1997 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-29-1997

Galgay v. Beaverbrook Coal Co

Precedential or Non-Precedential:

Docket 95-7532

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Recommended Citation

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1

 THE UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 __________ 

 No. 95-7532 

 __________ 

 FRANK J. GALGAY; FRANCIS P. BONNER, TRUSTEES OF THE 

 ANTHRACITE HEALTH AND WELFARE FUND (PENSION TRUST); ANTHRACITE 

 HEALTH AND WELFARE FUND (PENSION TRUST), 

 Appellants 

v. 

 BEAVERBROOK COAL COMPANY; GEORGE HUSS JR.; 

 WILLIAM HUSS; HUSS INDUSTRIES, INC. 

 Appellees 

 __________ 

 ON APPEAL FROM THE UNITED STATES DISTRICT COURT 

 FOR THE MIDDLE DISTRICT OF PENNSYLVANIA 

 (D.C. Civ. Action No. 95-00433) 

 __________ 

 Argued June 28, 1996 

 __________ 

 BEFORE: BECKER, NYGAARD AND LEWIS, Circuit Judges 

 (Opinion Filed January 29, 1997) 

 __________ 

 A. Richard Caputo (Argued) 

 Thomas J. Mosca 

 Shea, Shea and Caputo 

 387 Wyoming Avenue 

 P.O. Box 2059 

 Kingston, Pa. 18704-2059 

 Counsel for the Appellants 

 Michael Beltrami (Argued) 

 1110 South Church Street 

 Hazleton, Pa. 18201 

 Counsel for the Appellees 

Nygaard, Circuit Judge. 
2

 This appeal stems from appellants' action to compel 

Beaverbrook Coal Company, George Huss, Jr., William Huss and Huss 

Industries, Inc. to make interim withdrawal liability payments 

while the parties arbitrate liability. The district court denied 

appellants' motion for injunctive relief and their motion for 

reconsideration. We will reverse and remand. 

I. 

 Appellants are trustees of the Anthracite Health and Welfare 

Fund and the fund itself (collectively, the "Fund"), a 

multiemployer pension plan under the Multiemployer Pension Plan 

Amendments Act of 1980 ("MPPAA"), 29 U.S.C. § 1381 et seq. The 

Beaverbrook Coal Company, a signatory to the Anthracite Wage 

Agreement, is a general partnership consisting of George Huss, 

Jr. and William Huss. Huss Industries, Inc. is a Pennsylvania 

corporation. Beaverbrook, George and William Huss, and Huss 

Industries are all appellees. 

 For over ten years, Beaverbrook made payments to the 

Anthracite Health and Welfare Fund Pension Plan. In August of 

1994, the Fund notified Beaverbrook that it had effectively 

withdrawn from the Fund on June 15, 1993. The Fund subsequently 

assessed Beaverbrook withdrawal liability in the amount of 

$146,242.00, to be paid in monthly installments of $1,966.17. 

Beaverbrook initiated arbitration proceedings to contest the 

Fund's claim. Because Beaverbrook refused to make withdrawal 

liability payments in the interim, the Fund sued under 29 U.S.C. 

§ 1132(g)(2) to recover the delinquent payments, liquidated 
3

damages, attorney's fees and costs. The Fund also sought an 

order directing appellees to make monthly payments and to provide 

a bond in the total amount of the withdrawal liability. One 

month later the Fund requested the same relief by a motion for a 

mandatory preliminary injunction. 

 The district court denied both the Fund's motion for a 

preliminary injunction and its motion for reconsideration. 

Noting the employer's "compelling obligation to make interim 

payments" under MPPAA, the court nonetheless held that the Fund 

had failed to demonstrate that it would suffer irreparable harm 

if temporary relief were not granted. The district court further 

indicated that Beaverbrook might not be obligated to make interim 

payments when the merits of the Fund's claim were considered if 

Beaverbrook showed that it would suffer irreparable harm as a 

result. Finally, the court declined to rule on whether all of 

the defendants were employers for purposes of MPPAA and, 

consequently, obligated to satisfy Beaverbrook's withdrawal 

liability, holding that Flying Tiger Line v. Teamsters Pension 

Trust Fund of Philadelphia, 830 F.2d 1241 (3d Cir. 1987) mandated 

that the issue be addressed first in arbitration. 

