Opinion ID: 526976
Heading Depth: 2
Heading Rank: 1

Heading: Definition of Employer

Text: 20 In enacting ERISA in 1974, 29 U.S.C. Sec. 1001 et seq., Congress sought to prevent the losses suffered by employees and their families when vested pension benefits were not paid because a pension plan was terminated before sufficient funds had been accumulated. See Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 720, 104 S.Ct. 2709, 2713, 81 L.Ed.2d 601 (1984); Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 374-75, 100 S.Ct. 1723, 1732-33, 64 L.Ed.2d 354 (1980). 21 Multiemployer plans developed in industries where job changes are frequent, like longshoring where workers change employers from day to day or week to week. NLRB v. Truck Drivers Local Union No. 449, 353 U.S. 87, 94, 77 S.Ct. 643, 647, 1 L.Ed.2d 676 (1957). Collective bargaining agreements with multiple employers are particularly appropriate in such industries because of the pension protection provided by the pooled funds of many employers. See Textile Workers Pension Fund v. Standard Dye & Finishing Co., 725 F.2d 843, 847 (2d Cir.1984). Subsequent concern for the financial stability of some multiemployer plans prompted Congress, in 1980, to enact that provision of the MPPAA which states: If an employer withdraws from a multiemployer plan in a complete withdrawal or a partial withdrawal, then the employer is liable to the plan in the amount determined ... to be the withdrawal liability. 29 U.S.C. Sec. 1381(a). 22 The MPPAA itself contains no definition of the word employer. But Title I of ERISA does contain a definition that would support the Fund's arguments in favor of imposing withdrawal liability upon the carriers, see 29 U.S.C. Sec. 1002(5) (defining such status as any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan). Yet, the Supreme Court cautions that though the definitions in Title I may otherwise reflect the meaning of the terms defined as used in other Titles, Nachman v. Pension Benefit Guaranty Corp., 446 U.S. at 370 n. 14, 100 S.Ct. at 1731 n. 14, they do not apply elsewhere in the Act of their own force.... Id. The parties attempt to garner support for their respective positions from the language in Nachman. We conclude that the definition of who is an employer for purposes of determining withdrawal liability under the MPPAA is one that in the final analysis must be left to the courts. See DeBreceni v. Graf Bros. Leasing, Inc., 828 F.2d 877, 880 (1st Cir.1987), cert. denied, --- U.S. ----, 108 S.Ct. 1024, 98 L.Ed.2d 988 (1988). 23 Although, as is so often the case, the legislative history of the MPPAA is ambiguous and somewhat contradictory, see H.R.Rep. No. 869, 96th Cong., 2d Sess. 60, reprinted in 1980 U.S.Code Cong. & Admin.News 2918, 2928, the policies and purposes of the MPPAA are clear, and they fully support the rulings of the district court in these cases. The 1980 amendment to ERISA aimed to eliminate the incentive to withdraw from multiemployer plans, and reduced the burdens imposed on plans when employers do withdraw. See id. at 2928, 2933 (The basic policy of the Act is that the retirement income security of multiemployer plan participants is best assured by fostering the growth and continuance of multiemployer plans.... A primary objective of the legislation is to insulate plans to the extent possible from declines, through sounder funding [and] employer withdrawal liability....). Thus, in deciding how to define employer, the district court properly considered Congress' remedial and protective purposes in enacting the MPPAA, and correctly concluded that the ends sought to be achieved through the Act's passage would best be served by imposing withdrawal liability on Korea and Delta. 24 In both cases, the trial judges declined to give the term employer its common law or dictionary meaning, preferring instead to adopt a definition that more carefully implements the statute's clear objectives. Under this construction, the term employer in 29 U.S.C. Sec. 1381(a) means a person who is obligated to contribute to a plan either as a direct employer or in the interest of an employer of the plan's participants. Korea Shipping, 663 F.Supp. at 770; see also Delta S.S., 688 F.Supp. at 1563-66; accord In re Uiterwyk Corp., 63 B.R. 264 (M.D.Fla.1986). We agree with this definition. 25 The principal thrust of the carriers' argument on appeal is that it is a fundamental rule that inquiry into the meaning of a statute must begin with its plain meaning, that is, by examining the actual words used by the legislature. The word employer is to be construed in its common law sense which, they contend, is free from doubt. When Congress' term is construed in that fashion, appellants continue, it eliminates the carriers as employers of the longshoremen, and shifts the withdrawal liability to the stevedoring companies. This argument is less convincing than it may at first appear. 26 Concededly, the best starting point for examining a statute is the language of the statute itself. Landreth Timber Co. v. Landreth, 471 U.S. 681, 685, 105 S.Ct. 2297, 2301, 85 L.Ed.2d 692 (1985); Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 756, 95 S.Ct. 1917, 1935, 44 L.Ed.2d 539 (1975) (Powell, J. concurring). Courts generally assume that the ordinary meaning of the language accurately expresses the legislative purpose. See, e.g., Park 'N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 194, 105 S.Ct. 658, 661, 83 L.Ed.2d 582 (1985). Although inquiry begins with the words, words are not the end of it. See Massachusetts Bonding & Ins. Co. v. United States, 352 U.S. 128, 138, 77 S.Ct. 186, 191, 1 L.Ed.2d 189 (1956) (Frankfurter, J. dissenting). As this case illustrates, to adopt the meaning of the word employer appellants urge would open a gaping hole in many multiemployer plans. Such a common law definition of employer would eliminate withdrawal liability for such a significant number of contributors as to threaten those plans' financial viability and potentially make them victims of the precise threat Congress aimed to shield them from when it enacted the MPPAA. See Korea, 633 F.Supp. at 769 (quoted in Delta S.S., 688 F.Supp. at 1563). 