Board of Trustees of Western Conference of Teamsters Pension Trust Fund v. Thompson Bldg. Materials, Inc.

• Decision Date: 09 May 1984
• Docket Number: No. 83-5893,83-5893
• Citation: 749 F.2d 1396
• Parties: 6 Employee Benefits Ca 1233 BOARD OF TRUSTEES OF the WESTERN CONFERENCE OF TEAMSTERS PENSION TRUST FUND, Plaintiff-Appellee, v. THOMPSON BUILDING MATERIALS, INCORPORATED, a California Corporation, Defendant- Appellant. . Submitted *
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1396

749 F.2d 1396

6 Employee Benefits Ca 1233

BOARD OF TRUSTEES OF the WESTERN CONFERENCE OF TEAMSTERS PENSION TRUST FUND, Plaintiff-Appellee, v. THOMPSON BUILDING MATERIALS, INCORPORATED, a California Corporation, Defendant- Appellant.

No. 83-5893.

United States Court of Appeals Ninth Circuit.

Submitted ^* May 9, 1984.

Decided Dec. 27, 1984.

Kirke M. Hasson, Pillsbury, Madison & Sutro, San Francisco, Cal., for plaintiff-appellee.

David P. Strauss, Law offices of Roger A. Saevig, Irvine, Cal., Herbert A. Moss, Santa Ana, Cal., for defendant-appellant.

On appeal from the United States District Court for the Central District of California.

Before HUG ^**, TANG and BOOCHEVER, Circuit Judges.

BOOCHEVER, Circuit Judge:

Thompson Building Materials, Inc. (Thompson), appeals summary judgment by the district court in an action under the Multiemployer Pension Plan Amendments Act of 1980. The court held that Thompson was liable to the Western Conference of Teamsters Pension Fund (the Fund) for $103,156.52 in withdrawal liabilities, and for additional amounts in interest, liquidated damages and costs.

Thompson mounts a broad constitutional attack on the Act's statutory withdrawal liability provisions, contending that the Act is unconstitutional on grounds that it (1) impairs contractual obligations, (2) denies Thompson an impartial tribunal, (3) denies a meaningful hearing, (4) denies access to the courts, and (5) constitutes a taking without compensation. Thompson also argues for an exception to withdrawal liability where an employer's withdrawal is involuntary and caused by the union.

We reject Thompson's constitutional challenges to the statute and its argument for an exception, and affirm the district court's ruling.

Statutory Background

Title IV of the Employment Retirement Income Security Act (ERISA) of 1974, 29 U.S.C. Secs. 1301 et seq., established a system of insurance to protect employees' interests in accrued pension benefits in the event that their pension plan failed or terminated with insufficient funds. The program is administered by the Pension Benefit Guarantee Corporation (PBGC), a governmental entity, and is funded by premium payments from the pension plans. 29 U.S.C. Sec. 1306.

As originally enacted, ERISA allowed the PBGC, in its discretion, to underwrite certain nonforfeitable benefits if a terminating multiemployer plan lacked sufficient funds. 29 U.S.C. Sec. 1361. ¹ The PBGC could recover amounts it expended in proportionate shares from the employers, provided certain contingencies were met. Specifically, liability was dependent upon the PBGC's decision to exercise its discretion to make the expenditure and upon the employer's having contributed to the fund within the five year period immediately preceding termination. In addition, no individual employer's liability could exceed thirty percent of that employer's net worth. 29 U.S.C. Sec. 1364.

In 1980, Congress enacted the Multiemployer Pension Plan Amendments Act (MPPAA), Pub.L. No. 96-364, 94 Stat. 1208 (1980) in response to the PBGC's advice that the contingent liability provisions of ERISA gave employers an incentive to withdraw from multiemployer plans. The MPPAA required withdrawing employers to pay to the multiemployer fund a proportionate share of the fund's "unfunded vested benefit liability." 29 U.S.C. Sec. 1381. The "unfunded vested benefit liability" measures the shortfall in the fund's assets. The fund's "vested benefit liability" is the actuarial present cash value of all of the benefits that have vested. If the pension fund has insufficient assets to cover its vested benefit liability, the difference between the assets and the liability is the "unfunded vested benefit liability."

The fund's trustees have initial responsibility to determine the employer's allocable share of the unfunded vested benefit liability and to collect the amounts due. 29 U.S.C. Sec. 1382. The Act sets out several different methods of calculating the withdrawal liability, 29 U.S.C. Sec. 1391, and also allows the trustees, with PBGC approval, to design their own methods, 29 U.S.C. Sec. 1391(c)(5)(A). Disputes between the employer and the trustees regarding the amounts assessed must be resolved initially by arbitration. 29 U.S.C. Sec. 1401(a)(1). In the arbitration proceedings, the trustees' calculations are presumed correct, unless the employer shows by a preponderance of the evidence "that the determination was unreasonable or clearly erroneous." 29 U.S.C. Sec. 1401(a)(3)(A). The arbitrator's award in turn is subject to review by the courts, 29 U.S.C. Sec. 1401(b)(2), although the arbitrator's findings of fact are presumed correct unless rebutted by a clear preponderance of the evidence, 29 U.S.C. Sec. 1401(c).

