Manchester Knitted Fashions, Inc. v. Amalgamated Cotton Garment and Allied Industries Fund

• Decision Date: 16 June 1992
• Docket Number: No. 91-1764,91-1764
• Citation: 967 F.2d 688
• Parties: , 15 Employee Benefits Cas. 1672 MANCHESTER KNITTED FASHIONS, INC., Plaintiff, Appellee, v. AMALGAMATED COTTON GARMENT AND ALLIED INDUSTRIES FUND, and its Trustees: Olga Diaz, Henry Dropkin, Garry Ferraris, John Fox, Arthur R. Loevy, Daniel Myers, Frank Nicholas, Antillio Sant'Antonio, Jack Sheinkman, Joan Suarez, Benedict Berkowitz, Howard Corbin, Mark Fishman, Eric Margolin, Charles Miller, Bruce Moore, Houston Payne, Benjamin Rothfeld, George Silva, and Roger Webb, Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

Page 688

967 F.2d 688

23 Fed.R.Serv.3d 438, 15 Employee Benefits Cas. 1672

MANCHESTER KNITTED FASHIONS, INC., Plaintiff, Appellee, v. AMALGAMATED COTTON GARMENT AND ALLIED INDUSTRIES FUND, and its Trustees: Olga Diaz, Henry Dropkin, Garry Ferraris, John Fox, Arthur R. Loevy, Daniel Myers, Frank Nicholas,

Antillio Sant'Antonio, Jack Sheinkman, Joan Suarez, Benedict

Berkowitz, Howard Corbin, Mark Fishman, Eric Margolin,

Charles Miller, Bruce Moore, Houston Payne, Benjamin

Rothfeld, George Silva, and Roger Webb, Defendants, Appellants.

No. 91-1764.

United States Court of Appeals, First Circuit.

Argued Feb. 7, 1992.

Decided June 16, 1992.

Robert M. Schanzer, with whom Solomon & Rosenbaum, Drechsler & Leff and Judith A. Stoll, New York City, were on brief, for defendants, appellants.

Steven E. Grill, Manchester, N.H., with whom Devine, Millimet & Branch, P.A., Manchester, N.H., was on brief, for plaintiff, appellee.

Before TORRUELLA, Circuit Judge, ALDRICH and BOWNES, Senior Circuit Judges.

TORRUELLA, Circuit Judge.

This is an appeal by Amalgamated Cotton Garment and Allied Industries Fund and its Trustees, collectively, "the Fund" from an order granting appellee, Manchester Knitted Fashions Inc.'s ("MKF") partial summary judgment, declaring certain insurance withdrawal liability rules unenforceable and forbidding their implementation. Also before this Court are several procedural and jurisdictional issues; whether the court has jurisdiction to consider the merits of this appeal and whether the Fund waived its challenge to venue. We affirm, holding that the partial summary judgment is appealable as an injunction, that the Fund waived its challenges to venue and that the district court properly held the withdrawal liability rules unenforceable.

A cursory review of the background and facts leading to the summary judgment is all that is needed to discuss the preliminary issues. Upon discussion of the merits, the relevant facts will be outlined in turn.

1. The Fund

The Fund is the sponsor of a multi-employer, employee welfare benefit plan as defined in section 3(1) of the Employee Retirement Income Security Act of 1974 ("ERISA") 29 U.S.C. § 1002(1). It was created pursuant to an Agreement and Declaration of Trust, ("Trust Agreement") in order to provide health and welfare benefits to employees of employers who have entered into collective bargaining agreements with the Amalgamated Clothing and Textile Workers Union and its affiliated locals ("the Union"). The Fund was established in 1945 in New York City and nearly all of its business is carried out from its New York City office. The Fund provides welfare benefit coverage to about 48,286 active participants of which about 126 are employed in New Hampshire.

2. The Collective Bargaining Agreement

MKF a New Hampshire corporation and contributor to the Fund, was a party to a collective bargaining agreement with the Union effective September 1, 1988. Under the Collective Bargaining Agreement MKF makes contributions to the Fund and pursuant to a Supplemental Agreement, Trustees are authorized to increase employer contribution rates to the Fund during the term of the agreement. ¹ On May 25, 1989,

                the Fund and the Trustees amended the Trust Agreement to authorize the establishment of withdrawal liability rules.   By letter dated June 30, 1989, the Fund informed all employers participating in the plan that the Fund would assess withdrawal liability against any employer withdrawing from the Fund on or after July 1, 1989.   MKF challenged the authority of the Fund and the Trustees to adopt these insurance withdrawal liability rules and was granted partial summary judgment as to count IV of their complaint, 2 enjoining the enforcement of the rules.   The Fund filed this appeal
                

DISCUSSION

1. Appellate Jurisdiction

At the outset we must determine whether this court has appellate jurisdiction to consider this interlocutory appeal. According to the Fund, the granting of partial summary judgment effectively granted MKF an injunction thus jurisdiction is invoked by 28 U.S.C. § 1292(a)(1) which reads in pertinent part:

(a) Except as provided in subsection (c) and (d) of this section, the courts of appeals shall have jurisdiction of appeals from:

(1) Interlocutory orders of the district courts of the United States, ... granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court.

We agree.

