Giroux Bros. v. New England Teamster
U.S. Court of Appeals for the First Circuit
Giroux Bros. v. New England Teamster
Opinion
USCA1 Opinion
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT
____________________
No. 95-1032
GIROUX BROS. TRANSPORTATION, INC.,
Plaintiff, Appellant,
v.
NEW ENGLAND TEAMSTERS & TRUCKING INDUSTRY PENSION FUND,
Defendant, Appellee.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge] ___________________
____________________
Before
Boudin, Circuit Judge, _____________
Aldrich and Coffin, Senior Circuit Judges. _____________________
____________________
John D. O'Reilly, III with whom O'Reilly & Grosso was on brief _______________________ _________________
for appellant.
Christopher N. Souris with whom Feinberg, Charnas & Birmingham ______________________ ________________________________
was on brief for appellee.
____________________
January 4, 1996
____________________
ALDRICH, Senior Circuit Judge. Giroux Bros. ______________________
Transportation, Inc. (Giroux) appeals from the grant of
summary judgment in favor of New England Teamsters & Trucking
Industry Pension Fund (the Fund), the plan sponsor of a
multi-employer employee benefit plan in which Giroux
participated. Giroux sought a declaration of non-liability
for the Fund's assessment of withdrawal liability under the
Employee Retirement Income Security Act (ERISA), as amended
by the Multiemployer Pension Plan Amendments Act of 1980
(MPPAA), 29 U.S.C. 1381 et seq, claiming the Fund's demand ______
was barred by the statute of limitations, and that hardship
should excuse it from the obligation to make interim payments
of the Fund's demand pending resolution of this dispute. The
Fund counterclaimed to the contrary. The court concluded
that the Fund's demand was not barred, that Giroux failed to
allege facts sufficient to show irreparable harm in order to
avoid its obligation to make interim payments, and that
resolution of its withdrawal liability dispute is committed
in the first instance to arbitration. We affirm.
The parties agreeing to the material facts, we take
a moment to trace the genesis and procedural history of the
controversy. Giroux had been making pension contributions to
the Fund on behalf of its employees for a number of years
pursuant to a standard, industry-wide collective bargaining
agreement to which it periodically renewed its allegiance by
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executing "supplements" with a Teamsters local. It decided
to stop with the last executed agreement upon its expiration
in 1981 or 1982, but neglected to notify the local, or the
Fund. In light of a common industry tolerance for delay in
executing renewals,1 failure to execute a new agreement would
not necessarily give rise to an inference that an employer no
longer intended to be bound, and Giroux continued, without
interruption, to make employee contributions to the Fund's
pension plan until early 1994. When these payments ceased,
the Fund responded by sending Giroux a standard delinquency
notice, to which Giroux responded that it had "not had a
collective bargaining agreement with the Teamsters for some
15-20 years," and thus had no obligation to continue
contributions. The Fund then verified that Giroux had never
executed any successors to the agreement that expired in 1981
or 1982, and conceded Giroux thus had no contractual
obligation to contribute after that point. The parties agree
that Giroux therefore "withdrew" from the Fund within the
meaning of the MPPAA, 1383(a)(1), upon expiration of its
last collective bargaining agreement, sometime in 1981 or
1982. The Fund therefore assessed and demanded payment of
withdrawal liability from Giroux as of September 30, 1981, as
____________________
1. The district court noted that gaps of several years
between expiration and renewal are not uncommon among the
thousands of employers that adhere to the collective
bargaining agreement through executing supplements with
Teamsters locals.
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provided. 29 U.S.C 1381 et seq. _______
In October, 1994, Giroux initiated arbitration
according to the MPPAA's mandatory arbitration provision, id. ___
at 1401, claiming the Fund's demand for withdrawal
liability payment some 12 years after its effective
withdrawal was untimely, and, even if timely, it was entitled
to credit for post-withdrawal contributions. Giroux
simultaneously instigated this action in the District of
Massachusetts for declaratory judgment that the Fund's demand
was statutorily barred by the six year limitation contained
in 1451(f), and for injunctive relief from its obligation
under 1399(c)(2) to make interim payments of the Fund's
withdrawal liability assessment pending resolution of its
claims. The Fund counterclaimed to the contrary. It
stressed that the timeliness of its demand was governed
exclusively by 1399(b), which in turn is statutorily
committed to resolution through arbitration, 29 U.S.C.
