SIBLEY, ETC. v. BAKERY, CONFECTION. & TOB. WORKERS, CIV-82-555T.
| Decision Date | 15 March 1983 |
| Docket Number | No. CIV-82-555T.,CIV-82-555T. |
| Citation | 566 F. Supp. 32 |
| Parties | SIBLEY, LINDSAY & CURR CO., A DIVISION OF ASSOCIATED DRY GOODS CORP., Plaintiff, v. BAKERY, CONFECTIONERY AND TOBACCO WORKERS INTERNATIONAL UNION OF AMERICA, AFL-CIO, and Bakery and Confectionery Union and Industry International Pension Fund, Defendants. |
| Court | U.S. District Court — Western District of New York |
Harris, Beach, Wilcox, Rubin & Levey, Rochester, N.Y., for plaintiff.
Morgan, Lewis & Bockius, Washington, D.C., Albright, Yorks, Spadone & Anderson, Rochester, N.Y. (Donald Spadone, Rochester, N.Y., of counsel), for defendants.
This is an action challenging the constitutional validity of certain withdrawal liability provisions of the Multiemployer Pension Plan Amendment Act of 1980 (hereinafter the "MPPAA"), 29 U.S.C. § 1381 et seq. The MPPAA is an amendment to the Employee Retirement Income Security Act of 1974 (hereinafter "ERISA"), 29 U.S.C. § 1001 et seq. Presently before this Court are cross motions for summary judgment. Jurisdiction is conferred upon this Court by 29 U.S.C. § 1451. There being no genuine dispute between the parties as to the material facts presented in this case, judicial determination of the legal issues by means of summary judgment is appropriate.
The relevant facts may be summarized as follows. Plaintiff, Sibley, Lindsay and Curr Co. (hereinafter "Sibley's") operates retail department stores in Rochester, New York. For many years prior to May 31, 1980, Sibley's operated a bakery at its Main Street, Rochester store. Defendant, Bakery and Confectionary Workers International Union of America (AFL-CIO) (hereinafter "Union") represented the bakery workers for purposes of collective bargaining. Since 1956 Sibley's has negotiated and entered into formal collective bargaining agreements with the Union. Pursuant to these labor agreements, Sibley's was contractually required to make certain monetary contributions to the Bakery and Confectionary Union and Industry International Pension Fund (hereinafter "Fund") on behalf of its bakery employees for the purpose of providing pension benefits to retired bakery employees.
On May 31, 1980 Sibley's closed its bakery and terminated the employment of forty-three bakery workers. According to Sibley's, the termination of its bakery operations was due to substantial financial losses attributable to the bakery. Prior to the closing of the bakery, Sibley's and the Union entered into a contractual agreement "governing their obligations ... with regard to the closing of the bakery operation". (Complaint, Exhibit A). Under the terms of the agreement, Sibley's provided vacation and severance benefits for the terminated employees. Under Paragraph Five of the Agreement, the parties expressly provided that the agreement constituted "the entire remaining obligations of both parties under their labor contract with regard to cessation of bakery production operations". Id.
At the time Sibley's terminated its bakery operation, ERISA imposed no financial liability upon Sibley's for cessation of its bakery business or its withdrawal from the Fund.1 On September 26, 1980, four months after the closing of Sibley's bakery, the President signed into law the Multiemployer Pension Plan Act of 1980. (MPPAA) 29 U.S.C. § 1381 et seq. The MPPAA amended ERISA by, inter alia, creating and imposing substantial costs upon employers, such as Sibley's, who withdrew from multiemployer pension funds.2 While the majority of the MPPAA became effective on September 26, 1980, the date President Carter signed the legislation, the withdrawal liability provisions of the Act were made effective as of April 29, 1980, approximately five months prior to the President's signature. Thus, Sibley's found itself subject to the withdrawal liability provisions of the MPPAA, notwithstanding the fact that it had closed its bakery and withdrew from the pension fund almost four months prior to the date the MPPAA was signed into law.
