White Motor Corp. v. Malone, No. 76-1266

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Writing for the CourtBefore BRIGHT and WEBSTER, Circuit Judges, and TALBOT SMITH; BRIGHT; Brennan
Citation545 F.2d 599
Decision Date02 December 1976
Docket NumberNo. 76-1266
Parties93 L.R.R.M. (BNA) 3008, 79 Lab.Cas. P 11,764 WHITE MOTOR CORPORATION and White Farm Equipment Company, Appellants, v. E. I. MALONE, Commissioner of Labor and Industry for the State of Minnesota, Appellee.

Page 599

545 F.2d 599
93 L.R.R.M. (BNA) 3008, 79 Lab.Cas. P 11,764
WHITE MOTOR CORPORATION and White Farm Equipment Company, Appellants,
v.
E. I. MALONE, Commissioner of Labor and Industry for the
State of Minnesota, Appellee.
No. 76-1266.
United States Court of Appeals,
Eighth Circuit.
Submitted Sept. 15, 1976.
Decided Dec. 2, 1976.

Page 600

Curtis L. Roy, Minneapolis, Minn., for appellants; Peter S. Hendrixson of Dorsey, Windhorst, Hannaford, Whitney & Halladay, Minneapolis, Minn., Frank C. Heath, John L. Strauch and James A. Rydzel of Jones, Day, Reavis & Pogue, Cleveland, Ohio, on brief.

James P. Gerlach, Sp. Asst. Atty. Gen., St. Paul, Minn., for appellee; Warren R. Spannaus, Atty. Gen., Richard B. Allyn, Sol. Gen., and Richard S. Slowes, Sp. Asst. Atty. Gen., St. Paul, Minn., on brief.

Before BRIGHT and WEBSTER, Circuit Judges, and TALBOT SMITH, Senior District Judge. *

BRIGHT, Circuit Judge.

The question presented by this case is whether federal labor policy preempts the legislative power of the State of Minnesota to impose upon the White Motor Corporation 1 (White Motor) the obligation to fully fund its employee pension plan upon the closing of its factory and terminating its employees, notwithstanding an agreement to the contrary contained in the collective bargaining contract between White Motor and the employees' unions. The district court answered this preemption question in the negative 2 and denied White Motor injunctive relief barring enforcement of the questioned Minnesota legislation, referred to here as the Minnesota Pension Act. 3 We disagree, and hold that the Minnesota Pension Act, as applied to White Motor, is preempted by federal labor policy.

We have earlier considered other problems relating to White Motor's pension

Page 601

plan. 4 The historical facts related there are a prelude to the present litigation. White Motor closed its Minneapolis factory and attempted to terminate as of June 30, 1972, the pension plan benefiting employees at the Minneapolis plant and employees at another White Motor factory in Hopkins, Minnesota. The UAW (Union) challenged the action contending that the pension plan could not be terminated prior to May 1, 1974, the expiration date of the collective bargaining agreement then in effect. An arbitrator ruled in favor of the Union, and the federal district court sustained the award as within the arbitrator's powers granted under terms of the collective bargaining agreement. On appeal, we affirmed. During that prior litigation, White Motor took appropriate action to terminate the pension plan as of May 1, 1974, if the arbitrator's determination should be sustained. 5

During the pendency of the preceding litigation, the Minnesota legislature enacted the Minnesota Pension Act, effective April 10, 1974. 6 The statute requires full funding of pension benefits whenever an employer ceases to operate a place of employment or pension plan. The district court described and interpreted the relevant statutory provisions as follows:

The title of the Act describes it as

"(a)n act relating to private pensions; imposing an obligation upon certain employers who terminate pension plans; providing for the enforcement and method of payment of such obligations." Minn.Laws 1974, ch. 437.

Minn.Stat. §§ 181B.03-.06 impose a "pension funding charge" directly against any employer who ceases to operate a place of employment or a pension plan. Such charge shall be equal in amount to the vested and nonvested benefits described in the statutory provisions. These sections essentially provide that any employee who has completed ten or more years of credited service under a pension plan has, upon termination of that plan or of his place of employment, an automatically vested right to all pension benefits he would have received had the particular plan not been terminated or had the place of business not been closed.

