Seaway Port Authority of Duluth v. Duluth-Superior ILA Marine Ass'n Restated Pension Plan, DULUTH-SUPERIOR

• Decision Date: 30 November 1990
• Docket Number: DULUTH-SUPERIOR,No. 89-5601MN,89-5601MN
• Citation: 920 F.2d 503
• Parties: 13 Employee Benefits Ca 1205 SEAWAY PORT AUTHORITY OF DULUTH, Appellee, v.ILA MARINE ASSOCIATION RESTATED PENSION PLAN; and The Board of Trustees of the Duluth-Superior ILA Marine Association Restated Pension Plan, Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 503

920 F.2d 503

13 Employee Benefits Ca 1205

SEAWAY PORT AUTHORITY OF DULUTH, Appellee, v. DULUTH-SUPERIOR ILA MARINE ASSOCIATION RESTATED PENSION

PLAN; and The Board of Trustees of the

Duluth-Superior ILA Marine Association

Restated Pension Plan, Appellants.

No. 89-5601MN.

United States Court of Appeals,

Eighth Circuit.

Submitted Sept. 12, 1990.

Decided Nov. 30, 1990.

Kenneth D. Butler, Duluth, Minn., for appellants.

Robert C. Maki, Duluth, Minn., for appellee.

Before WOLLMAN, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and MAGILL, Circuit Judge.

MAGILL, Circuit Judge.

In this declaratory judgment action, the Duluth-Superior ILA Marine Association Restated Pension Plan and its trustees (the Trustees) appeal from the district court's ¹ order granting the Seaway Port Authority of Duluth's (SPAD) motion for summary judgment on the ground that SPAD was not an "employer" on or before May 28, 1987, for the purposes of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Secs. 1001-1461, and its amendment, the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), Pub.L. No. 96-364, 94 Stat. 1208 (1980). The Trustees argue on appeal that the district court erred in applying state law to determine whether SPAD was an employer under the federal statutes and also in determining that SPAD was not an employer under the federal statutes. Because the Authority was not an employer under the federal statutes, we need not decide the state law issue and thus affirm the district court's order.

I.

The Duluth-Superior ILA Marine Association Restated Pension Plan is a multiemployer pension plan. The Seaway Port Authority of Duluth is a public entity organized under Minn.Stat.Ann. Secs. 469.048-469.107 (Supp.1990). SPAD owns and operates the Arthur M. Clure Public Marine Terminal in Duluth, Minnesota. From 1977 until May 28, 1987, SPAD contracted with North Central Terminal Operators, Inc. to manage the terminal. Article I of the contracts ² between SPAD and North Central provided that North Central would act as SPAD's managing agent for all terminal operations, including stevedoring, securing, cleaning, fitting, and berthing services. Article II of the contracts provided that North Central would be the employer of all operating personnel and that North Central would sign any collective bargaining agreements. Article III of the contracts provided that all funds needed for or arising from the terminal's operation would be deposited in accounts designated by SPAD. Article III further provided that North Central would maintain a separate payroll account into which SPAD would deposit funds from the operating account to enable North Central to meet its payroll and fringe benefit expenses. The checks for pension fund contributions were signed by both SPAD and North Central personnel.

On May 29, 1987, North Central ended its relationship with SPAD. Pursuant to ERISA Sec. 4219, 29 U.S.C. Sec. 1399(a), North Central completed a Statement of Business Affairs, supplying information about North Central's cessation of contributions to the pension plan. In the report, North Central contended that it never had an obligation to contribute to the pension plan, and thus denied any withdrawal liability.

On July 1, 1988, the Trustees notified SPAD that they believed North Central's termination constituted a complete withdrawal from the pension plan and that SPAD had incurred withdrawal liability under 29 U.S.C. Sec. 1381. Section 4201 of ERISA, 29 U.S.C. Sec. 1381, states in pertinent part: "(a) If an employer withdraws from a multiemployer plan in a complete withdrawal or a partial withdrawal, then the employer is liable to the plan in the amount determined under this part to be the withdrawal liability." SPAD maintained that it was not an employer under the statute, that North Central was, and that SPAD thus was not liable for the withdrawal payments. SPAD and the Trustees agreed that SPAD would seek declaratory relief in federal district court to determine whether SPAD was an employer for the purposes of ERISA withdrawal.

SPAD filed its complaint for declaratory relief on October 6, 1988, and asked the court to determine whether it was an employer under ERISA, common law, or the MPPAA. The Trustees counterclaimed for a determination that SPAD was an employer under the federal statutes and the common law. Both parties then moved for summary judgment. The district court granted SPAD's motion for summary judgment and held that SPAD was not an employer under ERISA or the MPPAA on or before May 28, 1987, the date of North Central's termination. The Trustees now appeal this ruling.

