Central States, Southeast and Southwest Areas Pension Fund et al v. Duluth Paper & Specialties, Co.

Filing 19

MEMORANDUM Opinion and Order: For the foregoing reasons, Duluth's motion to dismiss 13 is denied. Duluth shall file its answer within twenty-one days of this order. Signed by the Honorable Sharon Johnson Coleman on 9/18/2015. (For further details see order) Mailed notice(air, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CENTRAL STATES, SOUTHEAST AND
SOUTHWEST AREAS PENSION FUND, and
ARTHUR H. BUNTE, JR., as Trustee,
Plaintiffs,
v.
DULUTH PAPER & SPECIALTIES CO.,
a Minnesota corporation,
Defendant.

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Case No. 15-cv-00796

Judge Sharon Johnson Coleman

MEMORANDUM OPINION AND ORDER
Plaintiffs Central States, Southeast and Southwest Areas Pension Fund, and Arthur H.
Bunte, Jr. (together the “Pension Fund”) filed their one-count complaint against Duluth Paper &
Specialties Co. (“Duluth”). The Pension Fund asserts a single claim for withdrawal liability
under the Employee Retirement Income Security Act (“ERISA”), as amended by the
Multiemployer Pension Plan Amendments Act (“MPPAA”), 29 U.S.C. § 1001 et. seq. Duluth
moves to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil
Procedure 12(b)(6). For the reasons stated below, the Court denies the motion to dismiss.
Background
The following facts are taken from the amended complaint and accepted as true for the
purposes of ruling on the instant motion. The Pension Fund is a multiemployer pension plan
within the meaning of ERISA. Duluth is a Minnesota corporation bound by collective
bargaining agreements with certain local Teamsters under which it was required to make
contributions to the Pension Fund on behalf of certain of its employees.

On May 19, 2013, the Pension Fund determined that Duluth either permanently ceased to
have an obligation to contribute to the Pension Fund or permanently ceased all covered
operations. The Fund thus concluded that Duluth had effected a “complete withdrawal” from the
Pension Fund within the meaning of ERISA § 4203, 29 U.S.C. § 1383. 1 As a result of the
withdrawal, the Pension Fund determined that Duluth incurred joint and several withdrawal
liability to the Pension Fund in the amount of $584,866.88. On or about March 27, 2014, the
Pension Fund sent Duluth a notice and demand for payment of the withdrawal lability, seeking
full payment by April 1, 2014, pursuant to ERISA § 4219(c)(5)(B), § 1399(c)(5)(B), and
Appendix E, § 5(e)(2) of the Pension Fund’s Plan Document. To date, Duluth has only paid the
Pension Fund $215,784.91. Duluth has not initiated arbitration pursuant to ERISA § 4221(a)(1),
§ 1401(a)(1). Thus, the Pension Fund filed the instant complaint seeking to collect the
outstanding withdrawal lability balance, interest, and attorneys’ fees and costs. Duluth then filed
its motion to dismiss which is now fully briefed.
Legal Standard
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of the complaint rather than the merits of the claim. Hallinan v. Fraternal Order of
Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). When reviewing a defendant’s
Rule 12(b)(6) motion to dismiss, the Court accepts all well-pleaded factual allegations in the
complaint as true and draws all reasonable inferences in the non-movant’s favor. Erickson v.
Pardus, 551 U.S. 89, 94, 127 S. Ct. 2197, 167 L. Ed. 2d 1081 (2007). Detailed factual
allegations are not required, but the plaintiff must allege facts that when “accepted as true …
state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.
Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
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The Court removes the “29 U.S.C.” prefix from future references.

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(2007)). A claim has facial plausibility when the complaint’s factual content allows the Court to
draw a reasonable inference that the defendants are liable for the misconduct alleged. Id.
Discussion
Duluth’s motion does not challenge the legal sufficiency of the Pension Funds’ claim,
rather its arguments address the merits of the claim and whether this Court should hear the
parties’ dispute. Duluth contests the amount of withdrawal liability owed. It argues that the
Court should reduce the amount of liability assessed by the Pension Fund pursuant to a provision
of ERISA it claims applies here. Duluth further argues that since the Pension Fund failed to
demand “interim payments” under the MPPAA, it has waived its right to collect the balance of
the assessed withdrawal liability. Alternatively, Duluth argues that the Court should equitably
toll the deadline for it to initiate arbitration under ERISA and order that the parties arbitrate their
dispute. In response, the Pension Fund contends that Duluth’s motion should be denied because
the Fund has satisfied the pleading requirements of Rule 8(a)(2).
The Court need not consider the parties’ arguments regarding the amount of withdrawal
liability owed and whether the Pension Fund waived its right to collect the outstanding
withdrawal liability balance as these arguments are directed towards the merits of the Pension
Fund’s claim and Duluth’s apparent affirmative defense, neither of which the Court addresses on
a 12(b)(6) motion to dismiss. See, e.g., Hallinan, 570 F.3d at 820. Further, Duluth’s request to
compel arbitration is more appropriately made in a separate motion.
The Court will, however, address the legal sufficiency of the Pension Funds’ claim for
withdrawal liability. In order to withstand a motion to dismiss, a complaint must allege the
“operative facts” upon which each claim is based. Kyle v. Morton High Sch., 144 F.3d 448, 45556 (7th Cir. 1998). Here, the Pension Fund seeks full payment of the entire amount of the

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assessed withdrawal liability, $584,866.88, pursuant to ERISA § 4219(c)(5)(B), § 1399(c)(5)(B)
and Appendix E, § 5(e)(2) of the Pension Fund’s Plan. (Compl., Dkt. # 1, ¶ 12.) That section of
ERISA provides that in the event of a default, any event defined in the rules adopted by the plan
which indicates a substantial likelihood that an employer will be unable to pay its withdrawal
liability, “a plan sponsor may require immediate payment of the outstanding amount of an
employer’s withdrawal liability, plus accrued interest on the total outstanding liability from the
due date of the first payment which was not timely made.” ERISA § 4219(c)(5)(B), 29 U.S.C.
§ 1399(c)(5)(B); see also Trustees of Chicago Truck Drivers, Helpers & Warehouse Workers
Union (Independent) Pension Fund v. Central Transport, Inc., 935 F.2d 114, 116 (7th Cir. 1991)
(citing 29 U.S.C. § 1451(a)(1)) (“If the employer does not pay the sums demanded, the trust [or
fund] may file a civil action in federal court to collect.”)
The Pension Fund alleged that Duluth effected a complete withdrawal from the Pension
Fund and thus incurred withdrawal liability. (Dkt. # 1, ¶¶ 10, 11.) It also alleged that it sent a
notice and demand of payment to Duluth, and that while Duluth paid the Pension Fund some of
the liability, $393,431.75 of the principal balance still remains outstanding. (Id., ¶¶ 12, 13.) The
Court finds that the Pension Funds’ allegations adequately state a cause of action against Duluth
for withdrawal liability. Accordingly, Duluth’s motion to dismiss is denied.
Conclusion
For the foregoing reasons, Duluth’s motion to dismiss [13] is denied. Duluth shall file its
answer within twenty-one days of this order.
SO ORDERED.
_____________________________
SHARON JOHNSON COLEMAN
United States District Judge
DATED: 9/18/15
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