Connors v. Ryan's Coal Co., Inc.

• Decision Date: 06 February 1991
• Docket Number: No. 89-7046,89-7046
• Citation: 923 F.2d 1461
• Parties: 13 Employee Benefits Ca 1433 Joseph P. CONNORS, Sr., Donald E. Pierce, Jr., William Miller, William B. Jordan, and Paul R. Dean, as Trustees of the United Mine Workers of America 1950 Pension Plan, and 1974 Pension Plan, Plaintiffs-Appellees, v. RYAN'S COAL COMPANY, INC., a corporation; Alan's Coal Sales, a partnership; Simmons Equipment Co., Inc., a corp.; Simmons Machinery, Inc., a corporation; Berry Mountain Mining Co., Inc., a corp.; George M. Simmons, an individual; and George Alan Simmons, an individual, Defendants, Janice Simmons, an individual, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1461

923 F.2d 1461

13 Employee Benefits Ca 1433

Joseph P. CONNORS, Sr., Donald E. Pierce, Jr., William

Miller, William B. Jordan, and Paul R. Dean, as Trustees of

the United Mine Workers of America 1950 Pension Plan, and 1974 Pension Plan, Plaintiffs-Appellees, v. RYAN'S COAL COMPANY, INC., a corporation; Alan's Coal

Sales, a partnership; Simmons Equipment Co., Inc., a corp.;

Simmons Machinery, Inc., a corporation; Berry Mountain

Mining Co., Inc., a corp.; George M. Simmons, an

individual; and George Alan Simmons, an individual, Defendants,

Janice Simmons, an individual, Defendant-Appellant.

No. 89-7046.

United States Court of Appeals, Eleventh Circuit.

Feb. 6, 1991.

William H. Mills, Gerald L. Miller, Redden, Mills & Clark, Birmingham, Ala., for defendant-appellant.

Patrick K. Nakamura, Longshore, Nakamura & Quinn, Birmingham, Ala., and United Mine Workers of America Health and Retirement Funds, Margaret M. Topps, Kathleen M. Dowd, David W. Allen, Washington, D.C., for plaintiffs-appellees.

Appeal from the United States District Court for the Northern District of Alabama.

Before TJOFLAT, Chief Judge, CLARK, Circuit Judge and SMITH ^*, Senior Circuit Judge.

EDWARD S. SMITH, Senior Circuit Judge:

Alan's Coal Sales (Alan's) ceased operations and defaulted on its payments to the United Mine Workers Pension Fund. After Alan's failed to take steps under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) ¹ to obtain arbitration, the pension fund trustees brought an action for enforcement under 29 U.S.C. Sec. 1451 in the United States District Court for the Northern District of Alabama. The court struck the defendants' timely jury demand and proceeded to find the entities under common control with Alan's jointly and severally liable for Alan's withdrawal liability. Appellant Janice Simmons first argues that the district court's decision to strike the jury demand on authority of the mandatory arbitration provisions of the MPPAA violated her Seventh Amendment rights. Appellant next asserts that the district court improperly held her to be a partner in a cattle farm operation which was a member of a controlled group with the signatory employer Alan's. We agree with the district court's disposition of the jury trial issue and hold that its findings on the partnership question are amply supported by the evidence. The judgment is affirmed.

Statutory Framework

The MPPAA was enacted in 1980 as an amendment to the then existing Employee Retirement Income Security Act of 1974 (ERISA), ² which Congress enacted to regulate employee benefit plans. Under ERISA, the Pension Benefit Guaranty Corporation (PBGC), a government corporation, protects covered employees by insuring their benefits against fund insolvency or premature termination. The PBGC's program receives no general revenue proceeds and is financed exclusively by premiums collected from pension funds. ³

The original version of ERISA had imposed no withdrawal liability on a contributor to a multiemployer plan except when the entire plan terminated within five years of the employer's withdrawal, and even then the employer's liability was limited to 30% of the employer's net worth. ⁴ The PBGC reported to Congress that the premiums paid to it were insufficient to cover its expected future liabilities; ERISA's contingent liability provisions gave employers an incentive to withdraw from financially weak multiemployer plans to avoid liability if the plan terminated in the future. ⁵ In response to this threat to the continued viability of the PBGC Congress enacted the MPPAA in 1980. ⁶ The MPPAA sought to discourage voluntary withdrawals from multiemployer plans by imposing a mandatory liability on all withdrawing employers. The basic concept of the provision is that each employer, in addition to the contributions to the plan pursuant to collective bargaining agreements, owes a share of the unfunded vested liability of the plan to its beneficiaries. ⁷ The withdrawing employer must pay its share even if the plan does not terminate.

