                United States Court of Federal Claims
                                        No. 14-989 C


                                            )
 CALL HENRY, INC.,                          )
                                            )
                      Plaintiffs,           )
                                            )
                                                   RCFC 12(b)(6); Failure to State a
 v.                                         )
                                                   Claim
                                            )
 THE UNITED STATES,                         )
                                            )
                      Defendant.            )
                                            )

Brian Koji, Allen, Norton & Blue, P.A., Tampa, Florida, for plaintiff.

James T. Mahoney, National Aeronautics and Space Administration, Washington, DC, and
Joyce R. Branda and Robert M. Norway, United States Department of Justice, Civil
Division, Washington, DC, for defendant.

                                    OPINION AND ORDER


SMITH, Senior Judge

       This action is before the court on defendant’s motion to dismiss. Plaintiff’s
complaint contests a final decision of the Contracting Officer of the United States
National Aeronautics and Space Administration (“NASA”) denying Call Henry, Inc.’s
(CHI) certified request for reimbursement in the amount of $1,897,627 plus associated
fees and costs under the contract and by operation of the Services Contract Act, 41
U.S.C. §§ 6701-6707.
       On January 28, 2015, defendant filed a motion to dismiss plaintiff’s breach of
contract claim for failure to state a claim, pursuant to Rule 12(b)(6) of the Rules of the
U.S. Court of Federal Claims (“RCFC”). For the following reason, the court grants
defendant’s motion to dismiss.
I.     Background

       A.     Factual History

        On April 23, 2003, Plaintiff, Call Henry, Inc., entered into a contract with
Defendant, the National Aeronautics and Space Administration (“NASA”), whereby
plaintiff agreed to provide inspection, maintenance, and testing services for the John H.
Glenn Research Center in Brook Park, Ohio. This contract has a base period of three
years followed by up to seven one-year option periods and is a services contract governed
by the Service Contract Act.
       At the commencement of the contract, plaintiff’s employees were members of the
International Brotherhood of Teamsters Local Union No. 416 (“the Teamsters”), and, as
such, plaintiff was subject to a collective bargaining agreement with the Teamsters
pursuant to the Services Contract Act. 41 U.S.C. § 6701 et seq. (2012). This collective
bargaining agreement, which included wage and fringe benefit provisions, was
incorporated into plaintiff’s contract with defendant. Compl. ¶ 20. Article XXIII of the
collective bargaining agreement required plaintiff to pay contributions to the Teamsters’
pension fund as follows:
               Effective January 1, 2003 and thereafter, the Employer agrees to pay into
       the Teamsters Local 416’s Pension Fund…the agreed amount during the term of
       this Agreement, for all hours for which said employee received pay, but not to
       exceed a total of forty (40) hours per week, for each employee covered under the
       classifications of this agreement.
       …
               Contributions to the Pension Fund must be made for each month on each
       eligible employee. Company contributions to the Pension Fund will in no way be
       distributed as wages.
Compl. Ex. 1, at 2. Pursuant to the SCA, this collective bargaining agreement was
incorporated into the contract between the parties, along with a price adjustment clause
which required Defendant to pay Plaintiff for “increase[s]…in applicable wages and
fringe benefits to the extent that the increase is made to comply…as a result of [the]
Department of Labor wage determination applicable of the anniversary date of the
multiple year contract….” 48 CFR § 52.222-431.
        In 2012, Plaintiff’s employees chose to decertify Teamsters as the representative
for the bargaining unit and voted for the International Association of Machinists and

1
 The contract initially referenced 48 CFR § 52.222-44, which deals with single-year contracts.
Both parties acknowledged that the intended provision was 48 CFR § 52.222-43, which deals
with multiyear and option contracts.
                                               2
Aerospace Workers District Lodge 60 as the new employee representative. After the
decertification, plaintiff was informed that it was deemed to have withdrawn from the
Teamsters’ pension fund pursuant to the Multiemployer Pension Plan Amendments Act
of 1980 (“MPPAA”). 29 U.S.C. § 1381 et seq. (2012). This constituted a complete
withdrawal under the Employee Retirement Income Security Act (“ERISA”), and
plaintiff was required to pay a withdrawal liability for the unfunded vested benefits,
which initially amounted to $3,304,727. Plaintiff initiated ERISA arbitration procedures
to contest portions of the liability, and the pension plan recalculated the withdrawal
liability amount as totaling $1,686,646.
       Plaintiff submitted a claim for increased costs associated with providing the
pension plan and the professional costs incurred through arbitration. The claim was
denied by NASA on September 11, 2014, and plaintiff filed this claim for breach of
contract on October 15, 2014.
       B.     Procedural History