1401(a)(1), and sought declaratory relief.
In December, 1994, the district court ruled that
the Fund's demand was not barred by 1451(f), that Giroux's
allegations of financial hardship did not amount to
"irreparable harm" sufficient to exempt it from statutory
obligation to make interim payments, and that any remaining
dispute with respect to the Fund's demand had to be resolved
through arbitration. Giroux's appeal was argued in
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September, 1995.
In October, 1995, the arbitrator ruled, inter alia, __________
that Giroux was estopped from contending that the Fund's
demand was untimely by its own "equivocal" and "deceitful"
actions, and that the Fund's demand was made "as soon as
practicable" under 1399(b)(1) in any event; it declined to
rule on Giroux's offset claim. Both parties briefed this
court on the implications of the arbitration award for this
appeal.
I. Withdrawal Liability ________________________
The MPPAA was enacted in response to a crisis
facing multi-employer pension plans from which employers had
withdrawn in increasing numbers, leaving the plans without
adequate funds to pay vested employee benefits. See Pension ___ _______
Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 722- ______________________ _______________
25 (1984). The act makes an employer withdrawing from such a
plan liable for its proportionate share of the plan's
unfunded vested benefits. Id. at 725; 29 U.S.C. 1381, ___
1391. Withdrawal generally occurs when an employer
permanently ceases to have an obligation to contribute under
the plan, or ceases all covered operations. Id. at ___
1383(a). The plan sponsor must assess, schedule and demand
withdrawal liability payment "[a]s soon as practicable after
an employer's complete or partial withdrawal," id. at ___
1399(b)(1), and an employer must pay according to the
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Fund's schedule notwithstanding any pending dispute. Id. at ___
1399(c)(2).
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II. Statute of Limitations ___________________________
Giroux seeks to avoid the Fund's demand for
withdrawal liability payment by invoking the limitations
provision of the MPPAA, which states, in relevant part, that
a plan fiduciary
who is adversely affected by the act or
omission of any party under this subtitle
with respect to a multiemployer
plan, . . . may bring an action for
appropriate legal or equitable relief, or
both,
29 U.S.C. 1451(a)(1), but no later than
(1) 6 years after the date on which the
cause of action arose, or
(2) 3 years after the earliest date on
which the plaintiff acquired or should
have acquired actual knowledge of the
existence of such cause of action; except
that in the case of fraud or concealment,
such action may be brought not later than
6 years after the date of discovery of
the existence of such cause of action.
Id. at 1451(f). Giroux claims that because the Fund did ___
not demand withdrawal liability payment until some 12 years
after Giroux's withdrawal from the Fund's pension plan, its
demand is barred by this provision.
The Fund contends on appeal that its demand in this
case is not governed by 1451(f) because this provision is a
limitation only on litigation, and since it did not instigate __
this lawsuit but merely demanded payment according to its
statutory rights, it has not commenced an "action" within the
meaning of 1451. Thus, according to the Fund, the statute
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of limitations cannot have begun to run with respect to any
action it could bring to enforce these rights. __ _______
We cannot agree that an action for declaration of
non-liability asserting a statute of limitations defense
renders the statute inapplicable simply by virtue of the fact
that the party claiming liability did not commence the
action, especially where (but not because) that party
counterclaimed for declaration and enforcement of its rights.
However, the principal question raised by Giroux's action,
whether the Fund timely made its demand, is explicitly
governed by 1399, which provides:
As soon as practicable after an
employer's complete or partial
withdrawal, the plan sponsor shall--
(A) notify the employer of--
(i) the amount of the liability, and
(ii) the schedule for liability payments,
and
(B) demand payment in accordance with the
schedule.
