Caesars Entm't Corp. v. Int'l Union of Operating Eng'rs Local 68 Pension Fund

• Citation: 932 F.3d 91
• Decision Date: 01 August 2019
• Docket Number: No. 18-2465,18-2465
• Parties: CAESARS ENTERTAINMENT CORPORATION v. INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 68 PENSION FUND, Appellant
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

932 F.3d 91

CAESARS ENTERTAINMENT CORPORATION

v.INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 68 PENSION FUND, Appellant

No. 18-2465

United States Court of Appeals, Third Circuit.

Argued on April 2, 2019

Filed: August 1, 2019

Michael T. Scaraggi [Argued], Oransky Scaraggi Borg & Abbamonte, 175 Fairfield Avenue, Suite 1-A, West Caldwell, New Jersey 07006, Attorney for Appellant

James E. Tysse [Argued], Eric D. Field, Lawrence D. Levien, Pratik A. Shah, Raymond P. Tolentino, Akin Gump Strauss Hauer & Feld, 2001 K Street N.W., Washington, DC 20006, Brian T. Carney, Stephanie L. Lindemuth, Akin Gump Strauss Hauer & Feld, One Bryant Park, Bank of America Tower, New York, NY 10036, Attorneys for Appellee

Before: CHAGARES, HARDIMAN, and SILER,^* Circuit Judges.

OPINION OF THE COURT

HARDIMAN, Circuit Judge.

To safeguard private pensions, Congress enacted the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U.S.C. § 1001 et seq. Six years later, Congress tried to shore up multiemployer pension plans by passing the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), Pub. L. No. 96-364, 94 Stat. 1208. The MPPAA imposes liability on employers who withdraw from covered plans by ceasing contributions in whole or in part. This appeal involves one type of partial withdrawal, "bargaining out," which occurs when an employer "permanently ceases to have an obligation to contribute under one or more but fewer than all collective bargaining agreements under which the employer has been obligated to contribute ... but continues to perform work ... of the type for which contributions were previously required." 29 U.S.C. § 1385(b)(2)(A)(i) (ERISA § 4205(b)(2)(A)(i)).

I

The relevant facts are undisputed. Appellee Caesars Entertainment Corporation (CEC) once operated four casinos in Atlantic City: Caesars, Bally’s, Harrah’s, and Showboat. These comprised a "controlled group" under ERISA, with CEC being the "single employer" of the group. 29 U.S.C. § 1301(b)(1) (ERISA § 4001(b)(1)); accord 29 C.F.R. § 4001.2. CEC bargained with the International Union of Operating Engineers, Local 68 (the Union), for engineering work at all four casinos. Under their collective bargaining agreements with the Union, each casino had to contribute to the Union’s multiemployer pension fund (the Fund). The Fund had 259 contributing employers making some $14 million in annual payments. See Local 68 Engineers Union Pension Plan, Form 5500: FY 2013 Annual Return/Report of Employee Benefit Plan 2, 23 (2015).

In 2014, the Showboat casino closed, and CEC stopped contributing to the Fund for engineering work there. The other three casinos under CEC’s control remain open, and CEC continues to pay the Fund for their Union work. Showboat’s closure reduced CEC’s total contributions to the Fund by 17%—well below the MPPAA’s 70% threshold that would have automatically triggered liability for a partial withdrawal. See 29 U.S.C. §§ 1381, 1385(a)(1).

Although CEC was not automatically liable, the Fund claimed CEC was liable under the bargaining out provision of the MPPAA, which applies when an employer:

[1] permanently ceases to have an obligation to contribute under one or more but fewer than all collective bargaining agreements under which the employer has been obligated to contribute under the plan but [2] continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required or transfers such work to another location or to an entity or entities owned or controlled by the employer.

Id. § 1385(b)(2)(A)(i) (emphasis added); see id. § 1385(a)(2). CEC disagreed. So the parties went to arbitration, and CEC lost. The arbitrator held CEC had triggered both clauses [1] and [2] of the bargaining out provision. As relevant to this appeal, the arbitrator reasoned clause [2] applied because "[t]he type of work for which contributions were required at the closed Showboat is the same type of work currently being done at the remaining casinos." 2 App. 345.

The District Court reversed the arbitrator’s decision. Caesars Entm’t Corp. v. IUOE Local 68 Pension Fund , 2018 WL 3000176, at *1 (D.N.J. June 15, 2018). The Court assumed without deciding that, under clause [1], the jurisdiction of the Showboat CBA included all engineering work in Atlantic City. But it held that, under clause [2], liability exists only when an employer replaces (a) work that contributes to the pension fund with (b) "work—of the same sort—that does not." Id. at *8. Such replacement hadn’t occurred here because CEC’s "constituent members [aside from the shuttered Showboat] continue to contribute to the Fund for all engineering work they perform throughout Atlantic City." Id. at *9. To reach this conclusion, the Court relied on "authoritative guidance" from the Pension Benefit Guaranty Corporation (PBGC). Id. at *7. The Fund’s appeal followed.