        Plaintiff originally filed suit on October, 15, 2014, contesting a final decision of
the Contracting Officer of NASA, denying plaintiff’s claim for reimbursement in the
amount of $1,897,627 under the Contract’s price adjustment clause for increased fringe
benefit costs incurred by plaintiff and associated with providing benefits mandated by
application of a wage determination by operation of the Service Contract Act, 41 USC
§§6701-6707. See Original Compl., Call Henry, Inc., No. 14-989, ECF No. 1. On
January 28, 2015, defendant, filed a motion to dismiss for failure to state a claim, alleging
that plaintiff’s withdrawal liability is not a fringe benefit, but a statutory liability. Call
Henry, Inc., No. 14-989, ECF No. 8.
        On July 7, 2015, this Court issued an order for supplemental briefing so that both
plaintiff and defendant might answer the following questions:
       1. Whether the defendant was required by contract between itself and plaintiff, or
          by some other authority, to reimburse plaintiff for any contributions to or costs
          associated with the pension plan, and, if so, the source of that authority.
       2. If there was a reimbursement requirement, whether that requirement was
          incorporated into the contract between plaintiff and defendant.
       3. Whether the defendant is considered an employer under 29 U.S.C. § 1002(5),
          where an employer is any person acting directly as an employer, or indirectly
          in the interest of an employer, in relation to an employee benefit plan.
       4. If the defendant reimbursed plaintiff for any contributions to or costs
          associated with the pension plan, whether defendant is considered an employer
          and is liable to the plan for the amount of the withdrawal liability pursuant to
          29 U.S.C. § 1381(a).
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       5. If defendant is considered an employer and it is required to pay the withdrawal
          liability, whether a failure to pay would constitute a breach of its contract with
          plaintiff.
      Call Henry, Inc., No. 14-989, ECF No. 13. Both plaintiff and defendant filed
opening supplemental briefs on November 9, 2015. Call Henry, Inc., No. 14-989, ECF
Nos. 18 and 19. Plaintiff and Defendant both responded to each other’s opening
supplemental briefs on November 23, 2015. Call Henry, Inc., No. 14-989, ECF Nos. 20
and 21. Defendant’s motion is now ripe for review.
II.    Discussion

        Motions to dismiss under RCFC Rule 12(b)(6) test the legal sufficiency of a
complaint in light of RCFC Rule 8(a), which requires “a plausible ‘short and plain’
statement of the plaintiff's claim, showing that the plaintiff is entitled to relief.” K-Tech
Telecommunications, Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1282 (Fed. Cir.
2013) (quoting Skinner v. Switzer, 131 S. Ct. 1289, 1291 (2011)). Although a complaint
“does not need detailed factual allegations,” the plaintiff must plead enough factual
allegations “to raise a right to relief above the speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). When considering a motion to dismiss for failure to
state a claim, the court must accept plaintiff’s factual allegations as true and draw all
reasonable inferences in favor of the plaintiff. Celotex Corp. v. Catrett, 477 U.S. 317, 327
(1986). Nonetheless, the court should dismiss a complaint “when the facts asserted by
[the] claimant do not entitle him to a legal remedy.” Lindsay v. United States, 295 F.3d
1252, 1257 (Fed. Cir. 2002).
       A.     The Contract Obligations

        As an initial matter, it is important to determine whether or not NASA had a
contractual obligation to reimburse CHI for contributions to or costs associated with the
pension plan. Plaintiff argues that the contract specifically incorporated the Teamsters
Local 416 collective bargaining agreement as the applicable wage determinations. The
clause plaintiff refers to (H.6) states, in pertinent part, that “in absence of the
[Department of Labor Wage Determination’s] incorporation, all economic provisions,
including all prospective increases, of the current Collective Bargaining
Agreement…shall apply.” (Emphasis added). Plaintiff further argues that a
reimbursement requirement is inherent in the incorporation of Clause 52.222-41 of the
Services Contract Act, which states that “[e]ach employee employed in the performance
of this contract by the Contractor or any subcontractor shall be paid not less than the
minimum monetary wages and shall be furnished fringe benefits in accordance with the
wages and fringe benefits determined by the Secretary of Labor, or authorized
representative, as specified in any wage determination attached to this contract.” FAR
52.222-41(c) (May 1989). Finally, plaintiff argues for the reimbursement requirement by

