Battelle Memorial Institute v. Hanford Multi-Employer Pension Plan, HAMTC Represented Employees et al
Filing
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ORDER granting 10 Defendants' Motion to Dismiss; Awarding Attorney Fees. Entry of judgment is delayed pending resolution of attorney fees, costs, and expenses. Signed by Chief Judge Thomas O. Rice. (BF, Paralegal)
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
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BATTELLE MEMORIAL
INSTITUTE,
NO. 4:17-CV-5080-TOR
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Plaintiff,
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v.
ORDER GRANTING MOTION TO
DISMISS; AWARDING ATTORNEY
FEES
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HANFORD MULTI-EMPLOYER
PENSION PLAN, HAMTC
REPRESENTED EMPLOYEES;
PENSION & SAVINGS PLANS
COMMITTEE c/o MISSION
SUPPORT ALLIANCE, LLC,
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Defendants.
BEFORE THE COURT is Defendants Hanford Multi-Employer Pension
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Plan, HAMTC Represented Employees and Pension & Savings Plans Committee’s
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Motion to Dismiss (ECF No. 10). The Motion was submitted for consideration
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without oral argument. The Court has reviewed the record and files herein, and is
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fully informed. For the reasons discussed below, the Motion to Dismiss (ECF No.
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10) is GRANTED.
ORDER GRANTING MOTION TO DISMISS; AWARDING ATTORNEY
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STANDARD OF REVIEW
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Federal Rule of Civil Procedure 12(b)(6) provides that a defendant may
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move to dismiss the complaint or a particular claim for “failure to state a claim
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upon which relief can be granted.” To survive dismissal, a plaintiff must allege
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“sufficient factual matter, accepted as true, to ‘state a claim to relief that is
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plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
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Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This requires the plaintiff to
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provide “more than labels and conclusions, and a formulaic recitation of the
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elements.” Twombly, 550 U.S. at 555.
When deciding, the Court may consider the plaintiff’s allegations and any
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“documents incorporated into the complaint by reference . . . .” Metzler Inv.
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GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 1061 (9th Cir. 2008) (citation
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omitted). Plaintiff’s “allegations of material fact are taken as true and construed in
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the light most favorable to the plaintiff[,]” but “conclusory allegations of law and
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unwarranted inferences are insufficient to defeat a motion to dismiss for failure to
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state a claim.” In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1403 (9th Cir. 1996)
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(citation and brackets omitted).
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ORDER GRANTING MOTION TO DISMISS; AWARDING ATTORNEY
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BACKGROUND1
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The instant action involves Plaintiff Battelle Memorial Institute (“Battelle”)
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and its liability for withdrawing from the Hanford Multi-Employer Pension Plan,
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HAMTC Represented Employee (“Hanford Plan”) administered by Hanford
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Pension & Savings Plans Committee (“Plan Administrator”) and governed by the
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Employee Retirement Security Act of 1974 (“ERISA”), as amended by the
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Multiemployer Pension Plan Amendments Act (“MPPAA”). ECF No. 1 at ¶ 1.
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Pursuant to ERISA, employers participating in a pension plan subject to
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ERISA are subject to withdrawal liability upon withdrawal from the plan. This
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liability arises because the employer’s departure leaves the plan with unfunded
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liabilities in the form of future pension benefits to the withdrawing employer’s
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employees. See 29 U.S.C. § 1381. The amount of withdrawal liability is
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calculated according to a formula provided by ERISA. See 29 U.S.C. §§ 1382,
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139l(c).
Battelle participated in the Hanford Plan – an ERISA governed plan – as an
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employer for some time, but decided to withdraw from the Hanford Plan after an
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underlying collective bargain agreement allowed Battelle to sponsor its own
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and the exhibits included with the Complaint.
The background facts are gleaned from Plaintiff’s Complaint (ECF No. 1)
ORDER GRANTING MOTION TO DISMISS; AWARDING ATTORNEY
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employer plan. ECF No. 1 ¶¶ 15-17. Battelle withdrew from the Hanford Plan on
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July 1, 2016. ECF No. 1 at ¶ 18.
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Before Battelle’s ultimate withdrawal, the Hanford Plan’s actuary provided a
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withdrawal liability estimate to Plaintiff of “‘approximately $14,200,000,’ with the
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final withdrawal liability to be based on final December 31, 2015 assets and actual
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January 1, 2016 valuation results.” ECF No. 1 at ¶¶ 19-21. In June of 2016, the
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parties entered into a Settlement Agreement obligating Battelle to “make a
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withdrawal liability payments totaling ‘approximately $14,200,000’ on or before
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June 30, 2017.” ECF No. 1 at ¶¶ 22-23; see ECF No. 1 at 15 (Settlement
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Agreement). As Plaintiff states, “[t]he term ‘approximately’ was used by the
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parties in the Settlement Agreement to account for adjustments for the final value
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of the Hanford plan assets as of December 31, 2015, and the January 1, 2016
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actuarial valuation results.” ECF No. 1 at ¶ 24.
