Source: http://il.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19920214_0000044.NIL.htm/qx
Timestamp: 2017-01-19 09:14:30
Document Index: 223501887

Matched Legal Cases: ['§ 1401', '§ 1381', '§ 1382', '§ 1001', '§ 1381', '§ 1382', '§ 1399', '§ 1398', '§ 1401', '§ 1401', '§ 1401', '§ 1401', '§ 401', '§ 1401', '§ 1398', '§ 1398', '§ 1401', '§ 1104', '§ 1401']

| SHERWIN-WILLIAMS CO. v. CENTRAL STATES
SHERWIN-WILLIAMS CO. v. CENTRAL STATES
The opinion of the court was delivered by: JOHN T. GRADY
MEMORANDUM OPINION This action, attacking § 1401(a)(3)(A) of the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1381-1461, on procedural due process grounds, comes before the court on plaintiff's motion for summary judgment and defendant's cross motion to dismiss, or in the alternative, to stay proceedings pending arbitration. Plaintiff's motion for summary judgment is denied and defendant's motion to dismiss is granted. THE FACTS The facts of this case are largely undisputed.
Plaintiff, The Sherwin-Williams Company ("Sherwin-Williams"), is an Ohio corporation with its principal place of business in Cleveland, Ohio. Defendant, Central States, Southeast and Southwest Areas Pension Fund (the "Fund"), is a retirement plan with its principal offices in Peoria, Illinois. In January of 1987, Sherwin-Williams acquired 100 percent of the shares of Lyons Group, Inc., a holding company that owned Lyons Transportation Lines, Inc. ("Lyons"), a less-than-truckload motor carrier. Plaintiff's Statement of Material Undisputed Facts ("Statement") at P 1. At the time of Sherwin-Williams' acquisition of control of Lyons Transportation Group, Inc., Lyons was a participant in and contributor to the Fund. Id. Sherwin-Williams sold all of its Lyons shares on or about May 31, 1990, to J.R.C. Acquisition Corporation ("J.R.C."). Plaintiff claims that at the time of the above sale, the existing officers and directors of Lyons resigned, and J.R.C. assumed full and complete control of Lyons, substituting its own directors and officers to run the company. See Statement at P 2. The parties agree that after Sherwin-Williams sold its interest in Lyons in May of 1990, J.R.C. became jointly liable with Lyons for the latter's contribution obligation to the Fund. In October of 1990, Lyons and J.R.C. filed bankruptcy proceedings and Lyons ceased making required payments to the Fund. Because of Lyons' cessation of contributions, in January of 1991, the Fund, pursuant to 29 U.S.C. § 1382, assessed withdrawal liability against Sherwin-Williams under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1368, as amended by MPPAA, 29 U.S.C. §§ 1381-1461 (1980). The Fund's trustees are required by § 1382
of MPPAA to determine the existence, and calculate the amount, of an employer's liability upon the employer's withdrawal from such multiemployer pension plans. The Fund trustees apparently concluded that Sherwin-Williams was liable for withdrawal liability on the theory that Sherwin-Williams and Lyons were members of a controlled group, as defined by the Act, at the time of Lyon's cessation of payments to the Fund. See Statement at P 4. After the Fund trustees notified plaintiff of the amount of withdrawal liability they assessed, plaintiff, pursuant to 29 U.S.C. § 1399(b)(2)(A)(i),
requested that the trustees review and retract their position regarding the assessment of withdrawal liability. See Statement at P5. Plaintiff asserted that, in view of 29 U.S.C. § 1398,
it was not a member of a controlled group with Lyons at the time the latter stopped contributing to the Fund. See Plaintiff's Complaint for Declaratory Relief ("Complaint") at P 16. Alternatively, plaintiff argued that, even if it had been part of the controlled group, it had not completely withdrawn from the Fund and therefore could not be held liable for complete withdrawal. Id. After waiting six months for a response to its request and receiving none (Complaint at P 17), plaintiff initiated arbitration proceedings before the American Arbitration Association as required by 29 U.S.C. § 1401(a). On the same day, plaintiff filed this declaratory judgment action claiming that § 1401(a)(3)(A) of MPPAA is facially unconstitutional insofar as it denies plaintiff its right to an unbiased decisionmaker in contravention of the Due Process Clause of the Fifth Amendment to the United States Constitution. Plaintiff asks that the court reach this constitutional issue now (before the arbitration proceeding runs its course), declare § 1401(a)(3)(A) to be violative of procedural due process guarantees, and issue a permanent injunction prohibiting the use of § 1401(a)(3)(A) in the pending statutorily-mandated arbitration proceeding between the parties. Plaintiff has moved for summary judgment, and the Fund has moved to dismiss the plaintiff's complaint or, alternatively, to stay proceedings pending the completion of the arbitration. DISCUSSION 29 U.S.C. § 401(a)(3)(A) Section 1401(a)(3)(A) is a provision in the dispute resolution subpart of MPPAA which accords a rebuttable presumption of correctness to the initial determinations of Fund trustees in the statutorily required arbitration proceedings. Section 1401(a)(3)(A) reads as follows: (3)(A) For purposes of any proceeding under this section, any determination made by a plan sponsor under sections 1381 through 1399 of this title . . . is presumed to be correct unless the party contesting the determination shows by a preponderance of the evidence that the determination was unreasonable or clearly erroneous. 29 U.S.C. § 1401(a)(3)(A). As noted above, after receiving notice from the Fund that it had been assessed withdrawal liability, Sherwin-Williams asked the Fund trustees to reevaluate their initial determination in light of 29 U.S.C. § 1398, which plaintiff believes exempts it from liability for withdrawal. Whatever the response of the trustees was,
it is clear enough that they did not agree with plaintiff's position. The trustees' determination -- express or implied -- that § 1398 does not afford Sherwin-Williams an exemption to MPPAA's imposition of withdrawal liability has the benefit of the presumption embodied in § 1401(a)(3)(A) in the pending arbitration proceedings. Plaintiff argues that because the trustees owe strict fiduciary duties exclusively to the Fund, including the obligation to discharge their Fund duties "solely in the interest of the participants and beneficiaries" of the Fund, 29 U.S.C. § 1104, they are predisposed to impose excessive liability on withdrawing employers. Plaintiff further argues that this bias in favor of imposing liability on withdrawing employers is exacerbated by the statutory presumption to be accorded the trustees' determination in the arbitration proceeding. Plaintiff asserts that this procedural device embodied in § 1401(a)(3)(A), in conjunction with ...