                                             4
pointing to the incorporation of the price adjustment clause set forth in FAR 52.222-44,
which requires reimbursement for any increases incurred by CHI associated with
providing wage and fringe benefits mandated by the Services Contract Act. Pl.’s Opening
Brief. Call Henry, Inc., No. 14-989, ECF Nos. 18.
       While we agree that the contract incorporated both a price adjustment clause and
wage determination clause, plaintiff has misconstrued the language and intent of the
Services Contract Act. The purpose of the Services Contract Act is to protect employees,
not contractors, from suffering financial disadvantage when a successor contractor
undertakes workforce management. See American Fed’n of Labor & Congress of Indus.
Org. v. Donovan, 757 F.2d 330, 352 (D.C. Cir. 1985)). Furthermore, the previously
mentioned contractual provisions suggest that the Services Contract Act requires
successor contractors to provide the same economic provisions of either Department of
Labor wage determinations or existing collective bargaining agreements. See, e.g., Trinity
Servs., Inc. v. Marshall, 593 F.2d 1250, 1257-58 (D.C. Cir. 1978). Only the economic
provisions, specifically wage determinations and fringe benefits, of the collective
bargaining agreement are incorporated into the contract between CHI and NASA. The
Services Contract Act does not incorporate the terms of a collective bargaining agreement
into a Government contract, but merely mandates that a successor contractor pay an
employee no “less than the wages and fringe benefits [that] the service employee would
have received under the predecessor contract, including accrued wages and fringe
benefits and any prospective increases in wages and fringe benefits provided for in the
collective-bargaining agreement as a result of arm’s-length negotiations.” 41 U.S.C. §
6707(c)(1). Furthermore, wage determination clauses and the Services Contract Act do
not “require successor contractors to comply with any provision of the predecessor’s
[collective bargaining agreement] other than the wage and fringe benefit provisions.”
Systems Application & Techs., Inc. v. United States, 100 Fed.Cl. 687, 717 (2011)
(Sweeney, J) (citing 29 C.F.R. § 4.163(a) (2009)).
       B.     Reimbursement Requirement

       Plaintiff contends that the history of price adjustment combined with the initial
inclusion of wage and fringe benefit costs into the original pricing schedule effectively
require NASA to reimburse CHI for the withdrawal liability that triggered when CHI
employees withdrew from the Teamsters Local Union 416. This court does not agree.
Though there exists a contractual requirement that defendant reimburse claimant for
contributions to and costs associated with the pension plan, that requirement does not
extend to withdrawal liability.
       Even if the inclusion of provisions from the collective bargaining agreement
effected an incorporation of a reimbursement requirement, it would not follow that
defendant is required to pay the withdrawal liability. CHI bases its theory of relief on
incorrect assumption that withdrawal liability is included as the fringe benefit of
                                             5
increased pension costs. Compl., Call Henry, Inc., No. 14-989, ECF No. 1, at 9.
Withdrawal liability is not a fringe benefit. The Services Contract Act specifically states
that “[n]o benefit required by any other Federal law…is a fringe benefit for the purpose
of the [Services Contract Act].” 29 C.F.R. § 4.171(c). Instead, withdrawal liability is
covered under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), 29
U.S.C. § 1381 et seq., which means that it is a “benefit required by [another] Federal
law” and not a fringe benefit. 29 C.F.R. § 4.171(c). Additionally, withdrawal liability is
not a contractual obligation, but a distinct statutory debt imposed by the MPPAA. See
e.g., Einhorn v. Dublin Bros. Lumber Co., Inc., 33 F. Supp. 3d 504, 516 (D.N.J. 2014).
The Teamsters Collective Bargaining Agreement provides for contributions to the
pension plan, but does not mention withdrawal liability. It follows that withdrawal
liability is not a fringe benefit provided for in the contract.
       C.     Employer Status under 29 U.S.C. § 1002(5)

