Source: http://dc.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19861020_0000233.DDC.htm/qx
Timestamp: 2017-04-24 05:32:04
Document Index: 4099393

Matched Legal Cases: ['§ 1001', '§ 1381', '§ 1383', '§ 1382', '§ 1399', '§ 1399', '§ 1401', '§ 1399', '§ 1399']

| CONNORS v. B & W COAL CO.
CONNORS v. B & W COAL CO.
B & W COAL COMPANY, INC., et al., Defendants
MEMORANDUM This is an action by trustees of the United Mine Workers of America 1950 and 1974 Pension Plans to collect "withdrawal liability" under the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), 29 U.S.C. § 1001 et seq. (1982). The matter is now before the Court in the form of two motions. First, a motion by plaintiffs for partial summary judgment against defendant B & W Coal Company, Inc. Second, a motion by the Bluestone Coal Corporation, third party defendant, to dismiss for lack of subject matter and personal jurisdiction. For the reasons stated below, both motions will be granted. I The enactment of ERISA in 1974 was the beginning of the federal government's attempt to regulate private pension plans in a comprehensive manner. ERISA covered both single employer plans -- those created, operated, and maintained by one employer acting alone -- and multiemployer plans. In 1980, Congress substantially amended the rules governing the latter type of plan. Among these amendments were changes in the rules governing an employer's withdrawal from a multiemployer plan. See generally Peick v. Pension Benefit Guaranty Corp., 724 F.2d 1247 (7th Cir. 1983). Under the amendments, an employer who withdraws from a multiemployer pension plan incurs a so-called withdrawal liability; that is, he is required immediately to begin to pay a fixed and certain debt owned to the plan. See 29 U.S.C. § 1381(a). The details of withdrawal liability are complex: complete withdrawal occurs where an employer either permanently ceases to have an obligation to contribute to the plan or permanently ceases covered operations under the plan (§ 1383(a)); when an employer withdraws from such a plan, the plan sponsor -- in this case the trustees -- must determine the amount of the employer's withdrawal liability, and collect that amount from the employer (§ 1382); and the plan must give notice and demand payment of the withdrawal liability in accordance with a schedule of payments as soon as practicable after the employer's withdrawal (§ 1399(b)(1)). Not later than 90 days after receiving notice and demand, the employer may request a review of the plan's withdrawal determination (§ 1399(b)(2)(A)). The plan then notifies the employer of its decision on review; if the employer disagrees with that decision, it may initiate arbitration (§ 1401(b)(1)); and the withdrawn employer must make withdrawal liability payments during review and arbitration (§ 1399(c)(2)). An employer's failure to make any withdrawal liability payment when due will constitute a default if not promptly cured, and upon such a default, the plan "may require immediate payment of the outstanding amount of [the] employer's withdrawal liability" plus accrued interest (§ 1399(c)(5)). These detailed provisions are a vital part of ERISA's scheme of protecting the interests of participants in employee benefit plans and their beneficiaries. In particular, the withdrawal liability provisions help to ensure that pension plans will not be rendered insolvent or incapable of meeting their obligations when one of the contributing employers withdraws. Peick, 724 F.2d at 1271. The withdrawal provisions apply to any employer's withdrawal from a multiemployer pension plan after September 26, 1980.
In order to decide plaintiffs' motion for partial summary judgment, the Court must determine whether, as a matter of law, defendant B & W Coal Company, Inc., withdrew from the plan before or after that date. II The facts underlying this lawsuit are as follows.
Defendant B & W Coal Company, Inc., was established as a partnership of defendants Herbert Bolden and Orlando Worthington in 1975. The company engaged in the business of coal mining and operated as a contract miner for Bluestone Coal Corporation, the third party defendant in the instant case. In October 1976, Orlando Worthington signed the 1974 National Bituminous Coal Wage Agreement on behalf of B & W Coal. About three years later, Worthington and Bolden, as partners, signed the 1978 Bituminous Coal Wage Agreement on behalf of B & W Coal. Under these agreements, B & W Coal was obligated to make and in fact did make contributions to the United Mine Workers of America Pension Plans, on behalf of employees covered by the agreements. On April 30, 1980, defendant Bolden sold his partnership interest in B & W Coal to Calvin Browning. According to that agreement, the partnership would "continue operating as B & W Coal Company." In fact, B & W continued its operations and continued also to make contributions to the pension plans pursuant to the 1978 agreement. In November 1980, Browning and Worthington incorporated the business as B & W Coal Company, Inc. The corporation continued the former mining operations without interruption, using the same mines, employees, and offices. It also continued to contribute to the pension plans. B & W Coal Company, Inc., did not, however, sign the 1981 Bituminous Coal Wage Agreement, which would have obligated it to continue contributing to the pension plans. The trustees notified B & W Coal of what they considered its withdrawal liability by letters dated May 4, 1983. The letters authorized B & W Coal to discharge its liability to the Plans according to a specified payment schedule. B & W Coal neither made any withdrawal liability payments, requested review of the trustee's determination, nor furnished additional information. On August 8, 1983, the trustees demanded by mail "all past due" withdrawal liability payments, plus interest, no later than October 17, 1983. The trustees also warned the company that if payments were not made by that date the withdrawal liability of $81,047.58 to the 1950 Pension Plan and $70,075.67 to the 1974 Pension plan would be due without further demand. III Plaintiffs advance three main arguments in support of their motion for partial summary judgment. First, plaintiffs argue that B & W Coal withdrew from the Plans in March 1981 by its failure to sign the 1981 Bituminous Coal Agreement, and not in April 1980 when the original partnership dissolved. Consequently, plaintiffs contend, defendant B & W Coal owes withdrawal payments under the MPPAA. Second, plaintiffs contend that B & W Coal is liable for withdrawal payment as a matter of statutory law, regardless of any contractual agreement by Bluestone Coal to make contributions to the plans. Third, plaintiffs maintain that B & W's failure to request review and arbitration precludes it from contesting either the fact or the amount of its withdrawal liability. The Court will deal with each of these points in turn. In its opposition to the partial summary judgment motion, defendant B & W Coal repeatedly and strenuously asserts that it withdrew from the pension plans on April 30, 1980, when the original partnership dissolved, "long before the effective date for imposition of withdrawal liability under the MPPAA."
Moreover, defendants present this as the "primary issue of fact raised by the instant case."
However, it is apparent that, as a matter of law, B & W Coal withdrew from the pension plans on March 27, 1981. As explained above, complete withdrawal from a MPPAA plan occurs when an employer permanently ceases to have an obligation to continue to contribute to the plan or permanently ceases covered operations under the plan. Despite defendants' assertions, the facts dictating whether there has been a complete withdrawal in the instant case are not disputed. Defendants do not deny that B & W Coal signed the 1978 Bituminous Coal Agreement, that it contributed to the Plans under that agreement until it expired, and that it neither signed the 1981 Agreement nor contributed to the Plans subsequently or engaged in covered operations since that time. Defendants' contention that -- these facts aside -- they do not owe withdrawal liability because their partnership dissolved before the effective date of the MPPAA's withdrawal liability provisions is not well taken. ERISA itself provides the answer to this question. Section 4218 of that Act provides: Withdrawal Not to Occur Merely Because of Change in Business Form or Suspension of Contributions During Labor Dispute &nbsp; Sec. 4218. Notwithstanding any other provision of this part, an employer shall not be considered to have withdrawn ...