Penn Cent. Corp. v. Western Conference of Teamsters Pension Trust Fund
| Decision Date | 08 January 1996 |
| Docket Number | No. 94-16754,94-16754 |
| Citation | 75 F.3d 529 |
| Parties | , 19 Employee Benefits Cas. 2607, 96 Cal. Daily Op. Serv. 631, 96 Daily Journal D.A.R. 967, Pens. Plan Guide P 23917G The PENN CENTRAL CORPORATION, Plaintiff-Appellant, v. WESTERN CONFERENCE OF TEAMSTERS PENSION TRUST FUND, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Christopher S. Thrutchley, Conners & Winters, Tulsa, Oklahoma, for plaintiff-appellant.
Robert M. Westberg, Kirke M. Hasson, Jennifer Wysong, Pillsbury, Madison & Sutro, San Francisco, California, for defendant-appellee.
Appeal from the United States District Court for the Northern District of California.
Before: LAY, ** GOODWIN, and PREGERSON, Circuit Judges.
The Penn Central Corporation ("Penn Central") appeals the district court's summary judgment upholding an arbitration award in favor of the Western Conference of Teamsters Pension Trust Fund (the "Fund") for "withdrawal liability" under section 4201 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1381. This appeal presents two issues. First, we must decide whether Penn Central is exempt from withdrawal liability under 29 U.S.C. § 1398. Second, we must decide whether an award of attorneys' fees to the Fund was appropriate. We have jurisdiction pursuant to 28 U.S.C. § 1291. The district court had jurisdiction pursuant to 29 U.S.C. § 1451. We affirm.
The Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1381-1453, amended ERISA to provide that "[i]f an employer withdraws from a multiemployer plan in a complete or partial withdrawal, then the employer is liable to the plan in the amount determined under this part to be the withdrawal liability." 29 U.S.C. § 1381. See also Concrete Pipe & Products v. Construction Laborers Pension Trust, 508 U.S. 602, ---- - ----, 113 S.Ct. 2264, 2271-2274, 124 L.Ed.2d 539 (1993). Before passage of MPPAA, employers that withdrew from pension plans were not required to pay their share of the plan's " 'unfunded vested benefits liability'--the shortfall between the assets of the pension fund (the hourly contributions paid by employers, plus earnings thereon) and the actuarial value of vested pension rights of the employees." Woodward Sand Co. v. Western Conference of Teamsters, 789 F.2d 691, 694 (9th Cir.1986).
Congress' purpose in enacting MPPAA was to ensure that employers withdrawing from multiemployer pension plans would not escape liability for employees' unfunded vested benefits. Concrete Pipe, 508 U.S. at ----, 113 S.Ct. at 2272. As the Supreme Court explained:
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 in order to fund past service liabilities, including liabilities generated by employers no longer participating in the plan, so-called inherited liabilities. The rising costs may encourage--or force--further 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.
Under MPPAA, an assessment of withdrawal liability "ensure[s] that employees and their beneficiaries [are not] deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plans." Pension Benefit Guaranty Corp., 467 U.S. at 720, 104 S.Ct. at 2713. If a withdrawal occurs, the employer is required to pay its share of the plan's unfunded liabilities which are attributable to that employer's participation. See 29 U.S.C. § 1381-1391.
Withdrawal liability is triggered where an employer withdraws completely or partially from a pension plan. See 29 U.S.C. §§ 1383, 1385. 1 A complete withdrawal occurs when an employer: "(1) permanently ceases to have an obligation to contribute under the plan, or (2) permanently ceases all covered operations under the plan." 29 U.S.C. § 1383(a). For purposes of determining whether a withdrawal has occurred, all trades and businesses under "common control" are treated as a single employer. 29 U.S.C. § 1301(b)(1).
Under 29 U.S.C. § 1398, an employer will be exempt from an assessment of complete withdrawal liability if the employer withdraws from the multiemployer pension plan as a result of one of the transactions listed in the statute. Section 1398 provides:
Notwithstanding any other provision of this part, an employer shall not be considered to have withdrawn from a plan solely because--
(1) an employer ceases to exist by reason of--
(A) a change in corporate structure described in section 4069(b), or
(B) a change to an unincorporated form of business enterprise, if the change causes no interruption in employer contributions or obligations to contribute under the plan, or
(2) an employer suspends contributions under the plan during a labor dispute involving its employees.
