808 F.2d 66 (D.C. Cir. 1987), 85-6160, Grand Union Co. v. Food Employers Labor Relations Ass'n

Docket Nº:85-6160, 86-5049 and 86-5077.
Citation:808 F.2d 66
Party Name:GRAND UNION COMPANY, Appellant, v. FOOD EMPLOYERS LABOR RELATIONS ASSOCIATION and United Food & Commercial Workers Pension Fund, et al. GRAND UNION COMPANY, Appellant, v. FOOD EMPLOYERS LABOR RELATIONS ASSOCIATION and United Food & Commercial Workers Pension Fund, et al. GRAND UNION COMPANY, Appellant, v. FOOD EMPLOYERS LABOR RELATIONS ASSOCIATION
Case Date:January 13, 1987
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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Page 66

808 F.2d 66 (D.C. Cir. 1987)

GRAND UNION COMPANY, Appellant,

v.

FOOD EMPLOYERS LABOR RELATIONS ASSOCIATION and United Food &

Commercial Workers Pension Fund, et al.

GRAND UNION COMPANY, Appellant,

v.

FOOD EMPLOYERS LABOR RELATIONS ASSOCIATION and United Food &

Commercial Workers Pension Fund, et al.

GRAND UNION COMPANY, Appellant,

v.

FOOD EMPLOYERS LABOR RELATIONS ASSOCIATION and United Food &

Commercial Workers Pension Fund, et al.

Nos. 85-6160, 86-5049 and 86-5077.

United States Court of Appeals, District of Columbia Circuit

January 13, 1987

Argued Nov. 21, 1986.

Page 67

Appeals from the United States District Court for the District of Columbia (Civil Action No. 85-01551).

Frank C. Razzano, Washington, D.C., for appellant.

Barry S. Slevin, with whom Jeffrey B. Cohen and Donald L. Havermann, Washington, D.C., were on the brief, for appellees.

Before MIKVA, RUTH BADER GINSBURG and SILBERMAN, Circuit Judges.

Opinion for the Court filed by Circuit Judge RUTH BADER GINSBURG.

RUTH BADER GINSBURG, Circuit Judge:

This case dominantly involves the primacy of arbitration as the first recourse dispute resolution mechanism in contests about an employer's withdrawal liability under the Employee Retirement Income Security Act of 1974 (ERISA), codified in relevant part at 29 U.S.C. Secs. 1001-1381, as amended by the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), codified in relevant part at 29 U.S.C. Secs. 1381-1453. The MPPAA 1) imposes withdrawal liability on an employer that ceases participation in a multiemployer pension plan, 2) assigns initial responsibility to the plan for determining the amount of the employer's withdrawal liability, and 3) establishes procedures, centering on arbitration, for resolving disputes over withdrawal liability between employer and plan sponsor.

Appellant Grand Union Company (Grand Union) owns and operates supermarkets and food warehouses. Pursuant to collective bargaining agreements, Grand Union made contributions to appellee Food Employers Labor Relations Association and United Food & Commercial Workers Pension Fund (Fund). In March 1984, Grand Union sold stores to Food-A-Rama, another food sale chain. In November 1984, the Fund notified Grand Union, that, by reason of the sale to Food-A-Rama and Grand Union's cessation of participation in the pension plan, the Fund was calculating Grand Union's withdrawal liability.

Asserting qualification for the "sale of assets" exemption from withdrawal liability, 29 U.S.C. Sec. 1384, Grand Union commenced this action in the district court--without first resorting to arbitration--for a declaration of its rights and liabilities, and attendant affirmative relief. Grand Union sued the Fund and certain individual Fund trustees. In addition to its claim against the Fund for declaratory and injunctive relief to stop assessment of withdrawal liability, Grand Union asserted claims for monetary and other relief against the Fund and individual Fund trustees for breach of fiduciary duty.

The district court dismissed Grand Union's principal declaratory and injunctive relief claim because Grand Union had failed to pursue and exhaust the arbitration remedy Congress ordered as a matter of first resort. That court dismissed Grand Union's breach of fiduciary duty counts for

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failure to state a claim within the federal court's subject matter jurisdiction. Grand Union Co. v. Food Employers Labor Relations Ass'n and United Food & Commercial Workers Pension Fund, 6 Employee Benefits Cas. (BNA) 2531 (D.D.C.1985) In a subsequent order, the district court awarded attorney's fees and costs to the defendants (the Fund and individual Fund trustees). Grand Union Co. v. Food Employers Labor Relations Ass'n and United Food & Commercial Workers Pension Fund, No. 85-1551 (D.D.C. Dec. 11, 1985) (hereafter, D.D.C. Dec. 11, 1985 Order), reprinted in J.A. at 23-27 Grand Union appealed.

We affirm the district court's orders in all respects. Congress stated as the main rule under MPPAA that withdrawal liability claims shall be arbitrated before they are brought to court. Exceptions to the statute's "arbitrate first" rule are narrowly cabined and, we hold, do not accommodate this case. Furthermore, Congress did not authorize employers to sue pension fund trustees individually for breach of fiduciary duty on account of the fund's efforts to impose and enforce withdrawal liability. Finally, the award of counsel fees underscores the firmness of the "arbitrate first" rule and was fully justified in view of the circumstances this case presents.

I. BACKGROUND

A.

The MPPAA added subtitle E to Title IV of ERISA, Pub.L. 93-406, secs. 4001-4082, 88 Stat. 829, 1003-35 (codified as amended at 29 U.S.C. Secs. 1301-1461 and in scattered sections of 26 U.S.C.) (1974). 1 Subtitle E, 29 U.S.C. Secs. 1381-1453, imposes liability on employers who withdraw from multiemployer pension plans. Under an exemption provision, 29 U.S.C. Sec. 1384, an employer does not incur withdrawal liability when a sale of assets causes it to cease participation in a plan, if the sale satisfies detailed statutory requirements ensuring that the purchaser of the assets will take over the seller's obligations to the plan.

Upon an employer's withdrawal from a plan, MPPAA confides to the plan sponsor responsibility for determining the amount of withdrawal liability, notifying the employer, and collecting the amount due. See 29 U.S.C. Secs. 1382, 1399(b)(1). On timely request, the plan sponsor is obliged to review and explain any aspect of the withdrawal liability determination questioned by the employer. See 29 U.S.C. Sec. 1399(b)(2). If informal review does not resolve the differences between...

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