Rootberg v. Central States, Southeast and Southwest Areas Pension Fund

• Decision Date: 19 August 1988
• Docket Number: No. 87-2873,87-2873
• Citation: 856 F.2d 796
• Parties: 9 Employee Benefits Ca 2603 Philip ROOTBERG and Edward W. Ross, as trustees under the Liquidating Trust Agreement of M.P. Electric, Inc., Plaintiffs-Appellees, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, et al., Defendants- Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 796

856 F.2d 796

9 Employee Benefits Ca 2603

Philip ROOTBERG and Edward W. Ross, as trustees under the Liquidating Trust Agreement of M.P. Electric Inc., Plaintiffs-Appellees, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND et al., Defendants- Appellants.

No. 87-2873.

United States Court of Appeals Seventh Circuit.

Argued June 2, 1988.

Decided Aug. 19, 1988.

Terence G. Craig, Central States Pension Fund, Chicago, Ill., for defendants-appellants.

Marc O. Beem, Miller, Shakman, Nathan & Hamilton, Chicago, Ill., for plaintiffs-appellees.

Before POSNER, COFFEY, and KANNE, Circuit Judges.

POSNER, Circuit Judge.

An employer who withdraws from a multiemployer pension fund, such as the teamsters pension fund involved in this case, is required by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. Secs. 1381 et seq., to compensate the fund by reimbursing it for his pro rata share of the fund's vested but unfunded pension liability. The idea is to prevent an employer from shifting to other employers its pension obligations to its employees. In 1981 M.P. Electric, Inc., a participant in the teamsters' Central States multiemployer pension fund, sold the part of its business (electric supply) covered by the Central States pension fund. The fund assessed withdrawal liability of some $165,000 against M.P. It based the assessment on the 14-month history of contributions to the fund by the company from which M.P. had bought the electric-supply business that it had just sold. See 29 U.S.C. Sec. 1382. M.P. contested the assessment, claiming that its predecessor's contribution history was insufficient to impose withdrawal liability on a successor corporation. See 29 U.S.C. Sec. 1389.

"Any dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination [of withdrawal liability] shall be resolved through arbitration," 29 U.S.C. Sec. 1401(a)(1), so on March 22, 1984, the trustees of M.P. (the firm is in liquidation) filed a demand for arbitration. The demand was timely, but the arbitration was delayed while Central States gave further consideration to M.P.'s arguments. On May 9, 1985, with the arbitration still in abeyance by mutual consent, M.P.'s trustees filed the present suit, seeking a declaratory judgment that M.P. has no withdrawal liability to the Central States fund. Central States asked the district court to dismiss the suit for want of subject-matter jurisdiction and failure to exhaust administrative remedies (i.e., arbitration), and told the American Arbitration Association that it wanted to proceed immediately with the arbitration over M.P.'s withdrawal liability. M.P.'s trustees responded in August by asking the court to stay the arbitration. On September 4, 1985, before the district judge had ruled on these motions, another district judge, Judge Shadur, in another suit challenging Central States' theory of successor liability, held that the theory had no basis in the statute. Richland Industries Ltd. v. Robbins, 617 F.Supp. 639 (N.D.Ill.1985). Persuaded of the correctness of Judge Shadur's decision, Central States on September 21, 1985, wrote the M.P. trustees that it had decided that M.P. had no withdrawal liability to the fund after all. The trustees then moved to drop this suit, and for an award of attorney's fees. The district court granted both of these motions, and, analogizing the trustees to prevailing plaintiffs in civil rights suits, awarded them almost $36,000 in attorney's fees. Central States appeals, contending that the trustees are entitled to no fee.

The MPPAA authorizes an employer adversely affected by an act or omission with respect to a multiemployer plan to bring suit in federal court for appropriate legal or equitable relief. See 29 U.S.C. Secs. 1451(a)(1), (c). And in any such suit "the court may award all or a portion of the costs and expenses incurred in connection with [the suit], including reasonable attorney's fees, to the prevailing party." 29 U.S.C. Sec. 1451(e). This section has no recorded legislative history except for a statement by the floor manager of the bill in the House of Representatives, Congressman Thompson, that if an employer fails to make timely withdrawal-liability payments required by the MPPAA "the court must award the plan ... attorneys' fees." 126 Cong.Rec. 23039 (1980). This language seems overemphatic in view of what section 1451(e) actually says ("the court may award all or a portion of the costs and expenses incurred"), but in any event does not address the case where the employer is the prevailing party. There are few reported cases under this section; but since the MPPAA is an amendment to ERISA (the Employee Retirement Income Security Act of 1974, 29 U.S.C. Secs. 1001 et seq.), which has a similarly worded provision on attorney's fees (in any suit under ERISA "by a participant, beneficiary, or fiduciary [which would include an employer, such as M.P.], the court in its discretion may allow a reasonable attorney's fee and costs of action to either party," 29 U.S.C. Sec. 1132(g)(1))--and such differences in wording between the two provisions as there are appear to be inadvertent--we hold that the standards for awarding attorney's fees are the same. See Central States, Southeast & Southwest Areas Pension Fund v. 888 Corp., 813 F.2d 760, 767 (6th Cir.1987); Cuyamaca Meats, Inc. v. San Diego & Imperial Counties Butchers' & Food Employers' Pension Trust Fund, 827 F.2d 491, 500 (9th Cir.1987). We can therefore treat decisions interpreting section 1132(g) as precedents for the interpretation of section 1451(e).

