Board of Trustees v. Bes Servs. Inc.

• Decision Date: 29 November 2006
• Docket Number: No. 05-1634.,05-1634.
• Citation: 469 F.3d 369
• Parties: BOARD OF TRUSTEES, SHEET METAL WORKERS' NATIONAL PENSION FUND, Plaintiff-Appellee, v. BES SERVICES, INCORPORATED, formerly known as International Visual Corporation of N.Y., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

469 F.3d 369

BOARD OF TRUSTEES, SHEET METAL WORKERS' NATIONAL PENSION FUND, Plaintiff-Appellee, v. BES SERVICES, INCORPORATED, formerly known as International Visual Corporation of N.Y., Defendant-Appellant.

No. 05-1634.

United States Court of Appeals, Fourth Circuit.

Argued: September 19, 2006.

Decided: November 29, 2006.

ARGUED: Jason Herbert Ehrenberg, Bailey & Ehrenberg, P.L.L.C., Washington, D.C., for Appellant. Marc H. Rifkind, Slevin & Hart, Washington, D.C., for Appellee. ON BRIEF: C. Wayne Owen, Jr., Slevin & Hart, Washington, D.C., for Appellee.

Before NIEMEYER, Circuit Judge, HAMILTON, Senior Circuit Judge, and HENRY F. FLOYD, United States District Judge for the District of South Carolina, sitting by designation.

Affirmed by published opinion. Judge NIEMEYER wrote the opinion, in which Senior Judge HAMILTON and Judge FLOYD joined.

OPINION

NIEMEYER, Circuit Judge:

After BES Services, Inc., sold all of its assets in March 2002 and ceased being obligated to contribute to the Sheet Metal Workers' National Pension Fund ("the Pension Fund"), the Pension Fund assessed BES with withdrawal liability of $175,833 under the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. § 1381 et seq., which amended the Employee Retirement Income Security Act of 1974 ("ERISA"). After paying $22,620 of the assessment, BES declined to make further payments, even though it did not seek arbitration to dispute the Pension Fund's assessment, as would be mandated by 29 U.S.C. § 1401(a)(1) for resolution of such disputes.

The Pension Fund commenced this action to collect the remainder of BES's withdrawal liability and filed a motion for summary judgment. In response, BES claimed that it was entitled to a reduction of its withdrawal liability by reason of the limitations on such liability afforded by 29 U.S.C. § 1405 because (1) it sold all of its assets to an "unrelated" party, and its liquidation value, after the sale, was less than $2 million, entitling it to an assessment of only 30 percent of its gross withdrawal liability, see id. § 1405(a); or (2) after the sale of assets, it was "an insolvent employer undergoing liquidation or dissolution and therefore entitled to a 50 percent reduction of its liability," see id. § 1405(b).

Concluding that BES waived its right to challenge the amount of withdrawal liability by not pursuing arbitration under § 1401, the district court granted the Pension Fund's motion for summary judgment in the full amount of the assessment, less the payment made, plus interest and liquidated damages. The court also awarded the Pension Fund attorneys fees of $30,000.

We conclude that, despite BES's statutory argument—that § 1405 is not one of the sections explicitly referenced in § 1401 (the mandatory arbitration provision)— consideration of the limitations of § 1405 is required in making a "determination" of withdrawal liability under §§ 1381 and 1391, which are explicitly subject to § 1401's arbitration requirement, and therefore issues arising under § 1405 are subject to § 1401's arbitration requirement as well. We also reject BES's argument that the issue before us is solely a legal issue of statutory construction that is exempt from § 1401's arbitration requirement. Accordingly, we affirm.

I

BES, a New York corporation owned by Bernard E. Shuman, was formerly known as International Visual Corporation of N.Y. and was engaged in the business of manufacturing store displays. Pursuant to its collective bargaining agreement with the Sheet Metal Workers' International Association Local Union No. 137, BES was obligated to contribute to the Sheet Metal Workers' National Pension Fund, a multiemployer pension plan governed by the MPPAA.

On March 29, 2002, BES entered into an agreement to sell all of its assets to International Visual Corporation of Canada Inc., a Canadian corporation, for $3.98 million. At closing, BES was paid $1.45 million and the remainder of the purchase price was attributed to the Canadian corporation's assumption of BES's accounts payable. Shuman testified by affidavit that following closing, he and BES paid the Canadian corporation roughly $980,000 for additional liabilities and adjustments.

Following the sale, the Pension Fund assessed BES with withdrawal liability imposed by 29 U.S.C. § 1381 in the amount of $175,832.56. BES made one payment in July 2003 of $22,620.08 toward discharging this liability. When BES failed to make any further payments, however, the Pension Fund commenced this action to collect the balance, as well as interest, liquidated damages, and attorneys fees.

