Court Opinion

ID: 9953883
Source: CourtListenerOpinion
Date Created: 2024-03-22 23:01:20.888611+00
Date Added: 2024-06-11T08:10:22.053502
License: Public Domain

In the
    United States Court of Appeals
                For the Seventh Circuit
                    ____________________

Nos. 23-1563 & 23-1917
BULK TRANSPORT CORP.,
                               Plaintiff-Appellant, Cross-Appellee,
                                 v.

TEAMSTERS UNION NO. 142 PENSION FUND and its TRUSTEES,
                     Defendants-Appellees, Cross-Appellants.
                    ____________________

        Appeals from the United States District Court for the
         Northern District of Indiana, Hammond Division.
         No. 2:21-cv-399-PPS-JPK — Philip P. Simon, Judge.
                    ____________________

   ARGUED DECEMBER 6, 2023 — DECIDED MARCH 22, 2024
               ____________________

   Before FLAUM, EASTERBROOK, and BRENNAN, Circuit Judges.
   EASTERBROOK, Circuit Judge. Bulk Transport and Teamsters
Local 142 have had many collective-bargaining agreements
through the years. This case, in which Local 142’s multi-em-
ployer pension fund seeks withdrawal liability, stems from
two agreements that were in eﬀect between 2003 and 2006.
  The main agreement was called the Construction Agree-
ment. The other agreement, called the Steel Mill Addendum,
2                                       Nos. 23-1563 & 23-1917

applied to “Steel Mill Operation Work only” (boldface and
underlining in original). An earlier version of the Addendum
covered three other kinds of tasks, but the 2003 version lim-
ited its coverage to steel mill work.
    In 2004 Bulk Transport landed a contract to haul commod-
ities, a sort of work that until 2003 had been covered by the
Addendum but had been excluded by the 2003 revisions. The
parties call this the “LISCO work.” They agree that none of
this haulage counted as “steel mill operation work”. Still, the
Union insisted that Bulk Transport apply the Addendum and
threatened to strike if it did not; the Union also refused to en-
gage in negotiations for an agreement covering the LISCO
work. Instead of ﬁling suit or complaining to the NLRB, Bulk
Transport capitulated and used the wage rates and pension
terms of the Addendum. But it did not tell the Pension Fund
that it was now remitting contributions for workers not cov-
ered by the Addendum.
    In August 2005 Bulk Transport lost the LISCO work (the
reasons do not matter) and stopped making pension contri-
butions on behalf of the employees who formerly handled
that work. The Pension Fund eventually assessed about $2
million in withdrawal liability under the terms of the Mul-
tiemployer Pension Plan Amendments Act (MPPAA), 29
U.S.C. §§ 1381–1405. Bulk Transport disputed the Pension
Fund’s assessment but paid and demanded arbitration under
29 U.S.C. §1401. Eventually the arbitrator concluded that Bulk
Transport had adopted the Addendum by conduct, which
meant that the Pension Fund was entitled to the money it
claimed. Technically, the Pension Fund had to show under 29
U.S.C. §1385 that the amounts that Bulk Transport paid on ac-
count of the LISCO work were “contribution base units”; the
Nos. 23-1563 & 23-1917                                                  3

parties agree that this is true only if Bulk Transport was
bound, one way or another, to apply the Addendum to the
LISCO work, and is not true if Bulk Transport was making
contributions not covered by a written agreement. We need
not decide whether this agreement is correct.
    Arbitrators’ legal decisions under §1401 are reviewable,
see Iron Workers Local 473 Pension Trust v. Allied Products Corp.,
872 F.2d 208, 211 (7th Cir. 1989); Central States Pension Fund v.
Midwest Motor Express, Inc., 181 F.3d 799, 805 (7th Cir. 1999),
and the adoption-by-conduct ruling is a legal determination
because its propriety turns on the legal eﬀect of an unwritten
practice. The district court agreed with the arbitrator’s ruling
and denied Bulk Transport’s request for a refund. 2023 U.S.
Dist. LEXIS 40576 (N.D. Ind. Mar. 8, 2023).
   Both the pension provisions of collective-bargaining
agreements and multi-employer pension plans must be in
writing. 29 U.S.C. §186(c)(5)(B) (collective-bargaining agree-
ments that provide pension coverage); 29 U.S.C. §1145 (agree-
ments with pension funds). The language of §1145 reads:
   Every employer who is obligated to make contributions to a mul-
   tiemployer plan under the terms of the plan or under the terms of
   a collectively bargained agreement shall, to the extent not incon-
   sistent with law, make such contributions in accordance with the
   terms and conditions of such plan or such agreement.

