Bakery & Confectionary Union & Industry International Pension Fund v. JUST BORN II, INCORPORATED, d/b/a Goldenberg Candy Company

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-1369
BAKERY & CONFECTIONARY UNION & INDUSTRY INTERNATIONAL
PENSION FUND; TRUSTEES OF THE BAKERY AND CONFECTIONARY
UNION AND INDUSTRY INTERNATIONAL PENSION FUND,
Plaintiffs – Appellees,
v.
JUST BORN II, INCORPORATED, d/b/a Goldenberg Candy Company,
Defendant – Appellant.
Appeal from the United States District Court for the District of Maryland, at Greenbelt.
Deborah K. Chasanow, Senior District Judge. (8:16-cv-00793-DKC)
Argued: January 24, 2018 Decided: April 26, 2018
Before AGEE, WYNN, and THACKER, Circuit Judges.
Affirmed by published opinion. Judge Agee wrote the opinion, in which Judge Wynn and
Judge Thacker concur.
ARGUED: David Boris Rivkin, BAKER & HOSTETLER, LLP, Washington, D.C., for
Appellant. Julia Penny Clark, BREDHOFF & KAISER, P.L.L.C., Washington, D.C., for
Appellees. ON BRIEF: Jay P. Krupin, Mark W. DeLaquil, Elizabeth A. Scully, Richard
B. Raile, BAKER & HOSTETLER LLP, Washington, D.C., for Appellant. Andrew D.
Roth, BREDHOFF & KAISER, P.L.L.C., Washington, D.C., for Appellees.

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AGEE, Circuit Judge:
Just Born II, Inc. (“Just Born”), a candy manufacturer, appeals the district court’s
judgment requiring it to pay delinquent contributions into the Bakery and Confectionary
Union and Industry International Pension Fund (the “Pension Fund”), as well as interest,
statutory damages, and attorneys’ fees. It contends, first, that the district court misapplied
the federal statute governing multiemployer pension funds in critical status and, second,
that the court erred in holding that it had failed to plead adequately its affirmative
defenses. For the reasons set out below, we affirm the judgment of the district court.
I.
Just Born and the Bakery, Confectionary and Tobacco Workers International
Union, Local Union 6 (the “Union”) were parties to a collective bargaining agreement
(the “CBA”) governing employment at Just Born’s Philadelphia, Pennsylvania,
confectionary plant from March 1, 2012, to February 28, 2015. The CBA required Just
Born to contribute to the Pension Fund, which is an employee benefit plan and
multiemployer pension fund governed by the Employee Retirement Income Security Act
of 1974 (“ERISA”), 29 U.S.C. §§ 1001–1461.1 These contributions were to be “paid
from the first day the employee begins working in a job classification covered by” the
CBA. J.A. 27.
1 In a multiemployer pension plan, “multiple employers pool contributions into a single
fund that pays benefits to covered retirees who spent a certain amount of time working for one or
more of the contributing employers.” Trustees of the Local 138 Pension Trust Fund v. F.W.
Honerkamp Co., 692 F.3d 127, 129 (2d Cir. 2012).

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While the CBA was still in effect, the Pension Fund’s actuaries certified it to be in
critical status, a designation based on statutory guidelines indicating the potential that the
Pension Fund’s assets and expected contributions would be insufficient to meet its
projected future obligations. See 29 U.S.C. § 1085(b)(2). A critical-status designation
triggers statutory safeguards, including the requirement that the plan sponsor “adopt and
implement a rehabilitation plan” designed to return the plan to financial stability and
bring it out of critical status. § 1085(a)(2)(A).2 To accomplish this objective, the
rehabilitation plan must adopt revised schedules of reduced benefits and increased
contributions. See § 1085(e).
As the plan sponsor, the Pension Fund’s Board of Trustees developed a
rehabilitation plan as required for multiemployer plans that are in critical status. In late
2012, Just Born and the Union selected a revised contribution schedule that, like the
CBA, required Just Born to “contribute for every hour or portion of an hour, beginning
on the first day of employment, that a person . . . works in a job classification that is
covered by the” CBA. J.A. 60. In addition, the revised schedule required Just Born to
increase its contributions to the Pension Fund by 5% each year. As a practical matter,
because the CBA required Just Born to participate in the Pension Fund, the Fund’s
critical-status designation altered the nature of Just Born’s obligations not only under its
agreement with the Pension Fund, but also under its CBA with the Union.
2 The plan sponsor of a multiemployer pension plan is the plan’s joint board of trustees,
or if there is not one, its administrator. 29 U.S.C. §§ 1002(16)(B)(iii), 1301(a)(10). The Pension
Fund has a Board of Trustees, and it therefore is the plan sponsor here.

