Dorn's Transp., Inc. v. Teamsters Pension Trust Fund of Philadelphia and Vicinity

• Decision Date: 22 August 1986
• Docket Number: No. 85-5006,85-5006
• Citation: 799 F.2d 45
• Parties: 7 Employee Benefits Ca 1965 DORN'S TRANSPORTATION, INC., and Oneida Motor Freight, Inc., Appellees, v. TEAMSTERS PENSION TRUST FUND OF PHILADELPHIA AND VICINITY, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 45

799 F.2d 45

7 Employee Benefits Ca 1965

DORN'S TRANSPORTATION, INC., and Oneida Motor Freight, Inc., Appellees, v. TEAMSTERS PENSION TRUST FUND OF PHILADELPHIA AND VICINITY, Appellant.

No. 85-5006.

United States Court of Appeals Third Circuit.

Submitted June 11, 1986.

Decided Aug. 22, 1986.

Lester M. Bridgeman, Louis E. Emery, Bridgeman & Urbanczyk, Washington, D.C., for appellees.

Paul A. Friedman, Cohn & Lifland, Saddle Brook, N.J., for appellant.

Before HUNTER, BECKER, Circuit Judges, and HUYETT, District Judge. ^*

OPINION SUR MOTION OF ATTORNEYS' FEES

BECKER, Circuit Judge.

This opinion addresses a motion for attorneys' fees made pursuant to 29 U.S.C. Sec. 1451(e), the fee-shifting provision of the Multiemployer Pension Plan Amendments Act ("MPPAA"), 29 U.S.C. Sec. 1381 et seq., which modified the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Sec. 1001 et seq. The motion papers require us to determine the standard for an award of attorneys' fees under MPPAA to employers who prevail in a suit seeking a determination of their withdrawal liability thereunder. The motion was filed by Dorn's Transportation, Inc. ("Dorn's") and Oneida Motor Freight, Inc. ("Oneida") to recover attorneys' fees and expenses in connection with an appeal to this court. In that appeal, we affirmed the district court's grant of summary judgment for Dorn's and Oneida and against the Teamsters Pension Trust Fund of Philadelphia and Vicinity ("the Plan"), thus absolving Dorn's and Oneida of withdrawal liability. Our opinion is reported at 787 F.2d 897 (3d Cir.1986).

Dorn's and Oneida contend that the standard for reviewing their application for attorneys' fees should be the same as that applied to prevailing plaintiffs in civil rights actions, see 42 U.S.C. Sec. 1988, under which attorney's fees are awarded almost as a matter of course. We conclude, however, that the civil rights attorneys' fees standard for prevailing plaintiffs is not the proper one for a prevailing employer under MPPAA. Instead, we adopt the test established in Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), for prevailing defendants in civil rights actions, and hold that a prevailing employer is to be awarded attorneys' fees under MPPAA only if the underlying claim against it was frivolous, unreasonable, or without foundation. Applying the Christiansburg test, we conclude that Dorn's and Oneida are not entitled to an award of attorneys' fees and expenses.

I.

The facts and procedural history of the underlying litigation are set forth in our opinion on the merits and need only be summarized. Dorn's, a motor freight carrier, was a contributing member of the Plan, which was a qualified ERISA plan. When Dorn's closed its terminal in Pennsauken, New Jersey, Oneida contracted to buy all of Dorn's outstanding stock. Oneida also offered employment to all twelve Dorn's employees at the Pennsauken facility, ¹ and ten accepted. All ten were union members on whose behalf Dorn's had made contributions to the Plan under a collective bargaining agreement. Because Oneida had a virtually identical agreement with the Plan, payments continued to be made on behalf of the ten employees.

A hitch in the stock sale transaction occurred when Oneida learned that Dorn's faced potential withdrawal liability to the Plan for which Oneida might be jointly liable under 29 U.S.C. Sec. 1301. When Oneida therefore refused to pay the agreed-upon price for the outstanding Dorn's stock, legal action ensued. Eventually, the two companies reached an accommodation and the sale was consummated. The Plan later notified Dorn's that it had assessed the company over $315,000 in withdrawal liability. Dorn's and Oneida thereupon brought an action for a declaratory judgment that Dorn's was not subject to withdrawal liability under the circumstances.

The district court granted summary judgment for Dorn's and Oneida on the ground that under two sections of the MPPAA, 29 U.S.C. Secs. 1301 and 1398, no withdrawal had taken place. The court also denied the Plan's motion for additional discovery on the question whether the Dorn's stock sale transaction had been bona fide and arm's length, as required by 29 U.S.C. Sec. 1392. According to the Plan, this evidence was crucial because, unless the transaction had been conducted in good faith, Dorn's could not be exempt from withdrawal liability.

