Robbins v. Pepsi-Cola Metropolitan Bottling Co.

• Citation: 637 F. Supp. 1014
• Decision Date: 23 June 1986
• Docket Number: 85 C 9385.,No. 84 C 170,84 C 170
• Parties: Loran W. ROBBINS, et al., Plaintiffs/Counterdefendants, v. The PEPSI-COLA METROPOLITAN BOTTLING COMPANY, et al., Defendants/Counterclaimants, and Frito-Lay, Inc., et al., Additional Counterclaimants, and Central States, Southeast and Southwest Areas Pension Fund, et al., Additional Counterclaim Defendant. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, et al., Plaintiffs/Counterclaim Defendants, v. PEPSICO, INC., et al., Defendants/Counterclaimants, and Pepsi-Cola Bottling Company of Los Angeles; Taco Bell Corp.; Pizza Hut, Inc.; and North American Van Lines, Inc., Additional Counterclaimants.
• Court: U.S. District Court — Northern District of Illinois

637 F. Supp. 1014

Loran W. ROBBINS, et al., Plaintiffs/Counterdefendants, v. The PEPSI-COLA METROPOLITAN BOTTLING COMPANY, et al., Defendants/Counterclaimants, and Frito-Lay, Inc., et al., Additional Counterclaimants,

and

Central States, Southeast and Southwest Areas Pension Fund, et al., Additional Counterclaim Defendant.

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, et al., Plaintiffs/Counterclaim Defendants, v. PEPSICO, INC., et al., Defendants/Counterclaimants, and Pepsi-Cola Bottling Company of Los Angeles; Taco Bell Corp.; Pizza Hut, Inc.; and North American Van Lines, Inc., Additional Counterclaimants.

Nos. 84 C 170, 85 C 9385.

United States District Court, N.D. Illinois, E.D.

June 23, 1986.

Neil K. Quinn, Joseph B. Lederleitner, Mary Anne H. Capron, Richard M. Waris, Pretzel & Stouffer, Chartered, Thomas C. Nyhan, Alan M. Levy, John E. Bardgett, Daniel M. Locallo, Chicago, Ill., Rodney F. Page, Michael Evan Jaffe, Ronald L. Castle, James J. Armbruster, Arent, Fox, Kintner, Plotkin & Kahn, Washington, D.C., James L. Coughlan, Coghlan & Joyce, Chicago, Ill., for plaintiffs/counterdefendants.

Arthur S. Friedman, Peter N. Wang, Deborah Fabricant, Friedman, Wang, Bleiberg & Heimer, P.C., New York City, Stanley J. Adelman, Rudnick & Wolfe, Chicago, Ill., for defendants/counterclaimants.

John R. Climaco, John A. Peca, Jr., Thomas L. Colaluca, John M. Masters, Climaco, Climaco, Seminatore & Lefkowitz Co., L.P.A., Cleveland, Ohio, Edward J. Calihan, Jr., Anna Lavin, Calihan & Lavin, Chicago, Ill., for third-party defendants.

Henry Rose, Mitchell L. Strickler, Pension Benefit Guar. Corp., Washington, D.C. Gen. Counsel, Eileen M. Marutzky, Asst. U.S. Atty., U.S. Atty.'s Office, Chicago, Ill., Local Counsel, for amicus curiae.

NORDBERG, District Judge.

On May 8, 1986, this court ordered the Central States, Southeast and Southwest Areas Pension Fund ("Central States" or "the Fund") to recompute the alleged withdrawal liability¹ of the "controlled group" consisting of PepsiCo, Inc. ("PepsiCo"), Pepsi-Cola Metropolitan Bottling Co. ("Pepsi-Cola"), Frito-Lay, Inc. ("Frito-Lay") and Wilson Sporting Goods Co. ("Wilson").² The May 8, 1986 order applied to the Fund's withdrawal liability assessments against the Pepsi group for the years 1981, 1982, 1983 and 1984. It also dismissed all of the Pepsi group's constitutional defenses,³ except for its fifth amendment challenge to the statutory presumptions set forth in 29 U.S.C. § 1401(a)(3).⁴

On May 23, 1986, this court ordered the Pepsi group to commence interim payments of their withdrawal liability in accordance with the Fund's original schedules. These payments are subject to a readjustment after the Fund completes the recalculation ordered in the May 8, 1986 opinion. The May 23, 1986 order instructed Pepsi to pay the overdue assessments, plus interest,⁵ and to begin paying the prospective monthly payments as they fell due. Pepsi's first payment is scheduled for July 1, 1986. Pepsi filed a notice of appeal of the May 23, 1986 order, and now motions this court for approval of a supersedeas bond pursuant to Fed.R.Civ.P. 62(d).⁶ This court heard oral argument on June 6, 1986, and set an expedited briefing schedule on Pepsi's motion for approval of the bond.⁷ For the following reasons, the court denies Pepsi's motion for approval of its supersedeas bond, and its request for an order staying the May 23, 1986 order during the pendency of the appeal.⁸

The MPPAA's Interim Payments Requirement

The MPPAA's interim payment provisions are set forth in 29 U.S.C. §§ 1399(c)(2) and 1401(d). These sections provide:

(2) Withdrawal liability shall be payable in accordance with the schedule set forth by the plan sponsor under subsection (b)(1) of this section beginning no later than 60 days after the date of the demand notwithstanding any request for review or appeal of determinations of the amount of such liability or of the schedule.

