Opinion ID: 495432
Heading Depth: 1
Heading Rank: 2

Heading: background of this dispute

Text: 7 Appellant Tiger International, Inc. (Tiger), is a holding company engaged through its subsidiaries--which include appellants The Flying Tiger Line, Inc. and Warren Transport, Inc.--in the air cargo, transportation, and trucking businesses. On January 2, 1980, Tiger acquired 100% of the stock of Hall's Motor Transit Co. (Hall's), a large interstate trucking company. Pursuant to collective bargaining agreements, Hall's had contributed for many years until early 1986 to a number of multiemployer pension plans on behalf of most of its approximately 3,500 employees. A number of factors, including deregulation of the trucking industry, caused Hall's to incur operating losses each year from 1981 through 1984. These losses occurred notwithstanding the extensive financial support Hall's received from Tiger during that time period. 3 8 In January 1985, Tiger sold 75% of its Hall's stock to Hall's Acquisition Corporation (HAC), a corporation wholly owned by Alvin Bodford, Hall's Chief Financial Officer. In consideration for the stock it received in this deal, HAC gave Tiger a $10.5 million promissory note that memorialized Hall's preexisting indebtedness to Tiger. To secure this note, Tiger received a blanket subordinated security interest in certain real and personal property of Hall's. 9 When HAC thus became the principal owner of Hall's, HAC agreed to honor Hall's obligations to contribute to various multiemployer pension plans. In addition, as part of its sale agreement with Tiger, HAC explicitly assumed full legal responsibility for any withdrawal liability that Hall's and/or Tiger might incur in the future. 4 In late 1985, with Hall's again in need of capital, Tiger agreed to transfer its remaining 25% interest in Hall's to HAC for no consideration. Tiger also agreed to restructure the $10.5 million promissory note and to release its lien on Hall's assets in an effort to help Hall's obtain additional financing. When its requests for such financing were subsequently denied, Hall's filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code, 11 U.S.C. Secs. 1101-1174, on March 10, 1986. 10 Upon filing its bankruptcy petition, Hall's severely cut back its operations and stopped making its contributions to the multiemployer pension plans. In Hall's bankruptcy proceeding, twelve of these plans asserted MPPAA withdrawal liability claims aggregating in excess of $36 million. At approximately the same point in time, Tiger's management was informed that several of Hall's multiemployer pension plans intended to assert that Tiger was jointly and severally liable for Hall's withdrawal liability. 11 On July 2, 1986, pursuant to MPPAA section 1399(b)(2)(A), 5 Tiger submitted a request to appellee Central States, Southwest and Southeast Areas Pension Fund (Central States), one of Hall's multiemployer pension funds, to review the question of Tiger's liability for Hall's withdrawal. Central States eventually responded with a Board of Trustees' finding that, based upon available information, 6 12 a principal purpose of the Hall's divesture by the Tiger International Control Group was to avoid or evade withdrawal liability. Accordingly, the Board of Trustees ... determined, pursuant to ERISA Section 4212(c) [29 U.S.C. Sec. 1392(c) (1982) ], that it must disregard that transaction and that the Tiger International Controlled Group (including Hall's) is the employer responsible for Hall's withdrawal liability. 13 J.A. at 798. 14 Tiger did not, however, wait for this response from Central States. Rather, on July 3, 1986, Tiger and its subsidiaries filed a federal class action complaint seeking declaratory and injunctive relief against Central States and the other plans that had asserted or had threatened to assert claims for withdrawal liability against Hall's. In Count I of its complaint, Tiger sought a declaration that it was not liable for any withdrawal liability that might be owed to the plans by Hall's and an order enjoining the plans from asserting claims for such liability against Tiger. In support of this count, Tiger claimed that, as a result of its sale to HAC in January 1985 of 75% of Hall's stock, Hall's was no longer part of the Tiger-controlled group when the withdrawal occurred in March 1986. 7 In addition, Tiger argued that MPPAA section 1401 specifically refers to disputes between employers and plans, 8 and that Tiger's status as an employer therefore should be judicially determined before it is compelled to enter arbitration. 15 The plans moved to dismiss Tiger's complaint for lack of subject matter jurisdiction, principally on the ground that all disputes concerning MPPAA withdrawal liability must be resolved by plan trustee determinations, trustee review, and MPPAA arbitration before appeal to a federal district court. On September 12, 1986, the district court denied these motions to dismiss and ruled that the Court ... will decide the question of Tiger's status under MPPAA in relation to Hall's alleged withdrawal liability. The Flying Tiger Line, Inc. v. Central States, Southwest & Southeast Areas Pension Fund, No. 86-304, mem. op. at 12-13 (D.Del. Sept. 12, 1986). The district court based its decision to resolve Tiger's employer status on a determination that Tiger had demonstrated a likelihood of irreparable injury sufficient to exempt Tiger from the requirements of the exhaustion doctrine. The court held that Tiger would suffer irreparable harm because it would be required by MPPAA section 1401(d) 9 to make interim payments of the assessed withdrawal liability during arbitration. Id. at 14-15. 16 The multiemployer pension plans thereafter moved for reconsideration. On October 17, 1986, the district court vacated its September 12th order, holding that any further consideration of Count I is stayed pending arbitration. The Flying Tiger Line, Inc. v. Central States, Southwest & Southeast Areas Pension Fund, 659 F.Supp. 13, 15 (D.Del.1986). The court concluded that, while Tiger faced serious financial hardship, there was no reason to believe that Tiger w[ould] be harmed more if forced to go to arbitration than if Tiger goes to court. Id. The court noted that the pension plans would have to petition the court to enforce the interim payments requirement of MPPAA section 1401(d) and that the possible harm that would result from the threat of withdrawal liability would be the same regardless of the forum in which this dispute was adjudicated. Id. at 15. 17 The district court also addressed Tiger's claim that arbitration may be bypassed because this case involves a question of pure statutory interpretation. The court found that Tiger's status as an employer can be decided only by addressing the question whether Tiger's January 1985 sale of Hall's to HAC was designed to evade or avoid withdrawal liability as defined in MPPAA section 1392(c). 10 The district court identified a need for factual determinations to resolve the legal questions raised by Count I of the complaint, and held that those findings should be made by an arbitrator in the first instance. 11