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Just Born contributed to the Pension Fund under the revised schedule without
incident until negotiations for a new CBA with the Union fell through. As part of the
negotiations for a new agreement, Just Born demanded the new CBA not require it to
contribute to the Pension Fund for newly hired employees. Citing concerns about the
Pension Fund’s solvency and management, Just Born proposed to contribute to a separate
401(k) plan for such new employees, but to continue contributing to the Pension Fund—
which was still operating under the rehabilitation plan schedules—for existing
employees.
The Union would not agree to those terms, and, as a result, Just Born declared a
good-faith impasse. Relying on the principle from federal labor law that permits an
employer to act upon a good-faith impasse, Just Born unilaterally implemented the terms
of its last, best offer to the Union. See AMF Bowling Co. v. NLRB, 63 F.3d 1293, 1299
(4th Cir. 1995) (“When the parties are thus without a collective bargaining agreement,
having made good faith efforts to reach one, the employer may impose its own terms and
conditions of employment unilaterally.”). Thus, while it continued to contribute to the
Pension Fund under the rehabilitation plan for existing employees, Just Born contributed
nothing to the Fund for newly hired employees. Instead, Just Born contributed to a
separate 401(k) plan for any employee who began working after November 2, 2015.

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The Pension Fund3 filed a complaint in the United States District Court for the
District of Maryland seeking to compel Just Born to contribute to it under the
rehabilitation plan for all employees, including any new hires. It alleged that 29 U.S.C. §
1085(e)(3)(C)(ii) (governing subsequent contributions schedules for plans in critical
status) (the “Provision”), coupled with the terms of the expired CBA and the agreed-to
rehabilitation plan’s revised schedules, required Just Born to continue making
contributions for all employees, including those individuals hired after it declared an
impasse.
In its amended answer, Just Born denied the applicability of the Provision and
raised several affirmative defenses. Relevant to this appeal, Just Born contended that,
once the CBA expired and the impasse occurred, it was not a “bargaining party” as
defined by 29 U.S.C. § 1085(j)(1) and, thus, that the Provision did not apply to it.
Further, Just Born asserted a series of affirmative defenses: fraudulent and fraudulently
induced material misrepresentation; fraudulent and intentional material
misrepresentation; unjust enrichment; unclean hands; and an unspecified defense of
“legally defective and unlawfully imposed” critical-status determination, rehabilitation
plan, and revised schedule. These defenses all centered on the theory that the Pension
3 References to the Pension Fund as a party in this case refer to both plaintiffs: the
Pension Fund and its trustees.

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Fund defrauded and deceived Just Born into accepting the critical-status designation and
its consequences.4
The Pension Fund moved for judgment on the pleadings on the issue of liability,
and Just Born filed a cross-motion for judgment on the pleadings as to the entire case.
The district court held in favor of the Pension Fund, concluding that Just Born was
liable for contributions to the Pension Fund for its newly hired employees. See generally
Bakery & Confectionary Union & Indus. Int’l Pension Fund v. Just Born II, Inc., Civil
Action No. DKC 16-0793, 2017 WL 511911 (D. Md. Feb. 8, 2017). Relying on a plain
reading of the Provision, the district court concluded it requires bargaining parties to an
expired collective bargaining agreement to continue making payments consistent with the
previously adopted rehabilitation plan and schedule. The court rejected Just Born’s
contention that the term “bargaining part[y]” did not apply to it because the company was
no longer a party to an operative collective bargaining agreement. Under the district
court’s reading of the Provision, because Just Born “still was a bargaining party with
respect to the expired” CBA, the statute applied to Just Born. Id. at *4. Consequently, the
court concluded that unless Just Born could prove an affirmative defense, it would be
liable to the Pension Fund for the delinquent contributions and associated costs.
4 Although Just Born asserted four additional defenses, the district court characterized
them as “speak[ing] to the merits” of the Pension Fund’s claims and rejected them as part of the
merits determination. Just Born does not raise a separate issue on appeal concerning those
defenses, which are therefore not before us. Bakery & Confectionary Union & Indus. Int’l
Pension Fund v. Just Born II, Inc., Civil Action No. DKC 16-0793, 2017 WL 511911, at *8 (D.
Md. Feb. 8, 2017). We do not consider them as part of our review of the court’s treatment of
Just Born’s affirmative defenses.

