Delta SS Lines v. NEW YORK SHIPPING ASS'N, ETC.

• Decision Date: 05 April 1988
• Docket Number: No. 85 CIV. 10007 (PKL).,85 CIV. 10007 (PKL).
• Citation: 688 F. Supp. 1560
• Parties: DELTA STEAMSHIP LINES, INC., Plaintiff, v. NEW YORK SHIPPING ASSOCIATION, INTERNATIONAL LONGSHOREMEN'S ASSOCIATION PENSION TRUST FUND, and the Board of Trustees of the New York Shipping Association-International Longshoremen's Association Pension Trust Fund, Defendants.
• Court: U.S. District Court — Southern District of New York

688 F. Supp. 1560

DELTA STEAMSHIP LINES, INC., Plaintiff, v. NEW YORK SHIPPING ASSOCIATION, INTERNATIONAL LONGSHOREMEN'S ASSOCIATION PENSION TRUST FUND, and the Board of Trustees of the New York Shipping Association-International Longshoremen's Association Pension Trust Fund, Defendants.

No. 85 CIV. 10007 (PKL).

United States District Court, S.D. New York.

April 5, 1988.

Gibson, Dunn & Crutcher, New York City (Stephen E. Tallent, Richard L. Dashefsky, Jonathan L. Sulds, Paul D. Inman, M. Chinta Gaston, of counsel), for plaintiff.

Lambos, Flynn, Nyland & Giardino (C.P. Lambos, Donato Caruso, of counsel), Thomas W. Gleason, Ernest L. Mathews, Jr., New York City, for defendants.

OPINION AND ORDER

LEISURE, District Judge:

Plaintiff, Delta Steamship Lines, Inc. ("Delta"), has brought this action seeking a declaratory judgment that it is not an "employer" subject to pension withdrawal liability under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461, as amended by the Multiemployer Pension Plan Amendments Act ("MPPAA"), 29 U.S.C. § 1381, et seq. Defendants New York Shipping Association-International Longshoremen's Association Pension Trust Fund and its trustees ("the pension plan") contend that Delta is an "employer" and counterclaim for the amount of Delta's withdrawal liability. The parties have cross-moved for summary judgment.

BACKGROUND

From 1978 to 1983, Delta Steamship Lines was engaged in steamship carrier operations at the Port of New York. Delta did not operate its own marine terminal facility at the port; instead, Delta engaged a stevedoring company, which utilized longshoremen to service Delta's vessels.

Throughout its tenure at the Port, Delta was a member of the Carriers Container Council ("CCC"), a regional shipping association representing vessel carriers operating in ports from Maine to Texas. Delta was also a member of the local New York Shipping Association ("NYSA"). As a member of the CCC and the NYSA, Delta was a signatory to two collective bargaining agreements with the International Longshoremen's Association ("ILA"): first, a coastwide "master contract", and second, a local New York labor agreement, known as the General Cargo Agreement ("GCA"). See Affidavit of Richard O'Neill, Executive Vice President of the New York Shipping Association, Sworn to on March 18, 1986 ("O'Neill Aff."), Exhibit 2. These two agreements reflected the two-tier structure in longshore collective bargaining.

On the regional level, the ILA negotiated the master contract with a combined group composed of the NYSA, its counterpart employer associations in local ports from Maine to Texas, and the CCC. This master contract fixed the general terms of employment which applied uniformly in every ILA port in the eastern region of the United States. The carriers promised to employ only ILA-represented longshore labor to work their ships. The carriers also committed themselves to pay "job security program assessments" to offset shortfalls in contributions to longshore pension, welfare, and trust funds.

On the local level, the New York General Cargo Agreement covered local terms and conditions of employment, including guaranteed annual income, seniority, hiring practices, safety, vacation, holidays, pension and welfare benefits, and other matters of local concern. The New York General Cargo Agreement also required the steamship carriers to pay certain assessments, which provided funds for longshoremen fringe benefits and retirement programs. From 1974 to 1985, the assessments were based solely on tonnage.¹ The assessments were paid by the carriers to the NYSA, and the bulk of the assessment monies were then placed in the NYSA-ILA Fringe Benefits Escrow Fund. The portion of the assessment monies to be used for pension plan contributions, however, was paid directly by the NYSA to the pension plan. The total annual amount of contributions to be paid to the pension plan was fixed by the New York General Cargo Agreement at a guaranteed minimum level, which was actuarially determined to ensure that adequate funds to provide retirement benefits would accrue over an extended period of time.

For the period during which Delta engaged in steamship operations in New York, Delta paid assessments based on the tonnage of cargo loaded and unloaded from its ships. After Delta discontinued its operations in New York in 1983, the pension plan attempted to obtain withdrawal liability payments from Delta pursuant to the provisions of the MPPAA.

