Republic Industries v. CENTRAL PA. TEAMSTERS, ETC.

• Citation: 534 F. Supp. 1340
• Decision Date: 22 March 1982
• Docket Number: Civ. A. No. 82-0146.
• Parties: REPUBLIC INDUSTRIES, INC., a Delaware corporation, as successor in interest to Johnson Motor Lines, Inc. v. CENTRAL PENNSYLVANIA TEAMSTERS PENSION FUND.
• Court: United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)

534 F. Supp. 1340

REPUBLIC INDUSTRIES, INC., a Delaware corporation, as successor in interest to Johnson Motor Lines, Inc. v. CENTRAL PENNSYLVANIA TEAMSTERS PENSION FUND.

Civ. A. No. 82-0146.

United States District Court, E. D. Pennsylvania.

March 22, 1982.

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Lester Bridgeman, L. T. Urbanczyk, Washington, D. C., David Steck, Philadelphia, Pa., for plaintiff.

Harry A. Dower, Allentown, Pa., for defendant.

David F. Power, amicus curiae Pension Benefit Guarantee Corp.

MEMORANDUM AND ORDER

TROUTMAN, District Judge.

The Multiemployer Pension Plan Act Amendments of 1980 (MPPAA or Act), 29 U.S.C. § 1381 et seq. amended the Employment Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 by creating and imposing upon employers liability for withdrawal from multiemployer pension funds in an amount equal to their pro rata share of unfunded, vested pension benefits; i.e., withdrawal liability. Plaintiff, Republic Industries, Inc., (Republic) successor in interest to Johnson Motor Lines, Inc., (Johnson) challenges the constitutionality of MPPAA and moves for a preliminary injunction to prohibit defendant, Central Pennsylvania Teamsters Pension Fund (Fund), from asserting a claim for $850,000 against it by reason of withdrawal liability under the provisions of the Act.

A brief factual recitation is necessary in order to fully understand the contentions of the parties.

Prior to August 8, 1980, Johnson was a motor carrier operating under authority granted by the Interstate Commerce Commission (ICC). Pursuant to collective bargaining agreements with various locals or associations of local unions of the International Brotherhood of Teamsters, Johnson made periodic payments to several multiemployer pension funds, including defendant.

Because of severe losses sustained in its business, Johnson's directors decided to terminate all its operations as of August 8, 1980. Johnson was not then obliged by the terms of any collective bargaining or other agreement, or otherwise by operation of law, to make any payments to the Fund or any other pension fund as a result of the cessation of its business.

On September 26, 1980, seven weeks after Johnson had shut down its operations and ceased making contributions to the funds, the President signed MPPAA; it applies retroactively.

Plaintiff alleges that the statute deprives it of due process in that the Act permits pension fund trustees to determine, based upon actuarial assumptions, 29 U.S.C. § 1393, the amount of a withdrawing employer's liability to the Fund. 29 U.S.C. § 1391. Upon receipt of an appropriate demand for withdrawal liability, the withdrawing employer "shall pay the amount determined". 29 U.S.C. § 1399(c)(1)(A)(i). Where a dispute exists regarding the validity or amount of a claim, the statute requires that it be decided by arbitration. See 29 U.S.C. § 1401. Significantly, defendant and amicus curiae, the Pension Benefit Guaranty Corporation (PBGC), have represented that there will not be, and indeed that there cannot be, any acceleration of payments during the arbitration process, this even in the event of a delinquency. Regular monthly payments, however, must be made during this period. Where an employer waives or avoids the arbitration process, the full demand falls due. Plaintiff's challenges to the Act are primarily based upon the Fifth, and to a lesser extent, the Seventh Amendments. The Fifth Amendment violations alleged are that MPPAA

(1) impermissibly authorizes seizure of plaintiff's assets without a pre-seizure hearing; i.e., that plaintiff must make monthly installment payments during the arbitration which it, plaintiff, must request in order to challenge the determination of its withdrawal liability.

(2) improperly delegates specified functions to actuaries who base their calculations upon assumptions and guesswork. Worse, these assumptions, and the conclusions which they yield, are "presumed correct unless the party contesting them shows by a clear preponderance of the evidence that the determination was unreasonable or clearly erroneous". See 29 U.S.C. § 1401(a)(3)(A). Hence, plaintiff complains, that the Act improperly sanctions actuarial assumptions by making them difficult to upset. Moreover, since the actuarial assumptions are dignified by a mild statutory presumption of correctness during the arbitration process, and our scope of review requires affirming all facts supported by a "clear preponderance" of the evidence, 29 U.S.C. § 1401(c), plaintiff additionally asserts that the whole procedure is irredeemably tainted and that it "stacks the deck" against it.