II

The District Court had jurisdiction under 29 U.S.C. §§ 1401(b) and 1451(c). We have jurisdiction under 28 U.S.C. § 1291. We review the summary judgment that reversed the arbitral award de novo, and we apply the same standard required of the District Court. E.g. , Montanez v. Thompson , 603 F.3d 243, 248 (3d Cir. 2010), as amended (May 25, 2010). We thus review legal conclusions de novo but presume that the arbitrator’s factual findings are correct unless they are clearly erroneous. SUPERVALU, Inc. v. Bd. of Trs. of Sw. Pa. & W. Md. Area Teamsters & Emp’rs Pension Fund , 500 F.3d 334, 340 (3d Cir. 2007). Only legal conclusions are at issue here.

III

We agree with the District Court that the dispositive question is whether under § 1385(b)(2)(A)(i) "work ... of the type for which contributions were previously required" includes work of the type for which contributions are still required. The statutory text and PBGC guidance confirm that the answer is no.

A

"Under the MPPAA, an employer who withdraws from a multiemployer pension plan becomes obligated to pay a proportionate share of the plan’s unfunded vested benefits." Crown Cork & Seal Co. v. Cent. States Se. & Sw. Areas Pension Fund , 982 F.2d 857, 861 (3d Cir. 1992).

The MPPAA imposes this liability to counter the threat withdrawals pose to plan solvency. See Pension Ben. Guar. Corp. v. R.A. Gray & Co. , 467 U.S. 717, 722–23 & nn.2–3, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984).

The bargaining out provision at issue in this appeal typically applies when there is a change in union representation or the employer negotiates out of an obligation to contribute to a plan. See, e.g. , ABA Section of Labor & Emp’t Law, Employee Benefits Law 17.III.B (4th ed. 2017 & Supp. 2018). Neither of those things happened here, but the Fund claims CEC continues to perform "work ... of the type for which contributions were previously required," 29 U.S.C. § 1385(b)(2)(A)(i), because engineering work continues at Caesars, Bally’s, and Harrah’s. On the Fund’s view, it is irrelevant that CEC still must contribute to the Plan for the work performed by Union members at those three casinos.

We disagree. "[W]ork ... of the type for which contributions were previously required" means "work ... of the type for which contributions are no longer required." Two features of the text stand out. First, "previously" connotes something that is no longer the case. In arriving at this conclusion, we give "previously" its ordinary meaning at the time Congress enacted the relevant provision. E.g. , New Prime Inc. v. Oliveira , ––– U.S. ––––, 139 S. Ct. 532, 539, 202 L.Ed.2d 536 (2019). Around the time of the MPPAA’s enactment, dictionary definitions of "previous" and its adverbial form included "coming or occurring before something else; prior: the previous owner ." The Random House Dictionary of the English Language 1535 (2d unabr. ed. 1987); see also The Oxford English Dictionary 1340 (2d ed. 1989) (defining "previously" as "at a previous or preceding time; before, beforehand, antecedently"); Black’s Law Dictionary 1070 (5th ed. 1979) (defining "previous" as "antecedent; prior; before"). Similarly, the largest structured corpus of historical English shows that the word’s most common synonyms in the 1970s–80s were "before" (the synonym used roughly 86% of the time), "earlier" (12%), and "formerly" (1%). See Corpus of Historical American English, BYU, https://www.english-corpora.org/coha/ (last visited May 3, 2019); see also Muscarello v. United States , 524 U.S. 125, 129, 118 S.Ct. 1911, 141 L.Ed.2d 111 (1998) (using "crude[ ]" corpus linguistics to interpret what it means to "carry" a gun); Thomas R. Lee & Stephen C. Mouritsen, Judging Ordinary Meaning, 127 Yale L.J. 788 (2018) (explaining and applying modern corpus linguistics).¹ The corpus also shows that the words that most often co-occurred with "previously" (a.k.a. collocates) were "had" (35%) and "been" (15%)—perfect tense verbs that connote completed action. See, e.g. , Carr v. United States , 560 U.S. 438, 448, 130 S.Ct. 2229, 176 L.Ed.2d 1152 (2010). So to say something is "previously required" is to suggest it is no longer required.

Second, the canon against surplusage confirms that "previously" means "no longer required." See, e.g. , Advocate Health Care Network v. Stapleton , ––– U.S. ––––, 137 S. Ct. 1652, 1659, 198 L.Ed.2d 96 (2017) (applying the canon elsewhere in ERISA). If Congress had meant to adopt the Fund’s interpretation, it could have omitted "previously" to no effect. The provision would have targeted work "for which contributions were [ ] required." Because that’s not what Congress wrote, we give "previously" some meaning. And that meaning tracks what we’ve learned from dictionaries and corpus linguistics.

For these reasons, the best reading of "work ... of the type for which contributions were previously required" excludes work of the type for which contributions are still required. To hold otherwise would put us in conflict with our sister courts’ interpretation of identical language in...