Court Opinion

ID: 6930944
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:00:13.346756+00
Date Added: 2024-06-11T16:07:10.888754
License: Public Domain

FERGUSON, Circuit Judge,
dissenting in part:
I dissent from Part V.A. of the majority opinion. Section 515 of ERISA, 29 U.S.C. § 1145, was adopted expressly for the purpose of simplifying collection actions by plan trustees against delinquent employers. See Laborers Health and Welfare Trust Fund for Northern California v. Advanced Lightweight Concrete Co., Inc., 484 U.S. 539, 545-49, 108 S.Ct. 830, 834-35, 98 L.Ed.2d 936 (1988); see also Southern California Retail Clerks Union v. Bjorklund, 728 F.2d 1262, 1265 (9th Cir.1984). The majority defeats that purpose when it excludes from Section 515 liability those, such as Mark, who enter into express, written agreements to pay into employee trust funds.
The first mistake that the majority makes is to collapse the ERISA definition of employer with its analysis of who is obligated to pay into a multiemployer plan under Section 515. These discussions should proceed separately in order to give each section its intended meaning. See, e.g., Massachusetts Laborers’ Health and Welfare Fund v. Starrett Paving Corp., 845 F.2d 23, 24-26 (1st Cir.1988).
I. The ERISA Definition of Employer
ERISA defines an employer as “any person acting directly as an employer, or indi*860rectly in the interest of an employer; in relation to an employee benefit plan.” 29 U.S.C. § 1002(5) (emphasis added). The legislative history of ERISA shows that Congress intended to broaden the common-law definition of employer. See Massachusetts Laborers’, 845 F.2d at 24-25; see also Kwatcher v. Massachusetts Service Employees Pension Fund, 879 F.2d 957, 960 (1st Cir.1989) (“That ERISA expands the concept of ‘employer’ beyond common-law or corporate law notions is not much in doubt.”). Indeed, this intent is obvious from the plain language of the statute.
Mark, by entering into an express written agreement with Stark to pay the labor benefits of Stark’s employees, is unquestionably acting “indirectly in the interests of an employer, in relation to an employee benefit plan.” It is incomprehensible that such an explicit undertaking of an employer’s responsibility to pay into employee benefit plans could be construed as falling outside of ERISA’s broad definition of employer.
It is true, as the majority notes, that the Eleventh Circuit has adopted a bright line rule requiring all ERISA employers to be signatories to collective bargaining agreements. See Xaros v. U.S. Fidelity & Guar. Co., 820 F.2d 1176, 1180 (11th Cir.1987); see also Laborers Local 938 Joint Health & Welfare Trust Fund v. B.R. Starnes Co., 827 F.2d 1454, 1457 (11th Cir.1987); Giardello v. Balboa Ins. Co., 837 F.2d 1566 (11th Cir.1988). The Eleventh Circuit’s collapsed analysis incorporates a misguided interpretation of section 515 into its interpretation of section 1002(5), and therefore runs afoul of the plain language of section 1002(5). In short, the Eleventh Circuit’s rule is incorrect, and we should decline to follow it.
The majority also relies on two Ninth Circuit decisions, Carpenter’s Southern California Administrative Corporation v. Majestic Housing, 743 F.2d 1341 (9th Cir.1984) and Carpenters Southern California Administrative Corporation v. D & L Camp Construction Company, Inc., 738 F.2d 999 (9th Cir.1984), to support its conclusion that Mark cannot be an employer under ERISA. Assuming arguendo that these cases are still good law, but see Trustees of Electrical Workers Health and Welfare Trust v. Marjo Corp., 988 F.2d 865, 867-68 (9th Cir.1992), they nonetheless do not support the majority’s conclusion.
In D & L Camp, the issue was whether the surety of an employer was acting “indirectly in the interests of an employer” under section 1002(5). We found that a surety is not acting “for the benefit of the employer; it is acting for the benefit of those who have been damaged by the employer’s failure to pay,” and therefore concluded that a surety’s obligations arise solely under state law, not under ERISA. D & L Camp, 738 F.2d at 1001. The same cannot be said of Mark, which expressly assumed the employer’s obligations to pay labor benefits. In entering into this agreement, Mark was not guaranteeing “protection ... [to] a broad class of entities that deal with contractors.” Id. Rather Mark was acting “primarily as [a protector of payments to] employee benefit plans.” Id. The express agreement between Mark and Stark therefore takes this case out of the ambit of D & L Camp’s holding.
Majestic Housing is similarly inapposite. In that case, we relied on the reasoning of D & L Camp to reach the narrow conclusion that “a non-signatory property owner whose holdings are subject to a state mechanic’s lien was [not] intended as a proper defendant in an [ERISA] action to enforce the employer’s obligation.” Majestic Housing, 743 F.2d at 1346. We found that the pension funds’ cause of action arose solely under a state mechanic’s lien law, and therefore even though the state law was enacted to benefit employee trust funds, ERISA was not implicated. Id. Here, Mark expressly assumed the obligation to pay into the employee’s benefit funds. The Trust Funds’ cause of action thus arises under section 515 of ERISA, as discussed below, and is not solely a function of state law.