Minn.Stat. §§ 181B.09-.12 provide that the Commissioner of Labor and Industry,

Page 602

after investigation, shall certify amounts owing by an employer. That certified amount is declared, under § 181B.11, to "be a lien upon the employer's assets." The pension funding charge is used to purchase an annuity payable to the employee when he reaches normal retirement age. (White Motor Corp. v. Malone, 412 F.Supp. 372, 375 (D.Minn.1976).)

Pursuant to applicable provisions of the Minnesota Pension Act, the State of Minnesota notified White Motor that the corporation owed a pension funding charge of $19,150,053. White Motor's obligations as to vesting and, particularly, as to funding under the pension plan differed significantly from obligations imposed on employers by the Minnesota Pension Act. The district court described the history of White Motor's plan and discussed the differences in obligations imposed on the employer by its plan, as compared to the statutory obligations under Minnesota law, as follows:

In 1950, a pension plan was established for the employees of the predecessor of White Farm (White Motor). This pension plan was carried forward in some form in each of the subsequent years that collective bargaining agreements were entered into: 1954, 1959, 1962, 1965, 1968 and 1971. Since 1955, the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America and certain of its local unions (hereinafter collectively referred to as the "UAW") have been the bargaining representatives for production and maintenance employees and clerical employees at the Lake Street and Hopkins plants. Pension benefits resulting from collective bargaining agreements continued to increase after the purchase of Motec Industries by White Motor in 1963.

The 1971 version of the pension plan is the plan pertinent to this action. The 1971 plan contained a provision, first inserted in the 1968 plan, requiring the funding of unpaid past service liability. Unpaid past service liability is at any given time, the excess of the accrued liability of the pension fund over the present value of the assets of the fund. The 1971 plan provided:

Section 9.05

The unfunded net deficiency as of January 1, 1971 shall be amortized over a thirty-five (35) year period from January 1, 1971. The deficiencies resulting from benefit increases effective January 1, 1972 and January 1, 1973 shall be funded uniformly over a thirty-five (35) year period from January 1, 1972 and January 1, 1973 respectively.

In language unchanged since the 1950 pension plan, the 1971 plan provided for the payment of pensions as follows:

Section 6.09 Source of Pensions

Pensions shall be payable only from the Fund and rights to pensions shall be enforceable only against the Fund.

Section 6.17 No Other Benefits

No benefits other than those specifically provided for are to be provided under this Plan. No employee shall have any vested right under the Plan prior to his retirement and then only to the extent specifically provided herein.

Section 9.04 Rights of Employees in the Fund

No employees, participant or pensioner shall have any right to, or interest in, any part of any Trust Fund created hereunder, upon termination of employment or otherwise, except as provided under this Plan and only to the extent therein provided. All payments of benefits as provided for in this Plan shall be made only out of the Fund or Funds of the Plan and neither the Company nor any Trustee nor any Pension Committee or Member thereof shall be liable therefor in any manner or to any extent.

During the 1968 and 1971 negotiations with UAW, Pension Guarantees applicable to the Lake Street and Hopkins plants were given by White Motor. These Guarantees provided that, upon termination

Page 603

of the pension plan, benefits were guaranteed by White Motor at a designated benefit level. By giving the Guarantees, White Motor assumed a direct liability of approximately $7,000,000.

At the time the Lake Street plant was closed, the pension fund was only partially funded and there was a net deficiency in the fund of approximately $14,000,000. (White Motor v. Malone, supra, 412 F.Supp. at 373-75 (footnote omitted).)

The Minnesota Pension Act obligations conflict with White Motor's pension plan provisions in the following respects: (1) the Act grants employees vested rights to pension benefits which are not available under the pension plan; (2) to the extent of any deficiency in the pension fund, the Act requires satisfaction of pension benefits from the general assets of the employer, while the pension plan provides that benefits shall be paid only out of the pension fund; and (3) the Act does not permit employers to escape liability for funding of pension rights, but the pension plan permits White Motor to terminate the plan at any time, and in so doing end any liability for future payments to the pension fund, save those specifically guaranteed. Thus, essential features of the pension plan, deferred funding of past service liability 7 coupled with limited employer liability and the power to terminate, were negated by the Pension Act.

The district court rejected White Motor's summary judgment motion for a declaration of invalidity of the Pension Act on preemption grounds, and for relief by way of a temporary injunction against its enforcement, reasoning that,

(t)he employer's duty to bargain in good faith over pensions is not altered by the Pension Act. The Pension Act does not require labor and management to agree to a pension plan or that specific provisions be included in a pension plan.