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According to the Complaint, “[i]n a letter to MSA, on behalf of the Plan
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Administrator, dated September 2, 2016, [the actuary] determined that Battelle’s
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withdrawal liability that was previously estimated to be $14,200,000 should be
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adjusted to $14,784,602 based on the final asset and liability calculations
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contemplated by Battelle and the Hanford Plan.” ECF No. 1 at ¶ 28. However, the
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letter actually states that the withdrawal liability is “$15,407,693, $623,091 of
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ORDER GRANTING MOTION TO DISMISS; AWARDING ATTORNEY
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which is due to the contributions made by Battelle Toxicology Northwest
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(‘BTNW’)2 during the plan years 2011, 2012 and 2013.” ECF No. 1 at 42.
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On December 1, 2016, Battelle submitted a request for review disputing
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only the $623,091 while paying the undisputed portion of the assessment in the
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amount of $14,784,602. ECF No. 1 at ¶¶ 28, 32; see ECF No. 1 at 58 (Letter).
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The Hanford Plan responded in a letter dated March 20, 2017. ECF No. 1 at 62.
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On May 18, 2017, Battelle initiated arbitration regarding the disputed amount
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“pursuant to Section 4221(a) of ERISA.” ECF No. 1 at ¶ 35.
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On June 12, 2017, Battelle filed this action requesting a declaratory
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judgment that Defendants did not have the authority to assess the disputed
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withdrawal liability based on calculations including BTNW employees. ECF No.
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Battelle that operated out of the Pacific Northwest National Laboratory (‘PNNL’)
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facilities”; “[c]ertain hourly employees at Battelle Toxicology were represented by
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HAMTC and were active participants in the Hanford Plan until 2013”; and “[f]or
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the period from 2007 to 2013, the contributions for the Battelle Toxicology
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participants in the Hanford Plan were paid directly by the contributing employer,
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Battelle.” ECF No. 1 at ¶ 10.
According to Plaintiff, BTNW “was, until 2013, a separate business unit of
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ORDER GRANTING MOTION TO DISMISS; AWARDING ATTORNEY
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1 at ¶¶ 38-43. Battelle also included a claim for breach of contract, asserting
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Defendants breached the Settlement Agreement in assessing the disputed
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withdrawal liability.
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Defendants now move to dismiss the case, arguing the action involves a
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dispute about the establishment and calculation of the withdrawal liability—an
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issue subject to mandatory arbitration under ERISA. See ECF Nos. 10; 12.
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Battelle opposes the Motion, arguing the instant dispute merely involves a question
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of whether Defendants have the authority to assess the disputed withdrawal
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liability. ECF No. 11 at 3.
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DISCUSSION
The scope of mandatory arbitration in the ERISA context is governed by
statute:
Any dispute between an employer and the plan sponsor of a multiemployer
plan concerning a determination made under sections 1381 through 1399 of
the Multiemployer Pension Plan Amendments shall be resolved through
arbitration.
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29 U.S.C. § 1401(a)(l) (emphasis added). The parties agree that issues concerning
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the establishment, calculation, and collection of withdrawal liability are subject to
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arbitration. See ECF No. 11 at 10 (Plaintiff’s Response) (citing Operating
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Engineers’ Pension Trust Fund v. Clark's Welding and Machine, 688 F. Supp. 2d
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902 (N.D. Cal. Feb. 10, 2010)).
ORDER GRANTING MOTION TO DISMISS; AWARDING ATTORNEY
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The instant action is clearly a dispute about the establishment and
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calculation of Plaintiff’s withdrawal liability and is thus subject to mandatory
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arbitration. Plaintiff attempts to caste the instant dispute as merely an issue of
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contract interpretation, but this is not the case. Although Plaintiff points to
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contract language stating there will be no further withdrawal liability,3 among other
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things, this cannot undermine the clear language that the amount of $14,200,000
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was an approximation of the ultimate withdrawal liability to be determined by
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future calculation. This calculation is what Plaintiff now disputes under the guise
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of interpreting the word “approximate” in the Settlement Agreement.4
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Agreement “shall be in complete and full satisfaction of any withdrawal liability
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that may otherwise be incurred, imposed or assessed against Battelle with respect
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to the Hanford Plan for any reason.” ECF No. 1 at ¶ 26.
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did not contemplate that the Hanford Plan would include additional pools of
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former Battelle employees in allocating the unfunded vested benefits to Battelle.”
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ECF No. 1 at ¶ 25. There is nothing in the Settlement Agreement indicating such a
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limitation on the manner of calculating the withdrawal liability, which is regulated
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by statute.
Plaintiff cites the language in the Settlement Agreement that states the
Without any real explanation, Plaintiff argues the term “approximately . . .
