On March 22, 2024, the United States Court of Appeals for the Seventh Circuit issued a ruling in Bulk Transp. Corp. v. Teamsters Union No. 142 Pension Fund, ordering the Teamsters Union No. 142 Pension Fund (the “Fund”) to repay Bulk Transp. Corp. (“Bulk Transport”) $2.3 million in withdrawal liability it had erroneously assessed upon Bulk Transport.
Bulk Transport and the Fund had a collective bargaining agreement (“CBA”) from 2003 to 2006. The CBA included a Construction Agreement and a Steel Mill Addendum. In 2004, Bulk Transport signed a contract for LISCO work – a term used by the parties to describe work hauling commodities. The LISCO work was not explicitly covered by the CBA, but Bulk Transport made contributions for the work using the wage rated and pension terms of the Addendum because the Union threatened to strike otherwise. In 2005, Bulk Transport stopped performing the LISCO work and subsequently stopped making contributions to the Fund for the employees who were performing that type of work. The Fund assessed withdrawal liability on Bulk Transport. Bulk Transport paid the withdrawal liability but requested arbitration.
The arbitrator and, subsequently, the district court, ruled that Bulk Transport had adopted the Addendum through its conduct and thus the withdrawal liability assessment was correct.
The Seventh Circuit disagreed. The court found that under ERISA and federal law, pension contribution provisions must be in writing. It added that although adoption by conduct can be used to determine who is bound to an agreement, it cannot be used to modify an existing agreement. For the LISCO work to be covered by the Addendum, it had to be in writing. Accordingly, the court reversed the district court’s ruling and ordered that the Fund repay Bulk Transport the withdrawal liability it had paid.
This decision affirms the statutory rule that pension obligations must be in writing and rejects an attempt to expand an employer’s obligation through conduct. Employers can sigh in relief that their agreements won’t be altered by conduct but should ensure all terms are clearly spelled out.
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