Bakery and Confectionery Union and Industry International Pension Fund et al v. Just Born II, Inc.

Filing 28

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 2/8/2017. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
BAKERY AND CONFECTIONERY UNION
AND INDUSTRIAL INTERNATIONAL
PENSION FUND, et al.
v.

:
:
:

Civil Action No. DKC 16-0793

:
JUST BORN II, INC.
:
MEMORANDUM OPINION
Presently pending and ready for resolution in this breach
of contract case are: (1) a motion for judgment on the pleadings
filed

by

Plaintiffs

Industrial

Bakery

International

and

Pension

Confectionery

Fund

(the

Union

“Fund”)

and

and
the

trustees of the Fund (the “Trustees”) (ECF No. 24); and (2) a
cross-motion for judgment on the pleadings by Defendant Just
Born II, Inc. (“Defendant”) (ECF No. 25).
briefed,

and

necessary.

the

court

Local

Rule

now

rules,

105.6.

no

For

The issues have been
hearing

the

being

following

deemed

reasons,

Plaintiffs’ motion will be granted in part and denied in part,
and Defendant’s cross-motion will be denied.
I.

Factual Background1
Plaintiffs

pursuant

to

29

are

a

U.S.C

trust
§

fund

established

186(c)(5),

administer it (together, “Plaintiffs”).
1

and

the

and

maintained

Trustees

who

(ECF No. 1 ¶¶ 4 & 5).

Unless otherwise noted, the facts
undisputed and set forth in the complaint.

outlined

here

are

The Fund provides retirement benefits to eligible employees of
participating

employers

and

qualifies

under

the

Employee

Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001, et
seq., as both an employee benefit plan, see id. § 1002(2), (3),
and a multiemployer pension plan, see id. § 1002(37).
1 ¶ 4).
series

(ECF No.

Defendant is a candy manufacturer that was a party to a
of

collective

Confectionery

and

bargaining

Tobacco

Union 6 (the “Union”).

agreements

Workers

(Id. ¶ 10).

with

International

the

Bakery,

Union,

Local

The most recent collective

bargaining agreement (the “CBA”) between Defendant and the Union
was effective from March 1, 2012, through February 28, 2015.
(Id.).

Article 22 of the CBA stated that contributions:
shall be paid [to Plaintiff] from the first
day the employee begins working in a job
classification covered by the [CBA], and
shall be paid on behalf of all employees in
covered job classifications – there are no
exceptions for employees who are not members
of the Union, temporary, seasonal, or parttime employees, for leased employees, or for
any other type of employee.

(ECF No. 1-2, at 17).
In 2012, during the term of the CBA, the Fund’s actuary
certified that the Fund was in “critical” status.
15).

(ECF No. 1 ¶

Under ERISA, multiemployer plans can be certified as being

in “endangered” or “critical” status based on the present and
projected value of the plan, its projected costs and benefits
payable,

and

other

potential

funding

2

deficiencies.

See

29

U.S.C. § 1085(b).
requires

When a plan is in critical status, ERISA

the

plan

sponsor

to

“adopt

rehabilitation

plan”

designed

to

improve

health.

Id.

rehabilitation

§

1085(a)(2),

plan

with

(e).

The

revised

and
the

implement
fund’s

Trustees

benefit

and

a

fiscal

developed

a

contribution

schedules and proposed two revised options to the Union and
Defendant.

(ECF Nos. 1 ¶ 16; 1-3).

On December 28, 2012, the

Union and Defendant selected one of the revised schedules and
signed a “PPA Schedule Election Form.”

(ECF Nos. 1 ¶ 17; 1-4).

The revised schedule proposal and the PPA Schedule Election Form
both included language similar to the CBA that bound Defendant
to

make

payments

for

all

work

done

classification covered by the CBA.

by

employees

in

a

job

(See ECF Nos. 1-3, at 7; 1-

4, at 2-3).
When the CBA expired on February 28, 2015, Defendant and
the Union agreed to a short-term extension of the CBA until
April 30, 2015, and the two sides began bargaining for a new
agreement.

(ECF

Nos.

1

¶

18;

1-5).

During

negotiations,

Defendant demanded that any new agreement relieve it from the
obligation to make contributions to the Fund on behalf of newly
hired

employees.

(ECF

No.

1

¶

19).

In

its

cross-motion,

Defendant explains that it had developed serious concerns about
the management of the Fund and that it no longer believed that
participation in the Fund was in its employees’ best interest.
3

(ECF No. 25-1, at 11).
terms,

and,

eventually,

were at an impasse.
when

an

The Union refused to accept Defendant’s

impasse

Defendant

declared

(ECF No. 1 ¶ 20).
in

bargaining

is

that

negotiations

Under federal labor law,
reached

in

good

faith,

bargaining can be suspended and the employer can make unilateral
changes, so long as the terms it applies are not substantially
different from those terms it last proposed in negotiations.
See McClatchy Newspapers, Inc., 321 NLRB 1386, 1996 WL 506086,
at *6 (2000).