29 U.S.C. 1399(b)(1). The MPPAA further provides that if
the Fund's demand for withdrawal liability payment was made
"as soon as practicable," then it is due and owing,
notwithstanding a pending dispute, id. at 1399(c)(1)(A)(i) ___
and (2), and the Fund can bring an action to compel
"immediate payment" of any outstanding amounts, id. at ___
1399(c)(5) and 1451(a), subject to the statutory time
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limitation. Id. at 1451(f). We find this statutory ___
framework governing a plan sponsor's demand for withdrawal
liability payment sufficiently clear so that to the extent
the general 6 year limitation on actions conflicts, Congress
did not intend it to override. We therefore hold that
questions concerning the timeliness of a plan sponsor's
demand are governed exclusively by 1399(b)(1). Thus
resolution of Giroux's claim turns solely on whether the
Fund's demand was made "as soon as practicable" after
Giroux's withdrawal.2
However, any dispute regarding the timeliness of
the Fund's demand under 1399(b)(1) is statutorily committed
to arbitration in the first instance. 29 U.S.C.
1401(a)(1).3 This is no less so because it may also
involve a measure of statutory interpretation. Vaughn v. ______
Sexton, 975 F.2d 498, 502 (8th Cir. 1992), cert. denied, ___ ______ ____________
U.S. ___, 113 S. Ct. 1268, 122 L.Ed.2d 664 (1993) (citing
cases of 2d, 3d, 4th, 6th and D.C. circuits); Teamsters _________
____________________
2. We express no views on the significance of section
1451(f) to a determination of whether the Fund's demand was
made "as soon as practicable" within the meaning of
1399(b)(1), as this question is not before us. See post. ___ ____
3. Any dispute between an employer and the ___
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).
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Pension Trust Fund v. Allyn Transp. Corp., 832 F.2d 502, 504 ___________________ ___________________
(9th Cir. 1987); Trustees of Colorado Pipe Ind. Pension Trust ____________________________________________
v. Howard Electrical & Mech., Inc., 909 F.2d 1379, 1386 (10th _______________________________
Cir. 1990), cert. denied, 498 U.S. 1085 (1991). ____________
Although the arbitration provision is an exhaustion
of administrative remedies requirement, rather than a
jurisdictional bar, see, e.g., Colorado Pipe, 909 F.2d at ___ ____ ______________
1385 (citing cases), there can be no question that it was
aptly applied here, when arbitration was already underway.
III. Relationship of this Appeal __________________________________
to Parallel Arbitration Proceedings ___________________________________
It now seems to be Giroux's position that the
arbitrator's determination that the Fund's demand was timely
under 1399(b)(1) is before this court for review, or, that
this issue, never raised before the district court, is open
for our consideration. Although it might conserve resources
in this instance to concur, we disagree. Rather, Giroux's
only recourse is to pursue judicial review of the arbitration
award:
Upon completion of the arbitration
proceedings in favor of one of the
parties,any party thereto may bring an
action, no later than 30 days after the
issuance of an arbitrator's award, in an
appropriate United States district court
in accordance with section 1451 of this
title to enforce, vacate, or modify the
arbitrator's award.
29 U.S.C. 1401(b)(2). This simultaneously pending action,
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brought separately to assert a claim under a non-arbitrable
provision of the MPPAA, does not qualify as a proper appeal
of the arbitrator's ruling. We see no reason to undertake
review of the arbitrator's analysis when it is beyond serious
dispute that issues arising under 1399 cannot normally be
litigated in federal court independent of arbitration, and
the process for appealing an arbitration award is clear.