 On appeal, the Fund argues that it need not satisfy the 

traditional requirements for a preliminary injunction because, 

under MPPAA, employers are required to make interim payments, so 

the Fund need show only that payments were not made when 

demanded. The Fund also disputes the district court's suggestion 

that Beaverbrook may avoid making interim payments if it can 

demonstrate that it would be irreparably harmed as a result. In 
4

addition, the Fund contends that under Flying Tiger the court 

must decide whether all of the appellees are considered employers 

for purposes of MPPAA, since the answer to that question 

determines the arbitrator's jurisdiction. The issues appellant 

raises are legal questions over which we exercise plenary review; 

we will consider each in turn. 

II. 

 An employer withdraws from a multiemployer pension plan when 

the employer either permanently ceases to have an obligation to 

contribute under the plan or permanently ceases all covered 

operations under the plan. 29 U.S.C. § 1383(a). The employer is 

liable for its share of the plan's unfunded vested benefits as 

calculated at the time of withdrawal. 29 U.S.C. §§ 1381, 1383, 

1391; Concrete Pipe & Products v. Construction Laborers Pension 

Trust, 508 U.S. 602, 609, 113 S. Ct. 2264, 2272 (1993). The plan 

sponsor has the responsibility of determining this withdrawal 

liability, notifying the employer and collecting payment. 29 

U.S.C. § 1382. If the employer disputes the amount set, it may 

ask the plan sponsor to conduct a reasonable review of the 

computed liability. 29 U.S.C. § 1399(b)(2)(A). In the event the 

dispute is unresolved, either party may request arbitration. 29 

U.S.C. § 1401(a)(1). The arbitrator's award, in turn, may be 

challenged in federal court. 29 U.S.C. § 1401(b)(2). 

 Congress enacted MPPAA out of concern that multiemployer 

pension plans would collapse as employers withdrew if the 

remaining contributors became too few in number to pay the 

unfunded vested benefits. See H.R. Rep. No. 869, Pt. II, 96th 
5

Cong., 2d Sess. 10-11 (1980), reprinted in 1980 U.S.C.C.A.N. 

2918, 3000-01. Congress foresaw that the purpose of MPPAA would 

be undermined if employers could postpone paying their debts to 

pension funds by engaging in protracted litigation over 

withdrawal liability. Pantry Pride, Inc. v. Retail Clerks TriState Pension Fund, 747 F.2d 169, 171 (3d Cir. 1984) (citing 

Senate Comm. on Labor and Human Resources, Summary and Analysis 

of S. 1076, 96th Cong., 1st Sess. (1980), reprinted in Special 

Supp. 310, Pens.Rep. (BNA) 81, 84-85 (1980); H.R. Rep. No. 869, 

reprinted in 1980 U.S.C.C.A.N. at 2952). Therefore, the statute 

directs employers to begin payments upon notification of 

withdrawal liability, whether or not they choose to dispute the 

determination. 

 Section 4219(c)(2) of MPPAA states: 

Withdrawal liability shall be payable in accordance with the 

schedule set forth by the plan sponsor . . . 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). Similarly, § 4221(d) of MPPAA, 29 U.S.C. 

§ 1401(d), specifies that payments are to be made during 

arbitration. Should the arbitrator decide that the plan sponsor 

erred in assessing withdrawal liability, the employer is 

reimbursed for any overpayment. Id.

 When an employer fails to make a withdrawal liability 

payment within the prescribed time, an action may be brought in 

federal or state court to compel payment. 29 U.S.C. § 1451(b) & 

(c). The plan sponsor need show only that it made a demand for 
6

interim payments under 29 U.S.C. § 1382 and that the payments 

were not made. 