Defendant thus unilaterally implemented its “best

offer,” under which it would continue to contribute to the Fund
on behalf of then-current employees and would contribute to an
unrelated 401(k) retirement plan on behalf of subsequently hired
employees.
contributions

(ECF
to

No.
the

1
Fund

¶

20).
for

Defendant

newly

hired

has

employees

declaring impasse and implementing its best offer.
II.

not

made
since

(Id. ¶ 22).

Procedural Background
On March 17, 2016, Plaintiffs filed the instant suit under

29 U.S.C. § 1145, which gives a multiemployer plan the right to
sue an employer for delinquent contributions.

Plaintiffs allege

that Defendant’s failure to make payments to the Fund on behalf
of new employees is a breach of its obligation under 29 U.S.C. §
1085(e)(3)(C)(ii) (the “Provision”).

The Provision was passed

as part of the Pension Protection Act (“PPA”), which amended
ERISA law to give multiemployer pension funds that are at risk

4

of failing authority to make the changes necessary to prevent
insolvency.

The

Provision

mandates

that,

even

after

a

collective bargaining agreement expires, a plan sponsor like the
Trustees

must

impose

the

contribution

schedule

previously

place under that agreement when certain criteria are met.

in
In

full it states:
If-(I)
a
collective
bargaining
agreement
providing
for
contributions
under
a
multiemployer plan in accordance with a
schedule
provided
by
the
plan
sponsor
pursuant
to
a
rehabilitation
plan
(or
imposed under subparagraph (C)(i)) expires
while the plan is still in critical status,
and
(II) after receiving one or more updated
schedules
from
the
plan
sponsor
under
subparagraph (B)(ii), the bargaining parties
with respect to such agreement fail to adopt
a
contribution
schedule
with
terms
consistent with the updated rehabilitation
plan and a schedule from the plan sponsor,
then the contribution schedule applicable
under the expired collective bargaining
agreement, as updated and in effect on the
date the collective bargaining agreement
expires, shall be implemented by the plan
sponsor beginning on the date specified in
clause (iii) [180 days after the date on
which the collective bargaining agreement
expires].
Id.

The primary dispute in this case derives from the parties’

interpretations of the Provision.
affirmative defenses in its answer.
Plaintiffs

filed

the

pending

Defendant also raised nine
(ECF No. 9-1, at 15-16).

motion
5

for

judgment

on

the

pleadings on June 24, 2016.
cross-motion
August 15.

for

judgment

(ECF No. 25).

and Defendant replied.

(ECF No. 24).
on

the

pleadings

Defendant filed a
in

its

favor

on

Plaintiffs responded to that motion,

(ECF Nos. 26; 27).

III. Standard of Review
Fed.R.Civ.P.

12(c)

provides:

“[a]fter

the

pleadings

are

closed — but early enough not to delay trial — a party may move
for judgment on the pleadings.”
motion

pursuant

to

relief being sought.

Rule

12(c)

The standard for resolving a
depends

on

the

nature

of

the

In some situations, the standard for a

Rule 12(c) motion on the pleadings is identical to the standard
for summary judgment motions.

5C Charles Alan Wright & Arthur

R. Miller, et al., Federal Practice & Procedure § 1369 (3d ed.
2004) (“Both the summary judgment procedure and the motion for
judgment on the pleadings are concerned with the substance of
the parties’ claims and defenses and are directed towards a
final judgment on the merits.”).

“[The summary judgment] rubric

is . . . appropriate where the moving party seeks affirmative
relief on the basis of the pleadings and not merely a dismissal
of claims brought against it.”

Geoghegan v. Grant, No. DKC-10-

1137, 2011 WL 673779, at *3 (D.Md. Feb. 17, 2011).

A motion for

summary judgment will be granted only if there exists no genuine
dispute as to any material fact and the moving party is entitled
to judgment as a matter of law.

6

See Fed.R.Civ.P. 56(a).

The

key distinction between a Rule 12(c) motion and a Rule 56 motion
is that the court may not consider facts outside the pleadings
under Rule 12(c).
IV.

Geoghegan, 2011 WL 673779, at *3.