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Plaintiff’s contention that “the Hanford Plan lacked authority to make a
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Post-Settlement Assessment[,]” ECF No. 11 at 9, is inconsistent with its own
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conduct in paying part of what it calls the Post-Settlement Assessment. Battelle
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paid the Hanford Plan $14,784,602 for its withdrawal liability, ECF No. 11 at 12,
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which exceeded the initial estimate of $14,200,000, and only disputes the inclusion
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of additional pools of employees in the calculation. ECF No. 1 at ¶ 25. This
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undermines Battelle’s position that the amount of withdrawal liability was a settled
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issue and that Defendants lacked authority to assess the later-determined
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withdrawal liability.5
Accepting Battelle’s position that the Hanford Plan did not have the
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authority to assess the disputed withdrawal liability would require the Court to
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accept Battelle’s underlying premise that the Settlement Agreement was a deal
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allowing Battelle to evade withdrawal liability assessed pursuant to ERISA—after
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Moreover, Battelle essentially concedes the dispute is subject to mandatory
arbitration. According to the complaint, Battelle initiated arbitration over the
disputed amount “pursuant to Section 4221(a) of ERISA.” ECF No. 1 at ¶ 35.
This section is limited to disputes “concerning a determination made under
sections 1381 through 1399 of this title”—the very scope of the arbitration
mandate.
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ORDER GRANTING MOTION TO DISMISS; AWARDING ATTORNEY
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all, Battelle has not argued the liability arising from the “additional pools” is not
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valid per ERISA, rather Battelle argues Defendants cannot assess such liability per
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the Settlement Agreement. First, Battelle’s own letter indicates the intent was not
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to evade liability, but was rather to determine the actual liability at an earlier date.
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ECF No. 1 at 59 (“By entering into the Settlement Agreement before the complete
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withdrawal had actually occurred, Battelle was attempting to obtain an early
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determination by the Hanford Plan of the amount of withdrawal liability.”).
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Second, if the parties’ intent was to evade actual withdrawal liability, the Court
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cannot enforce such an agreement—Congress mandated withdrawal liability to
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protect the plan’s otherwise unfunded liabilities and this cannot simply be
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contracted around. 29 U.S.C. § 1392(c) (1982) (“If a principal purpose of any
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transaction is to evade or avoid liability under this part, this part shall be applied
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(and liability shall be determined and collected) without regard to such
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transaction.”).
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Plaintiff also includes a claim for breach of contract arising out the disputed
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assessment. Casting withdrawal liability as a breach of contract does not bypass
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ERISA’s mandatory arbitration provision.
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As an additional matter, Defendants moved for attorney fees pursuant to
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Section 502(g)(1) of ERISA, 29 U.S.C. § 1132, and Section 4301 of the MPPAA,
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29 U.S.C. § 1451, which give the Court discretion to award costs and expenses,
ORDER GRANTING MOTION TO DISMISS; AWARDING ATTORNEY
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including reasonable attorney fees, to the prevailing party who is adversely
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affected by the act or omission of a party with respect to a multiemployer plan. 29
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U.S.C. § 1132(g); 29 U.S.C. § 1451(a), (e); Penn Cent. Corp. v. Western
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Conference of Teamsters Pension Trust Fund, 75 F.3d 529, 535 (9th Cir. 1996).
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The Court finds (1) Plaintiff’s suit is clearly subject to mandatory arbitration and
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that Plaintiff’s contention otherwise is unfounded; (2) Defendants are the
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prevailing parties; (3) an award of costs and expenses, including attorney fees, to
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Defendants is just and proper; and (4) the Court has discretion to award such fees
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pursuant to ERISA and the MPPAA. As Defendants have only requested fees
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incurred in bringing the Motion to Dismiss, ECF No. 10 at 17, the award is limited
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to such.
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ACCORDINGLY, IT IS HEREBY ORDERED:
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1. Defendants’ Motion to Dismiss (ECF No. 10) is GRANTED.
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2. Defendants are entitled to costs and expenses, including attorney fees, in
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bringing the Motion to Dismiss. Within 14 days of this Order,
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Defendant’s shall file a properly supported fee petition, substantiating the
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reasonableness of the hours and rate sought, and any costs. Plaintiff may
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file a response and Defendant may file a reply according to LR 7.1.
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3. The fee request shall be heard without oral argument on December 8,
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2017.
ORDER GRANTING MOTION TO DISMISS; AWARDING ATTORNEY
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4. The Clerk of Court shall delay entry of Judgment pending resolution of
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attorney fees, costs and expenses.
The District Court Executive is directed to enter this Order, furnish copies to
counsel.
DATED October 27, 2017.
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THOMAS O. RICE
Chief United States District Judge
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ORDER GRANTING MOTION TO DISMISS; AWARDING ATTORNEY
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