Many written pension agreements refer back to underlying
collective-bargaining agreements, as the one at issue here
does when specifying which contributions are required. This
brings us to §186(c)(5)(B), which says that “the detailed basis
on which such [pension contributions] are to be made is spec-
iﬁed in a written agreement with the employer”. Whether we
look at events from the perspective of one statute or the other,
4                                        Nos. 23-1563 & 23-1917

the absence of a written agreement addressing the LISCO
work stands out. The Addendum was in writing, but it did
not cover the LISCO work.
    The arbitrator and the district judge stressed that the Ad-
dendum was itself a writing. Both arbitrator and judge in-
voked the principle that an employer may agree by conduct
to abide by an existing agreement. So, for example, if Em-
ployer E has a collective-bargaining agreement with Union U,
Employer X may agree with U that it will follow the terms of
the agreement—and, once X begins to do so, it is bound by
those terms. See, e.g., Bricklayers Local 21 v. Banner Restoration,
Inc., 385 F.3d 761, 766 (7th Cir. 2004) (collecting cases);
Brookville Health Care Center, 337 N.L.R.B. 1064 (2002).
    The problem with the Pension Fund’s reliance on this prin-
ciple is that adoption by conduct does not change the substan-
tive provisions of the agreement. Adoption adds employers
while leaving the terms unaﬀected. And, even then, adoption
by conduct has its principal role in dealing with provisions
such as wages and hours, which in labor law need not be re-
duced to writing. The parties to a collective-bargaining agree-
ment may change most terms by conduct, Transportation Un-
ion v. Union Paciﬁc R.R., 385 U.S. 157, 160–61 (1966), so it is
easy to see why they may change by conduct the parties to be
bound. But the terms of pension contributions to multi-em-
ployer plans cannot be changed orally. The precise terms
must be in writing—and, having been reduced to writing,
must be enforced without any consideration of equitable ar-
guments. Central States Pension Fund v. Gerber Truck Service,
Inc., 870 F.2d 1148 (7th Cir. 1989) (en banc). See also Robbins v.
Lynch, 836 F.2d 330, 332 (7th Cir. 1988).
Nos. 23-1563 & 23-1917                                         5

     Neither the litigants nor the district court cited any deci-
sion holding that adoption by conduct can change the sub-
stantive terms of an agreement to contribute to a multi-em-
ployer pension plan. We looked too and could not ﬁnd such a
case. Yet unless the language “Steel Mill Operation Work
only” is erased from the Addendum, Bulk Transport’s pay-
ment on behalf of the LISCO workers cannot qualify. What’s
needed is not adoption of the Addendum but an amendment to
the Addendum. If amendment-by-conduct is possible, then
multi-employer pension agreements need not be written after
all, despite what sections 186(c)(5)(B) and 1145 say.
    Gerber Truck arose from a situation in which the written
documents covered all workers in a deﬁned bargaining unit,
but the employer and union agreed that contributions to a
multi-employer plan would be made on behalf of only three
workers. There was no question what the writings required
(all workers) or what the employer did (some workers); nor
was there any doubt that the union and employer had agreed
orally that the employer should proceed as it did. The pension
plan insisted on receiving contributions for all workers cov-
ered by the writings. The employer, by contrast, argued that
the writings had been amended by conduct or that equitable
considerations blocked their enforcement. We rejected those
arguments and held that the agreements must be enforced as
written, even if that is inequitable, in order to protect pension
plans’ actuarial calculations and distribution arrangements—
for those calculations and arrangements depend on taking the
documents as given. Multi-employer pension plans are not
privy to oral side deals between employers and unions. For
multi-employer plans, enforcing the writings is vital.
6                                       Nos. 23-1563 & 23-1917

    This case is the ﬂip side of Gerber Truck. In Gerber Truck the
employer and union orally agreed to contribute on behalf of
fewer employees than the written agreements required. Bulk
Transport and the Union, by contrast, agreed to contribute on
behalf of more workers than the written agreements permit-
ted. In Gerber Truck the pension plan insisted that the writings
control. Here, by contrast, the Pension Fund argues that the
oral agreement controls. We hold that the writings control
whether the employer and union orally agree to contribute for
more workers than required or for fewer. Through
§§ 186(c)(5)(B) and 1145 Congress made the writings conclu-
sive; employers and unions cannot opt out of those statutes
orally or by their course of conduct.
    In the district court, the Pension Fund asked for an award
of attorneys’ fees. The judge denied that request, ruling that
Bulk Transport’s arguments were substantially justiﬁed even
though they were wrong. Because we have concluded that
Bulk Transport’s arguments are correct, it follows that the
Pension Fund is not entitled to an award of attorneys’ fees.
   The district court’s decision on the merits is reversed, and
the case is remanded with instructions to order the Pension
Fund to repay the withdrawal liability it collected from Bulk
Transport. The district court’s decision on attorneys’ fees is
aﬃrmed.