For purposes of this part, a successor or parent corporation or the entity resulting from any such change shall be considered the original employer.
29 U.S.C. § 1398 (emphasis added).
When an employer withdraws from a plan, the plan sponsor (here the Fund) assesses the withdrawal liability by sending a notification to the employer and a demand for payment. 29 U.S.C. § 1399(b). Any dispute over the employer's withdrawal liability must be resolved by arbitration. 29 U.S.C. § 1401(a)(1). Any party may challenge the arbitrator's award by filing an action in the district court to enforce, vacate, or modify the award. 29 U.S.C. § 1401(b)(2).
The parties stipulated to the facts in this case. The Fund administers a multiemployer pension plan regulated under ERISA. G.K. Trucking ("G.K."), Marathon Steel Company ("Marathon"), and Buckeye Gas Products Company ("Buckeye Gas") were three former subsidiary corporations under Penn Central's "common control" within the meaning of 29 U.S.C. § 1301(b)(1). 2 From at least 1981 through December 1986, the three subsidiaries participated in the pension plan pursuant to various collective bargaining agreements.
In 1989, the Fund assessed Penn Central withdrawal liability in the amount of $60,618. The assessment was triggered by Penn Central's sale of one of its subsidiaries, Buckeye Gas, to the Ferrell Companies, Inc. and Ferrellgas, Inc. (the "Ferrell Group"). The Fund assessed Penn Central withdrawal liability for Penn Central's two former subsidiaries, G.K. and Marathon, which had ceased operations in February 1982 and March 1986, respectively. 3 The Fund did not assess any withdrawal liability for Buckeye Gas, because, apparently, Buckeye Gas, through the Ferrell Group, continued to make contributions to the multiemployer pension plan.
Penn Central paid the assessed withdrawal liability, but challenged the assessment through arbitration, pursuant to 29 U.S.C. § 1401(1). Penn Central maintained that it was exempt from withdrawal liability for G.K. and Marathon under 29 U.S.C. § 1398(1)(A), because, according to Penn Central, it ceased to exist as a covered employer "solely" by reason of a change in corporate structure. The arbitrator rejected this argument. The arbitrator concluded that Penn Central's sale of Buckeye Gas to the Ferrell Group was an event triggering assessment of withdrawal liability for G.K. and Marathon and that Penn Central had not ceased to exist "solely" because of corporate restructuring.
Penn Central brought this action under 29 U.S.C. § 1401(b)(2) to vacate the arbitration award. The parties filed cross-motions for summary judgment. The district court confirmed the arbitrator's award. The district court concluded that Penn Central ceased operations within the meaning of 29 U.S.C. § 1381 and that the Fund properly assessed withdrawal liability for G.K. and Marathon when Penn Central sold Buckeye Gas. The district court also held that the Fund was entitled to attorneys' fees. The district court, however, did not determine the specific amount of fees to be awarded.
On appeal, Penn Central contends that the arbitrator and the district court erred in not applying 29 U.S.C. § 1398 to this case. Penn Central argues that it is exempt from withdrawal liability because it ceased to exist "solely" because of a corporate restructuring. Penn Central also argues that, based on its construction of the statute, the Ferrell Group assumed Penn Central's withdrawal liability for G.K. and Marathon when the Ferrell Group purchased Buckeye Gas. Finally, Penn Central claims that an award of attorneys' fees was improper.
We review de novo the district court's grant of summary judgment. Jesinger v. Nevada Federal Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994). Under MPPAA, CMSH Co., Inc. v. Carpenters Trust Fund, 963 F.2d 238, 240 (9th Cir.), cert. denied 506 U.S. 864, 113 S.Ct. 185, 121 L.Ed.2d 130 (1992). "The arbitrator's conclusions of law are reviewed de novo." Id. Whether a withdrawal within the meaning of the statute has occurred presents a mixed question of law and fact. Concrete Pipe, 508 U.S. at ----, 113 S.Ct. at 2283.
In this case, the Fund determined that Penn Central had completely withdrawn from a multiemployer pension plan when it sold Buckeye Gas to the Ferrell Group. Accordingly, the Fund assessed Penn Central withdrawal liability for G.K. and Marathon. 4 The Fund did not assess withdrawal liability against Buckeye Gas, apparently, because Buckeye Gas, through...
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