NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JAN 9 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
AUTOMOTIVE INDUSTRIES PENSION No. 18-16170 TRUST FUND; et al., D.C. No. 4:17-cv-04491-JST Plaintiffs-Appellees,
v. MEMORANDUM*
SOUTH CITY MOTORS, INC., a Delaware corporation; et al.,
Defendants-Appellants.
SOUTH CITY MOTORS, INC.; et al., No. 18-16173
Plaintiffs-Appellants, D.C. No. 4:17-cv-04475-JST
v.
AUTOMOTIVE INDUSTRIES PENSION TRUST FUND; et al.,
Defendants-Appellees.
Appeal from the United States District Court for the Northern District of California Jon S. Tigar, District Judge, Presiding
Argued and Submitted December 3, 2019 San Francisco, California
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: SILER,** CLIFTON, and BYBEE, Circuit Judges.
Appellants, a controlled group of seven Ford dealerships and the Ford Motor
Company (the “Dealerships”), appeal the district court’s denial of their motion for
summary judgment and granting of Automotive Industries Pension Trust Fund’s
(the “Trust”) cross-motion for summary judgment. This dispute arose after two of
the appellant dealerships—South City Motors and Capitol Expressway Ford—
withdrew from the Trust’s multiemployer pension plan and were assessed
withdrawal liability under ERISA.1 The Dealerships sought arbitration, arguing
that they did not owe withdrawal liability because they met the requirements for
the “free look” exemption. See 29 U.S.C. § 1390. The arbitrator granted summary
judgment in favor of the Trust and awarded attorney’s fees. Both parties then filed
suit in federal district court—one to challenge and the other to enforce the
arbitrator’s award.
The Dealerships raised four issues in the district court, and raise the same
issues here: (1) whether the arbitrator erred by determining that he had the
authority to grant summary judgment and to do so without holding an evidentiary
** The Honorable Eugene E. Siler, United States Circuit Judge for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation. 1 The Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq.
2 18-16170 hearing; (2) whether the arbitrator erred by concluding that the Dealerships did not
qualify for the free look withdrawal liability exemption; (3) whether the arbitrator
erred by concluding that a prior settlement agreement with Antioch Ford—one of
the other appellant Dealerships—was inapplicable to this withdrawal liability
dispute; and (4) whether the arbitrator erred in awarding attorney’s fees to the
Trust. The district court concluded that the arbitrator did not err. We agree and
affirm.
We have jurisdiction pursuant to 29 U.S.C. § § 1401(b)(2), 1451(c). A
district court’s grant of summary judgment is reviewed de novo. Penn Cent. Corp.
v. W. Conference of Teamsters Pension Tr. Fund, 75 F.3d 529, 533 (9th Cir. 1996).
Likewise, the arbitrator’s conclusions of law are reviewed de novo. Id. (citation
omitted). The arbitrator’s findings of fact are presumed correct, but the
presumption is rebuttable by a clear preponderance of the evidence. 29 U.S.C. §
1401(c).
The Dealerships first challenge the authority of the arbitrator to resolve the
arbitration on a motion for summary judgment, as well as any authority to do so
without first holding an evidentiary hearing. The arbitration was governed by the
American Arbitration Association’s (“AAA”) Multiemployer Pension Plan
Arbitration Rules for Withdrawal Liability Disputes (“MEPPA”). Nothing in
MEPPA explicitly authorizes or forbids summary judgment. But the rules give the
3 18-16170 arbitrator the authority to “interpret and apply [them] insofar as they relate to the
Arbitrator’s powers and duties” as well as give him the discretion to vary the
procedures provided that he affords the parties “a full and equal opportunity” to
present their evidence and arguments. MEPPA § § 24, 45. Given the discretion
granted to the arbitrator, he did not abuse it by resolving the arbitration on
summary judgment. The arbitrator allowed the Dealerships to submit evidence and
written briefs in opposition to summary judgment, and held oral argument on the
motion. This suffices as a “full and equal opportunity” for the Dealerships to
present their evidence and arguments. MEPPA § 24.
The Dealerships next contend that the arbitrator erroneously concluded that
the free look exemption did not apply. The free look exemption provides that “[a]n
employer who withdraws from a plan in complete or partial withdrawal is not
liable to the plan” if the employer meets certain conditions. 29 U.S.C. § 1390.
Under ERISA, all businesses that are under common control are treated as a single
employer. See 29 U.S.C. § 1301(b)(1). The Dealerships argue that, although they
are under common control, each individual contributing employer within a
controlled group should be able to take advantage of the free look exemption even
if the controlled group of which they are part could not. But Congress enacted
section 1301(b)(1) “to prevent businesses from shirking their ERISA obligations
by fractionalizing operations into many separate entities.” Teamsters Pension Tr.