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Turning to the affirmative defenses, the district court held that Just Born had failed
to plead any of them with the particularity required for fraud-based allegations under
Federal Rule of Civil Procedure 9(b).5 First, the court observed that each defense was
“dependent on [the Pension Fund] having fraudulently or intentionally misrepresented the
Fund being in critical status as required or authorized by ERISA.” Id. at *9 (internal
alteration and quotation marks omitted). Second, it concluded that Just Born did not plead
“the time, place, and contents of the false representations, as well as the identity of the
person making the misrepresentation and what he obtained thereby.” Id. at *10. And,
although Just Born generally alleged that the Pension Fund’s actuary “departed from
‘sound actuarial principles’ in evaluating the financial health of the Fund,” id., the district
court noted that it was
unclear whether [Just Born was] accusing the actuary of fraud by way of its
certification or accusing the Trustees on the theory that they fraudulently
induced [Just Born] to agree to a contribution schedule under the
rehabilitation plan when they knew that the critical status was not based on
reasonable actuarial assumptions.
Id. The court noted that Just Born referred alternately to “actions taken by the actuary, the
Fund, or the Trustees.” Id. In sum, these deficiencies made it impossible for the court to
5 The district court alternatively held that Just Born’s claims were inadequate under the
Twombly/Iqbal pleading standard. As a threshold to that determination, it concluded it was
appropriate to hold Just Born to that standard for its affirmative defenses because that was the
majority view, it had been adopted in the District of Maryland, and Just Born had filed a cross
motion for judgment on the pleadings. See generally Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell
Atl. Corp. v. Twombly, 550 U.S. 544 (2007). Although applicability of this standard to
affirmative defenses continues to divide courts, we need not address it in this case because we
resolve the issue under Rule 9(b).

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determine what false representations Just Born relied upon or who made them, a fatal
deficiency under Rule 9(b).
The district court therefore denied Just Born’s motion, granted in part and denied
in part the Pension Fund’s motion, and gave Just Born approximately one month to file
an amended answer. Just Born elected not to amend its answer and, instead, filed a joint
motion with the Pension Fund to stipulate to judgment at a set monetary amount,
reserving its right to appeal the district court’s judgment as to liability.
The district court entered a final judgment awarding the Pension Fund
$255,264.16 consisting of the agreed-to amount for delinquent contributions, plus
interest, statutory damages, and fees. Just Born noted a timely appeal, and the Court has
jurisdiction under 28 U.S.C. § 1291.
II.
We review de novo the district court’s grant or denial of a motion for judgment on
the pleadings. Priority Auto Grp., Inc. v. Ford Motor Co., 757 F.3d 137, 139 (4th Cir.
2014). The same standard applies to questions of statutory interpretation. Stone v.
Instrumentation Lab. Co., 591 F.3d 239, 242–43 (4th Cir. 2009).
A. The Pension Fund’s Statutory Party Claim
Just Born first argues that the district court erred in concluding that the Provision
required it to contribute to the Pension Fund for employees hired after the expiration of
the CBA. In essence, Just Born contends that the Provision does not apply to it because
the company is not a “bargaining party” with respect to newly hired employees in the

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absence of an operative CBA. The Pension Fund responds that Just Born falls squarely
within the Provision because it was a bargaining party to the expired CBA. We hold that
the district court properly interpreted the statute and, accordingly, did not err in
concluding that Just Born remained a “bargaining party” required to contribute to the
Pension Fund under the rehabilitation plan schedule in effect, even after the CBA
expired.
Congress enacted the Provision as part of the Pension Protection Act of 2006
(“PPA”), which amended ERISA to “help severely underfunded multiemployer pension
plans recover.” Lehman v. Nelson, 862 F.3d 1203, 1207 (9th Cir. 2017). The Provision
states:
If—
(I) a collective bargaining agreement providing for contributions under a
multiemployer plan in accordance with a schedule provided by the plan
sponsor pursuant to a rehabilitation plan . . . expires while the plan is still in
critical status, and
(II) after receiving one or more updated schedules from the plan
sponsor . . . , the bargaining parties with respect to such agreement fail to
adopt a contribution schedule with terms consistent with the updated
rehabilitation plan and a schedule from the plan sponsor,
then the contribution schedule applicable under the expired collective
bargaining agreement, as updated and in effect on the date the collective
bargaining agreement expires, shall be implemented by the plan sponsor
beginning [180 days after the collective bargaining agreement expires].
§ 1085(e)(3)(C)(ii).
Under a plain reading of the Provision, the CBA’s expiration does not alter Just
Born’s status as a bargaining party to that CBA. If Just Born was a bargaining party to the