Interpreting the Provision
Plaintiffs

contend

that,

in

line

with

the

text

of

the

Provision: (1) Defendant and the Union were “bargaining parties”
with respect to “a collective bargaining agreement providing for
contributions”

to

the

Fund

“in

accordance

with

a

schedule

provided” pursuant to a rehabilitation plan; (2) the extension
of that collective bargaining agreement expired on April 30,
2015; (3) at that time, the Fund remained in critical status;
and

(4)

those

contribution

two

bargaining

schedule

with

parties
terms

“fail[ed]

to

consistent”

rehabilitation plan and a schedule from the Trustees.
24-1, at 11-13).

adopt

with

a

the

(ECF No.

Under Plaintiffs’ reading, the Trustees were

thus required to implement the schedule from the expired CBA 180
days

after

the

CBA

expired.

Because

the

schedule

from

the

expired CBA included the language requiring Defendant to pay
“from

the

first

day

[an]

employee

begins

working”

for

“all

employees in covered job classifications,” Plaintiffs maintain
that the Fund is entitled to contributions from Defendant for
new employees.

Defendant contends that the Provision does not

apply to it in the present circumstances because it is not a
“bargaining party” as that term is defined in the Provision or

7

because it reached a bargaining impasse in good faith and has a
labor law right to implement the terms of its last, best offer
unilaterally.
A.

Bargaining Parties

As noted above, the Provision applies when a collective
bargaining agreement expires and “the bargaining parties with
respect

to

such

schedule.”
not

agreement

fail

to

adopt

a

contribution

Defendant’s first counterargument is that it does

qualify

as

a

“bargaining

party”

under

the

Provision.

According to the definitions under § 1085, a “bargaining party”
is

either

an

employee

organization,

like

the

Union,

or

“an

employer who has an obligation to contribute under the plan.”
Id. § 1085(j)(1).

In turn, an “obligation to contribute” is

defined by reference to § 1392, which states that “the term
‘obligation

to

arising--(1)
related)

under

agreements,

applicable
1392(a).

contribute’
one
or

means

or

more

(2)

labor-management

an

as

obligation

collective
a

relations

result
law

to

contribute

bargaining

of
.

a

duty

.

.

.”

(or
under

Id.

§

According to Defendant, it no longer has an obligation

to contribute arising under a collective bargaining agreement
“because there is no collective bargaining agreement in force.”
(ECF No. 25-1, at 16).
longer

qualifies

(Id. at 14).

as

a

Therefore, Defendant maintains, it no
bargaining

party

under

the

Provision.

Plaintiffs respond that the Provision refers to

8

“the bargaining parties with respect to such agreement,” “such
agreement” being the expired collective bargaining agreement.
(ECF No. 26, at 7).

Defendant was quite clearly a bargaining

party to the expired CBA, as it had an obligation to contribute
to the plan under that agreement.
Defendant responds to this argument in two ways.

First,

Defendant argues that this reading makes the word “bargaining”
in the term “bargaining parties” superfluous because it refers
to all parties with respect to the earlier agreement.
27, at 9).

(ECF No.

To the contrary, there may well be other parties to

an expired collective bargaining agreement that do not qualify
as bargaining parties as defined in § 1085(j)(1).
argues

that

the

phrase

“with

respect

to”

Second, it

modifies

the

term

“bargaining parties,” and therefore it would be “grammatically
impossible” for the phrase to do anything but narrow the scope
of the term by specifying a subset of “bargaining parties.”
(Id. at 10-11).

This argument fails because it ignores the

temporal element inherent in the reference.

Defendant does not

and could not suggest that it was never a bargaining party.
Rather, it contends that it ceased to be a bargaining party when
its obligation to contribute expired with the CBA.

Even if that

is true and Defendant is no longer a bargaining party, however,
it still was a bargaining party with respect to the expired CBA.
Hence, it is actually Defendant’s reading that would read words
9

out of the Provision, applying it only to “bargaining parties”
that remain “bargaining parties” without regard for the fact
that the phrase “with respect to such agreement” necessarily
includes

former

bargaining

contribute has expired.
respect

to”

the

parties

whose

obligation

to

Those former “bargaining parties with

expired

CBA

are

indeed

a

subset

of

all

“bargaining parties,” and they are the subset identified in the
Provision.

Therefore, Defendant is a bargaining party in this

context.
B.

Applicability of the Provision After Impasse

Defendant also argues that applying the Provision after it
reached

an

impasse

would

“repeal

by

implication”

the

long-

standing federal labor law right to implement its last, best
offer after reaching an impasse in good faith.