4 18-16170 Fund-Bd. of Trs. of W. Conference v. Allyn Transp. Co., 832 F.2d 502, 507 (9th
Cir. 1987) (citation omitted). So, for purposes of the free look exemption, the
word employer refers to the Dealerships as a controlled group—not the individual
dealerships—and because the controlled group does not meet all of the
requirements to be eligible for the free look exemption, neither do the individual
dealerships.
The Dealerships next contend that the arbitrator erred by concluding that it
was unambiguous that the 2007 settlement agreement regarding the Dealerships’
withdrawal liability based on Antioch Ford’s 2005 withdrawal from the Trust was
not applicable to this dispute. The interpretation of the settlement agreement is
governed by state law. See Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir. 1989).
Under California law, the “mutual intention of the parties at the time the contract is
formed governs interpretation” and the parties’ intent is determined “solely from
the written provisions of the contract.” ASARCO, LLC v. Celanese Chem. Co., 792
F.3d 1203, 1212 (9th Cir. 2015) (quoting AIU Ins. Co. v. Super. Ct., 799 P.2d
1253, 1264 (Cal. 1990)). No matter how broad the terms of a contract may appear,
“it extends only to those things concerning which it appears that the parties
intended to contract.” Cal. Civ. Code § 1648.
Here, the settlement agreement is unambiguous. It releases the Dealerships
from all claims “arising out of the Dispute” where the “Dispute” is “[the Trust] has
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JAN 9 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
AUTOMOTIVE INDUSTRIES PENSION No. 18-16170 TRUST FUND; et al., D.C. No. 4:17-cv-04491-JST Plaintiffs-Appellees,
v. MEMORANDUM*
SOUTH CITY MOTORS, INC., a Delaware corporation; et al.,
Defendants-Appellants.
SOUTH CITY MOTORS, INC.; et al., No. 18-16173
Plaintiffs-Appellants, D.C. No. 4:17-cv-04475-JST
v.
AUTOMOTIVE INDUSTRIES PENSION TRUST FUND; et al.,
Defendants-Appellees.
Appeal from the United States District Court for the Northern District of California Jon S. Tigar, District Judge, Presiding
Argued and Submitted December 3, 2019 San Francisco, California
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: SILER,** CLIFTON, and BYBEE, Circuit Judges.
Appellants, a controlled group of seven Ford dealerships and the Ford Motor
Company (the “Dealerships”), appeal the district court’s denial of their motion for
summary judgment and granting of Automotive Industries Pension Trust Fund’s
(the “Trust”) cross-motion for summary judgment. This dispute arose after two of
the appellant dealerships—South City Motors and Capitol Expressway Ford—
withdrew from the Trust’s multiemployer pension plan and were assessed
withdrawal liability under ERISA.1 The Dealerships sought arbitration, arguing
that they did not owe withdrawal liability because they met the requirements for
the “free look” exemption. See 29 U.S.C. § 1390. The arbitrator granted summary
judgment in favor of the Trust and awarded attorney’s fees. Both parties then filed
suit in federal district court—one to challenge and the other to enforce the
arbitrator’s award.
The Dealerships raised four issues in the district court, and raise the same
issues here: (1) whether the arbitrator erred by determining that he had the
authority to grant summary judgment and to do so without holding an evidentiary
** The Honorable Eugene E. Siler, United States Circuit Judge for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation. 1 The Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq.
2 18-16170 hearing; (2) whether the arbitrator erred by concluding that the Dealerships did not
qualify for the free look withdrawal liability exemption; (3) whether the arbitrator
erred by concluding that a prior settlement agreement with Antioch Ford—one of
the other appellant Dealerships—was inapplicable to this withdrawal liability
dispute; and (4) whether the arbitrator erred in awarding attorney’s fees to the
Trust. The district court concluded that the arbitrator did not err. We agree and
affirm.
We have jurisdiction pursuant to 29 U.S.C. § § 1401(b)(2), 1451(c). A
district court’s grant of summary judgment is reviewed de novo. Penn Cent. Corp.
v. W. Conference of Teamsters Pension Tr. Fund, 75 F.3d 529, 533 (9th Cir. 1996).
Likewise, the arbitrator’s conclusions of law are reviewed de novo. Id. (citation
omitted). The arbitrator’s findings of fact are presumed correct, but the
presumption is rebuttable by a clear preponderance of the evidence. 29 U.S.C. §
1401(c).