The NLRA does not regulate the substantive terms of a collective bargaining agreement. * * *

The danger addressed in (San Diego Building Trades Council v.) Garmon (359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775 (1959)) is not presented by the facts of the present action. The state is not attempting to regulate a subject matter which lies within the exclusive competence of the National Labor Relations Board. The Pension Act does not

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6 practice notes
  • Wadsworth v. Whaland, Nos. 77-1135 and 77-1136
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • June 2, 1977
    ...Similarly, it has been held that state regulation of pension plans is not preempted by federal labor law. White Motor Corp. v. Malone, 545 F.2d 599 (8th Cir. 1976). State regulations of group insurance policies purchased by employee benefit plans are peripheral to any federal labor law othe......
  • DeRoche v. All American Bottling Corp., Civ. No. 98-675 (JRT/RLE).
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • November 5, 1998
    ...Council v. Garmon, supra at 246, 79 S.Ct. 773; White Motor Corp. v. Malone, 412 F.Supp. 372, 378 (D.Minn.1976), rev'd. on other grounds, 545 F.2d 599 (8th Cir.1976). In so holding, the Garmon Court explained: "Our concern is with delimiting areas of conduct which must be free from state reg......
  • Malone v. White Motor Corporation, No. 76-1184
    • United States
    • United States Supreme Court
    • April 3, 1978
    ...impairment-of-contract claims, which are not before the Court and which the District Court will consider on remand. Pp. 514-515. 8 Cir., 545 F.2d 599, reversed. Richard B. Allyn, St. Paul, Minn., for appellant. Allan A. Ryan, Jr., Washington, D. C., for the United States, as amicus curiae, ......
  • Bell v. Employee Sec. Ben. Ass'n, No. 77-4066.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • August 22, 1977
    ...denied, ___ U.S. ___, 98 S.Ct. 71, 54 L.Ed.2d 82; White Motor Corp. v. Malone, 412 F.Supp. 372, 380 n. 6 (D.Minn.), rev'd on other grounds 545 F.2d 599 (8th Cir. 1976); Fleck v. Spannaus, 412 F.Supp. 366, 368 (D.Minn.1976); Note, Insurance Regulation — Employee Benefit Plans, 28 Ark.L.Rev. ......
  • Request a trial to view additional results
6 cases
  • Wadsworth v. Whaland, Nos. 77-1135 and 77-1136
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • June 2, 1977
    ...Similarly, it has been held that state regulation of pension plans is not preempted by federal labor law. White Motor Corp. v. Malone, 545 F.2d 599 (8th Cir. 1976). State regulations of group insurance policies purchased by employee benefit plans are peripheral to any federal labor law othe......
  • DeRoche v. All American Bottling Corp., Civ. No. 98-675 (JRT/RLE).
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • November 5, 1998
    ...Council v. Garmon, supra at 246, 79 S.Ct. 773; White Motor Corp. v. Malone, 412 F.Supp. 372, 378 (D.Minn.1976), rev'd. on other grounds, 545 F.2d 599 (8th Cir.1976). In so holding, the Garmon Court explained: "Our concern is with delimiting areas of conduct which must be free from state reg......
  • Malone v. White Motor Corporation, No. 76-1184
    • United States
    • United States Supreme Court
    • April 3, 1978
    ...impairment-of-contract claims, which are not before the Court and which the District Court will consider on remand. Pp. 514-515. 8 Cir., 545 F.2d 599, reversed. Richard B. Allyn, St. Paul, Minn., for appellant. Allan A. Ryan, Jr., Washington, D. C., for the United States, as amicus curiae, ......
  • Bell v. Employee Sec. Ben. Ass'n, No. 77-4066.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • August 22, 1977
    ...denied, ___ U.S. ___, 98 S.Ct. 71, 54 L.Ed.2d 82; White Motor Corp. v. Malone, 412 F.Supp. 372, 380 n. 6 (D.Minn.), rev'd on other grounds 545 F.2d 599 (8th Cir. 1976); Fleck v. Spannaus, 412 F.Supp. 366, 368 (D.Minn.1976); Note, Insurance Regulation — Employee Benefit Plans, 28 Ark.L.Rev. ......
  • Request a trial to view additional results

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