Delta seeks summary judgment on its claim that it is not an "employer" subject to MPPAA withdrawal liability. Delta has also separately made a demand, pursuant to 29 U.S.C. § 1401, for arbitration to determine the amount of withdrawal liability in the event this Court finds Delta is an MPPAA "employer".²

DISCUSSION

When Congress enacted ERISA in 1974, one of its principal purposes "was to ensure that employees and their beneficiaries would not be deprived of anticipated benefits by the termination of pension plans before sufficient funds have been accumulated in the plans." Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 720, 104 S.Ct. 2709, 2713, 81 L.Ed.2d 601 (1984). Toward this end, Congress created the Pension Benefit Guaranty Corporation ("PBGC"), a wholly owned government corporation under the auspices of the Department of Labor. The PBGC collects insurance premiums from covered pension plans, and provides benefits to participants in those plans which terminate with insufficient assets to support guaranteed benefits. Id.

In July 1978, the PBGC issued a congressionally mandated report which analyzed certain problems facing multiemployer pension plans.³ The report concluded that ERISA, as originally enacted, was not adequately protecting multiemployer plans from the adverse consequences that resulted when individual employers terminated their participation in, or withdrew from, such plans. In order to "alleviate the problem of employer withdrawals, the PBGC suggested new rules under which a withdrawing employer would be required to pay whatever share of the plan's unfunded vested liabilities was attributable to that employer's participation." Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. at 723, 104 S.Ct. at 2715. Such withdrawal liability was included in proposed legislation formally sent by the Executive Branch to Congress in 1979.

Congress agreed with the analysis put forward in the PBGC report. Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211, 217, 106 S.Ct. 1018, 1022, 89 L.Ed.2d 166 (1986). In 1980, Congress thus enacted, and the President signed, the Multiemployer Pension Plan Amendments Act ("MPPAA"), 29 U.S.C. § 1381 et seq., which requires that an employer withdrawing from a multiemployer pension plan pay a fixed and certain debt to the plan. Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. at 724-25, 104 S.Ct. at 2715. "This withdrawal liability is the employer's proportionate share of the plan's `unfunded vested benefits,' calculated as the difference between the present value of vested benefits and the current value of the plan's assets." Id. at 725, 104 S.Ct. at 2715. See also Connolly v. Pension Benefit Guarantee Corp., 475 U.S. at 213-217, 106 S.Ct. at 1020-22. Specifically, the MPPAA provides that "if an employer withdraws from a multiemployer plan in a complete withdrawal or a partial withdrawal, then the employer is liable to the plan in the amount determined ... to be the withdrawal liability." 29 U.S.C. § 1381(a).

Although the MPPAA uses the term "employer" to refer to the party which contributes to the multiemployer pension plan, neither the MPPAA itself, nor its legislative history, provides any definition of that term. Title I of ERISA does define an "employer" as "any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan," 29 U.S.C. § 1002(5). However, while this definition "may otherwise reflect the meaning of the terms defined as used in other Titles of ERISA," this definition does not necessarily apply to the MPPAA of its own force. See Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 370 n. 14, 100 S.Ct. 1723, 1731 n. 14, 64 L.Ed.2d 354 (1980).

In the absence of an explicit definition in the MPPAA, the term "employer" must be defined in the context of the statute, and "must be read in the light of the mischief to be corrected and the end to be attained." See NLRB v. Hearst Publications, 322 U.S. 111, 124, 64 S.Ct. 851, 857, 88 L.Ed. 1170 (1944). At the very least, the term "employer" must not be defined in a way which undermines the MPPAA's remedial objectives and purposes—namely, to alleviate the fiscal instability of multiemployer pension plans caused by withdrawals of plan contributors.

Delta suggests that the common law definition of "employer" should be applied to the MPPAA. Under common law, the existence of an employer-employee relationship depends upon a variety of factors, including the control and supervision of work, the payment of wages, and the right to hire and fire. See, e.g., International Longshoremen's Association v. Delta Steamship Lines, 832 F.2d 759, 763 (2d Cir.1987) (citing Clinton's Ditch Cooperative v. NLRB, 778 F.2d 132, 138-39 (2d Cir.1985)). See also Avis Rent A Car System, Inc. v. United States, 503 F.2d 423, 429 (2d Cir.1974); Mav Freight Service, Inc. v. United States, 462 F.Supp. 503, 507 (E.D.N.Y.1978); Pelow v. Sork Enterprises, Ltd., 39 A.D.2d 494, 496, 337 N.Y.S.2d 218, 220 (3d Dept.1972), aff'd, 33 N.Y.2d 944, 353 N.Y.S.2d 729, 309 N.E.2d 130 (1974). Delta claims that applying these factors, it cannot be considered an "employer" for purposes of withdrawal liability.

However, none of the above common law factors relate to Congress' remedial purpose in adopting the MPPAA. Were Congress to be deemed to have adopted a common law definition of "employer,"...