Court Refuses to Dismiss Central States Pension Lawsuit
A U.S. court has denied a motion to dismiss a lawsuit brought by the Central States, Southeast and Southwest Areas Pension Fund that is seeking to recoup allegedly outstanding pension fund contributions from an employer.
The case, Central States, Southeast and Southwest Areas Pension Fund v. Crandell Bros. Trucking Co., filed in the U.S. District Court for the Northern District of Illinois, centered on a 2016 collective bargaining agreement between the International Brotherhood of Teamsters, Local Union No. 243 and Crandell Brothers Trucking Company, which serves the construction industry in Michigan. The CBA required Crandell to contribute to the pension fund and prohibited the company from withdrawing its contribution obligation during the stated term of the agreement. Meanwhile, the CBA automatically renewed each year after a stated end date, unless specific termination procedures were followed by both parties, including 60 days’ written notice.
Crandell Brothers and the union also signed a participation agreement in 2016 in which Crandell agreed to participate in the pension fund in accordance with the CBA’s terms. The company also agreed to be bound by the pension fund’s trust agreement, which contained restrictions on terminating its contribution obligation. The restrictions stated that the company’s obligation to pay contributions would not terminate until a contract or statute relieved it of its obligations and until the pension fund received written notice providing a reason why the employer was no longer obligated to contribute.
After negotiating a new CBA in 2019, Crandell Brothers sent a July 2019 letter to the pension fund saying it was no longer obligated to pay contributions because the new CBA voided the old one and replaced the pension fund with a 401(k) plan. The Central States pension fund and its trustee, arguing that the original CBA’s pension terms automatically rolled over for one additional year, sued Crandell under the Employee Retirement Income Security Act of 1974, seeking unpaid contributions from 2019 to 2020, plus interest and liquidated damages.
In response, Crandell filed a motion to dismiss the lawsuit, arguing that the new CBA terminated the old one, and that under the new CBA, the company was no longer obligated to make contributions to the fund. Meanwhile, the Central States pension fund opposed the motion and moved for a partial summary judgment on the issue of Crandell’s contractual liability.
U.S. District Judge John J. Tharp, Jr. cited U.S. 7th Circuit Court precedent specifically involving the same fund in his decision: “Crandall’s termination defense is one that courts in this circuit have often considered and rejected,” Tharp wrote in his opinion. “Indeed, this case is a near carbon copy of Central States, Southeast and Southwest Areas Pension Fund v. Standard Electric Company. … The Fund argued that the parties did not timely terminate the collective bargaining agreement.”
That timing issue proved decisive, as Crandell did not notify the Central States fund of its intent to discontinue pension obligations until about one month after the pension obligations had rolled over for an additional year.
“Because the original collective bargaining agreement clearly set forth termination procedures that Crandell did not follow, the Court finds that Crandell prematurely withdrew its contribution obligations during the agreement’s stated term,” Tharp wrote. “Accordingly, Crandell’s motion to dismiss is denied, and the plaintiffs’ partial motion for summary judgment is granted.”
Crandell Brothers did not respond to a request for comment.
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