ERISA-Seventh Circuit Discusses When Obligations To Contribute To A Multiemployer Pension Plan End

In Michels Corporation v. Central States, Southeast, and Southwest Areas Pension Fund, No. 14-3726 and 3737 (7th Cir. 2015), the Seventh Circuit Court of Appeals (the “Court”) faced a familiar problem for multiemployer pension plans, namely: when does an employer’s obligation to contribute to the plan end? The Court said that the answer turns on when the governing collective bargaining agreement (“CBA”) between a multi-employer group and a union terminated, and how one should characterize a series of temporary “extensions” of the CBA.

The Court concluded that, in this case, the CBA in question terminated it in accordance with its terms effective January 31, 2011. Thereafter, the union and the employer group entered into a series of short-term agreements that had the effect of extending the CBA’s terms for the designated periods while the parties negotiated. The interim agreement that took effect on November 15, 2011, however, was different: it eliminated the employers’ duty to contribute to the plan and extended all other terms of the CBA. The district court held that this was not sufficient to end the employers’ duty to contribute and thus granted summary judgment for the plan. The Court reversed, and held that the CBA imposing the duty to contribute had long since expired by November of 2011, and the interim agreement effective November 15, 2011 was sufficient to end employer’s obligations to contribute.

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