Jos. Schlitz Brewing Co. v. Milwaukee Brewery Workers' Pension Plan, s. 92-3811
| Decision Date | 13 August 1993 |
| Docket Number | 92-3894,Nos. 92-3811,s. 92-3811 |
| Citation | 3 F.3d 994 |
| Parties | , 16 Employee Benefits Ca 2841 JOS. SCHLITZ BREWING COMPANY and The Stroh Brewery Company, Plaintiffs-Appellees, Cross-Appellants, v. MILWAUKEE BREWERY WORKERS' PENSION PLAN, Defendant-Appellant, Cross-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
James W. Greer, David C. Hertel, argued, Barbara J. Janaszek, Whyte & Hirschboeck, Milwaukee, WI, for plaintiffs-appellees in Nos. 92-3811 & 92-3894.
Robert M. Chemers, Neil K. Quinn, Maryanne H. Capron, Michael G. Bruton, argued, Pretzel & Stouffer, Chicago, IL, for defendant-appellant in No. 92-3811.
Neil K. Quinn, Maryanne H. Capron, Pretzel & Stouffer, Chicago, IL, Marc Gertner, Schumaker, Loop & Kendrick, Toledo, OH, for defendant-appellee in No. 92-3894.
Before BAUER, Chief Judge, and CUMMINGS and EASTERBROOK, Circuit Judges.
Three brewers in Milwaukee--Schlitz, Miller, and Pabst--contributed to a multi-employer pension plan. The brewers also bargained jointly with the union over wages, pensions, and other benefits, and administered the pension plan. In 1981 Schlitz closed its Milwaukee brewery. (Schlitz has since been acquired by Stroh; we use its old name for clarity.) We must decide how much Schlitz owes as withdrawal liability under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA).
Several sets of documents govern relations between the Milwaukee Brewery Workers' Pension Plan and the Milwaukee Brewers' Association (the employers' collective bargaining group). An Association Agreement provides that the Labor Committee of the Brewers' Association may make decisions only by consensus: "All decisions and action taken by the ... Labor Committee shall be by unanimous vote of the respective committee, with each brewery having a reasonable opportunity to cast its vote on the question." The Plan was managed and administered by a Joint Committee consisting of four members appointed by the union and four members appointed by the employers. This committee was bound by the agreement establishing the Plan. That agreement could be amended by the "mutual agreement of the Union and the Employers". So changes in the Plan required the assent of both labor and management, which had agreed to act by consensus. When the consensus ended the difficulties began.
Schlitz withdrew from joint bargaining in January 1981 because it thought the other employers too willing to accept the union's demands. When giving notice of this withdrawal, Schlitz stated that it would continue to sit on the Plan's Joint Committee and participate in the Plan. On June 1, 1981, the union struck Schlitz, which responded by closing its Milwaukee brewery. On August 14 the Schlitz representative on the Joint Committee resigned, and Schlitz withdrew from the Plan. At the time, the Plan was underfunded to the tune of $111 million. Inflation was high, leading the Plan to estimate big future obligations to pay benefits, while steep interest rates had depressed the capital value of the Plan's existing assets. Schlitz estimated that it would be responsible for $27 million of this shortfall under the "presumptive method" that the MPPAA specifies when a pension plan has not adopted another method of allocation. 29 U.S.C. Sec. 1391(b).
Withdrawal liability under the presumptive method depends on Concrete Pipe & Products of California, Inc. v. Construction Laborers Pension Trust, --- U.S. ----, ----, 113 S.Ct. 2264, 2273, 124 L.Ed.2d 539 (1993) (citations omitted). Under the "direct attribution" method, which the MPPAA permits most plans to elect, each employer is responsible for that portion of the unfunded, vested liabilities earned by its current and former employees. 29 U.S.C. Sec. 1391(c)(4). See Artistic Carton Company v. Paper Industry Union-Management Pension Fund, 971 F.2d 1346, 1349-50 (7th Cir.1992). Miller and Pabst began to discuss adopting the direct attribution method, which altered the employers' shares of the $111 million. According to their memos, these were the options:
Method of Attribution
Brewer Direct Presumptive
Miller $31,100,000 (28%) $45,500,000 (41%)
Pabst 38,800,000 (35%) 38,800,000 (35%)
Schlitz 41,100,000 (37%) 26,700,000 (24%)
Miller, Pabst, and the union entered into memoranda of understanding in May 1981 purporting to amend the Plan to adopt the direct attribution method. Schlitz's assent was neither sought nor secured. On August 17, 1981, the remaining members of the Joint Committee directed the Plan's actuary to calculate Schlitz's withdrawal liability under the direct attribution method. Schlitz first learned of the change in funding method when it received notice in September 1981 that it owed $41,031,406. Schlitz demanded arbitration under 29 U.S.C. Sec. 1401(a)(1).
