Banner Indus. v. CENTRAL STATES, ETC., AREAS P. FUND

• Decision Date: 02 July 1987
• Docket Number: No. 86 C 3046.,86 C 3046.
• Citation: 663 F. Supp. 1292
• Parties: BANNER INDUSTRIES, INC., Plaintiff/Counterdefendant, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and its present Trustees in their capacity as Trustees, Defendants/Counterclaimants, and Pepsico, Inc., et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

663 F. Supp. 1292

BANNER INDUSTRIES, INC., Plaintiff/Counterdefendant, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and its present Trustees in their capacity as Trustees, Defendants/Counterclaimants and Pepsico, Inc., et al., Defendants.

No. 86 C 3046.

United States District Court, N.D. Illinois, E.D.

July 2, 1987.

Roger L. Taylor, Kirkland & Ellis, Carl L. Taylor, Thomas D. Yannucci, Kenneth N. Bass, Kirkland & Ellis, Washington, D.C., for plaintiff/counterdefendant.

Neil Quinn, Richard Waris, Mary Anne Capron, Pretzel & Stouffer, Chtd., Chicago, Ill., Deborah Fabricant, Stanley J. Adelman, Rudnick & Wolfe, Richard S. Huszagh, Edward J. Calihan, Jr., Chicago, Ill., Thomas C. Nyhan, Stanley J. Brown, Arent, Fox, Kintner, Plotkin & Kahn, Washington, D.C., John R. Climaco, John Masters, John A. Peca, Jr., Thomas L. Colaluca, Climaco Climaco Seminatore, Lefkowitz & Garofoli, Cleveland, Ohio, for defendants/counterclaimants.

MEMORANDUM OPINION AND ORDER

PLUNKETT, District Judge.

In a memorandum opinion and order dated March 25, 1987¹ ("Banner I"), this court granted the motion of the Central States, Southeast and Southwest Areas Pension Fund ("Central States") to dismiss Count I of the complaint filed by Banner Industries, Inc. ("Banner"), finding that Banner's challenge to the assessment of withdrawal liability against it by Central States should have been put before an arbitrator and not this court. Accordingly, we denied Banner's motion for summary judgment on the merits of its challenge, and, finding that Banner had not waived its right to arbitrate the dispute, referred the matter to arbitration.² We also granted Central States' motion for summary judgment on its claim for interim payments, finding that § 1401(d) of the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. § 1381 et seq., mandated that Banner make such payments pending a final decision by the arbitrator. The court ordered that Banner begin making such payments on April 1, 1987, and Banner has complied with that order; however, the court reserved ruling on whether Banner was also required to pay all arrearages on the interim payments. The court sought briefing on this issue and Central States responded by filing a motion for an award of past due interim payments, interest, liquidated damages, and attorney's fees. The briefing on this motion is now completed, and the court has heard oral argument. For the following reasons, Central States' motion is granted.

Banner essentially makes two arguments in opposition to Central States' motion. First, Banner argues that the decision whether to grant the award Central States seeks is a matter of discretion for the court, and that this court should exercise its discretion to deny Central States' motion because (1) Banner cannot be found "delinquent"; (2) the balance of hardships is in Banner's favor; and (3) the policies of MPPAA would not be furthered by granting Central States' motion. Alternatively, Banner argues that granting the relief sought by Central States would deprive Banner of rights to which it is entitled under a recent Seventh Circuit decision, Robbins v. McNicholas Transportation Co., 819 F.2d 682 (7th Cir.1987) and would also deprive Banner of its property without due process of law. We find these arguments to be without merit.

I. Interim Payments

A. The Court's Discretion with Respect to Interim Payments

As we indicated in our earlier memorandum opinion, § 1399(c)(2) expressly provides that:

Withdrawal liability shall be payable in accordance with the schedule set forth by the plan sponsor under subsection (b)(1) of this section beginning no later than 60 days after the date of the demand notwithstanding any request for review or appeal of determinations of the amount of such liability or of the schedule.

Similarly, § 1401(d) provides, in relevant part:

Payments shall be made by an employer in accordance with the determinations made under this part until the arbitrator issues a final decision with respect to the determination submitted for arbitration, with any necessary adjustments in subsequent payments for overpayments or underpayments arising out of the decision of the arbitrator with respect to the determination.

