Shelter Framing Corp. v. Pension Ben. Guar. Corp.
| Decision Date | 20 May 1983 |
| Docket Number | 82-5272,82-5460 to 82-5462 and 82-3506.,No. 82-5271,82-5271 |
| Citation | 705 F.2d 1502 |
| Parties | SHELTER FRAMING CORPORATION, Plaintiff/Appellee, and Carpenters Pension Trust for Southern California, Defendant/Appellee, v. PENSION BENEFIT GUARANTY CORPORATION, Applicant for Intervention/Appellant. G & R ROOFING COMPANY, a California corporation, Plaintiff/Appellee, and Carpenters Pension Trust for Southern California, Defendant/Appellee, v. PENSION BENEFIT GUARANTY CORPORATION, Applicant for Intervention/Appellant. SHELTER FRAMING CORPORATION, Plaintiff/Appellee, v. CARPENTERS PENSION TRUST FOR SOUTHERN CALIFORNIA, Defendant/Appellant. G & R ROOFING COMPANY, Plaintiff/Appellee, v. CARPENTERS PENSION TRUST FOR SOUTHERN CALIFORNIA, Defendant/Appellant. G & R ROOFING COMPANY, Plaintiff/Appellant, v. CARPENTERS PENSION TRUST FOR SOUTHERN CALIFORNIA, Defendant/Appellee. R.A. GRAY AND CO., Plaintiff/Appellant, v. OREGON-WASHINGTON CARPENTERS-EMPLOYERS PENSION TRUST FUND and Pension Benefit Guaranty Corporation, Defendants/Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
COPYRIGHT MATERIAL OMITTED
Howard A. Kroll, James P. Watson, George M. Cox, Cox, Castle & Nicholson, Los Angeles, Cal., for Carpenters Pension Trust for Southern California.
Michael E. Merrill, Merrill & Schultz, San Diego, Cal., for G & R Roofing Co.
Cathryn M. Brogan, Peter Szabadi, Ronald J. Seeley, Acret & Perrochet, Los Angeles, Cal., for Shelter Framing Corp.
David S. Paull, Bailey & Paull, Portland, Or., William B. Crow, Miller, Nash, Yerke, Wiener, Portland, Or., for Oregon-Washington Carpenters Employees Pension Trust Fund & Pension Benefit.
Henry Rose, Gen. Counsel, Baruch Fellner, J. Stephen Caflisch, David F. Power, Terence G. Craig, Pension Benefit Guaranty Co., Washington, D.C., amicus curiae for Pension Benefit Guaranty Corp.
Thomas M. Triplett, Mildred J. Carmack, Schwabe, Williamson, Wyatt, Moore & Roberts, Portland, Or., for R.A. Gray & Co.
Harris Weinstein, Covington & Burling, Washington, D.C., amicus curiae for Transport Motor Exp. E.W. Bohren, Transport & Essex Corp.
Before WRIGHT, KENNEDY and BOOCHEVER, Circuit Judges.
This opinion addresses the constitutionality of the retroactive application of the Multiemployer Pension Plan Amendments Act (the "Amendments Act"),1 the subject of extensive nationwide litigation.2 We hold that retroactive application of the withdrawal liability provision of the Amendments Act violates the due process rights of employers who withdrew from multiemployer pension plans before the Act became law.3
On September 26, 1980, the President signed into law the Amendments Act, amending certain provisions of the Employee Retirement Income Security Act ("ERISA").4 Under ERISA, the Pension Benefit Guaranty Corporation (the "Guaranty Corporation"), a government corporation, administers a system of termination insurance designed to protect employees whose pension plans fail or terminate with insufficient funds. The Guaranty Corporation receives no direct federal appropriations, but relies primarily on premium payments to meet its obligations to employees whose guaranteed benefits exceed the value of their plans' assets when the plans terminate. 29 U.S.C. § 1307 (Supp. V 1981).
When the Guaranty Corporation expended its own funds, it was formerly authorized by Title IV of ERISA to impose secondary liability on employers. Employers who withdrew from multiemployer plans incurred a contingent liability. If a plan terminated, all employers who contributed to that plan during the five years immediately preceding its termination were collectively liable to the Guaranty Corporation for the amount the Guaranty Corporation expended. If termination liability arose, however, no single employer's liability could exceed thirty percent of that employer's net worth. Id. at §§ 1362(b)(2), 1364 (1976).
The Guaranty Corporation advised Congress that the contingent liability provisions of ERISA gave employers an incentive to withdraw from multiemployer plans, particularly when their plans were in poor financial health. Congress responded by enacting the Amendments Act, which replaced contingent liability with absolute liability upon withdrawal. Under the Amendments Act, an employer who withdraws must immediately begin to pay a fixed and certain debt owned to the pension plan. The withdrawal liability is the employer's proportionate share of the plan's unfunded vested liability, the difference between the present value of vested benefits and the value of the plan's assets. The withdrawal liability provision was assigned a retroactive effective date of April 29, 1980. Id. at § 1461(e)(2)(A) (Supp. V 1981).
There are no disputed issues of material fact. A 1959 trust agreement between the United Brotherhood of Carpenters and Joiners of America ("the Union") and several multiemployer associations formed the Carpenters Pension Trust for Southern California, a multiemployer pension plan which primarily covers employees in the building and construction industry. The Trust assets are managed by a board of trustees. Half of the trustees are appointed by the Union; the other half are appointed by the multiemployer associations.