       In response to defendant’s motion to dismiss, this court deemed of import whether
or not defendant could be classified as an “employer” for the purpose of the Employee
Retirement Income Security Act of 1974 (ERISA). In an Order dated July 7, 2015, this
court sought additional briefing from the parties so that it might determine whether
NASA is considered an employer under 29 U.S.C. § 1002(5) for the purpose of
withdrawal liability. Supplemental briefs have been provided, and that question is now
ready for decision.
        Title I of ERISA defines an “employer” as “any person acting directly as an
employer, or indirectly in the interest of an employer, in relation to an employee benefit
plan; and includes a group or association of employers acting for an employer in such
capacity.” 29 U.S.C. § 1002(5). Title I of ERISA further defines a “person” as “an
individual, partnership, joint venture, corporation, mutual company, joint-stock company,
trust, estate, unincorporated organization, association, or employee organization.” 29
U.S.C. § 1002(9). The Federal Government is excluded from both of these definitions.
        Additionally, Title I of ERISA specifically excluded the Federal Government from
the definition of “employer” for the purpose of employee benefit plans by providing a
separate definition for “governmental plan.” The term “governmental plan” is defined as
“a plan established or maintained for its employees by the Government of the United
States, by the government of any State or political subdivision thereof, or by any agency
or instrumentality of any of the foregoing.” 29 U.S.C. § 1002(33). ERISA was designed
such that plans offered by the Federal Government are separate from other plans and,
thus, exempt from the general definition of “employer” for the purpose of general plans.
The Supreme Court noted that “[j]ust as Congress’ choice of words is presumed to be
deliberate, so too are its structural choices.” Univ. of Tex. Sw. Med. Ctr. v. Nassar, 133 S.
Ct. 2517, 2529 (2013) (citing Gross v. FBL Fin. Servs., Inc., 557 U.A. 167, 177 (2009)).

                                              6
       D.     Employer Status under 29 U.S.C. § 1381(a)

        Title IV of ERISA incorporates the definition of “employer” from Title I by
regulation. As a result, courts have routinely adopted a “contributing obligor” definition
of the term “employer” for the purposes of Title IV and withdrawal liability. Both
plaintiff and defendant attempt to do the same in this case.
       In determining whether defendant is an employer for withdrawal liability purposes
under Title IV of ERISA, both parties seek to apply the same standard in varying ways to
the determination of whether NASA is an employer for the sake of withdrawal liability.
They seek to apply the “contributing obligator” standard first articulated in Korea
Shipping Corp. v. New York Shipping Ass’n-Int’l Longshoremen’s Ass’n Pension Trust
Fund, 880 F.2d 1531 (2d Cir. 1989)(Korea Shipping Corp.). The court in Korea
Shipping Corp. defined an “employer” as “a person who is obligated to contribute to a
plan either as a direct employer or in the interest of an employer of the plan’s
participants.” Id. at 1537 (quoting Korea Shipping Corp. v. New York Shipping Ass’n-
Int’l Longshoremen’s Ass’n Pension Trust Fund, 663 F. Supp. 766, 770 (S.D.N.Y.
1987)). Rejecting the common law definition of “employer,” Korea Shipping Corp.
ultimately defined “employer” for the purposes of withdrawal liability as “one obligated
to contribute to a plan for the benefit of the plan’s participants.” Id. This standard was
subsequently adopted by other Federal Circuits. See Resilient Floor Covering Pension
Fund v. M&M Installation, Inc., 630 F.3d 848 (9th Cir. 2010); Carrier Container
Council, Inc. v. Mobile S.S. Ass’n Inc.-Int’l Longshoreman’s Ass’n. AFL-CIO Pension
Plan, 896 F.2d 1330 (11th Cir. 1990); Seaway Port Authority v. Duluth-Superior ILA
Marine Ass’n Restated Pension Plan, 920 F.2d 503 (8th Cir. 1990).
        Plaintiff contends that NASA should be classified as an employer based on the
standard set forth in Korea Shipping Corp. Plaintiff bases this contention on the
incorporation of the economic provisions of the collective bargaining agreement into the
initial contract and the subsequent reimbursement for all pension contributions. Pl’s
Resp. to Def. Opening Supp. Brief, 14-989, ECF No. 20 at 15-16. Likening the case to
Bowers v. Transportation Maritima Mexicana, S.A., 901 F.2d 258 (2d Cir. 1990),
plaintiff argues that an indirect obligation to contribute to a pension plan classifies a party
as an employer for the purpose of withdrawal liability. However, we do not agree. First,
Bowers is not analogous. In Bowers, when the defendant elected to become a member of
the New York Shipping Association, it became contractually bound to those bylaws,
which included a provision requiring all members be bound by any future collective
bargaining agreements between the New York Shipping Association and third-party
unions and pension plans. Id. at 262-263.
       Second, Seaway Port Authority applied a stricter definition of employer. 920 F.2d
at 506. That court agreed with the court in H.C. Elliot, Inc. v. Carpenters Pension Trust
Fund, 859 F.2d 808 (9th Cir. 1988), which found that the term “employer” describes a
                                              7
“signatory employer” when referring to pension plans. Id. at 509. Seaway Port Authority
highlighted the common factual pattern throughout relevant case law that parties subject
to withdrawal liability were contractually bound to make pension contributions. Id. That
is not the case here. Although defendant routinely reimbursed CHI for pension plan
contributions, defendant’s contractual obligation was for reimbursement, not
contribution. CHI posits that the incorporation of the collective bargaining agreement
into the initial contract with NASA created a contractual obligation to reimburse CHI for
increased pension costs. While this obligation for reimbursement does exist,
reimbursement and contribution are not the same.
       This court must also look to the holding in Transpersonnel, Inc. v. Roadway
Express, Inc., 422 F.3d 456 (7th Cir. 2005). Transpersonnel, Inc. found that “the nature
of the obligation to contribute [is] contractual, and therefore the party ‘who is signatory
to a contract creating the obligation to contribute is the employer for purposes of
establishing withdrawal liability.’” Id. at 460 (quoting Rheem Mfg. Co. v. Cent States, SE
& SW Areas Pension Fund, 63 F.3d 703 (8th Cir. 1995)). The Transpersonnel, Inc.
court, as well as subsequent courts, expounded upon the holding in Rheem in finding that
the obligation to reimburse for contributions made by the direct employer is not the
equivalent of an obligation to contribute to the fund. Id. The obligation of reimbursement
arises only after a contribution has been made. Id. Transpersonnel, Inc. drew a
distinction between the entity that signed the collective bargaining agreement and the
separate entity with a contractual reimbursement requirement, and we must apply that
distinction here. Thus, even if NASA was under a contractual obligation to reimburse
CHI, defendant is still not a “contributing obligor,” and, thus, not an employer for the
purpose of withdrawal liability.
       In order for defendant to be liable for the withdrawal liability, defendant must first
be classified as an “employer.” 29 U.S.C. § 1381(a) states that “[i]f an employer
withdraws from a multiemployer plan in a complete withdrawal or partial withdrawal,
then the employer is liable to the plan in the amount determined under this part to be the
withdrawal liablity.” Id. As stated above, the United States is not considered an
employer under 29 U.S.C. § 1002(5) or 29 U.S.C. § 1381(a). The crux of plaintiff’s
argument that NASA is required to pay the withdrawal liability is based upon the
incorrect classification of NASA as an employer. However, as this court has determined
that NASA is not an employer, it follows that defendant is not required to pay the
withdrawal liability.
       E.     Breach of Contract Claim