On appeal, we affirmed the judgment of the district court. The appeal presented the question whether, under MPPAA, an employer-member of an ERISA pension plan may be assessed withdrawal liability when it sells all of its stock to another employer that assumes the operations of the corporate seller, employs most of the seller's employees, and, under its independent collective bargaining agreement with the same local union, continues to make payments to the same pension plan as the seller did. In what we described as "the unusual circumstances" of the case, 787 F.2d at 898, in which the purchasing company's agreement concerning payments to the Plan was identical to that of the seller, we held that Dorn's was exempt from liability under 29 U.S.C. Sec. 1398. Id. at 902. We did not decide whether the Sec. 1398 exemption from withdrawal would apply if a buyer and seller had different agreements with the Plan. We also limited our holding to the Sec. 1398 ground, leaving for another day "the correctness of the district court's problematic holding with respect to Sec. 1301." Id. at 900. ²

After construing the good faith requirement of Sec. 1392, we further held that the district court's denial of additional discovery on the issue of bona fides had been correct, for since Oneida was unaware of any attempt to escape withdrawal liability, and even refused to pay the purchase price when it discovered that withdrawal liability might be assessed against Dorn's, the "principal purpose of the transaction" as a whole could not have been to escape liability. Finally, we held that the district court did not err in bypassing arbitration because the issues presented were matters of pure statutory interpretation. In reaching this conclusion, we relied on I.A.M. National Pension Fund Benefit Plan C v. Stockton TRI Industries, 727 F.2d 1204, 1210 (D.C.Cir.1984).

Dorn's and Oneida have now moved this court, pursuant to 29 U.S.C. Sec. 1451(e), for an award of costs and expenses, including a reasonable attorneys' fee, incurred in connection with their successful defense of the Plan's appeal from the district court judgment in favor of Dorn's and Oneida. We begin with a determination of the appropriate standard for awarding costs and expenses under Sec. 1451(e) to a prevailing employer.

II.

29 U.S.C. Sec. 1451(e) provides:

In any action brought under [29 U.S.C. Sec. 1451], the court may award all or a portion of the costs and expenses incurred in connection with such action, including reasonable attorney's fees, to the prevailing party. (emphasis added).

Section 1451 is a flexible provision, which allows an award to either prevailing plaintiffs or prevailing defendants and leaves the decision whether to grant an award to the discretion of the district court. ³ As such, it is similar to the attorneys' fees provisions in Titles II and VII of the Civil Rights Act of 1964, 42 U.S.C. Secs. 2000e-5(k) & 2000a-3(b); in the Civil Rights Attorneys' Fees Awards Act, 42 U.S.C. Sec. 1988; and in the Emergency School Aid Act of 1972, 20 U.S.C. Sec. 1617. Because of this similarity, Dorn's and Oneida (hereinafter "Dorn's") argue that Congress intended that Sec. 1451 be applied in the same manner as those provisions are applied to prevailing plaintiffs.

A.

Application of the same standard that is used for awarding fees to prevailing plaintiffs under the civil rights statutes would almost automatically result in an award for Dorn's, as a prevailing plaintiff. Under those statutes, a prevailing plaintiff "should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust." Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402, 88 S.Ct. 964, 966, 19 L.Ed.2d 1263 (1968) (referring to Title II of the Civil Rights Act). See also Hensley v. Eckerhart, 461 U.S. 424, 429, 433 n. 7, 103 S.Ct.1933, 1934, 1939 n. 7, 76 L.Ed.2d 40 (1983) (citing the legislative history of 42 U.S.C. Sec. 1988, which explicitly adopts the Piggie Park standard); Albemarle Paper Co. v. Moody, 422 U.S. 405, 415, 95 S.Ct. 2362, 2370, 45 L.Ed.2d 280 (1975) (applying Piggie Park standard to Title VII of the Civil Rights Act); Northcross v. Board of Education of Memphis City Schools, 412 U.S. 427, 428, 93 S.Ct. 2201, 2202, 37 L.Ed.2d 48 (1973) (applying Piggie Park standard to Sec. 718 of the Emergency School Aid Act).

In support of their argument that the Piggie Park Title II standard should be applied to the award of attorneys' fees under Sec. 1451, Dorn's points out that "similarity of language ... is, of course, a strong indication that the two statutes should be interpreted pari passu." Northcross, 412 U.S. at 428, 93 S.Ct. at 2202. However, as the Court stated in Northcross, id., we must look beyond facial similarity to the policies underlying the fee statutes before we determine the standard for awarding fees. Such an inquiry reveals that the policies favoring a liberal standard for awarding fees to civil rights plaintiffs do not support such a standard for employers who bring suits under MPPAA. Rather, for the purposes of fee awards, the position of plaintiff-employers under MPPAA is more analogous to that of prevailing civil rights defendants.

The civil rights statutes were designed to give victims of civil rights violations effective access to the judicial process. See S.Rep. No. 1011, 94th Cong., 2d Sess. 1, reprinted in 1976 U.S.Code Cong. & Ad.News 5908. The routine availability of fees to prevailing plaintiffs in civil rights actions reflects a congressional desire to...