 Here, Beaverbrook does not dispute that withdrawal liability 

payment was demanded, or that it has refused to comply with the 

demand. Instead, it argues that a motion for preliminary 

injunction is not a proper procedure for either compelling 

payment or determining whether the appellees are all considered 

employers for purposes of MPPAA. We reject its argument. The 

denomination of the procedural vehicle is not important. It is 

true that we often consider demands for interim withdrawal 

liability payments after summary judgment. E.g., Board of 

Trustees of Trucking Employees Pension Fund v. Centra, 983 F.2d 

495 (3d Cir. 1992); United Retail & Wholesale Employees Teamsters 

Union Local No. 115 Pension Plan v. Yahn & McDonnell, Inc., 787 

F.2d 128 (3d Cir. 1986), aff'd, 481 U.S. 735 (1987). 

Nonetheless, we have never foreclosed using preliminary 

injunctive relief to ensure the payments mandated by Congress are 

made. 

 For instance, in Pantry Pride, we heard an appeal from a 

district court order denying a motion to compel withdrawal 

liability payments, which we construed as an order denying a 

preliminary injunction. 747 F.2d at 170-71. Although we held 

that the district court should not have considered the motion 

because the moving party in that action had not first made a 

claim for interim payments, we indicated that the district court 

would be free to consider a request for affirmative relief once 

the claim had been made, since the court could then be certain 
7

the employer had been afforded an opportunity to respond to the 

motion and raise all defenses. Id. at 171-72. In this case, the 

Fund acted as we directed in Pantry Pride, first filing a 

complaint with a claim for interim payments, then making its 

motion for a preliminary injunction. 

 The district court held that for the Fund to obtain 

preliminary injunctive relief it must first meet the traditional 

requirements we reiterated in Acierno v. New Castle County: 1) a 

reasonable probability of eventual success in the litigation; and 

2) irreparable injury if relief is not granted, while taking into 

account when relevant; 3) the possibility of harm to other 

interested persons from the grant or denial of the injunction 

and; 4) the public interest. 40 F.3d 645, 653 (3d Cir. 1994) 

(citing Delaware River Port Authority v. Transamerican Trailer 

Transport, Inc., 501 F.2d 917, 919-20 (3d Cir. 1974)). The 

district court found that any loss to the Fund could be measured 

by economic terms; hence, the Fund would suffer no irreparable 

injury. In so finding, the district court erred. 

 The traditional four-prong test for garden-variety 

preliminary injunctions is not applicable in this context. In 

enacting the interim withdrawal liability provisions of MPPAA, 29 

U.S.C. §§ 1399(c)(2), 1401(d), and the judicial mechanism for 

their enforcement, 29 U.S.C. § 1451(b) & (c), Congress has 

effectively determined that pension funds will be irreparably 

harmed unless employers are enjoined to make interim payments 

while litigation proceeds. By enacting the withdrawal liability 

provisions, Congress has concluded that the uninterrupted flow of 
8

payments is important in itself, Pantry Pride, 747 F.2d at 171, 

and that the ultimate recovery of payments will not suffice to 

make the Fund whole. Congress has likewise determined that 

neither party's probability of success in litigation is relevant: 

 interim payments must be made regardless. 

 Employers may be financially pressed to make sizeable 

monthly payments to pension funds, and some courts when deciding 

generally whether to order interim payment under 29 U.S.C. § 

1381, have created an equitable exception to the requirement in 

instances where the employer can show that it would suffer severe 

financial hardship, and that the pension fund's claim is 

frivolous or not colorable. See Trustees of Plumbers and 

Pipefitters National Pension Fund v. Mar-Len, Inc., 30 F.3d 621, 

626 (5th Cir. 1994); Trustees of the Chicago Truck Drivers 

Pension Fund v. Rentar Industries, Inc., 951 F.2d 152, 155 (7th 

Cir. 1991); see also Giroux Brothers Transportation, Inc. v. New 

England Teamsters & Trucking Industry Pension Fund, 73 F.3d 1, 5 

(1st Cir. 1996) (dictum). Similarly, the district court 

indicated that, when considering the merits of the Fund's claim 

for interim withdrawal liability payments, it might have the 

equitable authority to refuse to order payments if Beaverbrook 

showed that irreparable injury would result. 