By letter dated May 11, 1982, the Fund notified Sibley's that it had computed Sibley's withdrawal liability under the MPPAA to be $315,927.00. An employer's withdrawal liability is its allocable share of the unvested benefits of the multiemployer fund as calculated by the Fund's trustees. 29 U.S.C. §§ 1381, 1391. The Fund provided Sibley's with the option of making payment in 59 consecutive installments, with interest. If an employer fails to make a monthly payment, the Plan Trustees are entitled to find the employer in default, and may declare the full amount of the employer's withdrawal liability to be due immediately. 29 U.S.C. § 1399(c)(5). Since July, 1981, Sibley's, under protest, and solely to avoid the default provisions of the MPPAA, has paid monthly installments of $6,245.00 to the Fund.
On June 25, 1982, Sibley's filed the instant action challenging the constitutionality of the MPPAA's retroactive imposition of withdrawal liability. By order of this Court dated August 4, 1982, Sibley's motion for a preliminary injunction was denied, the Fund's motion for dismissal was denied, the Union's motion for dismissal was denied, and venue was found to be proper in the Western District of New York. Additionally, it was determined that the plaintiff's motion for a preliminary injunction would be converted into a motion for summary judgment. On September 1, 1982, the Fund and the Union filed cross-motions for summary judgment. The parties were given ample time to submit materials in support of their summary judgment motions and the issues raised in the complaint have been exhaustively researched and briefed by the parties.
It is well settled that legislative acts adjusting the burden and benefits of economic life carry with them a presumption of constitutionality. "The burden is on the one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way". Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 96 S.Ct. 2882, 49 L.Ed.2d 752 (1976). The Court in Turner Elkhorn went on to state, however, that legislation imposing retroactive burdens may be subject to greater judicial scrutiny than legislation with simply prospective application. Id. at 16-17,3 96 S.Ct. at 2893.
In Nachman Corp. v. Pension Benefit Guaranty Corp., 592 F.2d 947 (7th Cir. 1979) the Seventh Circuit articulated a four factor test in determining whether retroactive legislation violates the due process clause of the Fifth Amendment.4 The four factor analysis of Nachman has been utilized by other district courts in adjudicating the identical constitutional challenge to the MPPAA as is presented here.5 I agree that the Nachman test is the proper approach and consequently adopt its use for consideration of the instant case.
Initially, it must be emphasized that judicial review of economic legislation under the Due Process Clause is limited to a determination as to whether the legislation represents a rational means to a legitimate end. See Turner Elkhorn Mining, 428 U.S. at 18-19, 96 S.Ct. at 2893-94. Under Nachman, the rationality of a retroactive legislature enactment is determined by a "comparison of the problem to be remedied with the nature and scope of the burden imposed to remedy that problem". Nachman, supra, at 960. In making this comparison, the Seventh Circuit identified four factors to be used as guidelines in ascertaining the constitutionality of retroactive legislation. The four factors are:
1. The Reliance Interests of the Parties — Sibley's argues with great force that its reliance interest is substantial because it was entitled to rely on the existing state of the law when it closed the bakery and withdrew from the Fund. The Fund, on the other hand, argues at length that Sibley's should not have relied on existing law because they knew or should have known that Congress was going to enact legislation that would have a drastic retroactive effect on their withdrawal liability. "In view of the legislative history of the MPPAA and particularly the amount of congressional activity in the area prior to Sibley's withdrawal, the company should have been more knowledgeable about the prospects for mandatory withdrawal liability." (Defendants Memorandum of Law, pp. 21)
This Court declines to charge Sibley's with the responsibility of predicting congressional action. Forecasting congressional action (or lack of action) is akin to forecasting the weather or the stock market: There are simply too many unpredictable variables involved. To adopt the view urged by the defendants would be to impose a burden upon Sibley's to be a clairvoyant — to predict that Congress would pass legislation four months hence. As Judge Hill stated in Shelter Framing Corp. v. Carpenters Pension Trust, 543 F.Supp. 1234 (D.C. Cal.1982): Id. at 1249 (emphasis added).
In measuring the reliance interest of a party, a court must also consider what that party would have done had it known that the legislative action was coming. Welch v....
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...withdrawal liability provisions violated Sibley's right to due process of law. See Sibley, Lindsay & Curr Co. v. Bakery, Confectionary and Tobacco Workers Int'l Union, et al., 566 F.Supp. 32 (W.D.N.Y.1983). From this judgment, the Union and pension fund II Background and Legislative History......