DocketNumber: No. 84-CV-1299
Citation Numbers: 658 F. Supp. 1469
Judges: Munson
Filed Date: 5/1/1987
Status: Precedential
Modified Date: 11/26/2022
MEMORANDUM-DECISION AND ORDER
This action requires the court to examine the circumstances under which an employ
I. BACKGROUND
The Fund brought this action seeking the accelerated payment of the total amount of the defendant’s outstanding withdrawal liability under the MPPAA, together with interest, costs, and attorney fees as provided by 29 U.S.C. §§ 1132(g)(2) and 1451(e). The Fund is a multiemployer pension plan sponsor which receives contributions from various employers pursuant to collective bargaining agreements and stipulations between employers and union locals. Defendant made contributions to the Fund in accordance with the terms of a collective bargaining agreement until September 1982.
Defendant’s freight company operated in New York, Ohio and Pennsylvania. On September 7, 1982, negotiations for a new collective bargaining agreement with the Teamsters Steelhaulers Local Union 800 of Pittsburgh, Pennsylvania broke down and the local union went on strike, shutting down defendant’s operations in the Pittsburgh area. Several of defendant’s primary shippers were located in the Pittsburgh area, and defendant maintains that the strike caused a severe disruption of its business that ultimately forced the company to cease operation entirely on September 28, 1982. The Fund disputes this contention, maintaining that the Pittsburgh strike did not affect defendant’s operations in upstate New York, where the employees covered by the Fund were located. Negotiation sessions were held between defendant and the local union in Pittsburgh until March 1983. Meetings between the employer and various labor representatives occurred more sporadically after March 1983. Finally, on November 13, 1985, defendant entered into an interim collective bargaining agreement with the Teamsters National Freight Industry Negotiating Committee.
On February 8, 1983 defendant was notified that the Fund had determined that the company had incurred withdrawal liability and that payments toward this liability should commence within sixty days. In a letter mailed to the Fund dated February 22,1983, defendant raised the labor dispute exemption set out in 29 U.S.C. § 1398(2)
II. DISCUSSION
The MPPAA requires an employer who withdraws in whole or in part from a mul-
In the instant case, either the letter dated February 22, 1983 or the letter dated March 17, 1983 could be considered a request by defendant that the Fund review its finding that defendant had incurred withdrawal liability. In either case, the Fund’s letter dated April 29, 1983 was a response to defendant’s request to review that complies with the requirements of 29 U.S.C. § 1399(b)(2)(B). Defendant did not request arbitration on the claimed labor dispute exemption until July 1, 1983, sixty-three days after it was notified of the Fund’s decision on defendant’s request for review of its initial determination. Thus, the request for arbitration was clearly untimely. The issue before the court is whether defendant’s failure to timely initiate arbitration proceedings precludes this court’s review of the Fund’s determination that the labor dispute exemption was inapplicable in this case.
The MPPAA requires that “[a]ny dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under sections 1381 through 1399 of this title shall be resolved through arbitration.” 29 U.S.C. § 1401(a)(1) (emphasis added). If an arbitration proceeding is not initiated in a timely manner, “the amounts demanded by the plan sponsor ... shall be due and owing on the schedule set forth by the plan sponsor,” and the plan sponsor can bring suit in federal court to compel collection. 29 U.S.C. § 1401(b)(1). If arbitration is timely requested, a party may start a proceeding in federal court to enforce, vacate or modify the arbitrator’s award within thirty days of the arbitrator’s decision. 29 U.S.C. § 1401(b)(2).