 We have never held that there are any equitable exceptions 

to the statutory provisions on interim payments, see Centra, 983 

F.2d at 507-08,1 and we decline to do so now. Congress has 

 

 

1In Flying Tiger, 830 F.3d at 1253, we suggested in dictum 

that a court could deny a pension fund's request upon an 

employer's demonstration of irreparable injury. However, we went 
9

clearly indicated its intent in this matter. The plain language 

of the statute declares, "Withdrawal liability shall be payable 

in accordance with the schedule set forth by the plan sponsor . . 

. ." 29 U.S.C. § 1399(c)(2) (emphasis added). No exceptions are 

provided. Our jurisdiction is limited to ordering the employer 

to make interim payments once the pension fund has demonstrated 

that it complied with the statutory requirements for calculating 

liability and notifying the employer. 29 U.S.C. § 1382. 

 Notably, the two circuits which adopted an irreparableinjury exception have later held that courts only have discretion 

to exercise it once the employer has made an affirmative showing 

that the pension fund lacks a colorable or non-frivolous claim. 

Mar-Len, 30 F.3d at 626 (5th Cir.); Rentar Industries, 951 F.2d 

at 155 (7th Cir.). These circuits have adopted the equitable 

exception solely to ensure that the courts are not used by an 

unscrupulous pension fund lacking a legitimate withdrawal 

liability claim to squeeze money from an employer and propel it 

into bankruptcy. Mar-Len, 30 F.3d at 626 (citing Trustees of 

Chicago Truck Drivers Pension Fund v. Central Transport, Inc., 

935 F.2d 114, 119 (7th Cir. 1991)). 

 We do not now have occasion to consider adopting a similar 

equitable exception. At no point in the argument of this case 

has Beaverbrook contended that the Fund's claim is frivolous or 

non-colorable, although supplemental briefs were submitted on the 

 

on to say that any such potential defenses were irrelevant to the 

issue in Flying Tiger, namely, whether the dispute in that case 

had to be arbitrated. 
10

very issue of possible equitable defenses to interim payment 

liability. See Rentar Industries, 951 F.2d at 155 (holding that 

the employer must make an affirmative showing that the pension 

fund lacks a colorable claim). Nor did Beaverbrook submit any 

evidence to support its claim of irreparable harm. See id.

(declaring the district court was not obligated to hold a hearing 

so the employer could demonstrate irreparable harm when employer 

offered no evidence to support its assertion). 

 We agree with the reasoning employed by the Fifth and 

Seventh circuits in concluding that a showing of irreparable harm 

to the employer is alone insufficient to warrant equitable relief 

from interim payment liability. In both instances, these courts 

of appeals have recognized that withdrawing employers are often 

financially troubled companies. Mar-Len, 30 F.3d at 626; Central 

Transport, 935 F.2d at 118-19. If such companies are allowed to 

defer paying their debt to the pension funds, and go out of 

business while liability is being litigated, the pension funds 

will be saddled with full liability for the unfunded pension 

benefits. The interim payment provisions are designed to 

diminish this risk. Mar-Len 30 F.3d at 626; Central Transport

935 F.2d at 118. 

 We believe that it would contort the law if we were to allow 

the undercapitalized or financially precarious companies that 

pose the very risk to pension funds that MPPAA was designed to 

correct to defer payment because they pose that risk. It is 

inappropriate to refuse a preliminary injunction ordering interim 

withdrawal liability payments on the grounds that the payments 
11

might pose a financial risk to the employer. 

 Congress has effectively answered all the questions a court 

generally asks when considering a motion for a preliminary 

injunction. We will not substitute our own views on the wisdom 

of ordering interim withdrawal liability payments. The Fund had 

sustained its burden of showing that withdrawal liability was 

assessed, Beaverbrook was notified and payments were not made. 

That is all the statute requires. Therefore, the district court 

erred by refusing to grant the Fund's request for a preliminary 

injunction. 

III. 

 The district court also did not decide whether all of the 

appellees are employers for purposes of MPPAA, finding that our 

decision in Flying Tiger directed that the issue first be 

resolved in arbitration. Here too it erred, because resolving 

this issue determines the arbitrator's authority over the 

withdrawal liability dispute. 

 In both Flying Tiger and our recent decision in Doherty v. 

