727 F.2d 1204 (D.C. Cir. 1984), 83-1290, I.A.M. Nat. Pension Fund Ben. Plan C. v. Stockton Tri Industries

Docket Nº:83-1290.
Citation:727 F.2d 1204
Case Date:February 14, 1984
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

Page 1204

727 F.2d 1204 (D.C. Cir. 1984)


Skolnick, Appellants



No. 83-1290.

United States Court of Appeals, District of Columbia Circuit

February 14, 1984

Argued Nov. 17, 1983.

As Amended Feb. 16, 1984.

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Appeal from the United States District Court for the District of Columbia (Civil Action No. 81-02907).

Robert T. Osgood, Washington, D.C., for appellants.

John T. Hayden, San Francisco, Cal., for appellee.

Before MIKVA, EDWARDS and STARR, Circuit Judges.

Opinion for the Court filed by Circuit Judge STARR.

STARR, Circuit Judge:

This appeal raises several issues under the federal statutes regulating employers' withdrawal from participation in multiemployer pension plans. The case had its genesis when appellant, a large national pension fund, brought this action in the United States District Court for the District of Columbia to collect withdrawal liability under the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. Secs. 1381 et seq., from Stockton TRI Industries ("Stockton" or "the Company"), a California-based corporation. Stockton moved for summary judgment, arguing, among other things, that the Company had completely withdrawn from participation in the plan before the date on which MPPAA imposed withdrawal liability. The district court granted Stockton's motion, holding that the Company completely withdrew from the plan on the date Stockton communicated its intent to withdraw from future participation. Inasmuch as we conclude that the district court, while correct in not requiring arbitration under the particular circumstances presented here, misinterpreted the pivotal statutory term, "complete withdrawal," we reverse the judgment below and remand for further proceedings.


The facts are clear and undisputed. The legal significance of those facts under applicable federal statutes is, however, hotly contested. On May 1, 1977 Stockton entered into a collective bargaining agreement with the International Association of Machinists and Aerospace Workers ("I.A.M."). The agreement, which was to terminate on April 30, 1980, included a provision whereby Stockton was obligated to contribute to the I.A.M. National Pension Fund ("the Fund") for the duration of the contract. Shortly before the contract was due to expire in 1980, Stockton and I.A.M. entered into negotiations to replace the existing agreement. The negotiators advanced an entirely different pension plan proposal that would have required Stockton to make payments into Individual Retirement Accounts ("IRA's") instead of contributing to the Fund.

When agreement in principle was reached on this proposal, Stockton on April 14, 1980, informed the Fund by telegram that the Company would no longer make contributions to the pension plan as of April 30, 1980, the date on which the new IRA pension plan was to be instituted. The April 14 date of notification, as will be seen, is of central importance to the resolution of this appeal.

Stockton's obligations to contribute to the Fund, however, continued under the collective bargaining agreement until April 30, which was after the effective date of the federal legislation at issue here. Accordingly, in May 1980 Stockton made one additional payment to the Fund in fulfillment of its contractual obligations.

Several months later, on September 26, 1980, Congress' enactment of the Multiemployer Pension Plan Amendments Act

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transformed the decision to change Stockton's retirement benefits program into a potentially momentous event. MPPAA amended the Employee Income Security Act of 1974 ("ERISA"), 29 U.S.C. Secs. 1001 et seq., which regulates employer pension plans to protect the financial interests of plan participants. Except in unusual circumstances not present in this case, 1 ERISA had imposed no liability when an employer withdrew from a multiemployer pension plan, such as the Fund. As of 1980, however, MPPAA imposes withdrawal liability on any employer which withdraws from a multiemployer pension plan. 29 U.S.C. Sec. 1381. By its terms, MPPAA imposes this liability retroactively to embrace any employer which withdrew on or after April 29, 1980. 29 U.S.C. Sec. 1461(e)(2)(A).

Approximately one year later, on May 22, 1981, the Fund informed Stockton that the Company's withdrawal liability amounted to $114,282.00, which the Fund asserted was payable in eighteen installments, beginning on July 21, 1981. This amount of alleged withdrawal liability, Stockton maintains, represents approximately one-half of the Company's net worth. In response to the Fund's demands, Stockton on September 24, 1981, contested the entire amount of assessed withdrawal liability and requested arbitration as provided by 29 U.S.C. Sec. 1401. 2 The Fund did not immediately respond to the Company's arbitration request; however, on October 21, 1981, the Fund demanded payment in full of Stockton's entire withdrawal liability, acknowledging the Company's arbitration request, but stating that arbitration should be delayed until the Pension Benefit Guaranty Corporation ("PBGC") promulgated regulations, as required by 29 U.S.C. Sec. 1401(a)(2).