In one of the few decisions interpreting section 1451(e), the Third Circuit held that an employer who prevails, either as plaintiff or defendant, in a suit under the MPPAA is entitled to an award of attorney's fees only if the pension fund's litigating position was frivolous. Dorn's Transportation, Inc. v. Teamsters Pension Trust Fund, 799 F.2d 45 (3d Cir.1986). The court reached this conclusion by analogizing the employer to a defendant in a civil rights suit. (No court before the district court in this case had ever suggested that the victorious employer should be analogized to the prevailing plaintiff in a civil rights suit and should therefore recover attorney's fees virtually as a matter of course.) We had rejected the analogy in interpreting section 1132(g) in Bittner v. Sadoff & Rudoy Industries, 728 F.2d 820, 829 (7th Cir.1984), and had gone on to hold that the employer was entitled to its attorney's fees if the plaintiff's litigating position had lacked substantial justification. See also Van Boxel v. Journal Co. Employees' Pension Trust, 836 F.2d 1048, 1054 (7th Cir.1987). If we are correct that sections 1451(e) and 1132(g) should be interpreted the same way, then Dorn's is not the standard in this circuit. But it will soon become clear that the choice of standard would not change the outcome of this case.

Central States argues that M.P.'s trustees did not prevail, for it withdrew its assessment of withdrawal liability not because of this suit but because of Judge Shadur's decision in Richland. Yet a party can prevail, in a common-sense interpretation of this term, through luck as well as sweat. If you bring a suit, and incur expense in its prosecution, and then the defendant throws in the towel for reasons entirely unrelated to your efforts, still you have won, and if your expense was prudent, should it not be reimbursed?

The problem lies in determining whether or in what sense the plaintiff has prevailed as a litigant. Suppose the plaintiff's suit was frivolous and would surely have gone down to defeat if litigated, but the defendant, for reasons extrinsic to the suit, decided to cure the plaintiff's grievance; then in no sense relevant to a statutory scheme for reimbursing the expenses of prevailing parties could the plaintiff be entitled to reimbursement.

The problem arises frequently in cases that are settled. See, e.g., Maher v. Gagne, 448 U.S. 122, 129, 100 S.Ct. 2570, 2574-75, 65 L.Ed.2d 653 (1980). The plaintiff has got something for his efforts, but does it follow that he prevailed? It does not. The suit may have been groundless, and settled merely because it had some nuisance value; in such a case the plaintiff will not receive an award of attorney's fees. Harrington v. DeVito, 656 F.2d 264, 266-67 (7th Cir.1981); Palmer v. City of Chicago, 806 F.2d 1316, 1323 (7th Cir.1986); EEOC v. Madison Community Unit School District No. 12, 818 F.2d 577, 590 (7th Cir.1987). (Conversely, if the suit is not frivolous and does produce results--which could be a favorable settlement, or even a judgment in another forum than the one in which the suit was brought--an award of attorney's fees is permissible. See, e.g., Hewitt v. Helms, --- U.S. ----, 107 S.Ct. 2672, 2676, 96 L.Ed.2d 654 (1987); Sullivan v. Commonwealth of Pennsylvania Department of Labor, Etc., 663 F.2d 443, 449 (3d Cir.1981).) The case before us presents the reverse situation: not the meritless case that produces some benefit for the plaintiff but the possibly meritorious case that, because of supervening events, has no effect. The courts uniformly reject the plaintiff's claim for reimbursement unless he can show that the suit was a cause (or "catalyst," as the cases often say) of the victory, the assumption being that "causing" is as prerequisite to an award of attorney's fees as "prevailing," or perhaps is implied by the latter word. Our most recent statement of this position is in Hendricks v. Bowen, 847 F.2d 1255, 1258 (7th Cir.1988), and there are many others. See, e.g., In re Burlington Northern, Inc. Employment Practices Litigation, 832 F.2d 422, 425 (7th Cir.1987); Janowski v. International Brotherhood of Teamsters Local No. 710 Pension Fund, 812 F.2d 295, 298 (7th Cir.1987); Gekas v. Attorney Registration & Disciplinary Comm'n, 793 F.2d 846, 849 (7th Cir.1986) (per curiam); Illinois Welfare...