In enacting the MPPAA, Congress manifested an unequivocal preference for the initial resolution of disputes between plan sponsors and employers concerning the imposition and amount of withdrawal liability by private arbitrators. Nonetheless, the courts have uniformly concluded that resort to arbitration is not an absolute prerequisite to a district court’s jurisdiction over disputes involving §§ 1381-99. See, e.g., T.I.M.E.-DC, Inc. v. Management-Labor Welfare & Pension Funds, 756 F.2d 939, 945 (2d Cir.1985) (hereinafter Longshoreman’s Fund); I.A.M. National Pension Fund Benefit Plan C v. Stockton TRI Industries, 727 F.2d 1204, 1207-10 (D.C.Cir.1984) (hereinafter Stockton Industries)', Republic Industries v. Teamsters Joint Council No. 83 of Virginia Pension Fund, 718 F.2d 628, 634 (4th Cir.1983), cert. denied, 467 U.S. 1259, 104 S.Ct. 3553, 82 L.Ed.2d 855 (1984) (hereinafter Virginia Pension Fund); Shelter Framing Corp. v. Pension Benefit Guar. Corp., 705 F.2d 1502, 1508-09 (9th Cir.1983), cert. denied, 467 U.S. 1259, 104 S.Ct. 3553, 82 L.Ed.2d 855 (1984); Republic Industries v. Central Pennsylvania Teamsters Pension Fund, 693 F.2d 290 (3d Cir.1982) (hereinafter Central Pennsylvania Fund). Instead, the MPPAA’s requirement that disputes over withdrawal liability assessments are to be presented to private arbitrators in the first instance has been analogized to statutes that provide for the initial processing of claims through administrative agencies, and the courts have concluded that the policies underlying the jurisprudential doctrine of exhaustion of administrative remedies are generally applicable to the arbitration requirement established by the MPPAA. See Central Pennsylvania Fund, 693 F.2d at 294-95; T.I.M.E.-DC, Inc. v. Trucking Employees of North Jersey Welfare Fund, 560 F.Supp. 294, 302 (E.D.N.Y.1983) (hereinafter North Jersey Fund).
When these underlying policies are not served by requiring parties to resort to arbitration in the first instance, courts have been willing to carve out exceptions to the exhaustion doctrine. Thus, when the non-judicial remedy provided is “inadequate to prevent irreparable injury,” Central Pennsylvania Fund, 693 F.2d at 293, courts will not require the individual threatened with such harm to proceed to arbitration before seeking judicial intervention. See T.I.M.E-DC, Inc. v. New York States Teamsters Conference Pension & Retirement Fund, 580 F.Supp. 621, 632-33 (N.D.N.Y.) aff'd, 735 F.2d 60 (2d Cir.1984) (hereinafter New York Fund). Exhaustion is not required when “the issue is one of purely statutory interpretation,” Touche Ross & Co. v. Securities & Exchange Comm’n, 609 F.2d 570, 577 (2d Cir.1979), since in such cases there is “no need for [the arbitrator’s] expertise or the exercise of [his] discretion.” Id. For similar reasons, constitutional questions must be resolved by the courts rather than by arbitrators. Central Pennsylvania Fund, 693 F.2d at 296. Finally, exhaustion of available non-judicial remedies is unnecessary when exhaustion would be an exercise in futility under the circumstances of the particular case. Olympus Corp. v. United States, 627 F.Supp. 911, 916 (E.D.N.Y.1985). None of these exceptions to the doctrine are applicable in the case at bar, and thus defendant’s failure to demand arbitration over the labor dispute exemption issue precludes this court from considering that defense to the Fund’s claim in this case.