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CBA, it remains a bargaining party “with respect to” that CBA even after the CBA’s
provisions lapsed. Indeed, the Provision only applies after a collective bargaining
agreement expires. That precondition is expressly set out in the first paragraph of
subsection I: “If a collective bargaining agreement . . . expires.” § 1085(e)(3)(C)(ii)(I).
What follows are additional limiting criteria that are all framed within the context of an
expired collective bargaining agreement. For example, the second paragraph refers to
“the bargaining parties with respect to such agreement” § 1085(e)(3)(C)(ii)(II) (emphasis
added). These “bargaining parties” can only be the bargaining parties to the expired
collective bargaining agreement because that is the “such agreement” referred to in the
statutory text. No other interpretation makes sense of all the words in the Provision.
Because the CBA’s expiration cannot change Just Born’s status as a bargaining
party under the Provision, the only question is whether Just Born was ever such a party. It
was, as Just Born acknowledges. And the remaining conditions of § 1085(e)(3)(C)(ii) are
also satisfied, another fact Just Born does not challenge. That is, the CBA expired while
the Pension Fund was in critical status and operating under a rehabilitation plan schedule,
and Just Born and the Union—the bargaining parties to the expired CBA—“fail[ed] to
adopt a contribution schedule” with terms consistent with an updated rehabilitation plan.
With these preconditions met, the Provision requires the Pension Fund to implement the
contribution schedule “as updated and in effect on the date the [CBA] expire[d].” See
§ 1085(e)(3)(C)(ii)(II). Thus, the plain language of the Provision requires Just Born to
continue to contribute according to the revised schedule that applied at the time the CBA

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expired, and that schedule, in turn, requires contribution for all employees: existing and
new hires.
Contrary to Just Born’s contention, this interpretation of the Provision does not
render the word “bargaining” in “bargaining parties” superfluous. “Bargaining parties” is
a statutorily defined term, and that definition determines an entity’s status. See
§ 1085(j)(1)(A)(i) (stating, with certain exceptions not relevant here, that a “bargaining
party” is “an employer who has an obligation to contribute under the plan”). It is Just
Born’s interpretation that would read “bargaining” out of the statutory language. As the
district court aptly explained, Just Born’s argument
ignores the temporal element inherent in the reference. [Just Born] does not
and could not suggest that it was never a bargaining party. Rather, it
contends that it ceased to be a bargaining party when its obligation to
contribute expired with the CBA. Even if that is true and [Just Born] is no
longer a bargaining party, however, it still was a bargaining party with
respect to the expired CBA. Hence, it is actually [Just Born]’s reading that
would read words out of the Provision, applying it only to “bargaining
parties” that remain “bargaining parties” without regard for the fact that the
phrase “with respect to such agreement” necessarily includes former
bargaining parties whose obligation to contribute has expired. Those former
“bargaining parties with respect to” the expired CBA are indeed a subset of
all “bargaining parties,” and they are the subset identified in the Provision.
Therefore, [Just Born] is a bargaining party in this context.
Just Born, 2017 WL 511911, at *4.
Just Born also contends that this interpretation of the Provision creates a Hotel
California6 scenario in which employers must contribute to a critical-status plan into
perpetuity once a governing collective bargaining agreement has expired. In support of its
6 The band Eagles tells us that at the Hotel California, “You can check out any time you
like / But you can never leave!” Eagles, Hotel California (Asylum 1976).