The Dealerships first challenge the authority of the arbitrator to resolve the
arbitration on a motion for summary judgment, as well as any authority to do so
without first holding an evidentiary hearing. The arbitration was governed by the
American Arbitration Association’s (“AAA”) Multiemployer Pension Plan
Arbitration Rules for Withdrawal Liability Disputes (“MEPPA”). Nothing in
MEPPA explicitly authorizes or forbids summary judgment. But the rules give the
3 18-16170 arbitrator the authority to “interpret and apply [them] insofar as they relate to the
Arbitrator’s powers and duties” as well as give him the discretion to vary the
procedures provided that he affords the parties “a full and equal opportunity” to
present their evidence and arguments. MEPPA § § 24, 45. Given the discretion
granted to the arbitrator, he did not abuse it by resolving the arbitration on
summary judgment. The arbitrator allowed the Dealerships to submit evidence and
written briefs in opposition to summary judgment, and held oral argument on the
motion. This suffices as a “full and equal opportunity” for the Dealerships to
present their evidence and arguments. MEPPA § 24.
The Dealerships next contend that the arbitrator erroneously concluded that
the free look exemption did not apply. The free look exemption provides that “[a]n
employer who withdraws from a plan in complete or partial withdrawal is not
liable to the plan” if the employer meets certain conditions. 29 U.S.C. § 1390.
Under ERISA, all businesses that are under common control are treated as a single
employer. See 29 U.S.C. § 1301(b)(1). The Dealerships argue that, although they
are under common control, each individual contributing employer within a
controlled group should be able to take advantage of the free look exemption even
if the controlled group of which they are part could not. But Congress enacted
section 1301(b)(1) “to prevent businesses from shirking their ERISA obligations
by fractionalizing operations into many separate entities.” Teamsters Pension Tr.
4 18-16170 Fund-Bd. of Trs. of W. Conference v. Allyn Transp. Co., 832 F.2d 502, 507 (9th
Cir. 1987) (citation omitted). So, for purposes of the free look exemption, the
word employer refers to the Dealerships as a controlled group—not the individual
dealerships—and because the controlled group does not meet all of the
requirements to be eligible for the free look exemption, neither do the individual
dealerships.
The Dealerships next contend that the arbitrator erred by concluding that it
was unambiguous that the 2007 settlement agreement regarding the Dealerships’
withdrawal liability based on Antioch Ford’s 2005 withdrawal from the Trust was
not applicable to this dispute. The interpretation of the settlement agreement is
governed by state law. See Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir. 1989).
Under California law, the “mutual intention of the parties at the time the contract is
formed governs interpretation” and the parties’ intent is determined “solely from
the written provisions of the contract.” ASARCO, LLC v. Celanese Chem. Co., 792
F.3d 1203, 1212 (9th Cir. 2015) (quoting AIU Ins. Co. v. Super. Ct., 799 P.2d
1253, 1264 (Cal. 1990)). No matter how broad the terms of a contract may appear,
“it extends only to those things concerning which it appears that the parties
intended to contract.” Cal. Civ. Code § 1648.
Here, the settlement agreement is unambiguous. It releases the Dealerships
from all claims “arising out of the Dispute” where the “Dispute” is “[the Trust] has
5 18-16170 made claims and demands against Antioch Ford and others, for ‘withdrawal
liability.’” The language of the settlement agreement released only then-existing
claims for withdrawal liability that had already been assessed against the
Dealerships based on Antioch’s withdrawal, not theoretical future withdrawal
liability that might arise from other members of the controlled group withdrawing
from the Trust. Thus, it is unambiguous that the settlement agreement does not
apply to the withdrawals at issue here.2
Finally, the Dealerships contend that the arbitrator abused his discretion in
awarding attorney’s fees. An arbitrator’s award of attorney’s fees is reviewed for
an abuse of discretion. Penn Cent. Corp., 75 F.3d at 535. There is an abuse of
discretion if the decision is “based on an erroneous conclusion of law or if the
record contains no evidence on which [the arbitrator] rationally could have based
[his] decision.” Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 270 (9th
Cir. 1989). Because there is some evidence “on which [the arbitrator] rationally
could have based [his] decision,” the arbitrator did not abuse his discretion. Id.
AFFIRMED.
2 At oral argument, counsel for the Dealerships raised the issue that the arbitrator erred in calculating the withdrawal liability the Dealerships owe by double- counting the withdrawal liability paid by the Dealerships from Antioch Ford’s 2005 withdrawal from the Trust. But they did not raise this argument in their brief, so it is waived. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999).
6 18-16170