Shelter Framing Corporation is a licensed construction contractor in southern California. Prior to July 1, 1980, Shelter Framing was bound by a collective bargaining agreement with the Union. The agreement obligated Shelter Framing to contribute to the trust fund for each hour worked by covered carpentry employees.
That agreement terminated on July 1, 1980. Shelter Framing and the Union attempted to reach a new agreement but failed. When their negotiations reached an impasse, Shelter Framing was no longer required to make any contributions to the trust fund on behalf of its employees. It ceased making payments on August 12, 1980.
On April 24, 1981, the trustees notified Shelter Framing that it had withdrawn from the trust within the meaning of the Amendments Act, and Shelter Framing thus owed to the trust fund withdrawal liability of $797,648.00. Shelter Framing had the option of paying the liability claim in a lump sum within 60 days, or in 40 monthly installments which, after interest, totalled $899,751.88. Shelter Framing admitted it withdrew from the trust, but refused to make any payments on the liability claim. The joint statement of stipulated facts indicates that for the period ending March 31, 1981, the withdrawal liability equals about 180 percent of the total stockholder equity in the corporation.5
G & R Roofing Company is a construction contractor, obligated under a collective bargaining agreement to make contributions to the Carpenters Pension Trust for each hour of covered work performed by carpentry employees. The agreement expired July 1, 1980, and the parties failed to reach a new agreement. The last pension contribution G & R made to the trust fund was for work performed through August 12, 1980. On September 2, 1981, the trustees assessed withdrawal liability against G & R for $687,387.00. G & R could pay a lump sum of that amount, or pay a total of $784,824.88 in 45 monthly payments. The stipulated facts indicate that for the fiscal year ending September 30, 1981, the withdrawal liability equals about forty percent of the total stockholder equity in the company.6
On August 28, 1981, Shelter Framing filed suit against the trust, seeking to enjoin the collection of withdrawal liability on constitutional grounds. G & R filed a similar complaint against the trust on October 27, 1981. The trustees answered and counterclaimed for collection of the assessed withdrawal liability in both cases, which were consolidated before Senior District Judge Irving Hill.
On October 2, 1981, the trust's co-counsel informed the appellant Guaranty Corporation of the pending suit. The Guaranty Corporation is authorized to intervene in civil actions brought under the withdrawal liability provisions of ERISA. 29 U.S.C. § 1451(g) (Supp. V 1981). The Guaranty Corporation declined the trustees' invitation to intervene, though it said it would monitor the case. G & R sent a Notice of Service of Complaint in its action to the Guaranty Corporation on October 30, 1981.
In November, G & R and Shelter Framing filed motions for preliminary injunctions against attempts by the trustees to collect the withdrawal liability. The Guaranty Corporation learned from a G & R attorney in early November that the motions would be heard on December 7, 1981. The motion hearing was continued until January 11, 1982.
Judge Hill granted the plaintiffs' motions to enjoin further efforts by the trustees to collect withdrawal liability. On January 14, 1982, at a hearing held to set the terms of the preliminary injunctions, Judge Hill said he would enjoin the parties from arbitrating the disputed amount of withdrawal liability. The order was entered on January 20, 1982. The parties then filed cross-motions for summary judgment, accompanied by a joint statement of stipulated facts.
The Guaranty Corporation moved to intervene in the case on February 22, 1982. It sought to dissolve the injunction against arbitration between the employers and the trustees. The district court held that the Guaranty Corporation could not move for partial dissolution of the preliminary injunctions unless and until it was a party to each action, but agreed to hear the question of exhaustion of arbitration on March 22, 1982, before the hearing on the motions for summary judgment. The court denied the Guaranty Corporation's motion to intervene as untimely, and stated the parties would be prejudiced if the Guaranty Corporation were given leave to intervene. It did allow the Guaranty Corporation to participate as amicus curiae.
After hearing arguments, Judge Hill held that exhaustion of the administrative remedy of arbitration was not required before proceeding...
To continue reading
Request your trial
-
Pension Benefit Guaranty Corporation v. Gray Company Pension Trust Fund v. Gray Company
... ... Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, ... Shelter Framing Corp. v. Pension Benefit Guaranty Corp., ... ...
-
Dorn's Transp., Inc. v. IAM Nat. Pension Fund
... ... Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51, 58 S.Ct. 459, 463, 82 ... Fund, 718 F.2d 628 (4th Cir.1983); Shelter Framing Corp. v. Carpenters Pension Trust for ... ...
-
Concrete Pipe and Products of California, Inc v. Construction Laborers Pension Trust For Southern California
... ... Ben. Guar. Corp. as amicus curiae by special leave of ... on the Ninth Circuit's decision in Shelter Framing Corp. v. Pension Benefit Guaranty Corp., ... ...
-
State Farm Mut. Auto. Ins. Co. v. Broadnax
... ... Berry v. Beech Aircraft Corp., 717 P.2d 670, 674 (Utah 1985); see also ... access to the Courts." Textile Workers Pension Fund v. Standard Dye & Finishing Co., 725 F.2d ... by the Ninth Circuit Court of Appeals in Shelter Framing Corp. v. Pension Benefit Guaranty Corp., ... ...