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argument, Just Born points to the Second Circuit’s decision in Trustees of the Local 138
Pension Trust Fund v. F.W. Honerkamp Co., 692 F.3d 127 (2d Cir. 2012). Just Born
posits that Honerkamp stands for the principle that employers must be allowed to leave a
critical-status plan by invoking the statutory right to withdraw from a multiemployer
plan, and that upon withdrawing, that employer no longer has a duty under the PPA to
continue contributing to the plan. Just Born contends that the district court’s
interpretation of the Provision—and thus our interpretation of it—conflicts with
Honerkamp and creates an irreconcilable conflict between the Provision and ERISA’s
withdrawal provisions because it would treat employers who have withdrawn to still be
“bargaining parties” to an expired collective bargaining agreement and thus obligated to
continue making contributions. We disagree.
Honerkamp involved a different issue: whether the PPA prohibited an employer
from withdrawing from a multiemployer pension fund while the fund was in critical
status.7 There, the Second Circuit observed that “in enacting the PPA, Congress did not
intend to prevent employers from withdrawing from multiemployer pension plans in
critical status.” 692 F.3d at 135. In doing so, the Second Circuit recognized that
Congress’ objective in enacting the PPA’s provisions requiring participating employers
to continue contributing to a critical-status plan is compatible with Congress’ recognition
7 The employer was obligated to contribute to a pension fund that was placed in critical
status. Honerkamp, 692 F.3d at 132. When the employer reached an impasse with its union in
negotiating a new collective bargaining agreement, the employer implemented its last best offer,
“withdrawing from the [pension fund] in favor of [a] 401(k) plan.” Id. at 133.

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that withdrawing employers must pay a withdrawal liability because both requirements
seek to ensure properly funded plans. Id. at 135–36.
Our interpretation of the Provision in no way limits the application of other
ERISA provisions governing when and how an employer may withdraw partially or
completely from an ERISA-qualified plan. See Borden, Inc. v. Bakery & Confectionary
Union & Indus. Int’l Pension, 974 F.2d 528, 530 (4th Cir. 1992); see also 29 U.S.C.
§ 1381. Instead, our decision centers on what is required of employers who have not
sought to withdraw, and who instead remain participants in the plan by virtue of an
expired collective bargaining agreement. Here, Just Born has never sought to withdraw
from the Pension Fund and our interpretation of the Provision does not limit its ability to
do so. We simply recognize that the Provision applies to entities like Just Born that meet
its requirements and have not exercised their option to withdraw. Just Born is attempting
a de facto partial withdrawal from the Pension Fund by not covering new employees,
which could lead to a complete withdrawal eventually over time through the attrition of
its older employees. In so doing, Just Born is seeking to circumvent both the critical-
status contributions for an expired collective bargaining agreement under the Provision
and the withdrawal penalty under § 1381.
As the district court observed, Just Born
seems to be trying to walk the line between [ERISA provisions], avoiding
the contributions required under [the Pension Fund’s] rehabilitation plan
schedules while simultaneously avoiding [statutory] withdrawal liability by
removing itself from the Fund by attrition, making each new hire an
effective withdrawal without acknowledging withdrawal in a way that
would trigger the withdrawal penalty.

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Just Born, 2017 WL 511911, at *6. ERISA does not allow Just Born this course. Just
Born can either withdraw and pay the penalty for doing so, or remain and make the
required payments under the Provision; it cannot avoid both obligations.
Just Born also maintains that this interpretation of the Provision undermines its
right under federal labor law to enforce the last, best proposal when CBA negotiations
reach an impasse. This argument derives from the National Labor Review Board’s view
that although an employer has a duty to negotiate in good faith, it does not have “an
obligation to agree[, so w]hen the parties are . . . without a collective bargaining
agreement, having made good faith efforts to reach one, the employer may impose its
own terms and conditions of employment unilaterally.” AMF Bowling, 63 F.3d at 1299.
But this principle describes Just Born’s obligations and rights only when negotiating with
the Union. Just Born’s obligations to the Pension Fund arise from a different authority:
ERISA, including the PPA. The Provision, as part of the PPA, is a separate and
independent statutory requirement under ERISA, distinct from the collective bargaining
process between an employer and union. Our interpretation leaves unaffected Just Born’s
ability under labor law to implement its last, best offer so long as it does not contravene
its statutory duties under the PPA.8
Under a plain-language application of the Provision to the facts of this case, Just
Born is liable to the Pension Fund for continued contributions for all employees hired
8 Because no other potentially conflicting duty is at issue in this case, we take no view on
whether or when other legal principles may affect an employer’s ability to invoke its last-and-
best offer outside the specific context of ERISA.