It points most

helpfully to Trustees of Local 138 Pension Trust Fund v. F.W.
Honerkamp Co., 692 F.3d 127 (2d Cir. 2012), in which the United
States

Court

of

1085(e)(3)(C)(i),
effects

Appeals
a

essentially

for

statute
the

the

that

same

Second

Circuit

parallels

mandatory

the

reviewed

Provision

implementation

§

and

of

a

contribution schedule on bargaining parties whose plan entered
critical

status

agreement.

during

the

term

of

a

collective

bargaining

Section 1085(e)(3)(C)(i) differs from the Provision

only in that it applies to bargaining parties whose agreement

10

expires before they receive or adopt a new contribution schedule
under the rehabilitation plan.2
In Honerkamp, the fund’s actuaries certified its critical
status in March 2008, and it presented the employer with several
new schedules under a rehabilitation plan in November.
132.

Before

the

bargaining

parties

adopted

one

Id. at

of

these

schedules, the collective bargaining agreement that was in place
expired in February of 2009.

Id.

The employer and the union

began negotiating for a new agreement but reached an impasse in
summer

2009.

Id.

at

132-33.

Under

the

labor

law

rights

described above, the employer unilaterally implemented its final
offer, which, rather than accepting any of the schedules the
fund had offered, withdrew entirely from the fund and created
401(k) retirement plans for its employees – similar to what
Defendant here has done for new employees.

Id. at 133.

The

plan challenged whether the employer had the right to withdraw
from the fund, given that the language of § 1085(e)(3)(C)(i)
mandated that the fund implement a “default” schedule if the
bargaining

parties

to

the

expired

collective

bargaining

agreement did not agree to one of the proposed schedules from
the fund.
2

Id.

At the time Honerkamp was decided, the provision in
question was located at 29 U.S.C. § 1085(e)(1).
When Congress
amended this section of the code in 2014, the same provision was
moved without substantive change to § 1085(e)(3)(C)(i).
For
simplicity, it is referred to as § 1085(e)(3)(C)(i) in this
opinion.
11

The

Second

Circuit

observed

that

§

1085(e)(3)(C)(i)

had

been enacted in 2006 as part of the PPA, which, as noted above,
was

intended

to

protect

becoming insolvent.

pension

Id. at 130.

funds

that

were

at

risk

of

The court emphasized, however,

that the PPA was added as a complement to preexisting sections
of ERISA that were passed under the Multiemployer Pension Plan
Amendments Act of 1980 (“MPPAA”), which forced an employer that
withdrew from a pension plan to pay its share of the pension
plan’s unfunded liability.
complement

the

MPPAA

was

Id.
clear

That the PPA was meant to
because,

among

other

things,

provisions in the PPA revised the calculation of the withdrawal
penalty where the pension plan withdrawn from was in critical
status.

Id. at 134.

beneficiaries

of

Because “both statutes aim to protect

multiemployer

pension

plans

by

keeping

such

plans adequately funded,” the court said, “it was not necessary
for Congress to forbid withdrawal, [which would be] accompanied
by MPPAA liability.”

Id. at 135.

Thus, the court held that the

employer was allowed to withdraw from the fund as part of the
implementation of its final offer, provided it was paying the
withdrawal penalty.
Defendant

Id.

argues

that

the

Second

Circuit’s

decision

confirms that Congress did not intend to abrogate an employer’s
rights to implement the terms of its best offer – whatever they
may be – after an impasse is reached in good faith.
12

(ECF No.

25-1,

at

22).

collective

Because

bargaining

the

court

rights

in

affirmed
the

an

face

employer’s
of

the

§

1085(e)(3)(C)(i) mandate – which, again, matches the Provision’s
mandate - Defendant asks “why an employer would have the right
to withdraw from contribution obligations under a pension fund,
notwithstanding [§ 1085(e)(3)(C)(i)], but would somehow be bound
to affirmatively assume obligations that never existed on behalf
of [new] employees.”

(ECF No. 27, at 16).

Honerkamp provides an answer to this question.

There, the

court affirmed a scheme in which a fund in critical status could
protect its interests and advance toward solvency by forcing
employers

either

to

stay

in

the

fund

and

contribute

to

its

rehabilitation under the PPA, or to withdraw from the fund and
pay the withdrawal penalty under the MPPAA.
at 135.
the

Honerkamp, 692 F.3d

By upholding the employer’s right to withdraw, then,

Second

Circuit

was

protecting

the

employer’s

negotiating

rights, while acknowledging that the employer would have to pay
into the fund, either on the PPA’s terms, by way of one of the
proposed rehabilitation schedules, or the MPPAA’s terms, by way
of

the

withdrawal

penalty.

This

dichotomy

is

especially

apparent because, as noted above, the PPA defines the employers
to which it is applicable by reference to an “obligation to
contribute” as defined in § 1392, the exact section of the MPPAA
that

defines

what

triggers

the
13

withdrawal

penalty.

