Contractor liable for ERISA exit contribution

Where an HVAC contractor manifested its intent to be bound by a collective bargaining agreement, it was liable for an exit contribution required under § 515 of the Employee Retirement Income Security Act of 1974, or ERISA, and that same collective bargaining agreement.

Background

The Board of Trustees of the Sheet Metal Workers’ National Pension Fund seeks to recover a delinquent exit contribution from Four-C-Aire Inc., a former participating employer, under ERISA § 515. The Fund claims Four-C-Aire’s obligation arose under a collective-bargaining agreement between the Sheet Metal Workers’ International Association Local Union No. 58 and the Central New York Sheet Metal Contractors Association. According to the Fund, Four-C-Aire signed on to this preexisting agreement while it was a member of the Contractors Association. The district court agreed and granted judgment to the Fund.

Analysis

It is settled that (1) the CBA incorporated the trust documents, including the exit-contribution obligation; (2) the exit contribution is a proper § 515 contribution; (3) assuming Four-C-Aire adopted the CBA, its withdrawal from the Fund triggered the exit-contribution requirement and (4) that obligation survived the CBA’s expiration. The relevant question is thus whether Four-C-Aire bound itself to the CBA.

The court concludes that Four-C-Aire manifested an intent to be bound by the CBA. For starters, it regularly contributed to the Fund under the agreement’s terms throughout the contract period. And while it’s true that the wage sheet doesn’t expressly incorporate the CBA, it does list all of Four-C-Aire’s wage and contribution obligations under the CBA, including those to the Fund. So by signing the wage sheet, Four-C-Aire intended to agree to something.

Further Four-C-Aire deducted Local 58 union dues from its employees’ pay and responded to letters demanding late remittance. Indeed, the clothiers themselves joined the union. And their membership applications “authorize[d] [Local 58] to represent [them] for purposes of Collective Bargaining, and in [their] behalf, to negotiate and conclude all agreements as to hours of labor, wages, and other conditions of employment.” The company also complied with the Fund’s payroll audit, which the CBA authorized. And a Four-C-Aire employee enrolled in Local 58’s apprenticeship program.

Four-C-Aire’s communications with the union are also telling. After the company first tried to end its relationship with Local 58 (incidentally, referencing its “contract agreements” with the union), the union’s business manager responded that its “attempt to terminate the collective bargaining agreement . . . [was] invalid and ineffective,” citing two standard form provisions. Four-C-Aire didn’t respond that there was no CBA or that it had never seen a “Standard Form.” Rather, it sent a new notice that complied with the standard form’s termination procedures. For these reasons, the court agrees that Four-C-Aire adopted the CBA between Local 58 and the Contractors Association by its conduct.

The company first contends that the adoption-by-conduct doctrine violates § 302(c)(5) of the Labor Management Relations Act. But Trustees of the Plumbers & Pipefitters National Pension Fund v. Plumbing Services, Inc., 791 F.3d 436 (4th Cir. 2015), forecloses this argument. This court—like several other sister circuits—have held that employers may owe contributions to a benefit plan under a written collective-bargaining agreement if it adopted the agreement by conduct. Nor does this rule conflict with the Labor Management Relations Act.

Four-C-Aire next argues it didn’t “knowingly compl[y]” with the CBA. Put another way, the company claims its conduct only incidentally complied with the agreement. The court is not persuaded. And while Four-C-Aire tries in vain to distinguish Plumbing Services, that effort is unavailing.

The company also says that “[t]he exit contribution is not statutory withdrawal liability,” so it’s an unrecoverable post contract obligation under ERISA § 515. The company is wrong. And while it insists this court’s decision creates a circuit split with the First Circuit’s opinion in Manchester Knitted Fashions, Inc. v. Amalgamated Cotton Garment & Allied Industries Fund, 967 F.2d 688 (1st Cir. 1992), this isn’t so.

Next, Four-C-Aire contends it repudiated its contract with Local 58, which ended its exit-contribution obligation. Not true. Last, Four-C-Aire complains that the Fund’s governing documents violate § 302 because “there [is] no evidence the Fund operates as a qualifying ‘trust fund.’” However Four-C-Aire failed to preserve this argument for appeal. In any event, even if Four-C-Aire had preserved the issue, it’s meritless.

Affirmed.

Board of Trustees, Sheet Metal Workers’ National Pension Fund v. Four-C-Aire Inc., Case No. 20-2181, July 27, 2022. 4th Cir. (Diaz), from EDVA at Alexandria (O’Grady). Michael E. Avakian for Appellant. Diana Migliaccio Bardes for Appellee. VLW 022-2-188. 29 pp.