        After considering both the defendant’s contractual obligations and its status as an
employer under both Title I and Title IV of ERISA, it becomes clear that NASA did not
breach its contract with CHI for failing to pay the withdrawal liability. As previously
stated, CHI bases its theory of relief on incorrect assumption that withdrawal liability is
                                              8
included as the fringe benefit of increased pension costs. Compl., Call Henry, Inc., No.
14-989, ECF No. 1, at 9. As this and other courts have indicated, withdrawal liability is
not a fringe benefit. Instead, withdrawal liability is covered under the Multiemployer
Pension Plan Amendments Act of 1980 (MPPAA), 29 U.S.C. § 1381 et seq., as a “benefit
required by [another] Federal law.” 29 C.F.R. § 4.171(c). Furthermore, withdrawal
liability is not a contractual obligation, but a distinct statutory debt imposed by the
MPPAA. See e.g., Einhorn v. Dublin Bros. Lumber Co., Inc., 33 F. Supp. 3d 504, 516
(D.N.J. 2014). The Teamsters Collective Bargaining Agreement provides for
contributions to the pension plan, but does not mention withdrawal liability. It follows
that withdrawal liability is not a fringe benefit provided for in the contract, and, thus, the
contract has not been breached.
        Furthermore, In order for defendant to be liable for the withdrawal liability,
defendant must first be classified as an “employer” under either Title I or Title IV of
ERISA. Title I of ERISA specifically excluded the Federal Government from the
definition of “employer” for the purpose of employee benefit plans by providing a
separate definition for “governmental plan.” For Title IV, courts have looked to Korea
Shipping Corp., which defines an “employer” as “one obligated to contribute to a plan for
the benefit of the plan’s participants.” 663 F. Supp. at 770. Courts have routinely drawn
a distinction between an obligation to reimburse and an obligation to contribute to
pension plans. Transpersonnel, Inc., 422 F.3d at 460. While NASA is obligated to
reimburse CHI for contributions to the pension fund, defendant is not directly obligated
to contribute to that fund. Thus, NASA is not obligated to pay the withdrawal liability
CHI accrued when its employees withdrew from that fund. The failure to pay the
withdrawal liability has not resulted in a breach of contract.
III.   Conclusion

       For the reasons set forth above, defendant’s MOTION to dismiss is GRANTED.


       IT IS SO ORDERED.



                                                  s/ Loren A. Smith
                                                  LOREN A. SMITH
                                                  Senior Judge




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