We are well aware that enforcing the statutorily
mandated procedure in this case could land it again before us
in substantially the same posture after additional expense on
both sides, and that the legislative aim in enacting the
MPPAA included lessening the costs and delay of withdrawal
liability dispute resolution. See, e.g., I.A.M. Nat. Pension ___ ____ ___________________
Fund v. Clinton Engines Corp., 825 F.2d 415 at 426 and n. 20 ____ _____________________
(D.C. Cir. 1987) (citing legislative history). Yet, to hold
otherwise would create a loophole for employers to bypass the
statutory scheme by disguising arbitrable disputes for
presentation directly in federal court, as Giroux did here,
then invoking legislative purpose in order to get prompt
appellate consideration. Because this is not a proper appeal
of the arbitrator's award, and we decline to independently
reach Giroux's arbitrable claims, we do not review whether
the Fund's demand was made "as soon as practicable," or any
other arbitrable issues.
IV. Interim Payment of the Fund's Demand _________________________________________
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The district court held that Giroux's claims of
hardship were insufficient to avoid meeting its statutory
obligation to make interim payments of the Fund's demand
pending ultimate resolution of its withdrawal liability
dispute. 29 U.S.C. 1399(c)(2).4 See Debreceni v. ___ _________
Merchants Terminal Corp., 889 F.2d 1, 4 (1st Cir. 1989); _________________________
Trustees of the Plumbers and Pipefitters National Pension _____________________________________________________________
Fund v. Mar-Len, Inc., 30 F.3d 621, 624 (5th Cir. 1994). ____ ______________
Giroux contended that the Fund's claim would most certainly
be found barred by 1451(f), and that meeting these payments
would require a partial liquidation of its assets and
employee layoffs, hence the court therefore abused its
discretion in failing to suspend payment. We have already
disposed of Giroux's first contention; we turn to the second.
The MPPAA indisputably creates a "pay now, dispute
later" mechanism, deeming the protection of multi-employer
pension plans and their beneficiaries paramount. See id. at ___ ___
624 (citing cases); Debreceni, 889 F.2d at 5. This scheme _________
____________________
4. This section states, in relevant part:
Withdrawal liability shall be payable in _____
accordance with the schedule set forth by
the plan sponsor under subsection (b)(1)
of this section beginning no later than ______________
60 days after the date of the demand
notwithstanding any request for review or _______________
appeal of determinations of the amount of
such liability or of the schedule.
29 U.S.C. 1399(c)(2) (emphasis added).
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puts payment ahead of decision even though the employer might
prevail in the end.5 Trustees of Chicago Truck Drivers ____________________________________
Pension Fund v. Central Transp., Inc., 935 F.2d 114, 118 (7th ____________ _____________________
Cir. 1991). Although we have therefore held that "assessed
interim liability payment must be paid . . . notwithstanding
a pending arbitrable dispute," Debreceni, 889 F.2d at 4, we _________
have never squarely decided whether an equitable exception
exists.6 Id. at 7. However, in light of the clear ___
congressional intent to protect multi-employer pension plans
in withdrawal liability disputes, we have indicated that
should an equitable exception exist it would "require no less
than the threat of imminent insolvency." Id. at 7 and n. 6. ___________________ ___
Giroux's allegations, even if accepted, do not suggest such
harm.
Affirmed. ________
____________________
5. The MPPAA requires "actual payment shall commence in
accordance with [the schedule set forth by the plan
sponsor]," 29 U.S.C. 1399(c)(1)(A)(i) and (2), note 4,
supra; Debreceni, 889 F.2d at 6; the plan has a right to _____ _________
"immediate payment" of any outstanding amount, plus interest,
"from the due date of the first payment which was not timely
made," 29 U.S.C. 1399(c)(5); a plan may enforce this right,
id. at 1451(a)(1); employers are entitled to recovery of ___
any overpayment, with interest, 29 C.F.R. 2644.2(d).
6. Other circuits have held an employer may avoid interim
payment only if the pension plan's claim is frivolous or not
colorable. Mar-Len, 30 F.3d at 626; Trustees of Chicago _______ ____________________
Truck Drivers v. Central Transport, Inc., 935 F.2d 114, 119 _____________ _______________________
(7th Cir. 1991).
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