See

29

U.S.C. § 1383(a) (“[A] complete withdrawal from a multiemployer
plan occurs when an employer . . . permanently ceases to have an
obligation to contribute under the plan.”).
Defendant seems to be trying to walk the line between these
two sections of ERISA, avoiding the contributions required under
Plaintiffs’ rehabilitation plan schedules while simultaneously
avoiding MPPAA withdrawal liability by removing itself from the
Fund by attrition, making each new hire an effective withdrawal
without acknowledging withdrawal in a way that would trigger the
withdrawal penalty.

See 29 U.S.C. §§ 1381-1385.

Allowing an

employer to avoid both payments would run contrary to the aim of
the

two

pension

statutes
plans

“to

by

protect

keeping

beneficiaries

such

Honerkamp, 692 F.3d at 135.

plans

of

multiemployer

adequately

funded.”

Although Defendant suggests that

paying into the Fund for new employees would be “assum[ing]
obligations that never existed,” the terms of the schedule that
mandated

payment

for

all

employees

in

a

job

classification

clearly did create an obligation to contribute for new employees
in those classifications under the expired CBA and the revised
schedules.

In creating the rehabilitation plan and contribution

schedules, the Trustees undoubtedly took into account the number
of employees for which employers would be paying into the Fund,
something that Defendant seeks to change by avoiding the terms
of

the

schedules

that

Plaintiffs
14

proposed.

This

type

of

withdrawal without compensation would put plans at risk of the
“vicious downward spiral” in which “withdrawals reduce a plan’s
contribution base . . . [pushing] the contribution rate for
remaining employers to higher and higher levels in order to fund
past service liabilities, [and] [t]he rising costs may encourage
– or force – further withdrawals.”

Id. at 129 (quoting Pension

Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 722 n.2
(1984)

(quoting

Pension

Plan

Termination

Insurance

Issues:

Hearings before the Subcomm. on Oversight of the H. Comm. on
Ways and Means, 95th Cong., 2d Sess., 22 (1978))).
To be sure, these provisions impose on an employer’s labor
law rights.

An employer must either adopt one of the schedules

proposed by the fund, which has no obligation to take input from
contributing employers, or it must withdraw and pay a penalty.
But just as an employer must pay a withdrawal penalty if that
withdrawal comes after impasse, see Honerkamp, 692 F.3d at 133136, so too must a fund impose a schedule on a non-withdrawing
employer

after

impasse.

The

Provision

does

not

distinguish

between parties that “adopt a contribution schedule” as part of
a new collective bargaining agreement and those that might adopt
such a schedule outside of one.
it

enacted

the

PPA

is

that

What mattered to Congress when
an

at-risk

contributions it needs to be rehabilitated.
mandates

imposition

of

rehabilitation
15

plan

fund

gets

the

Moreover, the PPA
schedules

even

if

both the employer and the union object to a schedule and agree
to different terms.

Nothing in the Provision indicates that

this imposition requirement should be retracted in situations
where,

as

here,

the

plan

is

imposing

objection of the employer alone.

a

schedule

over

the

Defendant bemoans being “bound

to affirmatively assume obligations that never existed” (ECF No.
27, at 16), but such an imposition is clearly what Congress
intended

when

it

passed

the

PPA

and

titled

the

subsection

containing the Provision “Imposition of a schedule where failure
to

adopt

a

rehabilitation

plan.”

As

Plaintiffs

point

out,

Defendant’s contention that the Provision was designed merely to
enforce the prior schedule during extended negotiations would be
no imposition at all because labor law already requires the
extension of expired terms during pending negotiations.
No.

26,

at

13-14).

Therefore,

Provision is correct.

Plaintiffs’

reading

(ECF
of

the

Plaintiffs’ motion will be granted in

part, and they are entitled to judgment in their favor unless
Defendant’s affirmative defenses preclude recovery.
V.

Affirmative Defenses
A.

Permissibility of Affirmative Defenses Under 29 U.S.C.
§ 1145

In its answer, Defendant raised nine affirmative defenses.
Plaintiffs first contend that courts have rejected the use of
affirmative defenses in actions brought under 29 U.S.C. § 1145,
which was enacted “to promote prompt payment of contributions”
16

and “[to] permit . . . plans to recover delinquent contributions
efficaciously.”

(ECF No. 24-1, at 26 (citing S. Comm. on Labor

& Human Res., 96th Cong., 2d Sess., 43-44 (1980))).

Although

Plaintiffs admit that the issue that prompted the passage of §
1145 was that pension plans were being dragged into contract
disputes between employers and unions, they argue that the court
should treat affirmative defenses similarly here for a variety
of reasons.

(ECF No. 24-1, at 27).

First, Plaintiffs argue

that allowing affirmative defenses to be raised in this context
would permit any employer to resist making payments to a fund by
challenging
critical

the

actuarial

status.