Arbitrator Siegel concluded that the Plan could be amended only by unanimous consent. 9 E.B.C. 2385 (1988). In May 1981, when Miller, Pabst, and the union tried to adopt the direct attribution method, Schlitz was still a contributing employer and held a seat on the Joint Committee. Lack of unanimity left the presumptive method in effect. The parties' actuaries jointly concluded that under the presumptive approach (and using actuarial assumptions not at issue here) Schlitz owed only $23.3 million; the arbitrator incorporated that figure into his award. 9 E.B.C. 2689 (1988). The Plan petitioned for review in the district court, which agreed with the arbitrator's use of the presumptive method but added interest for the year in which Schlitz withdrew from the Plan, plus prejudgment interest on this interest. Both sides appeal. The district judge neglected to determine the amount of prejudgment interest, which usually is essential to finality (and thus appealability). Osterneck v. Ernst & Whinney, 489 U.S. 169, 109 S.Ct. 987, 103 L.Ed.2d 146 (1989). But the parties reached an agreement on the subject. The district court's order of October 20, 1992, apparently accepts this agreement, and Schlitz has paid in full. So although the district court has not entered the form of judgment required by Fed.R.Civ.P. 58, its decision of October 20 is nonetheless appealable under the approach of Bankers Trust Co. v. Mallis, 435 U.S. 381, 98 S.Ct. 1117, 55 L.Ed.2d 357 (1978).
The extent of Schlitz's liability turns on whether it is bound by the purported modification of the Plan in 1981. Was the change by the "mutual agreement of the Union and the Employers", as the Plan's governing document provides? The Plan does not deny that Schlitz was a participating "employer" in May 1981. Schlitz argues that the ordinary understanding of "mutual", consistent with the Association Agreement's rules for decisionmaking, means that the Plan remains unchanged unless the employers agree unanimously to change it. Schlitz was not aware of, and did not agree to, the change in May 1981. The Plan tells us, however, that Schlitz's lack of assent is irrelevant. On its reading, "mutual agreement" does not mean that the Plan's participating employers must reach consensus. To the contrary, once Schlitz left the Brewers' Association, it subjected itself to the risk that the remaining members--its competitors--would "mutually" agree with the union to amend the Plan in a way singularly disadvantageous to Schlitz. Arbitrator Siegel agreed with Schlitz, interpreting the phrase "mutual agreement" to mean "agreement by all"--that is to say, all "employers" contributing to the Plan, as opposed to the two employers still engaged in joint bargaining with the union.
Although the parties argue this appeal as if this court's role is to interpret the documents from scratch, neither side explains why. We are a court of review and not of first instance. A vital issue in many appeals, including this one, is the standard of review--that is, the relation between this tribunal and its predecessors. On most issues appellate review is deferential. When an arbitrator makes the initial decision, judges have only a modest role to play. Paperworkers v. Misco, Inc., 484 U.S. 29, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987); W.R. Grace & Co. v. Rubber Workers, 461 U.S. 757, 764, 103 S.Ct. 2177, 2182, 76 L.Ed.2d 298 (1983). Cases under the Arbitration Act, 9 U.S.C. Secs. 1-16, or arising out of collective bargaining agreements, usually present a simple question: did the arbitrator interpret the parties' agreement, or did he apply a rule he preferred to their agreement? If the former, the award is enforced; if the latter, not. Hill v. Norfolk and Western Ry., 814 F.2d 1192, 1194-95 (7th Cir.1987). Arbitrator Siegel unquestionably interpreted the Association Agreement and the Plan's governing documents; he tried to carry out the parties' rules rather than invent his own, and no one contends that the award is marred by fraud or corruption. See 9 U.S.C. Sec. 10. If this were a standard labor or commercial case, we could end here.
Aspects of this case resemble ordinary labor and commercial disputes. The Plan was created by labor and management, and a clause provides for arbitration in the event the Joint Committee is unable to resolve a dispute. Had today's case arisen before 1980, then, arbitration would have occurred and the judicial role would have been minimal. But when enacting the MPPAA in 1980 Congress complicated matters substantially by simultaneously incorporating most provisions of the Arbitration Act, 29 U.S.C. Sec. 1401(...
To continue reading
Request your trial
-
Hartline v. Sheet Metal Workers' Nat. Pension Fund
...not to be fiduciary functions that run afoul of ERISA's restrictions and guarantees. See Jos. Schlitz Brewing Co. v. Milwaukee Brewery Workers' Pension Plan, 3 F.3d 994, 1001-1002 (7th Cir.1993). The D.C. Circuit in Systems Council explained that, under ERISA, AT & T, an employer and plan a......
-
Izzarelli v. Rexene Products Co.
...or otherwise sets the terms of a plan." McGath, 7 F.3d at 670-71 (citing cases, including Jos. Schlitz Brewing Co. v. Milwaukee Brewery Workers' Pension Plan, 3 F.3d 994 at 1001, 1002 (7th Cir.1993), petition for cert. filed, 62 U.S.L.W. 3378 (U.S. Nov. 12, 1993) (No. Of course, an employer......
-
Dantran, Inc. v. U.S. Dept. of Labor
...as a standard of review, operates much the same as the "clearly erroneous" standard. See Jos. Schlitz Brewing Co. v. Milwaukee Brewery Workers' Pension Plan, 3 F.3d 994, 998-99 (7th Cir.1993); Chicago Truck Drivers Pension Fund v. Louis Zahn Drug Co., 890 F.2d 1405, 1411 (7th Cir.1989). 6 T......
-
TRUSTEES OF PLMRS. & PIPFTRS. PEN. v. Mar-Len, Inc.
...disputes are reviewed de novo. See Bowers v. Andrew Weir Shipping, 27 F.3d 800, (2d Cir.1994); Schlitz Brewing Co. v. Milwaukee Brewery Workers' Pension Plan, 3 F.3d 994, 999 (7th Cir.1993), cert. granted in part, ___ U.S. ___, 114 S.Ct. 2736, 129 L.Ed.2d 858 (1994); Crown Cork & Seal Co., ......