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after the declaration of an impasse, pending the execution of a new CBA in compliance
with § 1085, the invocation of the withdrawal provisions, or some other statutorily
required act. Accordingly, the Pension Fund was entitled to judgment on the pleadings so
long as Just Born did not present a cognizable affirmative defense, the topic to which we
now turn.
B. Affirmative Defenses
Just Born contends the district court erred in requiring it to plead its affirmative
defenses with the level of particularity required for pleading fraud under Rule 9(b). It
argues that only two of its affirmative defenses were related to fraud and that those
defenses were pleaded in the alternative as misrepresentation-based defenses.
Accordingly, Just Born maintains the court held it to the wrong standard and, further, that
its pleadings were sufficient under 9(b) to allege that the Pension Fund fraudulently
claimed that the fund was in critical status for ERISA purposes because that
determination was unwarranted.
We agree with the district court’s reasoning that the Rule 9(b) standard applies to
Just Born’s affirmative defenses and that Just Born’s allegations did not satisfy this
standard. As an initial matter, we hold that defendants must satisfy Rule 9(b) when they
plead affirmative defenses sounding in fraud. This conclusion arises from the plain
language of Rule 9(b), which states, “In alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge,
and other conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b)
(emphasis added); see also Bose Corp. v. Ejaz, 732 F.3d 17, 22 (1st Cir. 2013) (“Fraud is

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an affirmative defense that must be pleaded with particularity.”); Massey-Ferguson, Inc.
v. Bent Equip. Co., 283 F.2d 12, 14–15 (5th Cir. 1960) (observing that allegations of
fraud as a defense must be pleaded with particularity under Rule 9(b)); 5A Charles Alan
Wright & Arthur R. Miller, Federal Practice and Procedure §§ 1274 & 1297 (3d ed.
1998) (reiterating that affirmative defenses dealing with fraud are subject to the
heightened pleading requirements of Rule 9(b)).
Just Born’s affirmative defenses all sounded in fraud and thus had to be pleaded
with the particularity required by Rule 9(b). In making this assessment, we look beyond
each defense’s label to its substance in order to ascertain if it actually sounds in fraud.
Cozzarelli v. Inspire Pharms. Inc., 549 F.3d 618, 629 (4th Cir. 2008) (“Rule 9(b) refers to
‘alleging fraud,’ not to causes of action or elements of fraud. When a [party] makes an
allegation that has the substance of fraud, therefore, he cannot escape the requirements of
Rule 9(b) by adding a superficial label[.]”). As noted, Just Born’s asserted defenses were
“fraudulent[] and/or intentional[] induce[ment]”; “fraudulent and/or intentional material
misrepresentations”; unjust enrichment; unclean hands; and “legally defective and
unlawfully imposed” placement into critical status, creation of the rehabilitation plan, and
implementation of the schedule. J.A. 82. As the district court correctly summarized, the
theory Just Born pleaded to support each of these defenses sounded in fraud:
[These] defenses pertain to the validity of the Fund’s certified critical
status. [Just Born] contends that . . . the Fund’s actuary “falsely and
fraudulently” revised its actuarial assumptions in order to certify the Fund
as being in critical status, thereby allowing the Fund to reduce benefits as
part of a rehabilitation plan. The crux of its argument is that the Fund’s
critical status should never have been certified.

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***
Each of these defenses is dependent on [the Pension Fund] having
fraudulently or intentionally misrepresented the Fund being in critical status
as “required []or authorized by ERISA.”
Just Born, 2017 WL 511911, at *9.9
Just Born’s amended answer failed to plead its allegations of fraud to support its
defenses with sufficient particularity. The Rule 9(b) standard requires a party to, “at a
minimum, describe ‘the time, place, and contents of the false representations, as well as
the identity of the person making the misrepresentation and what he obtained thereby.’
These facts are often ‘referred to as the who, what, when, where, and how of the alleged
fraud.’” U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir.
2008). Instead of alleging these necessary particular facts, Just Born broadly accused the
“plaintiffs” of “manipulat[ing] actuarial assumptions, departing from past practice in
analyzing the Pension Funds health,” for the purpose of “obtain[ing] certification of
‘critical status.’” J.A. 77.
However, Just Born did not specify who it was accusing of which specific
misrepresentations. Just Born’s allegations “variously refer[] to the actions taken by the
actuary, the Fund, [and] the Trustees” without detailing “who allegedly knew what” or
when. Just Born, 2017 WL 511911, at *10. This ambiguity makes it difficult to follow
9 Just Born claims that its inducement and misrepresentation claims should survive
because it labeled them as “fraudulent and/or intentional” behavior. That position ignores that
fraudulent conduct can be either intentional or reckless conduct, so that an allegation of
fraudulent conduct encompasses intentional conduct as well. See, e.g., JKC Holding Co. v. Wash.
Sports Ventures, Inc., 264 F.3d 459, 469 (4th Cir. 2001).

