Iron Workers Dist. Council of S. Ohio & Vicinity Pension Fund v. Lykins Reinforcing, Inc.

484 F.Supp.3d 544

IRON WORKERS DISTRICT COUNCIL OF SOUTHERN OHIO & VICINITY PENSION FUND, Plaintiff,

v.LYKINS REINFORCING, INC., Defendant.

Case No. 3:20-cv-00007

United States District Court, S.D. Ohio, Western Division.

Signed September 3, 2020

Jonah Daniel Grabelsky, Joseph C. Hoffman, Jr., Joseph D. Mando, Faulkner, Hoffman & Phillips LLC, Cleveland, OH, for Plaintiff.

Andrew J. Poltorak, Covington, KY, for Defendant.

OPINION AND ORDER

DOUGLAS R. COLE, UNITED STATES DISTRICT JUDGE

Iron Workers District Counsel of Southern Ohio & Vicinity Pension Fund (the "Fund") sued Lykins Reinforcing, Inc. alleging that Lykins failed to make required contributions to the Fund, which the Fund claims violated the Employee Retirement Income Security Act of 1974 ("ERISA"), and seeking to recoup the money it is supposedly owed. Before the Court are two motions—first, Lykins’ Motion To Dismiss Or, In The Alternative, Compel Arbitration And Stay The Action (Doc. 3), and second, the Fund's Motion and Memorandum In Support [Of Leave] To [File A] Sur-Reply (Doc. 7). To the extent the Fund's Sur-Reply seeks to clarify the type of relief the Fund requests, the Court GRANTS the motion for leave to file (Doc. 7). Also, for the reasons explained more fully below, the Court DENIES Lykins’ Motion to Dismiss or Compel Arbitration (Doc. 3), but ORDERS the Fund to file an Amended Complaint consistent with the representations made in its Sur-Reply.

BACKGROUND¹

Pursuant to an Agreement and Declaration of Trust various labor organizations and employers affiliated with the participating unions created the Fund at issue on October 30, 1962. (Compl., Doc. 1, ¶ 2, #1–2). Because multiple collective bargaining agreements, labor organizations, and employers maintain the Fund, it is considered a multiemployer plan under Sections 3(37)(A) and 4001(a)(3) of ERISA, 29 U.S.C. §§ 1002(37)(A) and 1301(a)(3). (Id. at ¶ 9–10, #3). This Fund, created to provide pension, retirement, and death benefits for participating employees and their beneficiaries, is considered an "employee benefit pension plan" under Section 3(2) of ERISA, 29 U.S.C. § 1002(2). (Id. at ¶ 3, #2).

Lykins Reinforcing, Inc., considered to be an "employer" bound by a participation agreement, had to make contributions to the Fund according to either the Fund Agreement itself or an applicable collective bargaining agreement. (See id. at ¶¶ 4, 11–12, #2–4). The Fund alleges that Lykins stopped making these required contributions, while at the same time continued to perform work of the type for which contributions were required to be made. (Id. at ¶ 19, #5). In fact, Lykins has not contributed to the Fund since 2018, which the Fund claimed constituted a "complete withdrawal" from the Fund. (Id. at ¶¶ 18–19).

On April 12, 2019, the Fund sent Lykins a letter notifying it about this supposed complete withdrawal. (Id. at ¶ 21). The Fund stated that it had assessed Lykins’ withdrawal liability to be $302,728 and included an explanation on how it reached that total. (Id. at ¶¶ 20–21; see also Withdrawal Liability Assessment, Doc. 1-3, #37–43). If Lykins wished, the Fund explained, it could pay the withdrawal liability in quarterly installments of $30,852.23. Yet, either way Lykins’ initial installment payment towards the withdrawal liability would be due no later than 60 days after the date of the letter. (Compl. at ¶ 23, #5–6). That gave Lykins until June 11, 2019, to make some form of payment towards the withdrawal liability. (Id. at ¶ 25, #6). The Fund explained that Lykins could request, in writing, a review of the withdrawal liability pursuant to Section 4219(b)(2) of ERISA, 29 U.S.C. § 1399(b)(2), but that it still had to make payments on the withdrawal liability. (Id. at ¶¶ 22, 24, #5–6). Lykins needed to request that review no later than 90 days after the date it received the Fund's demand letter. (See Withdrawal Liability Assessment at #39).

June 11 came and went without Lykins submitting any payment to the Fund. As a result, the Fund sent Lykins two more letters demanding payment. The Fund sent the first letter on June 21, 2019. (See Compl. at ¶ 26, #6; June 21 Demand Letter, Doc. 1-4, #45–53). The letter said it served "as the Pension Fund's written notification pursuant to Section 4219(c)(5) of ERISA, 29 U.S.C. § 1399(c)(5), that Lykins has failed to make the required payments on the Withdrawal Liability Amount." (June 21 Demand Letter at #45). Lykins received this June 21 letter on June 27, 2019, according to the United States Postal Service tracking information. (Compl. at ¶ 26, #6). After still not receiving any payment or correspondence from Lykins, the Fund sent Lykins a second letter dated July 8, 2019, again demanding payment towards the withdrawal liability. (Id. at ¶ 27; see also July 8 Demand Letter, Doc. 1-5, #55–62).

