Findlay Truck Line, Inc. v. States

• Decision Date: 19 September 2013
• Docket Number: 12–3531.,Nos. 12–3450,s. 12–3450
• Citation: 726 F.3d 738
• Court: U.S. Court of Appeals — Sixth Circuit
• Parties: FINDLAY TRUCK LINE, INC., Plaintiff–Appellee/Cross–Appellant, v. CENTRAL STATES, SOUTHEAST & SOUTHWEST AREAS PENSION FUND, Defendant–Appellant/Cross–Appellee.

726 F.3d 738

FINDLAY TRUCK LINE, INC., Plaintiff–Appellee/Cross–Appellant,

v.CENTRAL STATES, SOUTHEAST & SOUTHWEST AREAS PENSION FUND, Defendant–Appellant/Cross–Appellee.

Nos. 12–3450, 12–3531.

United States Court of Appeals,Sixth Circuit.

Argued: Jan. 22, 2013.

Decided and Filed: Aug. 9, 2013.

Rehearing and Rehearing En Banc Denied Sept. 19, 2013.

ARGUED:Brad R. Berliner, Central States Funds, Rosemont, Illinois, for Appellant. Tracy L. Turner, Habash & Reasoner, LLP, Columbus, Ohio, for Appellee. ON BRIEF:Brad R. Berliner, Edward H. Bogle, John Joseph Franczyk, Jr., Central States Funds, Rosemont, Illinois, for Appellant. Tracy L. Turner, W. Irl Reasoner, Habash & Reasoner, LLP, Columbus, Ohio, for Appellee.

Before: SUHRHEINRICH, MOORE and GIBBONS; Circuit Judges.

OPINION

SUHRHEINRICH, Circuit Judge.

I. Introduction

Plaintiff–Appellee/Cross–Appellant Findlay Truck Line (“Findlay”) brought this action seeking relief from a withdrawal liability payment it allegedly owes to Defendant–Appellant/Cross–Appellee Central States, Southeast and Southwest Areas Pension Fund (“the Fund”) under the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C. §§ 1381–1461. Findlay was involved in a labor dispute, and as a result, ceased making contributions to a pension plan administered by the Fund. Shortly thereafter, the Fund demanded Findlay pay withdrawal liability in excess of $10 million pursuant to the MPPAA. Findlay then filed a complaint in federal district court seeking declaratory and injunctive relief to prevent such payment, arguing that the Fund's assessment of withdrawal liability was improper. Findlay made three arguments in front of the federal district court. First, Findlay contended that withdrawal liability was improper because the withdrawal occurred as the result of a labor dispute. Second, Findlay contended that despite the MPPAA's arbitration requirement, it should not be forced to arbitrate the dispute because the withdrawal was “union-mandated.” Lastly, Findlay contended that despite the MPPAA's interim payment requirement, it should not be forced to make interim payments because it would suffer irreparable harm if made to do so.

The district court dismissed the case, holding that the MPPAA required the dispute be arbitrated. The district court also issued an injunction enjoining the Fund from collecting withdrawal liability payments pending arbitration, finding that such payments would cause irreparable harm to Findlay. The Fund appeals the district court's injunction, and Findlay cross-appeals the district court's dismissal. For the reasons set forth below, we REVERSE the injunctive order but AFFIRM the dismissal.

II. Background

A. Statutory Background

We begin with a brief overview of the statutory scheme that governs employee pension benefits because it is central to the case. In 1974, Congress enacted the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 101–1371 (“ERISA”), to ensure that “if a worker has been promised a defined pension benefit upon retirement—and if he has fulfilled whatever conditions are required to obtain a vested benefit—he actually will receive it.” Nachman Corp. v. Pension Ben. Guar. Corp., 446 U.S. 359, 375, 100 S.Ct. 1723, 64 L.Ed.2d 354 (1980). ERISA also created a plan termination insurance program, administered by the Pension Benefit Guaranty Corporation (“PBGC”), a wholly-owned government corporation within the Department of Labor. 29 U.S.C. § 1302. The plan termination insurance program required that the PBGC collect insurance premiums from covered pension plans and provide benefits to participants in those plans if their plans terminate with insufficient assets to support its guaranteed benefits. Pension Ben. Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 720, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984).

However, it soon became apparent that the PBGC would be overwhelmed by obligations in excess of its capacity, because a significant number of multiemployer plans were experiencing extreme financial hardship. Id. at 721, 104 S.Ct. 2709. In response, Congress directed the PBGC to prepare a comprehensive report analyzing the financial hardship problems faced by the multiemployer plans and to recommendappropriate legislative action. Id. at 722, 104 S.Ct. 2709. The PBGC issued its report on July 1, 1978. Id. at 722, 104 S.Ct. 2709. Among its findings was that ERISA failed to address the adverse consequences that occurred when an employer withdrew from a multiemployer pension plan:

A key problem of ongoing multiemployer plans, especially in declining industries, is the problem of employer withdrawal. Employer withdrawals reduce a plan's contribution base. This pushes the contribution rate for remaining employers to higher and higher levels.... The rising costs may encourage—or force—withdrawals, thereby increasing the inherited liabilities to be funded by an ever-decreasing contribution base. This vicious downward spiral may continue until it is no longer reasonable or possible for the pension plan to continue.