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the precise nature of the alleged fraud, and thus falls short of the applicable pleading
standard.
In addition, Just Born’s allegations do not explain why the complained-of changes
were false or misleading. Put another way, Just Born failed to allege particularized facts
demonstrating the requisite misrepresentations and deception to support its defenses. The
mere fact of a change in actuarial assumptions or the motive for moving the Pension
Fund into critical status does not suffice; instead, Just Born had to allege specific facts
demonstrating that the alleged conduct causing the change was unreasonable.10 The
critical-status determination involves judgment calls about future fund health, and courts
accord such judgment a “wide range of ‘reasonableness.’” Artistic Carton Co. v. Paper
Indus. Union-Mgmt. Pension Fund, 971 F.2d 1346, 1348 (7th Cir. 1992) (discussing
different ERISA provisions that require similar approximations of future fund health). Put
another way, the law recognizes that “[r]easonableness is a zone, not a point,” id. at 1351,
and projections of a pension fund’s future health necessarily involves decisions others
may have made differently. See, e.g., Combs v. Classic Coal Corp., 931 F.2d 96, 99–100
(D.C. Cir. 1991) (discussing different ERISA provisions that also rely on reasonable
10 Although § 1085 identifies the criteria for when a multiemployer plan is in critical
status, it defers to the actuary’s judgment as to when some of those benchmarks are met. For
example, a critical-status determination is based in part on both the present value of “reasonably
anticipated employer contributions for the current plan year and each of the 6 succeeding plan
years” as well as the present value of “all nonforfeitable benefits projected to be payable under
the plan during the current plan year and each of the 6 succeeding plan years.” 29 U.S.C.
§ 1085(b)(2)(A)(ii) (emphases added). In making those determinations, the PPA requires only
that an actuary’s assumptions be “based on reasonable actuarial estimates, assumptions, and
methods,” not that they avoid triggering a critical-status determination if at all feasible.
§ 1085(b)(3)(B)(i).

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actuarial assessments and observing that “[g]reat differences of opinion exist as to
actuarial methods” and that Congress’ focus on reasonableness “permits the actuary wide
latitude” in undertaking its duties).
Recognizing that there is an acceptable range of calculation, ERISA only requires
that an actuary’s projections relating to the fund’s health “be based on reasonable
actuarial estimates, assumptions, and methods that . . . offer the actuary’s best estimate of
anticipated experience under the plan.” 29 U.S.C. § 1085(b)(3)(B)(i). As the district court
observed, “[f]or [Just Born] to show that the need for a rehabilitation plan was fraudulent
and ‘neither required nor authorized by ERISA’, it must attack the reasonableness of the
actuary’s assumptions, not the alteration of the assumptions or the motivations behind the
alterations.” Just Born, 2017 WL 511911, at *9 (citation omitted). Just Born’s amended
answer does not provide the sort of specific allegations aimed at this question that would
allow its affirmative defenses to withstand the Pension Fund’s motion for judgment on
the pleadings.11
11 On appeal, Just Born points to two allegations as containing the requisite specificity:
that using two different interest rates was “in contravention of the usual assumption that
administrative expenses and employer contributions are uniformly distributed during a given
year,” and that the Pension Fund “evidently did not factor in the withdrawal liability that
employers would owe in the event that they ceased participation in the Pension Fund” when they
forecasted future contributions. Opening Br. 49. These allegations suffer from the same
misperception already described: something different from the “usual” is not a foundation for
fraud in this context any more than the mere failure to take something into account when
undertaking one’s duties is. Just Born never specified how these changes amounted to fraud and,
therefore, they do not satisfy Just Born’s burden under Rule 9(b).

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For these reasons, the district court did not err in concluding Just Born did not
plead its affirmative defenses with sufficient particularity to withstand the Pension
Fund’s motion for judgment on the pleadings.
III.
For the reasons set out above, we affirm the district court’s judgment.
AFFIRMED

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