851 F.2d 578 (2nd Cir. 1988), 947, Park South Hotel Corp. v. New York Hotel Trades Council

Docket Nº:947, Docket 87-9025.
Citation:851 F.2d 578
Party Name:PARK SOUTH HOTEL CORPORATION, Plaintiff-Appellant, v. NEW YORK HOTEL TRADES COUNCIL and Hotel Association of New York City, Inc., Pension Fund, Defendant-Appellee.
Case Date:June 29, 1988
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 578

851 F.2d 578 (2nd Cir. 1988)

PARK SOUTH HOTEL CORPORATION, Plaintiff-Appellant,

v.

NEW YORK HOTEL TRADES COUNCIL and Hotel Association of New

York City, Inc., Pension Fund, Defendant-Appellee.

No. 947, Docket 87-9025.

United States Court of Appeals, Second Circuit

June 29, 1988

Argued March 28, 1988.

Page 579

Andrew Irving, New York City (Michael F. O'Toole, Robin Roger, Robinson, Silverman, Pearce, Aronsohn & Berman, New York City), for plaintiff-appellant.

Michael Lesch, New York City (Christopher J. Sues, Clifford L. Davis, Shea & Gould, New York City), for defendant-appellee.

Before FEINBERG, Chief Judge, KEARSE and FRIEDMAN, [*] Circuit Judges.

FRIEDMAN, Circuit Judge:

This is an appeal from a declaratory judgment of the United States District Court for the Southern District of New York that the appellant Park South Hotel Corporation and Park South Associates are jointly and severally liable for withdrawal liability payments under the Multiemployer Pension Plan Amendments Act of 1980 (MP-PAA), 29 U.S.C. Sec. 1381 et seq. (1982). Park South Hotel Corp. v. New York Hotel Trades Council and Hotel Ass'n of New York City, Inc., Pension Fund, 671 F.Supp. 1000 (S.D.N.Y.1987). We reverse.

I

A. We recently summarized the background and pertinent provisions of MPPAA in ILGWU National Retirement Fund v. Levy Bros. Frocks, Inc., 846 F.2d 879, 880-81 (2d Cir.1988):

Page 580

MPPAA was enacted by Congress in September 1980 for "[t]he primary purpose of ... protect[ing] retirees and workers who are participants in [multiemployer] plans against the loss of their pensions." In particular, Congress was concerned that as of 1980:

(1) the magnitude of the risk and the potential exposure of the [multiemployer plan] system are intolerably high; and (2) existing law and particularly the plan termination insurance provisions are inadequate to assure financially sound multiemployer plans, may accelerate declines and further weaken and hasten the termination of financially weak plans.... [T]here are serious defects in current law which undermine the benefit security of multiemployer plan participants.

Thus, in T.I.M.E.-DC, Inc. v. Management-Labor Welfare & Pension Funds, 756 F.2d 939, 943 (2d Cir.1985), we pointed out that "[t]he policy of the MPPAA ... was to protect the interests of participants and beneficiaries in financially distressed multiemployer plans and to encourage the growth and maintenance of multiemployer plans."

Under MPPAA an employer who withdraws from a multiemployer plan, with certain exceptions, is assessed "withdrawal liability," that is, the employer is required to continue funding its proportionate share of the plan's unfunded vested benefits. 29 U.S.C. Secs. 1381, 1391. The purpose of withdrawal liability "is to relieve the funding burden on remaining employers and to eliminate the incentive to pull out of a plan which would result if liability were imposed only on a mass withdrawal by all employers." ....

When an employer withdraws from a multiemployer plan, the plan sponsor, that is, the entity maintaining the plan, must determine the amount of the employer's withdrawal liability, notify the employer of the amount and make a demand for payment. [Citations omitted.]

An employer's withdrawal liability is equal to the employer's proportionate share of the plan's unfunded vested employee benefits. The unfunded vested benefits are calculated as the difference between the present value of vested benefits and the current value of the pension plan's assets. See 29 U.S.C. Secs. 1381, 1391 (1982); Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 725, 104 S.Ct. 2709, 2715, 81 L.Ed.2d 601 (1984). An employer's past contribution history is considered in determining its proportionate share of unfunded benefits. Park South Hotel Corp., 671 F.Supp. at 1004.

B. The facts in this case are undisputed. The appellant, Park South Hotel Corporation (Park South), was the sole general partner of Park South Associates (the partnership), a limited partnership organized under the laws of New York. The partnership owned the Barbizon Plaza Hotel (Hotel). The partnership was a member of a multiemployer bargaining unit, the Hotel Association of New York City (Hotel Association). Pursuant to a collective bargaining agreement between the Hotel Association and the union, the partnership was required to contribute to the appellee New York Hotel Trades Council and Hotel Association of New York City, Inc., Pension Fund (the Fund). The Fund is a multiemployer pension plan under MPPAA.

The Hotel Association and the union regarded the partnership as the employer. The union directed complaints filed against the management of the Hotel to the partnership. The general partner, Park South, never was a member of the Hotel Association employers'...

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