Suit for contributions not barred by laches.

• Author: Ziemer, David

Byline: David Ziemer

Even assuming the doctrine of laches applies to a suit by a multiemployer pension plan to recover delinquent contributions, an employer could not reasonably rely on a representation that it could violate the plan with impunity, the Seventh Circuit Court of Appeals held on Mar. 19.

Teamsters

Pension Plan

Gorman Brothers Ready Mix signed a three-year collective bargaining agreement with a Teamsters local in 1991. The agreement required Gorman to contribute to a multiemployer pension trust.

Gorman failed to make the required contributions, as was discovered by an audit conducted by the plan during the term of the CBA. According to Eric Leonhardt (Gorman's proprietor), however, Dale Stewart, who was both the head of the local union and the chairman of the welfare trust, told Leonhardt that, as a favor to him, he had "made the audit go away."

The collective bargaining agreement was twice renewed, and in 1998, the trust conducted another audit, and again found that Gorman was not making the required contributions. This time, however, it sued for the contributions in federal court in the Central District of Illinois.

At trial, Gorman admitted that the trust had made a prima facie case for the recovery of the delinquent contributions, but argued that the suit was barred the doctrine of laches. District Judge Richard Mills agreed, and entered judgment for Gorman in a published decision. 139 F.Supp.2d 976 (C.D. Ill. 2001).

The trust appealed, and the Seventh Circuit reversed in a decision written by Judge Richard A. Posner and joined by Judge William J. Bauer. Judge Frank H. Easterbrook wrote a concurring opinion.

Statute of Limitations

The court began by noting that, although ERISA contains a statute of limitations for suits based on withdrawal liability, 29 U.S.C. 1451(f), ERISA has no such provision for suits against employers to recover delinquent contributions.

However, in other such suits, the court has chosen to borrow the forum state's statute of limitations for contracts. Following suit, the court concluded that Illinois' ten-year statute would apply.

Equitable Estoppel

Although the parties in the case failed to argue whether the statute of limitations can be shortened pursuant to the doctrine of laches, or what body of case law provides the relevant doctrine of laches if it does apply, the court assumed that the doctrine applies and that the relevant case law is that of the state whose statute of limitations is being...