Republic Industries, Inc. v. Teamsters Joint Council No. 83 of Virginia Pension Fund

Citation718 F.2d 628
Decision Date09 September 1983
Docket Number83-1109,83-1119 and 83-1196,Nos. 83-1054,s. 83-1054
Parties4 Employee Benefits Ca 2057 REPUBLIC INDUSTRIES, INC., a Del. Corp., Appellant, v. TEAMSTERS JOINT COUNCIL NO. 83 OF VIRGINIA PENSION FUND, an unincorporated assoc., Appellee. Pension Benefit Guaranty Corp., Amicus Curiae. REPUBLIC INDUSTRIES, INC., a Del. Corp., Appellee, v. TEAMSTERS JOINT COUNCIL NO. 83 OF VIRGINIA PENSION FUND, an unincorporated assoc., Appellant. Pension Benefit Guaranty Corp., Amicus Curiae. REPUBLIC INDUSTRIES, INC., a Del. Corp., Appellee, v. TEAMSTERS JOINT COUNCIL NO. 83 OF VIRGINIA PENSION FUND, an unincorporated assoc., Appellant. Pension Benefit Guaranty Corp., Amicus Curiae. REPUBLIC INDUSTRIES, INC., a Del. Corp., Appellant, v. TEAMSTERS JOINT COUNCIL NO. 83 OF VIRGINIA PENSION FUND, an unincorporated assoc., Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

Lester M. Bridgeman, Washington, D.C. (Louis T. Urbanczyk, Washington, D.C., Philip B. Kurland, John J. Coffey, III, Christopher G. Walsh, Jr., Rothschild, Barry & Myers, Chicago, Ill., on brief), for appellant.

Paul J. Ondrasik, Jr., Washington, D.C. (Antonia B. Ianniello, Steptoe & Johnson Chartered, Washington, D.C., on brief), for appellee.

Henry Rose, Gen. Counsel, Baruch A. Fellner, Associate Gen. Counsel, J. Stephen Caflisch, Sp. Counsel, Peter H. Gould, Terence G. Craig, David F. Power, Washington, D.C., on brief, for amicus curiae Pension Ben. Guaranty Corp.

Before WINTER, Chief Judge, RUSSELL, Circuit Judge, and HAYNSWORTH, Senior Circuit Judge.

WINTER, Chief Judge:

The principal issue in these cross appeals is the constitutionality of the Multiemployer Pension Plan Amendments Act of 1980 (1980 Act), 29 U.S.C. Secs. 1381 et seq., which became effective September 26, 1980 but which provided liability for complete or partial employer withdrawal from a multiemployer pension plan retroactive to April 29, 1980. Sec. 1461(e)(2)(A). The constitutionality of the 1980 Act is attacked on the grounds that the withdrawal provisions, including their retroactive effective date, are arbitrary and irrational, the collection proceedings deprive an employer of an impartial prepayment hearing and the right to trial by jury, the 1980 Act generally impairs pre-existing contract rights, takes property for public use without the payment of just compensation and is void for vagueness. Threshold questions are whether the district court correctly declined to decide an alleged statutory defense which, if it prevailed, would have mooted the constitutional issue, and whether the district court should have stayed decision of the constitutional issues until arbitration was undertaken. Finally there is a question resulting from the district court's ruling on the merits as to whether it was in error in declining to award attorney's fees.

The district court ruled that it should pass on the constitutional issues and should remit to later arbitration procedures the statutory defense to plaintiff's liability. It ruled the statute constitutional in all respects, including the retroactive imposition of withdrawal liability. Although defendants thus prevailed, the district court declined to award them attorney's fees.

We affirm except with respect to attorney's fees.

I.

We begin with a brief description of the scheme of the 1980 Act. The 1980 Act was an amendment to the then-existing Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Secs. 1001 et seq., which had been enacted to regulate employee benefit plans so as to protect the interests of participants and their beneficiaries. ERISA had imposed no withdrawal liability on a contributor to a multiemployer plan except when the entire plan terminated within five years of the employer's withdrawal, and even then the employer's liability was limited to 30 percent of the employer's net worth.

The 1980 Act regulates employer withdrawals from multiemployer benefit plans. 1 Its basic concept is that each employer, in addition to contributions to the plan pursuant to collective bargaining agreements, owes a share of the unfunded vested liability of the plan to its beneficiaries and the employer must pay that share if he withdraws from the plan even if the plan does not terminate. 2 Although effective generally September 26, 1980, the 1980 Act makes withdrawal liability applicable to any employer on or after April 29, 1980. Sec. 1461(e)(2)(A).