27 Rather, it is the task of judges to start with the language of a statute and to reach a judgment that applies that language to a particular set of circumstances in a manner consistent with the statute's stated objectives. The fallacy in the carriers' argument is their failure to recognize that in construing a statute, the task of the courts is to interpret the words of the statute in light of the purposes that animated the lawmakers in enacting it. See Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 608, 99 S.Ct. 1905, 1911, 60 L.Ed.2d 508 (1979). It is in this broader framework that the word employer was properly defined by the district courts as one obliged to contribute to a plan for the benefit of the plan's participants. Such a definition is fully consonant with the MPPAA's objectives.B. Objections to Obligation to Contribute Definition 28 The carriers have raised additional objections to the obligation to contribute definition that triggers withdrawal liability. They argue that this standard conflicts with the proscriptions contained in Sec. 302 of the Labor Management Relations Act, 29 U.S.C. Sec. 186 (1982 & Supp. V 1987), which they contend prohibits the carriers from making any payments to the Fund. And, the carriers further claim that a showing of harm to the pension plan is a prerequisite to the imposition of withdrawal liability, that the Fund has failed to demonstrate such harm, and that compelling the carriers to make payments to the Fund constitutes an impermissible windfall. We consider these contentions. 29 First, Sec. 302(a) of the LMRA provides, in part, that [i]t shall be unlawful for any employer or association of employers or any person who acts as a labor relations expert, adviser, or consultant to an employer or who acts in the interest of an employer to pay, lend, or deliver, or agree to pay, lend, or deliver, any money or other thing of value to an employee representative under certain enumerated circumstances. 29 U.S.C. Sec. 186(a). In essence, the carriers urge that the common law definition of employer applies to the LMRA, and again argue that the same definition must also be applied to the MPPAA to avoid a situation in which the same contributions supposedly rendered illegal under Sec. 302 would nonetheless provide the basis for withdrawal liability under the MPPAA. 30 Nothing in the LMRA supports such a contention. Appellants' argument ignores the provisions of Sec. 302(c)(5) that exempt from the Sec. 302(a) prohibition those contributions to a trust fund established by [a labor] representative, for the sole and exclusive benefit of the employees of such employer.... 29 U.S.C. Sec. 186(c)(5). Contributions may be made legally to the Fund under the exception carved out by Sec. 302(c)(5). Although the plaintiffs are not the direct employers of the plan's beneficiaries, they did make payments for the employees' benefit to the Fund as members of an association of employers. 31 In addition, the carriers' argument disregards the policies and purposes of this section of the LMRA which was enacted to guard against corruption in the collective bargaining process through, among other things, the bribery of employee representatives and abuses of power by union officers. See Arroyo v. United States, 359 U.S. 419, 425-26, 79 S.Ct. 864, 868, 3 L.Ed.2d 915 (1959). We cannot adopt the carriers' argument that the employees mentioned in Sec. 302(c)(5) must invariably be the payor's own employees. Inasmuch as the entity making the payments described in Sec. 302(a) may simply be one which acts in the interests of an employer, and because the language of Sec. 302(c)(5) refers to the employees of such employer, it plainly appears that the beneficiaries of trust funds covered by the exception in Sec. 302(c)(5) need not be direct employees of the payor contemplated in Sec. 302(a). 32 The carriers' reliance on Walsh v. Schlecht, 429 U.S. 401, 97 S.Ct. 679, 50 L.Ed.2d 641 (1977), should give them no comfort. There, the terms of a labor agreement required a contractor to make contributions to a carpenter's trust fund on the basis of the number of hours worked by a non-signatory subcontractor's employees. Although ruling that the contributions did not violate Sec. 302 of the LMRA because the benefits were payable only to employees of signatories to the labor agreement, the Supreme Court also held that payments made on behalf of or for the benefit of the subcontractor's employees would violate Sec. 302(a) because those employees were not eligible for benefits. Walsh, 429 U.S. at 407, 97 S.Ct. at 684. Here, appellants were parties to the agreement that created the Fund, and benefitted from using the labor of the Fund's beneficiaries who were employed by stevedoring companies that were also signatories to the same agreement. See Delta, 688 F.2d at 1566 n. 6. Thus, under the present circumstances a carrier may be obligated for withdrawal liability payments to a pension trust fund to benefit eligible employees of another employer, even though its own employees are not the benefic aries of that fund. See, e.g., Spring Branch Mining Co. v. United Mine Workers, 691 F.Supp. 973, 976-78 (S.D.W.Va.1987), aff'd, 854 F.2d 37 (4th Cir.1988) (per curiam), cert. denied, --- U.S. ----, 109 S.Ct. 817, 102 L.Ed.2d 806 (1989); Warrior Coal Co. v. Connors, 649 F.Supp. 1090, 1096-97 (W.D.Va.1986). 