The 32BJ North Pension Fund And Its Board of Trustees, Plaintiff-Appellee,
Nutrition Management Services Company, AKA Nutrition Management Services Corp., AKA Nutrition Management Services, Inc., Defendant-Appellant.
Argued: May 7, 2019
from the United States District Court for the Southern
District of New York. No. 15-cv-8680 - Katherine B. Forrest,
Nutrition Management Services Company ("NMSC")
appeals from a final judgment of the United States District
Court for the Southern District of New York (Forrest,
J.). NMSC entered into a collective bargaining
agreement ("CBA") in 1998 that required it to make
pension contributions on behalf of its employees to
Plaintiff-Appellee, the 32BJ North Pension Fund. After NMSC
failed to make the required contributions from 2008 to 2015,
the Fund brought this ERISA action seeking unpaid
contributions. Following a bench trial, the district court
awarded the Fund damages that included an interest rate set
forth in a delinquency policy established pursuant to a trust
agreement referred to in NMSC's 1998 CBA with the 32BJ
union. The district court held that NMSC's mere reference
bound NMSC to the trust agreement and its delinquency policy,
without concluding that the reference demonstrated NMSC's
intent to be bound. NMSC argues that, until it executed an
amendment to the CBA in 2014, it did not agree to be bound to
the trust agreement, and thus the delinquency policy's
interest rate did not apply. We agree with NMSC. Accordingly,
we VACATE the judgment of the district court
and REMAND for the district court to
redetermine the amount of damages, consistent with this
opinion, and to reconsider the amount of its award of
Houston Pope, Epstein Becker & Green, P.C., New York, NY,
Richard Scott Siegel (Jeffrey S. Swyers, on the brief),
Slevin & Hart, P.C., Washington, DC, for Plaintiff-
Before: Newman, Jacobs, and Droney, Circuit Judges.
Droney, Circuit Judge.
appeal primarily concerns whether, in an action brought under
the Employee Retirement Income Security Act
("ERISA") against an employer for unpaid pension
fund contributions, 29 U.S.C. §§ 1132(g)(2), 1145,
employer was bound to a term established by an ERISA plan
document where the collective bargaining agreement
("CBA") that the employer signed only
referred to the plan document but the employer did
not expressly agree to be bound by that document. The
district court in this action so held, awarding to the
Plaintiff-Appellee 32BJ North Pension Fund ("the
Fund") damages for unpaid contributions from 2008 to
2015 that included a substantial interest component. The
interest rate was established by a Delinquency Policy that
was adopted by the Fund under a Trust Agreement. The district
court held that the Defendant-Appellant employer, Nutrition
Management Services Company ("NMSC"), was bound by
the terms of the Trust Agreement because NMSC signed a 1998
CBA that, in the district court's words,
"specifically reference[d]" the Trust Agreement.
32BJ N. Pension Fund v. Nutrition Mgmt. Servs.,
15-cv-8680 (KBF), 2017 WL 4863095, at *7 (S.D.N.Y. 2017).
appeal, NMSC contends that it did not agree to be bound to
the Trust Agreement until it entered into a 2014 Memorandum
of Agreement ("MOA") that, in amending and
extending the CBA, specifically adopted the Trust Agreement
and its associated policies, retroactive to August 1, 2013.
App'x 385. NMSC argues that the Trust Agreement's
interest rate for unpaid contributions should have been
applied only beginning on August 1, 2013, not from 2008 when
the delinquent contributions began accruing. The result of
the district court's error, NMSC contends, is that the
damages awarded to the Fund overstate the amount NMSC owes by
at least $200, 000.
clarify, consistent with our precedent and that of the
Supreme Court, that an employer in an ERISA action for unpaid
contributions is bound to the terms of an ERISA plan document
(here, a Trust Agreement) only if the employer objectively
manifests an intent to be so bound, as evaluated under
ordinary principles of contract interpretation. Applying
those familiar principles here, we conclude that NMSC did not
bind itself to the Trust Agreement-and the interest rate
established under its Delinquency Policy-until NMSC agreed to
the MOA modifying the CBA in 2014.