Teamsters Pension Trust Fund of Philadelphia, we have 

distinguished between disputes over whether an entity has ceased 

to be an employer within the meaning of MPPAA, which must be 

resolved in arbitration, and disputes over whether an entity has 

ever become an employer, which must be resolved in the courts. 

Doherty, 16 F.3d 1386, 1390-91 (3d Cir. 1994); Flying Tiger, 830 

F.2d at 1250-51. In the first instance, Congress has directed 

that an arbitrator shall initially determine if an entity that 

was once an employer took steps to evade or avoid liability as 
12

defined under 29 U.S.C. § 1392(c). 29 U.S.C. § 1401(a)(1) ("Any 

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."); Flying Tiger, 830 F.2d at 1250. 

 By contrast, an entity which has never been an employer 

within the meaning of MPPAA is not subject to the arbitrator's 

jurisdiction, since 29 U.S.C. § 1401(a)(1) only mandates 

arbitration for disputes between "an employer and the plan 

sponsor." Doherty, 16 F.3d at 1390 (quoting 29 U.S.C. § 

1401(a)(1)). Therefore, entity's employer status is a legal 

question to be resolved by the court. In particular, we held in 

Doherty that the issue of whether persons or entities are "alter 

egos" or members of the same controlled group is properly 

resolved in the courts. Id. at 1390-91. 

 Here, some of the appellees have disputed the Fund's 

assertion that they are liable as employers under an "alter-ego" 

or controlled-group theory. This is a question of law upon which 

courts are indeed empowered to act. The district court erred by 

holding that the issue should be resolved in arbitration. We 

will remand this issue for further proceedings. 

IV. 

 For these reasons, we will reverse and remand to the 

district court to determine whether the appellees are employers 

under MPPAA, and for it to enter an order requiring Beaverbrook 

to make interim payments as scheduled by the Fund. 

 ________________________ 
13

 Circuit JudgeFRANK J. GALGAY; FRANCIS P. BONNER, TRUSTEES OF THE 

ANTHRACITE HEALTH AND WELFARE FUND (PENSION TRUST); ANTHRACITE

HEALTH AND WELFARE FUND (PENSION TRUST), Appellants v. 

BEAVERBROOK COAL COMPANY; GEORGE HUSS JR.; WILLIAM HUSS; HUSS 

INDUSTRIES, INC.

Appellees, No. 95-7532

BECKER, J., Dissenting. 

 The majority's decision is driven by its conclusion that 

when the Congress provided that withdrawal liability "shall be

payable . . . no later than 60 days after the date of the demand 

notwithstanding any request for review," 29 U.S.C. § 1399(c)(2) 

(emphasis added), Congress provided for a mandatory injunction. 

Under this approach, a district court must impose such an 

injunction even if: (1) the trustees' demand for payment is 

frivolous (in terms of either liability or amount demanded); and 

(2) the payment would bankrupt or financially cripple the 

withdrawing employer and eliminate the possibility of future 

payments. I disagree. 

I. 

 First, I doubt that Congress's words here are susceptible to 

that construction. It uses the phrase "shall be payable," which 

seems much more open-ended than "shall be paid." Thus, the 

statute is at least ambiguous. Looking to Congressional intent, 

I do not believe that Congress here intended a result so 

inflexible and therefore so problematic. 

 Like the majority, I read Congress to be concerned that an 
14

employer could stymie a pension fund's collection attempts by 

pursuing litigation over withdrawal liability. However, by 

disallowing consideration of the employer's inability to pay in 

the face of a frivolous withdrawal liability claim, the majority 

actually undermines Congress's goals. If an employer becomes 

financially insolvent as a result of its withdrawal payment 

obligations, the pension fund will not only be unable to receive 

"an uninterrupted flow of payments," but also will be the but 

for cause of its own inability to secure "ultimate recovery." 

Furthermore, the proposal that I will advance -- giving courts 

the discretion to deny a preliminary injunction only when the 

pension's claim is not colorable and when requiring interim 

payments would push a financially distressed employer over the 

cliffs -- preserves Congress's "pay now, dispute later" scheme. 