In response to the Pension Fund's motion for summary judgment, BES claimed that it was entitled to a reduction of its withdrawal liability, as authorized by § 1405, due to (1) the sale of its assets, and (2) its insolvency. BES presented evidence of the agreement for the sale of its assets, its income tax return filed following the sale of assets, and evidence of the subsequent payments made to the Canadian corporation for various additional liabilities and adjustments.

The district court refused to consider making the claimed reductions because BES "was required to arbitrate the issue of whether its withdrawal liability could be reduced or limited under 29 U.S.C. § 1405." Accordingly, the court entered judgment in favor of the Pension Fund in the amount that it claimed. This appeal followed.

II

BES contends that it is entitled to have a federal court grant the reductions of withdrawal liability afforded by 29 U.S.C. § 1405 and that it need not proceed first to arbitration because § 1405 is not one of the provisions of the MPPAA that is explicitly made subject to mandatory arbitration by § 1401. While § 1401(a)(1) subjects disputes under "sections 1381 through 1399" to arbitration, it makes no reference to § 1405, by which BES seeks to limit its withdrawal liability. BES argues:

Under the doctrine of expressio unius est exclusio[] alterius, one can logically conclude from the omission of Section [1405] in Section 1401(a)(1)'s arbitration provision that Congress did not intend that disputes arising under [1405](a) or (b) of ERISA would be subject to the aforementioned arbitration requirement.

It requests that we remand this case to the district court to determine the amount of withdrawal liability, taking into consideration the limitations of liability described in § 1405.

Thus, the issue presented is whether a claim to the reductions in withdrawal liability authorized by 29 U.S.C. § 1405 must be arbitrated by reason of the mandatory arbitration provision in § 1401(a).

Section 1401(a)(1) provides:

Any dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under sections 1381 through 1399 of this title shall be resolved through arbitration. Either party may initiate the arbitration proceeding within a 60-day period [after specified dates].

As BES points out, § 1405 is conspicuously absent from the list of sections that § 1401(a)(1) explicitly subjects to mandatory arbitration.

Without looking further, the failure of § 1401(a) to reference § 1405 might suggest that parties may proceed directly to federal court, without first initiating arbitration proceedings, to resolve disputes over whether to limit an employer's withdrawal liability under § 1405.

Additionally, § 1405 is explicitly referred to further on in § 1401. Section 1401(a)(3) provides that "any determination made by a plan sponsor under sections 1381 through 1399 of this title and section 1405 of this title is presumed correct" in any arbitration proceeding. 29 U.S.C. § 1401(a)(3)(A) (emphasis added). The inclusion of § 1405 in this provision might suggest that its exclusion from § 1401(a)(1) was meaningful. "Where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." INS v. Cardoza-Fonseca, 480 U.S. 421, 432, 107 S.Ct. 1207, 94 L.Ed.2d 434 (1987) (citations omitted). This is especially true when the disparate exclusion and inclusion are only lines away from each other.

On the other hand, the inclusion of a reference to § 1405 in § 1401(a)(3)(A) might mean that § 1405 considerations must be taken into account during arbitration proceedings. Indeed, a closer look at the entire MPPAA removes all doubt and leads decisively to the conclusion that the limitations in § 1405 must be considered in making a "determination" under §§ 1381 through 1399, which are themselves subject to mandatory arbitration.

The analysis is straightforward. Section 1401(a)(1), which requires arbitration, refers to determinations "made under sections 1381 through 1399." In turn, § 1381, which is clearly subject to arbitration, creates withdrawal liability and establishes its amount, stating:

If an employer withdraws from a multiemployer plan in a complete withdrawal or partial withdrawal, then the employer is liable to the plan in the amount determined under this part [§§ 1381-1405] to be the withdrawal liability.

29 U.S.C. § 1381(a). Subsection (b) fixes the amount of withdrawal liability, stating:

The withdrawal liability of an employer to a plan is the amount determined under section 1391 of this title to be the allocable amount of unfunded vested benefits, adjusted ... in accordance with section 1405 of this title.

Id. § 1381(b) (emphasis added). Thus, any determination of withdrawal liability under § 1381 must take into consideration an employer's sale of assets or insolvency under § 1405. Indeed, a § 1381 determination of withdrawal liability cannot be accomplished in accordance with the statutory mandate unless it is "adjusted" in accordance with § 1405. See id. § 1381(b)(1)(D). Since consideration of § 1405 is a necessary step in determining withdrawal liability under § 1381, disputes arising under §...