33 Second, the carriers claim that there must be demonstrable harm to the Fund to justify the imposition of withdrawal liability. In light of the MPPAA's policies, and the payments expressly mandated by the statute, there is no unjust enrichment upon receipt of such payments without a showing of harm. This follows because withdrawal liability is designed as a compensatory mechanism to counterbalance shrinkages in the contribution base of covered plans--shrinkages such as those that occurred here when the carriers withdrew from the Port of New York. See Central States S.E. & S.W. Areas Pension Fund v. Bellmont Trucking Co., 788 F.2d 428, 433 (7th Cir.1986). Thus, the Fund need not prove specific harm resulting from the withdrawals; the very act of withdrawal alone suffices because it could well begin the vicious cycle of withdrawals that Congress sought to prevent in enacting the MPPAA. See Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211, 216, 106 S.Ct. 1018, 1021, 89 L.Ed.2d 166 (1986). C. Plaintiffs' Obligation to Contribute 34 Having concluded that the contributing obligor definition of employer is appropriate under the MPPAA, we next turn to the issue of whether Korea and Delta have such an obligation. Appellants assert that even using this definition as the test, they cannot be subjected to withdrawal liability because, under their collective bargaining agreements, they have no direct obligation to contribute to the Fund. We disagree. 35 As noted earlier, in signing the General Cargo Agreement the shippers obligated themselves to pay certain assessments to the NYSA which, in turn, transferred that portion of the assessment monies to be used for pension plan contributions directly to the Fund. Appellants take slightly different tacks in challenging withdrawal liability: Korea asserts that payment of a tonnage assessment was always the stevedores' obligation. It argues that Judge Weinfeld's decision was based upon a practice that had developed whereby the carriers paid tonnage assessments directly to the NYSA, and professes disbelief that multi-million dollar questions of withdrawal liability would hinge on local billing practices. Delta rechristens the payments it made to the NYSA as being cargo assessments and claims that these payments were not obliged contributions to the Fund. Each contend therefore that they had no obligation to contribute to the Fund, and that it is the NYSA which fulfills the obligation to fund the ILA pension plans. 36 As the Fund correctly points out, the General Cargo Agreement states that [e]ach vessel carrier ... shall be responsible for an assessment amount per ton on each ton of non-excepted cargo loaded or discharged in the Port of New York, that those assessments shall be collected by the direct employer [the stevedores] from each of the carriers and shall be paid to NYSA for immediate transmittal to the NYSA-ILA Fringe Benefits Escrow Fund, and that [p]ension payments shall be made by NYSA directly to the NYSA-ILA Pension Trust Fund. These contractual provisions amply support the conclusion that the stevedores and the NYSA were merely conduits for monies which the carriers were obligated to pay into the longshoremen's pension fund. 37 The fact that the NYSA was the party that transferred the monies to the Fund is irrelevant. The contributions were received directly from the carriers under the GCA for the express purpose of funding the NYSA-ILA pension plan. We agree with the district courts' observation that to hold that NYSA but not its members must make contributions to the Fund elevates form over substance, and effectively permits contributors to a multiemployer plan to conveniently insulate themselves from withdrawal liability. The mere existence of an intermediary used to collect and distribute the separate contributions of its members does not remove those members from the status of contributors to the plan. Korea, 663 F.Supp. at 771; see also Delta, 688 F.Supp. at 1566. 38 In short, the determination that Korea and Delta were subject to withdrawal liability was firmly bottomed on the express terms of the GCA and clear congressional purpose in enacting the MPPAA's withdrawal liability provisions. To rule otherwise would effectively undermine the very aims and purposes for which the Act came into being. D. Proportional Relationship 39 Finally, Delta urges that the assessments it paid to the NYSA must bear a proportional relationship to the number of man-hours dedicated to the loading or unloading of its cargo and, absent such proportionality, the amount of the contributions made to the plan through the NYSA cannot serve as the basis for the imposition of withdrawal liability. The statute and the relevant decisional authority are conspicuously silent on this proportionality argument. Congress chose contributions as the basis for allocation of withdrawal liability. It did not regulate the nature or method of those contributions. The method of contribution was left to the parties. 40 Once the contributions are agreed upon and made, they become the focus by which the withdrawing contributor's share of the plan's unfunded vested benefits pursuant to 29 U.S.C. Sec. 1391 is determined. The structure of wages, assessments, and benefits may not appear wholly rational and consistent. Yet the carriers, the stevedores, and the longshoremen negotiated and agreed upon that structure, and any disproportion between the number of man-hours worked and the tonnage assessments must be deemed to represent the equilibrium that was reached among contending forces in the bitter economic struggle over containerization. In our view the MPPAA simply accepts the parties' contractual arrangement and imposes withdrawal liability upon the party that has assumed an obligation to contribute to the pension fund.