On the basis of these provisions, we ordered in our previous decision that Banner commence making interim payments to Central States.

To the extent Banner urges that this court is vested with a certain amount of discretion in deciding whether to order interim payments, Banner is quite correct that the Seventh Circuit has recently so held. In Robbins v. McNicholas Transportation Co., the court reasoned:

Depending on the facts of the particular case, there can be unfairness and injury not likely intended by Congress in compelling interim payments while arbitration of the liability is pending. Congress has provided that interim payments are to be made. It has not expressly required courts to use injunctive powers to compel the payments in every case. We conclude that where the trustees bring an action to compel payment, pending arbitration, the court should consider the probability of the employer's success in defeating liability before the arbitrator and the impact of the demanded interim payments on the employer and his business.

Upon considering the employer's probability of success before the arbitrator, and the gravity of any economic hardship caused by payment of installments while awaiting decision, the court should have discretion, similar to that exercised in deciding whether to issue a preliminary injunction, to decline to use its injunctive power to compel payment. Although the statute itself creates a duty to make the payments, and permits resort to the powers of a court, it does not expressly provide that the court must grant an order compelling payment in every instance. Recognition of this degree of discretion alleviates concern that there be unnecessarily harsh and unintended results.

819 F.2d at 685-86 (7th Cir.1987). The Seventh Circuit's decision thus gives this court the freedom to decline to compel interim payments when the court concludes that to order the payments would be unfair or produce results unintended by Congress. Banner argues that this is just such a case, but as we explain below, we cannot agree.

1. Banner's "delinquency"

Under § 1451(b), "in any action under this section to compel an employer to pay withdrawal liability, any failure of the employer to make any withdrawal liability payment within the time prescribed shall be treated in the same manner as a delinquent contribution (within the meaning of section 1145 of this title)." Section 1145, in turn, is entitled "Delinquent Contributions," and provides that "every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement." In view of these provisions, as well as § 1399(c)(2) and § 1401(d), Central States argues that it is entitled to the relief sought in its motion.

Banner first claims that it would be unfair to require it to make past-due interim payments because the facts and circumstances show that Banner is not "delinquent." Rather, Banner argues, Banner filed a timely declaratory action "raising a threshold issue committed exclusively to court review." Banner Br. at 2, 10. Banner further argues that this court previously noted in Banner I that the issue Banner raised was a difficult one and that Banner's position was not frivolous or taken in bad faith. Taking all of the circumstances into account, Banner argues that it cannot now be considered delinquent and required to make "past-due" interim payments.

Banner's argument blurs the distinction between a possible delinquency in contesting its liability and its delinquency in making payments to the pension plan as called for by the statute. We have no quarrel with Banner's assertions that it timely filed its action in this court, that its position was not frivolous and that it did not act in bad faith; indeed, it is for precisely those reasons that we found Banner was not "delinquent" in asserting its rights and contesting its withdrawal liability, and thus held that Banner had not waived its right to initiate arbitration and pursue its challenge to withdrawal liability before the arbitrator. That decision, however, has nothing to do with whether Banner was required to make interim payments to Central States during the pendency of the dispute—the question of payments raises an entirely separate issue.

Banner insists that it raised an issue committed exclusively to court review. Such an argument simply ignores this court's holding in Banner I. Although Banner contended in Banner I that the issue was Banner's "employer" status, and thus one that was required to be resolved by a court, we concluded that Banner's contention was without merit, and that the issue was not Banner's "employer" status (Banner had admittedly been an employer) but rather, was the accuracy of the plan sponsor's determinations which resulted in the assessment of withdrawal liability against Banner. See Banner I at 883. Thus, we held that the issue was not a threshold one committed exclusively to court review, but instead was one committed exclusively to arbitral review that should have been placed before the arbitrator from the start. See id.³ Had Banner done what it should have done, it would have been required to commence making payments no later than 60 days after the date of demand and would have been required to continue making those payments until the arbitrator issued a final decision. §§ 1399(c)(2), 1401(d). We can think of no reason why Banner should be excused from making these payments simply because it instead chose to file suit in federal court. The...