(Id.

assumptions

at

28).

underlying

Second,

they

a

plan’s

contend

that

Congress gave employers only two explicit causes of action under
the PPA and neither is valid here.

(Id.).

Third, they contend

that only the Secretary of Labor may challenge the certification
of a critical status because, absent an express cause of action
allowing an employer to bring challenges like the ones Defendant
brings here, Congress must have intended to leave such actions
to the Secretary of Labor’s sweeping powers to sue for ERISA
violations.

(Id. at 30).

Defendant points to Kaiser Steel Corp v. Mullins, 455 U.S.
72

(1982),

which

held

that,

although

§

1145

was

enacted

to

“simplify delinquency collection,” id. at 87, the goal was to
minimize

“lengthy,

costly

and
17

complex

litigation

concerning

claims and defenses unrelated to the employer’s promise and the
plans’

entitlement

original).3

to

Congress

the
“did

contributions,”
not

say

that

id.

(emphasis

employers

should

in
be

prevented from raising all defenses; rather they spoke in terms
of

‘unrelated’

and

‘extraneous’

defenses.”

Id.

at

88.

Defendant cites several other cases that support this conclusion
in contexts similar to this case.

(ECF No. 25-1, at 25-26); see

also Bd. of Trs. of Watsonville Frozen Food Welfare Tr. Fund v.
Cal. Coop. Creamery, 877 F.2d 1415, 1425 (9th Cir. 1989) (holding
that an employer could raise the affirmative defense of conflict
of interest because the defense “goes directly to the Trust
Fund’s actions in imposing [a fee on an employer] and thus is
related directly to [the employer’s] obligation to pay and the
Trust Fund’s entitlement to [payment]”); Laborers’ Pension Fund
v. Litgen Concrete Cutting & Coring Co., 128 F.R.D. 96, 98 n.2
(N.D.Ill.

1989)

(recognizing

that

an

employer

may

raise

affirmative defenses related to “the actions of the Fund itself
in asserting its rights,” including, inter alia, defenses of
fraud and misrepresentation).4

Plaintiffs do not address Kaiser

Steel in their response, nor do they refute that Defendant has
cited

several
3

cases

in

which

federal

courts

have

supported

Kaiser Steel dealt with the predecessor to § 1145, §
306(a), but it contained the exact same language.
Compare
Kaiser Steel, 455 U.S. at 86, with 29 U.S.C. § 1145.
4
Defendant also argues that it is asserting affirmative
defenses, not claims, so Plaintiffs’ arguments related to causes
of actions should not apply.
18

Defendant’s

position

that

“federal

common

law”

can

be

appropriate in spite of the comprehensive scheme of ERISA law
and

the

Secretary’s

Defendant

is

challenging

contributions,”
inapplicable,

broad

the

and

the

powers

“the

rule

under

that

plan[’]s[]

that

argument

law.

entitlement

Defendant

to

the

reference

Plaintiffs

that

Because

is

may

not

raise

affirmative defenses fails.
B.

Pleadings Standard

The parties next dispute whether Plaintiffs’ rebuttals to
Defendant’s affirmative defenses are properly considered part of
the Rule 12(c) motion for judgment on the pleadings.

Defendant

contends that the normal vehicle for rebutting an affirmative
defense is through a motion to strike under Fed.R.Civ.P. 12(f).
(ECF No. 25-1, at 22).

Plaintiffs suggest that, although their

arguments could be construed as a series of motions to strike,
such

motions

are

“more

fitting

.

.

.

where

a

plaintiff

challenges only some of the defenses raised in a defendant’s
pleading.”

Haley Paint Co. v. E.I. Du Pont De Nemours & Co.,

279 F.R.D. 331, 335 (D.Md. 2012) (citing Wright & Miller, supra,
§ 1367); see also Wright & Miller, supra, § 1369 (noting that
Rule

12(f)

“serves

as

a

pruning

device

to

eliminate

objectionable matter from an opponent’s pleadings and, unlike
the Rule 12(c) procedure, it is not directed at gaining a final
judgment on the merits”).

This dispute is largely academic.

19

Federal Rule 12(c) should be read in
conjunction with several other federal rules
authorizing pretrial motions, especially the
various Rule 12(b) motions to dismiss, the
Rule 12(f) motion to strike, and the Rule 56
motion for summary judgment.
Collectively,
these procedures provide an arsenal of
weapons for challenging the sufficiency of
an opponent’s pleading and the viability of
the underlying claim or defense.
Wright & Miller, supra, § 1369.
motion

pursuant

relief

being

to

Rule

sought.”

12(c)

“The standard for resolving a
depends

Geoghegan,

on

2011

the
WL

nature

673779,

of
at

the
*4.