II. 

 There is an even more fundamental problem with the 

majority's analysis, one which does not depend on finding an 

ambiguity in the Congressional language. The majority 

uncritically assumes that the Congressional locution "shall be 

payable" translates into a proscription against a federal court's 

using its historic equity powers to withhold or condition relief. 

 It is incorrect. 

A. 

 As I see it, the seminal cases in this area are Hecht Co. v. 

Bowles, 321 U.S. 321 (1944), and Porter v. Warner Holding Co., 

328 U.S. 395 (1946). These cases arose under the World War II 

Emergency Price Control Act and Regulations, and involved actions 
15

by the Price Administrator to enforce compliance therewith. 

Section 205(a) of the Act provided that 

[w]henever in the judgment of the Administrator any person has 

engaged or is about to engage in any acts or practices which 

constitute or will constitute a violation of any provision 

of section 4 of this Act, *** he may make application to the 

appropriate court for an order enjoining such acts or 

practices, or for an order enforcing compliance with such 

provisions, and upon a showing by the Administrator that 

such person has engaged or is about to engage in any such 

acts or practices a permanent or temporary injunction, 

restraining order, or other order shall be granted without 

bond. 

Emergency Price Control Act of 1942, 50 U.S.C. App. Supp. II 

§§ 901 et seq., 925. (emphasis added). 

 The question presented in Hecht was whether the 

Administrator, having established that a defendant has engaged in 

acts or practices violative of § 4 of the Act, is entitled as of 

right to an injunction restraining the defendant from engaging in 

such acts or practices, or whether the court has some discretion 

to grant or withhold such relief. Although the Court determined 

that the mandatory character of § 205(a) is clear from its 

language, history and purpose (in our case the language is less 

clear), it held that the phrase "shall be granted" does not 

require issuance of an injunction against violation of a price 

regulation merely because the Administrator asks for it. 

Instead, the district court may, in accordance with equity 

practice, exercise discretion in determining what order shall be 

made. Hecht, 321 U.S. at 328-29. The court explained that 

[a] grant of jurisdiction to issue compliance orders hardly 

suggests an absolute duty to do so under any and all 

circumstances. We cannot but think that if Congress had 

intended to make such a drastic departure from the 

traditions of equity practice, an unequivocal statement of 

its purpose would have been made. 
16

Id. at 329. 

 In Porter, the Court dealt with the power of a federal 

court, in an enforcement proceeding under § 205(a), to order 

restitution of rents collected by a landlord in excess of the 

permissible maximums. In rejecting the position of the Price 

Administrator that there was no jurisdiction under the statute to 

give the equitable remedy of restitution, the Court, following 

Hecht, held that 

 the comprehensiveness of this equitable jurisdiction is not to 

be denied or limited in the absence of a clear and valid 

legislative command. Unless a statute in so many words, or 

by a necessary and inescapable inference, restricts the 

court's jurisdiction in equity, the full scope of that 

jurisdiction is to be recognized and applied. 'The great 

principles of equity, securing complete justice, should not 

be yielded to light inferences, or doubtful construction.' 

Brown v. Swann, 10 Pet. 497, 503. See also Hecht Co. v. 

Bowles, supra. 

Porter, 328 U.S. at 398. 

 Another helpful case is Weinberger v. Romero-Barcelo, 456 

U.S. 305 (1982). In Weinberger, the Court faced the question 

whether the mandatory language of the Federal Water Pollution 

Control Act requires a district court to enjoin immediately all 

discharges of pollutants that do not comply with the Act's permit 

requirements, or whether the district court retains discretion to 

order other relief to achieve compliance. Reviewing the 

structure of the statutory scheme and the legislative history, 

the Court held that the statute contemplated the exercise of 

discretion. Importantly, however, the Court also relied on Hecht 

Co. v. Bowles, supra, pointing out that, while Congress may 

intervene and guide or control the exercise of the courts' 
17

historic equity discretion, which reflects a "practice with a 

background of several hundred years of history," Hecht, 321 U.S. 

at 329, we "should not lightly assume that Congress has intended 

to depart from established principles." Weinberger, 456 U.S. at 

313 (emphasis added). Nor should we. 