Defendant argues that because the interpretation of the labor dispute exemption contained in 29 U.S.C. § 1398 is central to its claim that it has not incurred withdrawal liability, the statutory interpretation exception to the exhaustion doctrine renders harmless its failure to demand arbitration on the issue in a timely manner. Defendant’s position is inconsistent with the limited scope and underlying justification of the statutory interpretation exception. This exception is applicable only when there are “no significant disputes of fact,” Refined Sugars, Inc. v. Local 807 Labor-Management Pension Fund, 580 F.Supp. 1457, 1461 (S.D.N.Y.1984), thus making the application of an arbitrator’s peculiar expertise
The fact that an arbitrator’s factual inquiry in a case such as the one at bar would require some statutory interpretation on his part does not mean that the statutory interpretation exception necessarily excuses a party for its failure to initiate arbitration. An arbitrator’s responsibilities under the MPPAA necessarily include the interpretation of those statutory provisions (§§ 1381-99) that the Act has committed to arbitral resolution in the first instance. To hold otherwise would render the arbitration requirement of § 1401 a nullity. See Virginia Pension Fund, 718 F.2d at 634 (meaning of “facility” under § 1397(a) is an arbitrable issue); New York State Teamsters Conference Pension & Retirement Fund v. St. Lawrence Transit Mix Co., 612 F.Supp. 1003, 1006 (N.D.N.Y.1985) (hereinafter St. Lawrence Transit Mix) (“Sale of Assets” defense provided in § 1384 is subject to interpretation by arbitrator in the first instance); Combs v. Adkins & Adkins Coal Co., Inc., 597 F.Supp. 122, 127 (D.D.C.1984) (“[A]n arbitrator could have determined whether a ‘labor dispute’ existed within the meaning of section 1398”); contra: Sheet Metal Workers’ Pension Fund v. Advanced Metal and Welding Corp., 643 F.Supp. 1201, 1204-06 (N.D.Ga.1986) (Employer does not waive judicial review of “correctness” of plan sponsor’s determination of withdrawal liability by failing to initiate arbitration when interpretation of “labor dispute” required).
The “irreparable harm” exception to the exhaustion doctrine is also unavailable to defendant in this case. Exhaustion typically is not required “when the nonjudicial remedy is clearly shown to be inadequate to prevent irreparable injury.” Central Pennsylvania Fund, 693 F.2d at 293; see also T.I.M.E.-DC, Inc. v. Western Conference of Teamsters Pension Fund, 7 E.B.C. 2124 (N.D.Cal.1986); New York Fund, 580 F.Supp. at 633. As Judge Miner noted in New York Fund, “the injury required to avoid the arbitration process is the same injury required by law for the issuance of a preliminary injunction.” 580 F.Supp. at 633. Most of the cases in which the “irreparable harm” exception has been applied have involved the T.I.M.E.-DC, Inc. freight company. As a result of a protracted strike, T.I.M.E.-DC’s net worth plummeted from $12 million to $740,000; its assets were reduced from $40 million to only $8 million; and its cash on hand was reduced to a nominal amount. See Central States, Southeast and Southwest Areas Pension Fund v. T.I.M.E.-DC, Inc., 639 F.Supp. 1468, 1476 (N.D.Tex.1986) (hereinafter Central States). A number of multiem-ployer plan sponsors claimed withdrawal liability from the company. Under the MPPAA, an employer must make payments toward the withdrawal liability assessed by a plan sponsor pending the outcome of the arbitration proceeding mandated by the Act. 29 U.S.C. § 1401(d). Under the unique conditions faced by T.I.M.E.DC, the courts found that these interim
The present case is distinguishable from the above-cited cases. In this case, the record fails to demonstrate that the financial burden of making interim monthly payments toward the liability assessed by the Fund threatened the very economic existence of defendant corporation, or that the Fund’s assessment in any way threatened to undermine customer confidence in the continued economic viability of the company. Moreover, unlike T.I.M.E.-DC, defendant did not seek immediate relief from this court before the applicable time periods set out in the MPPAA had run; instead, it allowed the time within which the Act contemplates the initiation of arbitration to expire without acting in any way. The Third Circuit has found this latter distinction of paramount importance. In Central Pennsylvania Fund, the Third Circuit instructed the district court below to enjoin an arbitration proceeding pending the resolution of a constitutional challenge to the MPPAA. 693 F.2d at 298. In that case, the employer had sought the injunction even before the expiration of the ninety day period for requesting review by the plan sponsor of its initial withdrawal liability assessment. Id. at 292. In IUE AFL-CIO Pension Fund v. Barker & Williamson, Inc., 788 F.2d 118 (3d Cir.1986), the employer seeking to avoid the exhaustion requirement had not acted until after all of the time limits set out in the MPPAA had run. Id. at 128-29. The Third Circuit concluded that under such circumstances, and in the absence of a significant constitutional challenge to the plan sponsor’s determination, the employer’s “inaction should not be reawarded.” Id. at 129; see also Canario v. Byrnes Express & Trucking Co., Inc., 644 F.Supp. 744, 749 (E.D.N.Y.1986). This court agrees, and finds that defendant’s failure to act before the expiration of the time within which it was to initiate arbitration precludes a finding of irreparable harm at this point in the litigation.