A couple of days later, on July 10, 2019, Lykins finally responded. (See Compl. at ¶ 28, #6; see also Lykins’ July 10 Letter, Doc. 1-6, #64–66). In the letter, Lykins stated that it was requesting a review of the Fund's calculation of the withdrawal liability. Specifically, Lykins wanted a review of (1) the amount of unfunded vested benefits allocated to Lykins as a consequence of the withdrawal; (2) the appropriate date of withdrawal; (3) the determination of Lykins’ liability; and (4) the schedule of payments. (Lykins’ July 10 Letter at #64). Lykins explained that, even though it had been a few months since the Fund heard from Lykins, Lykins’ request was timely since Lykins received the Fund's April 12 demand letter on May 1, 2019, and had until August 1, 2019, to request such a review. (Id. ).

Despite sending this letter to the Fund, Lykins did not remit any payment. The Fund alleges that Lykins’ initial installment payment on the withdrawal liability Assessment was due 60 days after May 1, 2019, which would have been July 1, 2019. (Compl. at ¶ 29, #7). And, even if the July 8, 2019 demand letter set a new 60-day deadline for Lykins’ payment, Lykins’ initial installment payment of $30,852.23 was then due by September 6, 2019. (Id. ). Lykins missed both deadlines. (See id. at ¶ 30).

Because Lykins failed to make the installment payments, the Fund considered Lykins to be in default. (See id. at ¶ 31). The Fund sent Lykins a letter, dated September 9, 2019, notifying Lykins about the default, and demanding that it cure this default within 60 days. (Id. ; see also Default Letter, Doc. 1-7, #68–73). Since Lykins received the Default Letter on September 12, 2019, according to the Post Office tracking information, Lykins had until November 11, 2019, to cure that default by paying the installment payment. (Compl. at ¶ 32, #7; see also Default Letter at #71–73). The letter notified Lykins that, if Lykins did not cure the default within the 60-day window, the entire withdrawal liability Assessment amount would be immediately due. (Default Letter at #69).

To date, Lykins has not made any payments toward the withdrawal liability. (Compl. at ¶ 34, #7). Because Lykins failed to make any payments, and therefore failed to cure its default, the Fund alleges that Lykins now owes the Fund the entire withdrawal liability assessment, $302,728, together with interest, liquidated damages, penalties, and attorneys’ fees and costs. (Id. at ¶¶ 41–43, #9).

PROCEDURAL HISTORY

The Fund initiated this action on January 9, 2020, seeking not only to compel Lykins to make interim payments, but also to recoup the entire withdrawal liability amount because of Lykins’ default. (See generally Compl. at #1–10). In response, Lykins filed the instant Motion about a month later, on February 5, 2020. Lykins asks the Court to either dismiss the Fund's Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, or in the alternative, grant Lykins’ motion to compel arbitration and stay the case. (See Doc. 3). The Fund subsequently filed a motion for leave to file a sur-reply, claiming that it wished to clarify the relief it was seeking and correct misstatements and mischaracterizations Lykins supposedly made in its reply brief. (See Doc. 7). Lykins’ Motion to Dismiss and the Fund's Motion to File a Sur-Reply are currently before the Court.

LAW AND ANALYSIS

In its motion, Lykins contends that the Fund is seeking to proceed in the wrong forum. More specifically, Lykins claims the Court must dismiss the current action, or at the very least suspend consideration of it, given Lykins’ demand that the parties arbitrate Lykins’ withdrawal liability. The Court concludes that Lykins would be correct in its argument, if the Fund were pursuing this action to establish Lykins’ withdrawal liability, or to accelerate the payment of that overall withdrawal liability amount. The Fund responds, however, that it is not seeking that remedy through this action, but rather only an order that Lykins make certain interim payments while the arbitration is pending. For the reasons set forth below, the Court concludes that it can consider that issue, notwithstanding Lykins’ demand for arbitration. Explaining why that is the case, though, requires the Court to start with some basic background on ERISA and the provisions implicated here, before exploring in detail how those provisions impact this case.

A. Background On ERISA.

Congress enacted the Employee Retirement Income Security Act ("ERISA") in 1974. See 29 U.S.C. § 101 – 1371. Congress’ purpose behind ERISA was to ensure that "if a worker has been promised a defined pension benefit upon retirement—and if he has fulfilled whatever conditions are required to obtain a vested benefit—he actually will receive it." Nachman Corp. v. Pension Benefit Guar. Corp. , 446 U.S. 359, 375, 100 S.Ct. 1723, 64 L.Ed.2d 354 (1980). Unfortunately, this statute had practical issues as written. Specifically, it turned out that ERISA did not adequately address the adverse consequences that occur when employers withdraw from multiemployer pension plans. See Pension Benefit Guar. Corp. v....