(3) unlawfully imposes retroactive liability in that it assesses withdrawal liability against Republic for Johnson's withdrawal from the Fund notwithstanding the fact that on the date of Johnson's withdrawal, MPPAA and its resulting obligations were not yet enacted.

(4) illegally promotes the public purpose of providing pension benefits to workers while using private funds to accomplish this task; i.e., it "takes" private property without just compensation.

The Seventh Amendment violation may be simply stated: MPPAA denies plaintiff the right to trial by jury on the issues of the amount and extent of plaintiff's withdrawal liability.

Defendant and amicus curiae, responding to these contentions, assert that because the Act does not facially abrogate constitutional rights, plaintiff must exhaust non-judicial remedies prior to institution of suit. Since plaintiff has failed to do so, defendant urges dismissal without prejudice. We agree with defendant's analysis of MPPAA and grant its motion to dismiss.

We begin our analysis of this matter with reference to the "long settled rule" that "no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted". Myers v. Bethlehem Steel Shipbuilding Corp., 303 U.S. 41, 50-51, 58 S.Ct. 459, 463-464, 82 L.Ed. 638 (1938). This rule, however, admits of some exceptions. For example, where a dispute centers on legal questions of constitutional dimensions and the facts are uncontested, "full administrative fact gathering and utilization of agency expertise" is not necessary. McGee v. United States, 402 U.S. 479, 486, 91 S.Ct. 1565, 1569, 29 L.Ed.2d 47 (1971). Moreover, where irreparable injury will result, if plaintiff is required to exhaust administrative remedies, courts do not insist upon exhaustion. Renegotiation Board v. Bannercraft Clothing Co., 415 U.S. 1, 24, 94 S.Ct. 1028, 1040, 39 L.Ed.2d 123 (1974). Lastly, exhaustion will be excused where agency action "clearly and unambiguously violates statutory or constitutional rights". Babcock and Wilcox v. Marshall, 610 F.2d 1128, 1138 (3d Cir. 1979), quoting Barnes v. Chatterton, 515 F.2d 916, 920 (3d Cir. 1975) (emphasis added); Mikkilineni v. United Engineers & Constructors, Inc., 485 F.Supp. 1292, 1298 (E.D.Pa.1980). See generally, Bethlehem Steel Corp. v. Environmental Protective Agency, 669 F.2d 903 (3d Cir. 1982).

Not surprisingly, in order to circumvent the exhaustion requirement, plaintiff argues that the Act "clearly and unambiguously" violates the Fifth and Seventh Amendments. Defining a "clear and unambiguous" violation is, of course, a difficult task. One court has held that in order to come within the "extraordinarily narrow" exception to the exhaustion doctrine, plaintiff must show that the challenged law is "patently at variance" with secured rights. American Federation of Government Employees v. Resor, 442 F.2d 993, 995 (3d Cir. 1971). Another court within this Circuit has held that the "clear and unambiguous" standard is met where plaintiff shows that the alleged violation "merits a decision to enter judgment ... as a matter of law". Lower Alloways Creek Township v. United States Nuclear Regulatory Comm., 481 F.Supp. 443, 450 (D.N.J.1979). In yet another case, the court tested the "sufficiency" of plaintiff's allegations. First Jersey Securities, Inc. v. Bergen, 605 F.2d 690, 697 (3d Cir. 1979).

Whether plaintiff's allegations bring it within the articulated exception to the exhaustion requirement mandates reference to the Act and plaintiff's claim thereunder. Our approach is guided by the following inquiry: Do plaintiff's claims reveal a statutory scheme "patently at variance" with or "clearly and unambiguously" in violation of constitutional rights? If they do not, initial resort to non-judicial remedies is appropriate.

We turn now to the allegation that the statute impermissibly authorizes a pre-hearing seizure of plaintiff's assets. Plaintiff argues that the statutory requirement that it make installment payments approaching $10,500 per month while simultaneously submitting its claim to arbitration violates notions of due process as articulated in North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975). Specifically, plaintiff's obligation to pay installments on the claim while litigating the ultimate amount thereof purportedly offends due process in that plaintiff's property is "seized" prior to an adjudication by the arbitrator. This argument falls in the wake of the Third Circuit's decision in Bethlehem Steel Corp. v. Environmental Protection Agency, supra, which rejected plaintiff's challenge to a "pay as you litigate" statute for failure to exhaust non-judicial remedies. The instant case presents facts which are far less compelling than those which existed in Bethlehem Steel, wherein plaintiff had to pay a statutory penalty while contesting defendant's action. In sharp contrast, plaintiff here faces no penalty; i.e., no acceleration of the amount claimed while proceeding in arbitration. In fact, arbitration shields it from the penalty of acceleration. Continuing, plaintiff also complains that there is no requirement for a prompt "post-seizure" determination and that it is in any case doubtful that one can be...