By failing to demand arbitration in a timely manner, defendant has waived any defense it may have had under § 1398. Cf. St. Lawrence Transit Mix, 612 F.Supp. at 1006 (Failure to arbitrate factual questions under “Sale of Assets” provision of § 1384 constituted waiver of any defense employer had under that provision). Consequently, any discovery relating to the Fund’s determination that the labor dispute exemption did not apply to defendant would be pointless. Plaintiff’s motion for an order precluding defendant from obtaining discovery is therefore granted. Plaintiff also moves to amend the ad damnum clause of the complaint to increase the amount of defendant’s unpaid contributions, which is an essential figure in the calculation of defendant’s withdrawal liability, from $124,954 to $127,236. This motion must be denied. The strict time limits imposed by Congress in the Act are in part intended to further the interest of finality in withdrawal liability assessments. Cf. Nequoia Ass’n Inc. v. Department of Interior, 626 F.Supp. 827, 836 (D.Utah 1985) (Exhaustion doctrine barred action to vacate determination of Bureau of Land Management because said determination
Since defendant has not made any payments to date on the withdrawal liability assessed by the Fund, defendant is in “default” within the meaning of 29 U.S.C. § 1399(c)(5). Therefore, the entire amount of defendant’s withdrawal liability is due and owing. Id. Under 29 U.S.C. § 1132(g)(2), the Fund is entitled to the unpaid contributions, interest on the unpaid contributions from the date on which the first monthly payment was due under the schedule prepared by the fund, liquidated damages and reasonable attorney fees, and the costs of this action. See Combs v. Western Coal Corp, 611 F.Supp. 917, 922-23 (D.D.C.1985); Board of Trustees v. Johnson, 606 F.Supp. 231, 234-35 (W.D.Wash.1985).
III. CONCLUSION
The Fund’s motion for an order precluding defendant from obtaining discovery is granted. The fund’s motion to amend the ad damnum clause of the complaint is denied. The Fund’s motion for summary judgment is granted. The Fund shall submit a proposed judgment to the court within twenty days of the date of this order. Defendant shall have an additional twenty days within which to make objections to the proposed judgment.
It is so Ordered.
. Section 1398(2) provides that "[n]otwithstand-ing any other provision of this part, an employer shall not be considered to have withdrawn from a plan solely because ... an employer suspends contributions under the plan during a labor dispute involving its employees.” 29 U.S.C. § 1398(2).
. Injunctions were also issued in T.I.M.E.-DC, Inc. v. I.A.M. National Pension Fund, 597 F.Supp. 256 (D.D.C.1984) and North Jersey Fund, 560 F.Supp. 294. In the former case, the court did not address the exhaustion issue in the text of the opinion. In North Jersey Fund, the court found that the "central facts [were] not in dispute” and concluded that the statutory interpretation exception was applicable. 560 F.Supp. at 302-03.
. In denying the Fund’s motion to increase the ad damnum clause of the complaint, the court does not decide whether the Fund is precluded from demanding the additional amount sought from defendant under 29 U.S.C. § 1399. The court notes, however, that § 1399(b)(1) requires the plan sponsor to notify the employer of the amount of its liability "[a]s soon as practicable after [its] complete or partial withdrawal." 29 U.S.C. § 1399(b)(1)(A). Whether the Fund can make a supplemental demand under § 1399 four years after defendant’s withdrawal is not an issue properly before the court.