § 1381(a),
(b)(1). That penalty provision gave rise to this case.
   B. The facts
    J. Supor & Son Trucking is a construction contractor. It got
a job on New Jersey’s American Dream Project, one of the
largest retail developments in America. J. Supor agreed to use
truck drivers exclusively from one union chapter. It also agreed
to contribute to the union drivers’ multiemployer pension fund,

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the Trucking Employees of North Jersey Welfare Fund, Inc. –
Pension Fund.
   But the Dream Project stalled. So J. Supor stopped working
with the union drivers and pulled out of the Fund. To its
surprise, it got a letter from the Fund demanding $766,878,
more than twice what J. Supor had earned on the project.
Because J. Supor was an employer under the MPPAA, the
Fund reasoned, J. Supor had to pay a withdrawal penalty for
ending its pension payments without covering its share. 29
U.S.C. § 1381(a).
    J. Supor disagreed. The union, it said, had promised that it
would not have to pay any penalty. So J. Supor sued the Fund
in federal court to contest the withdrawal fee. The Fund moved
for summary judgment, arguing that the statute requires
“employer[s]” to arbitrate such disputes. Id. § 1401(a)(1). J.
Supor retorted that it was not an employer under the Act.
    Neither the MPPAA nor Third Circuit case law defines
“employer.” So the District Court adopted the definition used
by every circuit to face the issue. An “employer,” it ruled,
includes “any entity ‘obligated to contribute to a [pension] plan
either as a direct employer or in the interest of an employer of
the plan’s participants.’ ” App. 8–9 (quoting Korea Shipping
Corp. v. N.Y. Shipping Ass’n-Int’l Longshoremen’s Ass’n
Pension Tr. Fund, 880 F.2d 1531, 1536–37 (2d Cir. 1989))
(alteration in original). Because J. Supor met this definition,
the District Court granted summary judgment and sent the
parties to arbitration.

                               4
    Now J. Supor appeals, asking us to depart from our sister
circuits and define “employer” differently. The District Court
had jurisdiction under 29 U.S.C. § 185, and we have
jurisdiction under 28 U.S.C. § 1291. We review the District
Court’s grant of summary judgment de novo. Tundo v. Cnty. of
Passaic, 923 F.3d 283, 286 (3d Cir. 2019).
    II. THE DISTRICT COURT PROPERLY USED ERISA’S
               DEFINITION OF “EMPLOYER”

   Under the MPPAA, disputes between “employers” and
“plan sponsors” over withdrawal liability go to arbitration. 29
U.S.C. § 1401(a)(1). The Fund is the “plan sponsor.” And the
parties dispute J. Supor’s withdrawal liability. So if J. Supor is
an “employer,” it must arbitrate.
   We start with the text’s plain meaning. An “employer” is
“[o]ne who employs,” specifically “[o]ne who employs
servants, workmen, etc. for wages.” Employer, Oxford English
Dictionary (2d ed. 1989). Under that definition, J. Supor might
not be liable because it may have employed the drivers only
indirectly.
    But the dictionary definition creates an immediate problem.
It would cripple a core feature of the MPPAA: withdrawal
liability for employers who exit multiemployer pension plans
without covering their share. 29 U.S.C. § 1381. If that
penalized only direct employers, others could easily evade it
by hiring indirectly through third parties. See Carriers
Container Council, Inc. v. Mobile S.S. Ass’n, 896 F.2d 1330,
1343 (11th Cir. 1990). And that would defeat one of the
MPPAA’s chief innovations.