When an employer withdraws, the benefit plan's sponsor (here, the Board of Trustees of Teamsters Joint Council No. 83 of Virginia Pension Fund) determines the amount of the employer's withdrawal liability, devises a payment schedule, gives notice to the employer and demands payment. Secs. 1382 and 1399. If the employer disputes either the fact or the amount of its liability, it has the right to negotiate the matter with the plan's sponsor, Sec. 1399(b)(2)(A), and if it is unsuccessful, it (as well as the plan's sponsor) has the right to invoke arbitration. Sec. 1401(a). Either party to arbitration may apply to a district court "to enforce, vacate, or modify the arbitrator's award," but in any such proceeding, there is a statutory presumption that the arbitrator's findings of fact were correct, rebuttable only by a clear preponderance of the evidence. Sec. 1401(b) and (c). Although an employer may seek arbitration and judicial review of the arbitrator's decision, it is statutorily obligated to pay the sponsor's determination of its withdrawal liability no later than sixty days after the initial demand "notwithstanding any request for review or appeal of determinations of the amount of such liability or of the [payment] schedule." Sec. 1399(c)(2).

Factually, this case arose in this manner. Plaintiff, Republic Industries, Inc. (Republic), is the successor in interest to Johnson Motor Lines, Inc. (Johnson), an interstate motor carrier of freight. 3 Johnson continued to operate until August 8, 1980, but in November 1979, because of operating losses, it closed its Richmond General Commodities terminal (Hull Street terminal) and transferred some of the employees to another terminal also in Richmond but some eight miles away (Maury Street terminal). 4 Johnson, pursuant to collective bargaining agreements, had obligated itself to make periodic contributions to defendant, Teamsters Joint Council No. 83 of Virginia Pension Fund (Pension Fund), with respect to employees at the Hull Street terminal, as well as contributions to other funds with regard to employees at other terminals. 5 On August 8, 1980, Republic concluded to terminate all of Johnson's operations; Republic acquired Johnson's assets; Johnson was dissolved; and all contributions to the Pension Fund ceased.

On July 3, 1981, Pension Fund notified Johnson that its withdrawal liability would be $189,107.00. However, because Sec. 1383(d) makes special provision for the amount and terms of payment of withdrawal liability of "employers primarily engaged in the long and short haul trucking industry" and others, Pension Fund demanded that Republic, instead of payment in full, post security for 50 percent of the amount claimed pending a determination by the Pension Benefit Guaranty Corporation (Guaranty Corporation) of whether Pension Fund's contribution base had been "substantially damaged" as a result of withdrawal. 6 Republic protested, contesting retroactive liability and asserting that liability for employees at the Hull Street terminal closed in 1979 should have been excluded with the result that withdrawal liability would become de minimis. Pension Fund did not accede to this protest and Republic did not seek arbitration. A year later, Pension Fund, because it became uncertain of Republic's right to the special provisions of Sec. 1383, demanded payment in full, stating that it had determined that Pension Fund was not a trucking industry plan.

Republic then instituted this action, seeking a declaration that the retroactive withdrawal liability provisions of the 1980 Act are unconstitutional and a permanent injunction restraining Pension Fund from collecting its withdrawal liability claim. Pension Fund was named as defendant. The district court and we permitted Guaranty Corporation to participate in the proceedings as amicus curiae.

The district court, on cross-motions for summary judgment, held that the retroactive aspect of withdrawal liability was valid and constitutional. It recognized that, with respect to withdrawal from a multiemployer pension plan, the case was one of first impression. It placed principal reliance on Nachman Corp. v. Pension Benefit Guaranty Corp., 592 F.2d 947 (7 Cir.1979), aff'd on statutory grounds, 446 U.S. 359, 100 S.Ct. 1723, 64 L.Ed.2d 354 (1980), which was a case dealing with withdrawal from a single employer pension plan, because it thought the difference was not distinguishing. The district court concluded that it should decide the case on constitutional grounds, neither deciding it on the statutory ground that the Hull Street terminal was a separate facility from the Maury Street terminal nor requiring resort to arbitration as a condition precedent to the constitutional challenge, because it was of the view that the constitutional challenge was one that went to the very process of arbitration and that arbitration would not moot the constitutional issue. In this connection, after ruling the 1980 Act valid, the district court ruled that arbitration was still available since the pendency of the action tolled any period of limitations on seeking arbitration. Because it understood the law with regard to plaintiff's other constitutional challenges to be well settled in favor of their rejection, the district court did not discuss them. From these rulings, Republic appeals. At a later stage of the proceedings, the district court denied defendant's request for attorney's fees, and from that order defendant appeals.

II.

We consider first...

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