At the heart of the MPPAA's regime are provisions for informal, expeditious resolution of withdrawal liability disputes. ⁸ A withdrawal occurs when an employer ceases to have an obligation to contribute under a plan or ceases all operations covered under the plan. ⁹ Upon withdrawal the trustees of the multiemployer fund must promptly determine the amount of liability pursuant to a statutory formula, ¹⁰ formulate a payment schedule, and notify the employer of the resulting assessment and schedule. ¹¹ Within 90 days of the notification the employer may request that the sponsor review its determination. ¹² If either party is dissatisfied with the outcome of the review, the MPPAA mandates arbitration proceedings. ¹³ After arbitration, or if no arbitration proceeding has been initiated, either party may bring an action in federal district court "to enforce, vacate, or modify the arbitrator's award." ¹⁴ The employer is required to make interim payments to the fund until the dispute is resolved by the arbitrator or through judicial review. ¹⁵ Any failure to make such payments as outlined in the Act results in default; in the event of a default the plan sponsor may require immediate payment of the outstanding amount of an employer's withdrawal liability. ¹⁶

Background

George Simmons and members of his family owned interests in several different enterprises which mined coal and serviced the coal mining industry. One of the mining concerns, Ryan's Coal Company (Ryan's), was a signatory to the National Bituminous Coal Wage Agreements of 1979, 1981 and 1984. Under the agreements Ryan's was a participating member in the United Mine Workers of America (UMW) Pension Plans and was obligated to contribute to the plans on behalf of its employees. In March of 1985 Ryan's ceased covered operations under the plans and thereby became subject to withdrawal liability under the provisions of the MPPAA.

The trustees of the 1950 and 1974 UMW pension funds assessed withdrawal liability against Ryan's by a notice and demand letter to George Simmons ¹⁷ dated September 30, 1985. The letter set forth a payment schedule, notified Simmons of his rights to arbitration, and outlined the consequences of default. The letter also discussed, in a section entitled "Persons Liable", the potential joint and several liability of all businesses under common control with Ryan's. Simmons was advised to consult an attorney for advice on the ERISA controlled group rules. Unfortunately, Ryan's and the other entities allegedly controlled by Simmons failed to request review or initiate arbitration as provided by the MPPAA. Ryan's also failed to comply with the payment schedule, so the company was technically in "default" as that term is defined in the MPPAA; consequently, under the statute, the entire outstanding withdrawal liability was due and payable at the option of the trustees.

The trustees then filed an action under 29 U.S.C. Secs. 1132(a)(3), 1451(a)(1) and 1451(b) of ERISA in U.S. District Court against Alan's Coal Sales ¹⁸ and other Simmons family enterprises for collection of the unpaid withdrawal liability. The trustees sought liability against George Simmons and Alan Simmons on the basis of the alter ego finding affirmed in Combs v. Ryan's Coal Co. ¹⁹ and their various interests in the operation of Alan's. Other corporate defendants, Simmons Equipment Co., Simmons Machinery, and Berry Mountain Mining Co., were alleged to be liable for withdrawal liability as members of a group of trades or businesses under common control of the signatory employer. ²⁰ The trustees asserted that the wife of George Simmons, Janice Simmons, was liable for the delinquent withdrawal liability payments based on her partnership interest in a cattle farm jointly owned with her husband. The farm operation was alleged to be an additional member of the group of trades or businesses under common control with the other Simmons family enterprises.

The district court found all the corporate defendants and the cattle farm to be part of a controlled group with the signatory employer Alan's. A judgment was entered finding all the individual and corporate defendants jointly and severally liable to the 1950 and 1974 pension plans for Alan's outstanding withdrawal liability obligation. Defendant Janice Simmons takes issue with several of the district court's legal conclusions with respect to her interests in the cattle farm operation and appeals from the judgment entered against her.

Issues

I. In view of the MPPAA's mandatory arbitration provisions the district court struck appellant's timely jury demand in the pre-trial order. Did the court's action violate appellant's rights to a jury trial under the Seventh Amendment?

II. As noted above, the district court held that the Simmons cattle farm was a member of the control group with signatory employer Alan's Coal Sales. Appellant does not take issue with this finding, but instead contends that the court erred in finding her individually liable to the trustees based on her interest in the cattle farm operation.

A. Initially the court found appellant liable to the trustees based on her interest as a partner or joint venturer in the cattle farm operation. Is the court's determination of the existence of a partnership supported by the evidence?

B. As an alternative ground of liability the court found appellant to be a co-owner of the trade or business which owned the farm land and leased it to the cattle farming operation. Did the court err by finding that appellant's activities constituted a trade or business under the ERISA controlled group provisions?

I.

The MPPAA requires entities challenging assessments of withdrawal liability to do so in an arbitration proceeding. Although district court review of the arbitration decision is available under the provisions of the Act, a de novo trial with a jury is not. In the present case the defendants ...