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     The dictionary definition of “employer” would also make
withdrawal liability turn on minutiae. Is an entity an employer
if it hires a pensioner as an independent contractor, not as an
employee? What if it hires him through a subsidiary or
subcontractor? Consider this case. On the record before us,
even counsel are unsure whether J. Supor employed the truck
drivers directly or through subcontractors. Oral Arg. 24:23–
25:23, 28:26–28:41.
    To avoid these thickets, every circuit to face this issue has
adopted a more technical definition. All seven circuits define
an “employer” as an entity “obligated to contribute to a plan
either as a direct employer or in the interest of an employer of
the plan’s participants.” Korea Shipping, 880 F.2d at 1537
(internal quotation marks omitted); accord Resilient Floor
Covering Pension Fund v. M&M Installation, Inc., 630 F.3d
848, 851–52 (9th Cir. 2010); Cent. States, Se. & Sw. Areas
Pension Fund v. Int’l Comfort Prods., LLC, 585 F.3d 281,
284–85 (6th Cir. 2009); Cent. States, Se. & Sw. Areas Pension
Fund v. Cent. Transp., Inc., 85 F.3d 1282, 1287 (7th Cir. 1996);
Seaway Port Auth. of Duluth v. Duluth-Superior ILA Marine
Ass’n Restated Pension Plan, 920 F.2d 503, 507 (8th Cir.
1990); Carriers Container, 896 F.2d at 1343; see also Mary
Helen Coal Corp. v. Hudson, 235 F.3d 207, 212 (4th Cir.
2000). This judicial consensus spans more than three decades.
   The technical approach draws that definition from Title I of
ERISA, the law that the MPPAA amends. Title I defines an
“employer” as “any person acting directly as an employer, or
indirectly in the interest of an employer, in relation to an
employee benefit plan.” 29 U.S.C. § 1002(5). Though Title I

                               6
definitions do not automatically apply elsewhere in ERISA,
“they may … reflect the meaning” of terms in other titles.
Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359,
370 n.14 (1980). And here, a version of the Title I definition
fits better than the dictionary definition. By covering both
direct and indirect employers, it avoids punching a hole in the
statutory scheme.
    But understanding the Title I definition in the MPPAA
context presents a further puzzle. What kind of “relation” must
an entity have to an employee-benefit plan to count as an
employer? The MPPAA answers this question. It routinely
describes an “employer” by its obligation to contribute to a
pension. See, e.g., 29 U.S.C. § 1002(37)(A), (A)(i) (defining a
“multiemployer plan,” in part, as “a plan … to which more than
one employer is required to contribute”); id. § 1391(2)(A)
(making withdrawal-liability computation turn on the “plan
year[s] in which the employer has an obligation to contribute”)
(emphases added). Thus, an entity “relat[es] to an employee
benefit plan” if it must contribute to one. Cent. States, 585 F.3d
at 285 (quoting 29 U.S.C. § 1002(5) and citing id. § 1381(a))
(emphasis omitted). Following this logic, our sister circuits
define an “employer” by its obligation to pay into a pension,
either as a direct employer or on behalf of one. Id. at 284–85.
   We adopt this definition too. It is plausible, protective of
the statutory scheme, and supported by three decades of
consensus.
    This technical definition is in good company. Congress
routinely defines “employer” both more expansively than
direct employment and “in relation” to something else. See,

                                7
e.g., 29 U.S.C. § 2611(4)(A)(ii) (defining “employer” to
include “any person who acts, directly or indirectly, in the
interest of an employer to any of the employees of such
employer”); id. § 203(d) (“ ‘Employer’ includes any person
acting directly or indirectly in the interest of an employer in
relation to an employee.”); id. § 2001(2) (“ ‘[E]mployer’
includes any person acting directly or indirectly in the interest
of an employer in relation to an employee or prospective
employee.”); id. § 152(2) (“ ‘Employer’ includes any person
acting as an agent of an employer, directly or indirectly.”).
    This reading also fits with the MPPAA’s enacted statement
of purpose and findings. In designing the MPPAA, Congress
found that employers’ premature withdrawal from
multiemployer pension plans “adversely affect[ed] the plan[s],
[their] participants and beneficiaries, and labor-management
relations.” Id. § 1001a(a), (4)(A). So the MPPAA imposed a
penalty for employer withdrawal to fix that free-rider problem.
That solution would unravel if an employer could free ride
again by outsourcing pension contributions to third parties.
    Finally, our approach avoids creating a circuit split,
something we are “generally reluctant” to do. Parker v.
Montgomery Cnty. Corr. Facility/Bus. Office Manager, 870
F.3d 144, 152 (3d Cir. 2017) (internal quotation marks
omitted). That is doubly so when there is a thirty-year
consensus favoring another reading of the statute. True, we
may have a “compelling basis” to depart from the consensus of
other circuits when only one reading of the statute is plausible.
Id. But that is not true here. Because this technical definition is
plausible, we will follow our sister circuits’ consensus.