(3) Each annual payment determined under paragraph (1)(C) shall be payable in 4 equal installments due quarterly, or at other intervals specified by plan rules. If a payment is not made when due, interest on the payment shall accrue from the due date until the date on which the payment is made.

29 U.S.C. § 1399(c)(2).

Payments shall be made by an employer in accordance with the determinations made under this part until the arbitrator issues a final decision with respect to the determination submitted for arbitration, with any necessary adjustments in subsequent payments for overpayments or underpayments arising out of the decision of the arbitrator with respect to the determination.

29 U.S.C. § 1401(d). The May 8, 1986 opinion upheld the constitutionality of the interim payments scheme set forth in these sections. May 8th Mem.Op. at 54-56. It concluded that the MPPAA's statutory scheme, which requires payment of withdrawal liability pending the resolution of any disputes, was consistent with due process and therefore enforceable in the district courts. Id.⁹ In the May 23, 1986 opinion, this court concluded that ordering interim payments was "the most appropriate method of implementing Congress' intent regarding installment payments pending the resolution of any disputes over the determination or calculation of withdrawal liability." May 23rd Mem.Op. at 7. The court based this conclusion on the language and legislative history of Sections 1399(c)(2) and 1401(d) of the MPPAA. See May 23rd Mem.Op. at 2-7.

The undisputed purpose of the interim payments provision is to ensure a continuous flow of money to the pension fund. Pantry Pride v. Retail Clerks Tri-State Pension Fund, 747 F.2d 169, 171 (3d Cir. 1984). To this end, § 1399(c)(2) requires an employer to make interim payments "notwithstanding any request for review or appeal," and § 1401(d) directs payments "until the arbitrator issues a final decision."¹⁰ The Fund argues that this specific language of the MPPAA supplants the general procedure under Fed.R.Civ.P. 62(d),¹¹ which allows a defendant to stay a money judgment pending appeal if he posts an adequate supersedeas bond.

After reviewing the arguments of the parties and the language of the statute, the court concludes that the supersedeas procedure set forth in Rule 62(d) is inapplicable to appeals from an interim payments order.¹² Section 1399(c)(2) contains no limiting language. The plain meaning of the statute directs interim payments "notwithstanding any ... appeal," whether it is before the arbitrator, the district court or the circuit court. If Congress meant to limit the broad meaning of the words "any appeal," it could easily have done so.

Pepsi cites TIME-DC, Inc. v. Management-Labor Welfare & Pension Funds of Local 1730, 756 F.2d 939, 946 n. 1 (2d Cir.1985) for the proposition that the term "appeal" in § 1399(c)(2) refers only to an appeal to an arbitrator under 29 U.S.C. § 1401. This court finds that the TIME-DC court's narrow definition of "appeal" is inconsistent with the statutory language and the legislative purpose underlying its enactment.¹³

In Dorns Transportation, Inc. v. IAM National Pension Fund, 578 F.Supp. 1222, 1232 (D.D.C.1984), aff'd, 753 F.2d 166 (D.C. Cir.1985), the court explained the Congressional purpose behind the interim payments requirement:

The legislative history voices Congressional concern with the adverse effects of non-payment of liability upon multiemployer plans. Plans lose the benefit of investment income that may have been earned upon timely payments. Additional administrative costs are incurred by the need to ascertain, review and defend challenges to the amount of imposed liability. By requiring payments during the adjudicatory process, Congress sought to further the policy that those who remain in the fund should not bear additional burdens and losses from employer withdrawals. Remarks of Rep. Thompson, 26 Cong.Rec. H7899 (Daily ed., August 26, 1980).... By requiring payment pending appeal, the Act effectuates the avowed purpose of shifting the economic burdens of withdrawal back to the withdrawing employer.

The court finds that neither the plain statutory language nor the legislative history contain any indication that Congress intended the interim payments provision to apply only to appeals to the arbitrator. This interpretation, if accepted, would run counter to Congress' express goal of ensuring that litigation would not disrupt the continuous flow of contributions to the Fund. Following Pepsi's interpretation, the court could order interim payments while the parties were before the arbitrator, but the employer could avoid this statutory requirement by posting an adequate supersedeas bond and appealing to the district courts, circuit courts, or even the Supreme Court. In most cases, the arbitration process will result in a far shorter delay than any appeals to the federal courts. If Pepsi's interpretation of the interim payments provision were valid, then the statute would ensure continued payments only for a short period of time, and allow a suspension during any subsequent appeals, which could take years. This construction of the statute cannot be reconciled with the Congressional purpose underlying § 1399(c)(2).

Congress emphasized that an employer could challenge his withdrawal liability, but the decision to do so would not suspend his statutory obligation to continue contributing to the Fund. The court finds that when Congress ordered these installment payments, it intended them to continue until the issuance of a final decision regarding the employer's total obligation to the Fund, whether by arbitrator or court. See also 29 U.S.C. § 1401(d). Given the clear mandate of Congress set forth in § 1399(c)(2), Pepsi's assertion that it has a "right" to a supersedeas bond pursuant to Rule 62(d) is rejected as being contrary to that section. The MPPAA's unique statutory scheme was designed to rectify and protect against the serious economic repurcussions caused by...