reject the Fund's alternative argument that applying
ERISA-plan-based interest provisions is so fundamental to the
functioning of a fund that its trustees may unilaterally
impose such provisions on a delinquent employer.
we vacate the judgment of the district court and remand for
the district court to redetermine the amount of damages,
consistent with this opinion, and to reconsider the amount of
its award of attorney's fees in light of that
AND PROCEDURAL BACKGROUND
The Pertinent Agreements and Other Documents
provides food services to nursing homes in New York state.
One of its nursing home clients is Hebrew Hospital Home of
Westchester. NMSC's employees at that nursing home are
members of union Local 32BJ of the AFL-CIO ("the
union" or "Local 32BJ").
September 1, 1998, NMSC entered into a CBA with Local 32E,
the predecessor union to Local 32BJ. Article 22 of the CBA
required that NMSC "shall contribute to the . . .
Pension Fund" a fixed sum for "all employees in the
bargaining unit" who met certain
conditions. App'x 412. Importantly, Article 22
also stated, "[t]he parties understand that the . . .
Fund will be held and managed under the terms and provisions
of an Agreement and Declaration of Trust to be executed in
connection with the said Fund . . . ." Id.
operative "Agreement and Declaration of Trust"
described in Article 22 of the CBA was, at all times relevant
to this case, the "Amended and Restated Agreement and
Declaration of Trust." App'x 416-39. We refer to
that document as the "Trust Agreement," as do the
parties. As pertinent to this appeal, Article VII, Section 8
of the Trust Agreement specifies that "[a]n Employer
that does not pay Contributions when due shall be obligated
to pay, in addition to any penalties required under any
applicable Collective Bargaining Agreement or other
contract," inter alia, "interest on the
unpaid Contribution at such rate as the Trustees may fix from
time to time." App'x 700, 432-33.
accordance with that interest provision in the Trust
Agreement, the Fund's trustees in 2008 established the
first version of the "Policy for Collection of
Delinquent Contributions," which we and the parties
refer to as the "Delinquency Policy." App'x
670-84. Article 2, Section 2.1, Part C of the Delinquency
Policy established a 10% annual interest rate for delinquent
contributions to the pension fund. Then, effective June 1,
2013, the trustees established a revised Delinquency Policy,
which lowered the interest rate to 9%.
April 30, 2014, NMSC executed a Memorandum of Agreement
("MOA") with the union, which "continu[ed] in
full force" the terms of the CBA "for the period
from August 1, 2013 through July 31, 2014," and also,
among other things, added a new Article applicable to
NMSC's pension fund contributions. App'x 384-85.
The new Article stated that "the Employer [NMSC]
hereby adopts and shall be bound by the [Trust
Agreement] as it may be amended and the rules and
regulations adopted or hereafter adopted by the Trustees
of each Fund in connection with the provision and
administration of benefits and the collection of
contributions." App'x 385 (emphasis added).
The Fund's Action for Unpaid Contributions
2008 and 2015, NMSC failed to make its required contributions
to the Fund. The Fund conducted two audits (the "First
Audit" and "Second Audit") of NMSC's
records, which discovered some of these unpaid contributions,
after which the Fund filed this suit. The Fund then conducted
another audit (the "Third Audit"), which increased
the amount that it sought to recover in this
district court granted summary judgment to the Fund as to the
unpaid contributions discovered by the Second Audit. The
district court held a bench trial with regard to issues
surrounding the remaining unpaid contributions discovered by
the First and Third Audits. The district court also received
post-trial briefing as to the interest NMSC was required to
pay for its unpaid contributions.
district court issued its findings of fact and conclusions of
law in an opinion on October 27, 2017. The district court
held that the Fund was entitled to recover the remaining
unpaid contributions not resolved at summary judgment, and
NMSC does not challenge that ...