Teamsters Joint Council No. 83 v. CenTra, Inc.

• Decision Date: 22 October 1991
• Docket Number: No. 90-1815,90-1815
• Citation: 947 F.2d 115
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: , 14 Employee Benefits Cas. 1776 TEAMSTERS JOINT COUNCIL NO. 83, Plaintiff-Appellee, v. CENTRA, INCORPORATED; Central Cartage Company; Detroit International Bridge Company; Superior Forwarding Company; Transport Communications Systems; Central Transport, Incorporated; Bancroft Trucking Company; GLS Leasco, Incorporated, Defendants-Appellants.

Page 115

947 F.2d 115

60 USLW 2328, 14 Employee Benefits Cas. 1776

TEAMSTERS JOINT COUNCIL NO. 83, Plaintiff-Appellee, v. CENTRA, INCORPORATED; Central Cartage Company; Detroit International Bridge Company; Superior Forwarding Company Transport Communications Systems; Central Transport Incorporated; Bancroft Trucking Company; GLS Leasco Incorporated, Defendants-Appellants.

No. 90-1815.

United States Court of Appeals Fourth Circuit.

Argued April 11, 1991.

Decided Oct. 22, 1991.

Patrick A. Moran, Simpson Moran, Birmingham, Ala., argued (Michael A. Nedelman, Fredric A. Smith, Simpson Moran, Birmingham, Thomas E. Spahn, Gary S. Marshall, McGuire, Woods, Battle & Boothe, Richmond, Va., on brief), for defendants-appellants.

Melvin R. Manning, Manning, Davis Kirby, Richmond, Va., argued (F. William Kirby, Jr., Manning, Davis & Kirby, on brief), for plaintiff-appellee.

Before ERVIN, Chief Judge, and PHILLIPS and HAMILTON, Circuit Judges.

OPINION

ERVIN, Chief Judge:

This appeal requires us to consider whether the statutory duty under ERISA of a control group of corporations to make interim withdrawal payments to the multi-employer pension fund of a bankrupt subsidiary may be suspended pending arbitration and appeal in the federal courts. We affirm the district court's finding that the duty to make interim payments continued in this case despite the defenses to liability asserted by the control group.

I.

The present appeal represents only one in a series of actions arising out of the financial difficulties and ultimate Chapter 11 bankruptcy of Mason & Dixon Lines, Inc. (M & D), an interstate trucking company operating out of Tennessee. On behalf of its employees, M & D contributed to Teamsters Joint Council No. 83 of Virginia Pension Fund (Pension Fund), a multi-employer pension plan as defined in the Employee Retirement Income Security Act (ERISA), §§ 3(2), 3(37), & 4001(a)(3), 29 U.S.C. §§ 1002(2), 1002(37) & 1301(a)(3). This plan provides pension benefits to employees of participating employers who are represented by various local unions affiliated with the Teamsters.

M & D suffered severe financial losses in 1982 and 1983. On November 29, 1983, M & D's shareholders executed two stock purchase agreements with Central Transport and GLS Leasco, two of the present appellants, whereby Central Transport and GLS Leasco acquired the exclusive right to purchase all outstanding shares of M & D stock. Central Transport and GLS Leasco are wholly-owned subsidiaries of appellant CenTra, Inc. (collectively, "Centra"). On January 4, 1984, Centra received temporary ICC authority to operate M & D, and Centra assumed control of M & D on January 9. Centra obtained permanent ICC authority, together with approval of its proposed stock acquisitions, on March 7, 1984. On February 2, 1985, the stock purchase agreements involving M & D were consummated, with the result that between them Central Transport and GLS Leasco purchased 100% of M & D's common stock.

On March 29, 1984, soon after Centra took control, M & D instituted Chapter 11 reorganization proceedings in the United States Bankruptcy Court for the Middle District of North Carolina. Prior to filing its petition, M & D had operated both a General Commodities Division and a Special Commodities Division within the Pension Fund's jurisdiction, and had contributed to the Pension Fund on behalf of employees in both divisions. As the result of a strike, however, M & D terminated the operations of the more profitable General Commodities Division and operated only the Special Commodities Division after December 7, 1984. The termination of the General Commodities Division caused M & D to reduce its contributions to the Pension Fund significantly in 1985, 1986, and 1987.

In the belief that M & D would suffer a complete withdrawal from the fund, ¹ the Pension Fund on April 14, 1984 filed the first of a series of contingent and, later, fixed proofs of claim with the bankruptcy court. When M & D in fact continued its contributions, but on a reduced basis, the Pension Fund filed subsequent contingent claims for partial withdrawal under ERISA. The Pension Fund's second amended fixed proof of claim, filed April 3, 1989, asserted that the anticipated partial withdrawal had occurred as of December 31, 1987, and that M & D was therefore indebted to the Pension Fund for partial withdrawal liability in the amount of $247,172.98.