Depending on the context, “the district court will apply the
same standards for granting the appropriate relief or denying
the motion as it would have employed had the motion been brought
prior to the defendant’s answer under Rules 12(b)(1), (6), or
(7) or under Rule 12(f).”
Plaintiffs
that

make

assert

[its

Wright & Miller, supra, § 1367.

that

Defendant

affirmative

“has

defenses]

applicable Twombly-Iqbal standards.”

not

alleged

plausible

under

facts
the

(ECF No. 24-1, at 31).

Defendant argues, in response, that courts within this district,
this

circuit,

and

nationwide

are

split

as

to

whether

the

pleading standards in Twombly and Iqbal apply to affirmative
defenses

and

that

the

“better

interpretation

of

the

Federal

Rules of Civil Procedure is that the Iqbal-Twombly standard does
not apply.”
neither

(ECF No. 25-1, at 30).

Twombly

nor

Iqbal

expressly

Defendant is correct that
addressed

the

pleading

requirements applicable to affirmative defenses, and district
20

courts

throughout

the

country

have

since

debated

the

issue.

This court, however, has expressly adopted the majority view
that affirmative defenses must meet those standards.

See Long

v. Welch & Rushe, Inc., 28 F.Supp.3d 446, 461-62 (D.Md. 2014).
Therefore, affirmative defenses must be sufficiently pleaded to
“ensure

that

an

opposing

party

receives

fair

notice

of

the

factual basis for an assertion contained in a [ ] defense.”
Bradshaw
(D.Md.

v.

Hilco

2010).

Receivables,

This

pleading

LLC,

725

standard

F.Supp.2d

requires

532,

that,

536

“at

a

minimum, some statement of the ultimate facts underlying the
defense must be set forth, and both its non-conclusory factual
content and the reasonable inferences from that content, must
plausibly

suggest

defendant.”
C.

a

cognizable

defense

available

to

the

Haley Paint, 279 F.R.D. at 336.5

Defendant’s Pleadings

The first four affirmative defenses are easily rejected.
Defendant’s

first

two

defenses

are

that

(1)

Plaintiffs

have

failed to state a claim upon which relief can be granted; and
(2) that Defendant was within its rights to implement the terms
of its best offer after the expiration of the CBA and reaching
impasse in new negotiations.

5

These defenses speak to the merits

Although Defendant may have intended for its own crossmotion for judgment on the pleadings to rest on its statutory
interpretation arguments described above, its pending crossmotion further counsels in favor of holding it to a higher
pleading standard.
21

of the case and fail for the reasons stated above.

Defendant’s

third and fourth affirmative defenses, that the NLRB dismissal
of the Union’s unfair labor practice charge precludes review in
this court and that jurisdiction over this dispute belongs in
the exclusive jurisdiction of the NLRB, also fail.
Defendant

is

jurisdiction

correct
to

make

that

federal

determinations

district
under

§

Although

courts

lack

1392(a)(2),

see

Laborers Health & Welfare Trust Fund for Northern California v.
Advanced Lightweight Concrete Co., 484 U.S. 539, 549 (1988),
these

jurisdictional

defenses

apply

only

to

Defendant’s

arguments that it does not qualify as a “bargaining party” under
§

1392(a)(2)

because

labor-management

of

an

relations

obligation

law.”

(ECF

to

contribute

No.

25-1,

“under

at

16).

Because Plaintiffs’ theory of liability is based on Defendant
being a bargaining party by way of its obligation to contribute
arising under the expired CBA as defined in § 1392(a)(1), these
defenses are immaterial to the present motions.
Defendant’s remaining defenses pertain to the validity of
the Fund’s certified critical status.

Defendant contends that,

after losing a legal dispute over the benefits the Fund owed to
certain

beneficiaries,

fraudulently”

revised

the

its

Fund’s

actuarial

actuary
assumptions

“falsely
in

order

and
to

certify the Fund as being in critical status, thereby allowing
the Fund to reduce benefits as part of a rehabilitation plan.
22

(ECF No. 9-1 ¶¶ 34-43).

The crux of its argument is that the

Fund’s critical status never should have been certified.
final

five

affirmative

defenses,

Defendant

contends

In its

that

(1)

Plaintiffs fraudulently induced it into agreeing to the revised
schedule

in

the

PPA

Schedule

Election

Form;

(2)

Plaintiffs’

rights asserted in this case are the result of fraud or material
misrepresentations;

(3)

granting

Plaintiffs

recovery

in

this

suit would unjustly enrich them; (4) Plaintiffs have unclean
hands and cannot recover equitable relief sought; and (5) the
critical status certification, and the ensuing rehabilitation
plan

and

contribution

unlawfully imposed.

schedules

are

legally

defective

and

(Id. at 16).