II.

This is a matter of first impression in this circuit. Before discussing the parties' arguments, we will briefly describe the statutory scheme involved. Congress enacted ERISA in 1974 to "ensure that employees and their beneficiaries would not be deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plans." Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 720, 104 S.Ct. 2709, 2713, 81 L.Ed.2d 601 (1984). To achieve this, Congress created the Pension Benefit Guaranty Corporation (PBGC), which insures certain pension plans and provides benefits to underfunded plans upon termination. Id. After several years, the PBGC determined that ERISA did not sufficiently insulate plans from the adverse effects caused by the withdrawal of one employer from a multiemployer plan. Id. at 722, 104 S.Ct. at 2714. Responding to this concern, Congress amended Title IV of ERISA by enacting the Multiemployer Pension Plan Amendments Act of 1980, Pub.L. No. 96-364, 94 Stat. 1208 (1980). As one court has described the statute:

The [MPPAA] added subtitle E to Title IV of ERISA. The MPPAA establishes withdrawal liability for employers that cease participation in a multiemployer pension plan, as well as means for computing that liability. Complete withdrawal from a multiemployer pension plan occurs when an employer either permanently ceases to have an obligation to contribute under the plan or permanently ceases all operations covered under the plan.... At the time that an employer withdraws from a plan, the plan is required by the MPPAA to determine the amount of the employer's withdrawal liability, and notify the employer of that amount.

Connors v. B.M.C. Coal Co., 634 F.Supp. 74, 75 (D.D.C.1986) (citations omitted). In this case, the Trustees have determined that SPAD's alleged withdrawal liability is approximately $200,000.

The Trustees argue on appeal that the district court erred in holding that SPAD was not an employer for the purposes of ERISA and the MPPAA. They first argue that the district court improperly applied state common law in determining that SPAD was not an employer. It is impossible, however, to discern from the record what exactly were the grounds on which the district court based its decision. At the summary judgment hearing, the district court remarked that to determine whether SPAD was an employer, it had to look to the Minnesota statute that established SPAD and to the existing law about the control of funds and employees. But the district court also addressed the Trustees' federal law arguments. In its subsequent order granting SPAD's summary judgment motion, the district court cited no authority and gave no reasons for its decision, but simply concluded that SPAD was not an employer under ERISA and the MPPAA. Regardless of the actual grounds on which the district court based its decision, ³ we review the Trustees' arguments de novo because the definition of employer under the MPPAA is a question of law. Cf. Short v. Central States, S.E. & S.W. Areas Pension Fund, 729 F.2d 567, 571 (8th Cir.1984) (stating that definition of employee under ERISA is a question of law).

The Trustees contend that the proper standard for determining whether SPAD is an employer is the definition found in ERISA: "The term 'employer' means any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity." ERISA Sec. 3(5), 29 U.S.C. Sec. 1002(5). SPAD responds, correctly, that although ERISA defines an employer, the MPPAA does not. ERISA's definition of employer is contained in Title I of the statute. The withdrawal liability provision, however, is contained in Title IV of ERISA. This distinction is important because Title I's definitional section begins with the statement, "For purposes of this title:...." ERISA Sec. 3, 29 U.S.C. Sec. 1002 (emphasis added). As the Supreme Court noted in Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 100 S.Ct. 1723, 64 L.Ed.2d 354 (1980), terms defined in Title I of ERISA "are not necessarily applicable to Title IV, because they are limited by the introductory phrase, 'For purposes of this title,' " id. at 370, 100 S.Ct. at 1731, and "Title I definitions do not apply elsewhere in the Act of their own force." Id. at 370 n. 14, 100 S.Ct. at 1731 n. 14.

The Trustees reason that ERISA's broad definition nevertheless applies because it best effectuates the purpose of ERISA, which is to provide the maximum degree of protection to employees covered by private retirement plans. The Trustees do not draw this conclusion in a vacuum; several district courts have held that the ERISA definition of employer applies to the MPPAA. See In re Uiterwyk Corp., 63 B.R. 264, 266 (M.D.Fla.1986); Central Pa. Teamster's Pension Fund v. Service Group, Inc., 645 F.Supp. 996, 997 (E.D.Pa.1985); American Stevedoring Corp. v. Burlington Indus., Inc., No. 85-4180, 1985 WL 5057 (N.D.Ill. Dec. 19, 1985) (LEXIS, Genfed library, Dist file). More persuasive authority, however, holds otherwise. See Korea Shipping Corp. v. New York Shipping Ass'n-Int'l Longshoremen's Ass'n Pension Trust Fund,...