On March 29, 1986, the bankruptcy court confirmed the M & D reorganization plan. See In re Mason & Dixon Lines, Inc., 63 B.R. 176 (Bankr.M.D.N.C.1986). The plan called for the cancellation of all of M & D's outstanding common stock and an issue of new common stock to CenTra, Inc., the principal corporation which owned Central Transport and GLS Leasco, in exchange for a capital contribution of $1 million. New preferred stock was to be issued to all unsecured creditors, with each creditor receiving preferred stock having a par value equal to the amount of the unsecured claim. The unsecured creditors were divided into two classes: Class 7, consisting of pension plans having withdrawal liability claims, including appellee Pension Fund; and Class 6, consisting of all other unsecured creditors.

The plan established a liquidation preference for the preferred stock and provided for its mandatory redemption 20 years after issuance at par value. During the 20 years, however, preferred stockholders were to have no voting rights and receive no dividends. Class 6 creditors would be able to redeem their stock (Series 1) immediately at 10% of its stated value up to $20 million, because of an offer to purchase this stock submitted by the R-100 Corp., a non-party. The remaining preferred stockholders, Class 7, held Series 2 preferred which was not included in R-100's offer. Therefore, the Class 7 stockholders could not redeem immediately but would be forced to wait for 20 years. Over Class 7 stockholders' objection to the plan, the bankruptcy court confirmed it as meeting the requirements of 11 U.S.C. § 1129(a)(8). ² The plan became effective April 9, 1986. ³

On May 9, 1989, soon after the Pension Fund had filed its second amended proof of claim and in accordance with the statutory procedures outlined in the MPPAA, ⁴ the Fund issued a partial withdrawal liability assessment and demand against Centra in the amount of $247,170. This assessment asserted that Centra and M & D were members of a "control group" and thus were jointly and severally liable under 29 U.S.C. § 1301(b)(1) for any withdrawal liability generated by M & D's actions. Citing the authority of MPPAA § 1399(c)(2), the Pension Fund demanded that Centra pay this liability in a lump sum or in 12 monthly installments of $21,067, beginning no later than 60 days after the date of the demand.

Centra then invoked the MPPAA dispute resolution procedures by requesting Pension Fund review of the withdrawal liability assessment. When the Pension Fund affirmed its initial assessment, Centra instituted arbitration proceedings contesting the Pension Fund's assessment. Meanwhile, Centra made no interim payments on the withdrawal liability assessment.

The Pension Fund filed an action in the United States District Court for the Eastern District of Virginia at Richmond, seeking to compel Centra to make interim payments as required by 29 U.S.C. § 1399(c)(2). Centra counterclaimed, requesting declaratory and injunctive relief against arbitration and the payment of interim withdrawal liability. Acting on the basis of a stipulated record, the district court denied Centra's requested relief and granted summary judgment for the Pension Fund. The court held that the defenses Centra advanced to arbitration of its withdrawal liability must be submitted to arbitration, and that Centra was delinquent in its obligation to pay the assessed withdrawal liability. The court ruled that the Pension Fund was entitled to the unpaid contributions with interest, liquidated damages in the amount of 20 per cent of the unpaid contributions, and attorneys' fees and costs. Centra appealed to this court.

We review summary judgments de novo on appeal. Higgins v. E.I. DuPont De Nemours & Co., 863 F.2d 1162, 1166-67 (4th Cir.1988); Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1127-28 (4th Cir.1987). Summary judgment is appropriate in cases where there is no genuine dispute as to a material fact, and where it appears that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(d); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). Summary judgment should be granted only in those cases where it is perfectly clear that no issue of fact is involved and inquiry into the facts is not desirable to clarify the application of the law. Charbonnages De France v. Smith, 597 F.2d 406, 414 (4th Cir.1979); Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir.1950).

On summary judgment, any permissible inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986). However, where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, disposition by summary judgment is appropriate. Id. at 587, 106 S.Ct. at 1356; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986).

II.

In disputing its withdrawal liability to the Pension Fund, Centra makes two related claims: (1) that M & D was the only source of Centra's liability to the Fund, and that therefore M & D's discharge in bankruptcy also discharged Centra; and (2) that Centra was not an "employer" for MPPAA purposes because Centra purchased the stock of the reorganized debtor M & D after confirmation of the plan, free and clear of all pre-confirmation liability. We find...