Each of these defenses is dependent on Plaintiffs having
fraudulently or intentionally misrepresented the Fund being in
critical status as “required []or authorized by ERISA.”
ECF No. 9-1 ¶ 46).6
the

Fund’s

actuary

(See

Defendant makes much of its allegations that
“manipulated

actuarial

assumptions”

and

“depart[ed] from past practice” to certify the Fund’s critical
status (ECF No. 9-1 ¶ 28), which, it contends, would not have
occurred had prior actuarial assumptions been used (ECF No. 251, at 32).
6

But § 1085 generally requires only that “projections

Defendant also claims that Plaintiffs failed to provide
sufficient notice to plan beneficiaries according to governing
statutory requirements (ECF No. 9-1 ¶ 50), but it has alleged no
facts related to this accusation. To the degree that issues of
notice are embedded in Defendant’s affirmative defenses, they
have not been sufficiently pleaded here.
23

shall be based on reasonable actuarial estimates, assumptions,
and methods that . . . offer the actuary’s best estimate of
anticipated

experience

1085(b)(3)(B)(i).

under

the

“Reasonableness

plan.”
is

a

29
not

zone,

U.S.C.
a

§

point.”

Artistic Carton Co. v. Paper Indus. Union Mgmt. Pension Fund,
971 F.2d 1346, 1351 (7th Cir. 1992).

When Congress provided that

funds must rely on reasonable actuarial methods, it did so with
the understanding that funds seeking to improve their solvency
may make generous assumptions.
v.

Classic

(noting

Coal

that

Corp.,

“[g]reat

931

Id. at 1348-49; see also Combs

F.2d

differences

96,
of

99-100

(D.C.Cir.

opinion

exist

1991)
as

to

actuarial methods” and finding that Congress recognized that the
“range of reasonableness permits the actuary wide latitude”).
Therefore, the Fund’s actuary was entitled to make adjustments
in making its determinations and projections.

For Defendant to

show that the need for a rehabilitation plan was fraudulent and
“neither required nor authorized by ERISA” (ECF No. 9-1 ¶ 46),
it must attack the reasonableness of the actuary’s assumptions,
not the alteration of the assumptions or the motivations behind
the alterations.
Moreover,

it

is

well-established

that

a

party

alleging

fraud must do so with particularity, regardless of whether the
allegation is made by way of a claim or an affirmative defense.
Aguilar v. City Lights of China Rest., Inc., No. DKC 11-2416,
24

2011 WL 5118325, at *4 (D.Md. Oct. 24, 2011); Fed.R.Civ.P. 9(b)
(“In

alleging

particularity
mistake.”).

fraud
the

or

mistake,

a

circumstances

party

must

state

constituting

with

fraud

or

While “intent, knowledge, and other conditions of a

person’s mind may be alleged generally” under Fed.R.Civ.P. 9(b),
a party alleging fraud must plead “the time, place, and contents
of the false representations, as well as the identity of the
person

making

thereby.”

the

misrepresentation

and

what

he

obtained

Harrison v. Westinghouse Savannah River Co., 176 F.3d

776, 784 (4th Cir. 1999) (citations omitted).
Here,

Defendant

has

not

sufficiently

through ninth affirmative defenses.

pleaded

its

fifth

Defendant does argue that

the actuary did not take proper account of the various factors
that one would expect a reasonable actuary to consider.
No. 25-1, at 33).

(ECF

In its answer, Defendant identified six ways

that the Fund’s actuary allegedly departed from “sound actuarial
principles”

in

evaluating

(ECF No. 9-1 ¶¶ 38-41).7

the

financial

health

of

the

Fund.

Based on the pleadings, however, it is

unclear whether Defendant is accusing the actuary of fraud by
way of its certification or accusing the Trustees on the theory
that

they

7

fraudulently

induced

Defendant

to

agree

to

a

Defendant has provided fairly limited detail to support
its contention that the specific changes it identifies were
unreasonable, and Plaintiffs have already attempted to show why
each of these assumptions were reasonable (ECF No. 24-1, at 3436).
25

contribution schedule under the rehabilitation plan when they
knew

that

actuarial

the

critical

assumptions.

status

was

Defendant

not

based

variously

on

reasonable

refers

to

the

actions taken by the actuary, the Fund, or the Trustees.

It

must plead clearly who allegedly knew what when making what
assertions.

Defendant

will

have

to

amend

its

affirmative

defenses to state with more particularity the circumstances of
the alleged misrepresentation.
VI.

Conclusion
For the foregoing reasons, the motion for judgment on the

pleadings will be granted in part and denied in part, and the
cross-motion will be denied.

A separate order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

26