Id. at 722 n. 2, 104 S.Ct. 2709 (quoting Pension Plan Termination Insurance Issues: Hearings before the Subcommittee on Oversight of the House Committee on Ways and Means, 95th Cong., 2nd Sess., 22 (1978) (statement of Matthew M. Lind)), “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.” R.A. Gray & Co., 467 U.S. at 723, 104 S.Ct. 2709. On September 26, 1980, Congress enacted the MPPAA based on this recommendation. 29 U.S.C. §§ 1381–1461. The MPPAA provides a statutory scheme that is both “lengthy and complex.” Marvin Hayes Lines, Inc. v. Cent. States, Se. & Sw. Areas Pension Fund, 814 F.2d 297, 299 (6th Cir.1987). Four principles of the MPPAA are especially relevant to the dispute before us.

The first principle is that an employer withdrawing from a fund must make withdrawal liability payments. An employer is defined to have completely withdrawn from a fund when it “permanently ceases to have an obligation to contribute under the plan” or “permanently ceases all covered operations under the plan.” 29 U.S.C. § 1383(a). Any employer withdrawing from a multiemployer plan must make a payment of “withdrawal liability,” which is calculated as the employer's proportionate share of the plan's unfunded, unvested benefits. 29 U.S.C. § 1381(a). The MPPAA provides that once a fund determines that an employer has withdrawn from its plan, it must notify the employer of the amount of the liability, prepare a schedule for liability payments,¹ and demand payment in accordance with the schedule. 29 U.S.C. §§ 1382, 1399(b)(1).

A second key principle of the MPPAA is that even if an employer disputes the withdrawal liability payments, the employer must make payments to the fund no later than 60 days after the fund demands such payments, and must continue to make them until the dispute has been resolved. Specifically, the MPPAA states that:

Withdrawal liability shall be payable in accordance with the schedule set forth by the plan sponsor under subsection (b)(1) of this section beginning no later than 60 days after the date of the demand notwithstanding any request for review or appeal of determinations of the amount of such liability or of the schedule.

29 U.S.C. § 1399(c)(2). The MPPAA repeats this requirement in a subsequent section, providing that “[p]ayments shall be made by the employer ... until the arbitrator issues a final decision with respect to the determination submitted for arbitration, with any necessary adjustments in subsequent payments for overpayments or underpayments arising out of the decision of the arbitrator with respect to the determination.” 29 U.S.C. § 1401(d). We have referred to these payments as “interim payments,” and referred to this process as “pay now, dispute later.” Mason & Dixon Tank Lines, Inc. v. Cent. States, Se. & Sw. Areas Pension Fund, 852 F.2d 156, 165 (6th Cir.1988). The congressional intent behind “pay now, dispute later” is to alleviate the risk that during the course of arbitration, an employer will become insolvent, and the fund will not be able to collect in the event of a favorable award. Trs. of the Chi. Truck Drivers, Helpers & Warehouse Workers Union (Indep.) Pension Fund v. Cent. Transp., Inc., 935 F.2d 114, 118–19 (7th Cir.1991). As the Seventh Circuit explained:

Many [employers] are small and thinly capitalized. During the time consumed by the arbitration and any proceedings to review or enforce the award, some will go out of business.... Although the [fund] bears substantial risk if the employer holds the stakes pending final resolution, the employer faces no corresponding risk if the fund holds the stakes. Pension funds are solvent, diversified, regulated institutions.... [F]unds will be able to repay any withdrawal liability that a court or arbitrator ultimately determines they should not have collected.

Id. (internal citations omitted).

A third key principle is that disputes over withdrawal liability between an employer and a fund must be arbitrated. The MPPAA provides detailed instructions for dispute resolution, in recognition that “the employer and the Plan may not always be in agreement as to the computation of withdrawal liability.” Marvin Hayes, 814 F.2d at 299. If either party disputes the liability, the MPPAA requires that “[a]ny 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.” 29 U.S.C. § 1401(a)(1). Congress intended the arbitration provision to promote “judicial economy and judicial restraint.” Mason & Dixon, 852 F.2d at 164 (citing Flying Tiger Line v. Teamsters Pension Trust Fund, 830 F.2d 1241, 1248 (3d Cir.1987) (quoting Robbins v. Chipman...