Although the district court did not specifically grant injunctive relief to MKF, we consider the substantial effect of the order and not the terminology employed by the court in deciding whether an appeal is available under the statute. Avery v. Secretary of Health and Human Services, 762 F.2d 158, 160 (1st Cir.1985) (citations omitted). It is generally established that in order for an interlocutory order to be appealable, a litigant must also show that the "order of the district court might have a 'serious, perhaps irreparable, consequence,' and that the order can be 'effectually challenged.' " Carson v. American Brands, Inc., 450 U.S. 79, 84, 101 S.Ct. 993, 997, 67 L.Ed.2d 59 (1981). However in a case such as this one, where the flow of withdrawal liability payments has been stopped, this burden is almost always met and immediate appeal is available. I.A.M. Nat. Pension Fund v. Cooper Industries, Inc., 789 F.2d 21, 25 (D.C.Cir.), cert. denied, 479 U.S. 971, 107 S.Ct. 473, 93 L.Ed.2d 417 (1986); Pantry Pride v. Retail Clerks Tri-State Pension, 747 F.2d 169, 171 (3d Cir.1984). Congress recognized the importance of the continued flow of these benefits because it "believed that it was important to insure that the flow of employer withdrawal liability payments was not delayed by an employer disputing liability." I.A.M. Nat. Pension Fund, 789 F.2d at 25 (citing Senate Committee on Labor and Human Resources, Summary and Analysis of S. 1076, 96th Cong., 2d Sess. (1980), reprinted in Special Supp. 310, Pens.Rep. (BNA) 81, 84-85 (1980); H.R.Rep. No. 869, 96th Cong., 2d Sess. 84, reprinted in 1980 U.S.C.C.A.N. 2918, 2952). The damage to the Fund could be irreparable in that stoppage of the flow of funds could effectively deprive benefactors of the Fund, the employees, of their otherwise protected benefits. Furthermore, should MKF ultimately prevail on the merits "[a]dequate safeguards exist to insure that [it] will promptly recover any repayment in a lump sum with interest." I.A.M. Nat. Pension Fund, 789 F.2d at 25 (citing 29 C.F.R. § 2644.2(d) (1985)). MKF petitioned the court, via a motion for summary judgment, to enjoin the enforcement of the Trust Agreement. The court granted summary judgment to that effect. Thus we conclude that this Court has jurisdiction to entertain this interlocutory appeal as the summary judgment order effectively granted injunctive relief.

2. Venue

In a prior order entered on April 30, 1991, the district court denied the Fund's motion to dismiss for improper venue. On appeal the Fund also challenges the propriety of that order. MKF on the other hand claims that a) the Fund failed to properly preserve the issue for appeal; b) the Fund waived its challenge to venue; and c) the district of New Hampshire was the proper venue. ³

MKF filed its complaint on July 6, 1990. The complaint was served by mail and received by the Fund on July 11, 1990. In the interim alleged consultations had begun between the Fund and MKF employees regarding the "opt out" provision of the Trust Agreement and the Fund's withdrawal liability. Because MKF was involved in wage renegotiations with its employees and feared that the Fund's contact with the employees regarding the "opt out" provision could cause difficulty in those negotiations, MKF filed a motion on August 14, 1990, for an ex parte temporary restraining order and a preliminary injunction seeking to enjoin the Fund from communicating with the employees regarding the "opt out" program. On August 16th, the Fund requested and MKF consented to granting an extension of time in which the Fund would file an answer to the July 6th complaint. On that same date, the Fund, without objecting to venue, also filed a "Motion to Request Hearing on Plaintiff's Motion for an Ex Parte Temporary Restraining Order" and a motion to permit its New York counsel to appear pro hac vice.

A stipulation and order was filed on August 17, 1990, whereby the parties agreed to dismiss the motion for the temporary restraining order. The parties also entered into a stipulation and order agreeing to certain expedited discovery and limiting communications with the Union. In addition, the stipulation provided for a hearing on the preliminary injunction should their dispute not be resolved by the discovery. ⁴ The stipulation was entered in the district court record, "so ordered" on September 12, 1990. Still there was no objection raised to venue by the Fund. Not until September 14, 1990, did the Fund file an answer and for the first time contested venue.

The Supreme Court has held that both venue and personal jurisdiction are personal privileges which may be waived. Leroy v. Great Western United Corp., 443 U.S. 173, 180, 99 S.Ct. 2710, 2714, 61 L.Ed.2d 464 (1979); Neirbo Co. v. Bethelehem Shipbuilders Corp., 308 U.S. 165, 167-68, 60 S.Ct. 153, 154-55, 84 L.Ed. 167 (1939); United States v. Systems Architects, Inc., 757 F.2d 373, 378 (1st Cir.) (citing Singer v. United States, 380 U.S. 24, 35, 85 S.Ct. 783, 790, 13 L.Ed.2d 630 (1965)), cert. denied, 474 U.S. 847, 106 S.Ct. 139, 88 L.Ed.2d 115 (1985). Fed.R.Civ.P. 12(h)(1) provides that:

A defense of lack of jurisdiction over the person, improper venue, insufficiency of process, or insufficiency of service of process is waived ... (B) if it is neither made by motion under the rule nor included in a responsive pleading or an amendment thereof permitted by Rule 15(a) to be made as a matter of course.

The...