When Stockton refused to pay the full amount of alleged withdrawal liability, the Fund filed this suit, contending that even if the Company were entitled to arbitration, the Fund nonetheless had the right to payment of withdrawal liability while arbitration was pending. 29 U.S.C. Sec. 1401(d). 3 Stockton responded that, to the contrary, the applicable statutory provision, 29 U.S.C. Sec. 1401(b)(1), demonstrated that once a party requested arbitration, no payments were owing, 4 and that the Fund's acceleration of the amount due pending arbitration was inconsistent with the legislative history of MPPAA and its interpretation by the PBGC. 5 Stockton further contended that it

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had withdrawn from the Fund prior to the retroactive liability date of April 29, 1980 and that even if the Company were held to have withdrawn after April 29, 1980, MPPAA's imposition of retroactive liability was so Draconian as to violate requisite due process guarantees of the Fifth Amendment.

The district court ruled that Stockton had in fact completely withdrawn from the Fund prior to the retroactive liability date of April 29, 1980. Interpreting the critical statutory provision in this case, 29 U.S.C. Sec. 1383(a)(1), which defines "complete withdrawal" as occurring when an employer "permanently ceases to have an obligation to contribute under the plan," the district court concluded that Stockton's obligation ceased when the Company notified the Fund on April 14, 1980 of its intent to withdraw. The court concluded that since the withdrawal was effected by this notification prior to the retroactive effective date of the MPPAA, Stockton had incurred no withdrawal liability; accordingly, the court determined that the other issues raised by Stockton need not be reached.



The threshold issue before us is whether the district court erred in declining to refer this dispute to arbitration, rather than reaching and deciding the central issue of statutory interpretation in this case. We conclude that, under the specific and undisputed circumstances of this case, the district court's declination was proper.

MPPAA provides that "any dispute between an employer and the plan sponsor ... concerning a determination made under sections 1381 through 1399 of this title shall be resolved through arbitration." 29 U.S.C. Sec. 1401. The Fund, which was less than eager to engage in arbitration until it ultimately met with judicial adversity, now argues that Congress' establishment of the arbitrative scheme demonstrates that arbitration is the proper forum for initial determination of the date of Stockton's withdrawal from the Fund. Notwithstanding the Fund's enchantment with arbitration, we conclude for the reasons set forth below that resort to arbitration was neither a statutory prerequisite to the district court's jurisdiction, nor in the particular circumstances of this case was arbitration a requirement mandated by jurisprudential considerations.

Federal courts confronted with the issue whether arbitration is required under MPPAA have uniformly analyzed the question as an issue of exhaustion of administrative remedies, not as an issue of an absolute jurisdictional bar vel non. 6 The courts have concluded, correctly in our view, that judicial deference to the arbitration process under MPPAA is mandated by the same policies that underlie the principle of judicial deference to administrative agencies. 7

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See, e.g., Republic Industries v. Central Pennsylvania Teamsters Pension Fund, 693 F.2d 290, 294 (3d Cir.1983). First, in establishing the arbitrative scheme, as in establishing an administrative agency, Congress has expressed a preference for initial resolution of the dispute in a non-judicial forum. Second, an arbitrator skilled in pension and labor matters, like an agency in a given administrative area, is in theory likely to fashion superior resolutions of disputes within the arbitrator's area of expertise. Third, initial resort to arbitration, like initial resort to an administrative tribunal, promotes judicial economy both because an arbitrator's decision may dispose of the dispute, 8 and because, even if one party appeals the arbitral decision, courts will have the benefit of the arbitrator's sifting of the facts.


The Supreme Court has distinguished between exhaustion requirements that are "statutorily specified jurisdictional prerequisite[s]" and those that are judicially imposed and reflect prudential concerns. Weinberger v. Salfi, 422 U.S. 749, 766, 95 S.Ct. 2457, 2467, 45 L.Ed.2d...

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