FACTS

The essential facts are undisputed. Prior to December 2, 1980, Thompson participated in the Western Conference of Teamsters Pension Plan (the Plan) and was required to contribute to the Fund on behalf of its employees. On December 2, Thompson ceased its contributions, allegedly because Teamsters Local 952 notified Thompson that it disclaimed any further interest in representing Thompson's employees. ² Thompson argues that continued contributions to the Fund would have violated 29 U.S.C. Sec. 186(c)(5). ³

The Fund notified Thompson that Thompson was liable for $103,156.53 as its portion of the Fund's unfunded vested benefit liability. Thompson demanded arbitration of its liability to the Fund, but did not request a reconsideration by the Fund of its calculations or take the other steps required by the Act to initiate arbitration. ⁴ Despite a subsequent notice by the Fund, Thompson failed to pay the assessed liability, and the Fund brought this action under 29 U.S.C. Sec. 1401(b)(1) to collect the amounts owing. The district court granted the Fund summary judgment.

On appeal, Thompson challenges the constitutionality of the MPPAA's withdrawal liability provisions. Thompson also argues that the courts should establish an exception to such liability where the employer's withdrawal was involuntary and caused by union action.

DISCUSSION

I. Constitutionality of the MPPAA

This is the second time that the question of the MPPAA's constitutionality has come before this court. In Shelter Framing Corp. v. Pension Benefit Guaranty Corp., 705 F.2d 1502 (9th Cir.1983), vacated and remanded sub nom., Carpenters Pension Trust v. Shelter Framing, --- U.S. ----, 104 S.Ct. 3550, 82 L.Ed.2d 853 (1984), a panel of this court held unconstitutional a provision of the MPPAA that imposed withdrawal liability retroactively on employers who withdrew from multiemployer pensions prior to passage of the Act. The Supreme Court subsequently vacated our decision in Shelter Framing and remanded for reconsideration in light of the Court's decision in Pension Benefit Guaranty Corp. v. R.A. Gray & Co., --- U.S. ----, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984), in which the Court upheld as constitutional the retroactive provisions that this court had held invalid in Shelter Framing. Both R.A. Gray and Shelter Framing, however, expressly limited their holdings to the retroactive provisions of the Act. See R.A Gray, 104 S.Ct. at 2717 n. 7; Shelter Framing, 705 F.2d at 1514-15. Thompson's withdrawal in the instant case occurred on December 2, 1980, subsequent to enactment of the MPPAA, and consequently R.A. Gray is not controlling.

We also note that several other circuits have addressed most of the constitutional arguments Thompson raises and with one exception have upheld the Act against constitutional attack. See The Washington Star Co. v. International Typographical Union Negotiated Pension Plan, 729 F.2d 1502 (D.C.Cir.1984) (hereinafter The Washington Star ); Textile Workers Pension Fund v. Standard Dye & Finishing Co., 725 F.2d 843 (2d Cir.), cert. denied, --- U.S. ----, 104 S.Ct. 3554, 82 L.Ed.2d 856 (1984) (hereinafter Standard Dye ); Peick v. Pension Benefit Guaranty Corp., 724 F.2d 1247 (7th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 3554, 82 L.Ed.2d 855 (1984) (hereinafter Peick ); Republic Industries, Inc. v. Teamsters Joint Council, 718 F.2d 628 (4th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 3553, 82 L.Ed.2d 855 (1984) (hereinafter Republic Industries ): But see Keith Fulton & Sons, Inc. v. New England Teamsters and Trucking Industry Pension Fund, 741 F.2d 451 (1st Cir.1984) (hereinafter Keith Fulton ) (holding unconstitutional the presumption of correctness accorded the trustees' calculations on grounds of due process). With these decisions in mind, we review Thompson's constitutional contentions.

A. Due Process and Impairment of Contract

Thompson contends that the MPPAA violates due process by imposing on Thompson financial liabilities for withdrawal from the Plan that it neither contemplated nor agreed to in its collective bargaining agreement with the Teamsters. Central to Thompson's argument is its belief that the due process clause of the fifth amendment restricts Congress from impairing contractual obligations to the same extent that the contract clause restricts state governments. U.S. Const. art. I, Sec. 10, cl. 1. The Supreme Court in R.A. Gray, however, expressly rejected this argument. R.A. Gray, 104 S.Ct. at 2720. The Court reaffirmed that, for purposes of due process analysis, economic legislation comes to the court "with a presumption of constitutionality, and the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way." ⁵ [citations omitted] Id. at 2717-18, quoting Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15, 96 S.Ct. 2882, 2892, 49 L.Ed.2d 752 (1976). Economic legislation does not automatically violate due process simply because it upsets settled monetary expectations. Usery v. Turner Elkhorn Mining Co., 428 U.S. at 15-16, 96 S.Ct. at 2892-2893 (1976). To assess the rationality of the MPPAA, we first must examine the problems that ...