                                8
    True, if Congress meant to define “employer” this way
here, it could have done so expressly. But the MPPAA has no
definitions section. So this reading draws from the definition
section of the very Title that the MPPAA amends. See
Nachman, 466 U.S. at 370 n.14. It reinforces ERISA’s
statutory plan, buttressing withdrawal liability. And it
eliminates the problem of employers evading withdrawal
liability by outsourcing pension payments. We thus hold that
under the MPPAA, an “employer” is any person obligated to
contribute to a plan either as a direct employer or in the interest
of one.
           III. AS AN EMPLOYER, J. SUPOR MUST
                  ARBITRATE ITS DISPUTE

   Under that definition, J. Supor is an employer. For the
Dream Project, it agreed to hire drivers from one union chapter
and contracted to pay into their Fund. Though we do not know
whether it hired the drivers directly, it promised to pay into the
fund either as a direct employer or on behalf of one.
    Pushing back, J. Supor says that even if it is an employer,
the union orally committed not to hold it liable for withdrawal
fees. But that does not matter. Arbitrability does not hinge on
liability. See 29 U.S.C. § 1401(a)(1). Besides, J. Supor agreed
to pay into the fund, so it had to arbitrate any withdrawal
disputes. Id. And parties may not contract to “evade or avoid
liability” under the statute’s protections. Id. § 1392; Connolly
v. Prison Benefit Guar. Corp., 475 U.S. 211, 224 (1986).
  Even so, J. Supor argues on appeal, it was “deceived.”
Appellant’s Br. at 13. And it repeats a line from its summary-

                                9
judgment brief: J. Supor “never would have signed the
[agreement] had [it] not received assurances and promises
from [a union representative] that [it] would not be obligated
to pay withdrawal liability.” Id. at 11. That line gestures at the
possibility that J. Supor was fraudulently induced to sign the
very agreement that now makes it an “employer.” See Carl
Colteryahn Dairy, Inc. v. W. Penn. Teamsters & Emps.
Pension Fund, 847 F.2d 113, 119 (3d Cir. 1988).
    That suggestion does not let J. Supor off the hook. Even if
there was fraudulent inducement, that would at most make the
agreement voidable. Restatement (Second) of Contracts
§ 164(1). To avoid it, J. Supor would have to repudiate it. See
id. § 380(2). But J. Supor has never rejected the agreement. On
the contrary, it treats the “contribution clauses that required J.
Supor to contribute to the [Fund]” as still binding. Appellant’s
Br. 4. Yet it claims a “waiver of any withdrawal liability.” Id.
at 10. Because it cannot get that carve-out, it is still bound to
pay into the Fund—making it an MPPAA employer.
    Thus, we affirm the grant of summary judgment. On the
record before us, J. Supor is an “employer,” so we have no
jurisdiction over its withdrawal-liability dispute with the Fund.
29 U.S.C. § 1401(a). But in resolving that threshold issue, we
do not rule on the underlying merits. AT&T Techs., Inc. v.
Commc’ns. Workers of Am., 475 U.S. 643, 649 (1986). Instead,
if J. Supor would like to continue to contest that liability, it
must turn to arbitration. 29 U.S.C. § 1401(a).

                               10
                           *****
   We follow all seven sister circuits in adopting the definition
of “employer” as someone obligated to contribute to a plan,
drawn from Title I of ERISA. Because J. Supor counts as an
employer, it must resolve its withdrawal-liability dispute in
arbitration. We will thus affirm.

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