In sum, there is no Ninth Circuit precedent controlling the determination of whether Mark is an employer as defined by 29 U.S.C. § 1002(5). However, both the plain language and legislative history of ERISA lead to the inevitable conclusion that Mark is such an employer.
*861II. Section 515
The majority assumes that, because Mark’s express promise to pay labor benefits is contained in a sub-contract with Stark instead of in a collective bargaining agreement, Mark is not obligated under section 515.1
Section 515 was enacted for the express purpose of facilitating collection actions by plan trustees against employers who fail to make promised contributions. Laborers Health and Welfare Trust Fund for Northern California v. Advanced Lightweight Concrete Co., Inc., 484 U.S. 539, 545-47, 108 S.Ct. 830, 834, 98 L.Ed.2d 936 (1988). A host of problems ensue when employers fail to make promised contributions, including loss of benefits from investment income, additional administrative costs, and increased attorneys fees and other legal costs in connection with collection efforts. Id. at 545-49 n. 14, 108 S.Ct. at 834 n. 14 (citing Senate Committee on Labor and Human Resources, 96th Cong., 2d Sess., S. 1076, The Multiemployer Pension Plan Amendments Act of 1980: Summary and Analysis of Consideration 43 (Comm.Print 1980)). To avoid these problems, section 515 gives pension plans a direct cause of action against delinquent employers, without having to contend with claims and defenses unrelated to the employer’s promise and the plans’ entitlement to the contributions. Id. at 545-49, n 14, 108 S.Ct. at 835 n. 14.
The essential requirement of section 515 is that there be a written agreement to pay into the funds. See Central States, Southeast and Southwest Areas Pension Fund v. Behnke, Inc., 883 F.2d 454, 459 (6th Cir.1989). Whether that promise is contained in a collective bargaining agreement or in a separate contract to pay benefits is immaterial. See Central States, Southeast and Southwest Areas Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148, 1153-54 (7th Cir.1989) (en banc) (the agreement to contribute to a pension plan “need not be a formal collective bargaining agreement”); see also Behnke, 883 F.2d at 460 (“Although [the writings obligating the employer] are not collective bargaining agreements, they sufficiently comport with the writing requirement[ ] of ... ERISA”). Here, Stark was obligated to pay into the pension funds pursuant to a collective bargaining agreement. Stark then entered into a written contract with Mark, a provision of which obligated Mark to pay labor benefits. Mark, by virtue of the written agreement with Stark, is obligated to pay into the pension funds. The fact that Mark’s obligation arises from a separate, written contract does not exempt Mark from ERISA liability.
The majority attempts to cast Mark’s obligation to pay as a state law obligation arising out of the Trust Funds status as a third-party beneficiary to the contract between Mark and Stark. It is true that the Trust Funds’ cause of action is based on the written agreement between Stark and Mark. However, section 515 of ERISA gives employee pension funds a cause of action “independent of the contract on which the duty to contribute is based and [which] may be enforced by an action brought in federal district court.” Bituminous Coal Operators’ Association, Inc. v. Connors, 867 F.2d 625, 633 (D.C.Cir.1989). The Trust Funds’ status as a third-party beneficiary therefore does not defeat its claim under ERISA. In fact, all actions under section 515 of ERISA are essentially grounded in an employee pension fund’s status as a third-party beneficiary. See Benson v. Brower’s Moving & Storage, 907 F.2d 310, 313-14 (2d Cir.1990) (section 515 transforms pensions funds from ordinary third-party beneficiaries into parties analogous to holders in due course, not subject to any of the promisee’s defenses); see also Gerber Truck Service, 870 F.2d at 1151.
Conclusion
In sum, it is contrary to the plain meaning and expressed intention of the relevant sections of ERISA to conclude that those who *862promise in writing to pay employee benefits are not subject to ERISA liability. The majority’s decision will make it all too easy for employers to contract away their duty to make payments, leaving the pension funds with no recourse under either state or federal law. This result will undermine the ability of pension funds to deliver benefits to workers. ERISA was enacted to eliminate just this type of problem: “In enacting ERISA ... Congress sought to prevent the losses suffered by employees and their families when vested pension benefits were not paid because a pension plan was terminated before sufficient funds had accumulated.” Korea Shipping Corp. v. New York Shipping Ass’n, 880 F.2d 1531, 1536 (2nd Cir.1989). Therefore, I must dissent.

. Section 515 provides:
Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms of the collective bargaining agreement.
29 U.S.C. § 1145.