ERISA-Seventh Circuit Holds That Employer Must Keep Making Contributions To The Welfare Funds Even Though The Bargaining Unit Was Decertified

 

In Midwest Operating Engineers Welfare Fund v. Cleveland Quarry, Nos. 15-2628, 15-3221, 15-3861, 16-1870 (7th Cir. 2016), the plaintiffs are certain employee welfare funds.  The defendant is RiverStone Group, Inc., a producer of crushed stone, sand, and gravel (“RiverStone”).

RiverStone had collective bargaining agreements with Local 150 of the International Union of Operating Engineers, AFL-CIO.  The latest agreement, made in 2010, was scheduled to expire in 2015.  It required RiverStone to contribute a specified dollar amount to the welfare funds specified in the agreement for each hour for which an employee receives wages under the terms of the agreement.  But in 2013 employees at RiverStone voted in an election supervised by the National Labor Relations Board to decertify Local 150 as their collective bargaining representative.  Following the vote, RiverStone stopped contributing to the welfare funds, precipitating these suits against it by the welfare funds under 29 U.S. Code § 1145, a provision of ERISA permitting suits for delinquent contributions. The welfare funds were seeking payment of the contributions that would have been due pursuant to the terms of the last collective bargaining agreement  until its 2015 expiration. The question: does the collective bargaining agreement, or “CBA”, expire when the union is decertified as the representative?

The Seventh Circuit Court of Appeals (the “Court”) said No. The CBA at issue states that “the employer’s responsibility to make contributions to the [w]elfare [funds] shall terminate upon expiration of this agreement”. The meaning of this phrase depends on whether “expiration” means the date on which the agreement becomes unenforceable or the date on which it lapses by passage of time. It became unenforceable by the union when the union was decertified, whereby the employer was no longer bound to the promises it had made to the union; but the agreement did not thereby cease to exist—and therefore did not expire—until its five-year term ended. By prematurely ceasing to contribute to the welfare funds, RiverStone became liable under ERISA to make delinquent contributions, the relief sought by the welfare funds. The welfare funds could also prevail as third party beneficiaries of the CBA.

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