United Retail & Wholesale Employees Teamsters Union Local No. 115 Pension Plan v. Yahn & Mc Donnell, Inc.

787 F.2d 128, 54 U.S.L.W. 2527, 7 Employee Benefits Cas. (BNA) 1273, 1986 U.S. App. LEXIS 23637
CourtCourt of Appeals for the Third Circuit
DecidedMarch 31, 1986
DocketNos. 85-1035, 85-1065
StatusPublished
Cited by8 cases

This text of 787 F.2d 128 (United Retail & Wholesale Employees Teamsters Union Local No. 115 Pension Plan v. Yahn & Mc Donnell, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United Retail & Wholesale Employees Teamsters Union Local No. 115 Pension Plan v. Yahn & Mc Donnell, Inc., 787 F.2d 128, 54 U.S.L.W. 2527, 7 Employee Benefits Cas. (BNA) 1273, 1986 U.S. App. LEXIS 23637 (3d Cir. 1986).

Opinions

OPINION OF THE COURT

BECKER, Circuit Judge.

This case presents three important questions concerning the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C. § 1381 et seq. (1982): 1) whether MPPAA authorizes a right of action to collect withdrawal liability payments pending arbitration proceedings at which employers withdrawing from the plan may challenge assessments of withdrawal liability made by plan trustees; 2) whether the statutory scheme, under which the determination of withdrawal liability is made by trustees who themselves owe a fiduciary duty to the plan, and whose findings must be presumed correct by the arbitrator, deprives withdrawing employers of an impartial tribunal in violation of their procedural due process rights under the Fifth Amendment (and whether the alleged offending provisions are severable from the statutory scheme); and 3) whether MPPAA makes an award of attorney’s fees, liquidated damages and costs mandatory upon an entry of a judgment for delinquent payments in favor of a pension plan, even though arbitration and review of arbitration in the district court have yet to take place. The district court held that withdrawal liability may be pursued in court prior to arbitration; that MPPAA comports with the constitutional requirement of due process; and that it would be premature to award a pension plan attorney’s fees, liquidated damages and costs prior to the final resolution of the controversy.

[130]*130We agree with the district court that MPPAA provides for a cause of action to collect withdrawal liability pending arbitration. We find, however, that the scheme violates the due process rights of withdrawing employers. We further find that the scheme is severable, and accordingly strike down only the portion of the scheme that requires the arbitrator to accord the trustees’ determination of withdrawal liability a presumption of correctness. Finally, we hold that once the district court granted judgment for delinquent payments in favor of the pension plan, it was required to award attorney’s fees, liquidated damages and costs even though the matter-had yet to go to arbitration. Accordingly, we affirm in part and reverse in part.

Because of MPPAA’s complexity, we must commence our analysis with a rather detailed description of its historical background and statutory scheme.

I. HISTORICAL BACKGROUND & STATUTORY SCHEME

Under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. (1976), amended by 29 U.S.C. § 1301 et seq. (1982), employers contribute to a pension plan on behalf of each of their employees who is a member of a participating union. The amount of the payments is determined by a collective bargaining agreement between each employer and its employees. The plan is administered by trustees, half of whom are chosen by contributing employers and half by the union. 29 U.S.C. § 186(c)(5)(B). The trustees set the level of benefits paid to participants and determine investment policy. ERISA also established the Pension Benefit Guaranty Corporation (“PBGC”), a government corporation, to insure employees’ benefits against a plan’s termination for insufficient funds.

Prior to MPPAA, 29 U.S.C. § 1381 et seq. (1982), an employer who withdrew from a pension plan incurred a contingent liability: if a multiemployer plan terminated within five years following an employer’s withdrawal; the employer was liable to the PBGC, but if the plan did not terminate within five years, the employer had no liability. The maximum of each employer’s liability was 30% of its net worth. Because an employer who withdrew from a plan more than five years prior to its termination escaped with no liability, the remaining employers bore a greater share of liability. There was thus an incentive for employers to withdraw from plans in order to avoid future liability. Many withdrawals resulted, and the solvency of pension plans was threatened.

In 1980, Congress passed MPPAA, amending ERISA, to discourage withdrawals from multiemployer pension plans and to ensure the solvency of such plans. H.R. Rep. No. 869, 96th Cong.2d Sess. 67, reprinted in 1980 U.S.Code Cong. & Ad. News 2918, 2935. MPPAA, inter alia, imposed mandatory liability on withdrawing employers regardless of whether the plan terminated, and repealed the provision that set 30% of an employer’s net worth as its maximum liability. Because MPPAA was signed into law on September 26, 1980, but imposed retroactive liability on employers who ceased contributing to a plan on or after April 29, 1980, in a worst case scenario an employer could be liable for all of its assets even if the plan remained solvent and even if the employer had left the pension plan prior to the enactment of MPPAA.1

[131]*131Title 29, § 1381 provides that upon an employer’s withdrawal from a pension plan, the plan’s trustees determine the amount of liability. In determining the amount of liability, the trustees are required to use one of several actuarial methods set forth in § 1391 or any alternative method approved of by the PBGC. 29 U.S.C. § 1391(c)(1) (1982). Section 1394(a) prohibits the retroactive application of a method chosen after the date of the employer’s withdrawal and Section 1394(b) requires that the selected method be applied uniformly to all employers who withdraw from the plan.

Once an employer’s withdrawal liability is calculated, the plan is required to notify the employer and demand payment on an installment schedule. 29 U.S.C. § 1399(b)(1). After the employer receives notice of the amount of his withdrawal liability, it may, within ninety days, ask for a review by the plan’s trustees. 29 U.S.C. 1399(b)(2)(A). After a “reasonable review,” the trustees must notify the employer of their determination. 29 U.S.C. 1399(b)(2)(B). If a dispute persists, either party may initiate arbitration proceedings, in which the trustees’ determination is presumed correct unless the party contesting it shows “by a preponderance of the evidence that the determination was unreasonable or clearly erroneous.” 29 U.S.C. § 1401(a)(3)(A). Section 1401(c) provides that the arbitrator’s decision is subject to review in a district court where there is also a presumption, rebuttable by a clear preponderance of the evidence, that the arbitrator’s factual findings are correct.

Under §§ 1399(c)(2) and 1401, the employer must commence payments within 60 days of being informed of its liability, regardless of whether a review has been requested or arbitration proceedings initiated.

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787 F.2d 128, 54 U.S.L.W. 2527, 7 Employee Benefits Cas. (BNA) 1273, 1986 U.S. App. LEXIS 23637, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-retail-wholesale-employees-teamsters-union-local-no-115-pension-ca3-1986.