B. 

 Nothing cited to us suggests that Congress has been so 

direct and explicit in the MPPAA that we can conclude, much less 

“lightly assume,” that all equitable discretion has been removed. 

 I, therefore, would follow the lead of the Fifth Circuit in 

Trustees of Plumbers and Pipefitters N.H. Pension Fund v. MarLen, Inc., 30 F.3d 621, 626 (5th Cir. 1994), and the Seventh 

Circuit in Robbins v. McNicholas Transport Co., 819 F.2d 682, 

685-86 (7th Cir. 1987). As the majority acknowledges, these 

courts have adopted an “equitable exception” to the MPPAA’s “pay 

now, dispute later” scheme. The equitable exception was first 

articulated by the Seventh Circuit, which observed in McNicholas: 

where the trustees bring an action to compel payments, pending 

arbitration, the court should consider the probability of 

the employer's success in defeating liability before the 

arbitrator and the impact of the demanded interim payments 

on the employer and his business. 

McNicholas Transport Co., 819 F.2d at 685. The McNicholas

standard has evolved into a test whereby “a reviewing court 

merely determines whether the pension plan’s claim [for 

withdrawal liability] is nonfrivolous and colorable.” If the 

claim is colorable, then the employer “must make interim payments 

while it contests the underlying liability.” Mar-Len, 30 F.3d at 

626. If the claim is frivolous or not colorable, the district 
18

court has a narrow measure of discretion to excuse interim 

payments which to do otherwise would cause irreparable economic 

injury to the employer. Id.; Trustees of Chicago Truck Drivers 

Union Pension Fund v. Central Transport, Inc. 935 F.2d 114, 119 

(7th Cir. 1991). 

 In suggesting that we follow the Fifth and Seventh Circuit 

test, I underscore that the "equitable exception" would take hold 

only in the rare case. The district court can exercise 

discretion solely to ensure that the courts are not used by an 

unscrupulous pension fund lacking a legitimate withdrawal 

liability claim to squeeze money from an employer and propel it 

into bankruptcy. See Central Transport, 935 F.2d at 119. It 

also bears emphasizing that federal judicial involvement need not 

be extensive nor burdensome -- federal judges are comfortable 

with making threshold colorability assessments, which is what I 

would require as to the viability of the withdrawal liability 

claim. The same is true for the inquiry as to whether the 

withdrawal liability will be so burdensome as to permanently 

cripple the employer (and deprive the Fund of future payouts). I 

also stress that, contrary to the majority's intimation, our 

decision in Board of Trustees of Trucking Employees Pension Fund 

v. Centra, 983 F.2d 495 (3rd Cir. 1992), did not decide the 

question before us here. Indeed, after noting the Seventh 

Circuit position, the Centra panel was careful to explain that 

the equitable exception could not possibly apply in the case 

before it because the withdrawing employer was "well heeled." 

C. 
19

 It is not clear from the present record whether the 

Trustees' withdrawal liability claim here is in fact colorable or 

whether the financial impact of withdrawal liability payouts on 

Beaverbrook will in fact be devastating. I note that Beaverbrook 

has represented that it will experience serious financial 

difficulty if required to make interim withdrawal payments prior 

to the resolution of its challenge to the assessment of 

liability. And while it did not make a formal proffer on the 

point, Beaverbrook’s litigation position suggests its belief that 

the withdrawal liability claim is wholly without merit. I would 

remand for consideration of such matters under the Seventh 

Circuit test, which I read to be conjunctive: if the district 

court finds that the claim for withdrawal liability is not 

colorable, and if payment of withdrawal liability would push 

Beaverbrook over the cliff, as it were, it can utilize its 

equitable discretion to fashion a decree that might relieve 

Beaverbrook of the obligation to make interim payments (or some 

portion thereof). 

 A good argument can be made that this test should be made in 

the disjunctive, so as to protect every employer from frivolous 

claims and from bankruptcy. But I would be reluctant to extend 

our equitable discretion in the absence of more persuasive 

authority and a more compelling factual scenario. 

 For the foregoing reasons, I respectfully dissent.