Opinion ID: 467556
Heading Depth: 1
Heading Rank: 3

Heading: propriety of a cause of action pending arbitration

Text: 15 We turn first to the question whether MPPAA authorizes a right of action to collect withdrawal liability payments pending arbitration. The statutory scheme is unclear on this point. See Republic Industries v. Teamsters Joint Council No. 83, 718 F.2d 628, 641-42 n. 16 (4th Cir.1983). Several provisions strongly suggest that there is such a cause of action. Section 1399(c)(2) says Withdrawal liability shall be payable in accordance with the schedule set forth by the plan ... no later than 60 days after the date of the demand notwithstanding any request for review or appeal.... Section 1401(d) is perhaps even more to the point: 16 Payments shall be made by an employer in accordance with the determinations made under this part until the arbitrator issues a final decision with respect to the determination submitted for arbitration, with any necessary adjustments in subsequent payments for overpayments or underpayments arising out of the decision of the arbitrator with respect to the determination. 17 (emphasis added). These sections explicitly provide for payments pending the arbitrator's decision, and would appear meaningless if there were no cause of action to enforce them. 5 Indeed, Sec. 1451(a)(1) establishes such a cause of action, saying that [A] plan fiduciary, employer, plan participant, or beneficiary, who is adversely affected by the act or omission of any party ... may bring an action for appropriate legal or equitable relief, or both. 18 Yahn argues that these provisions establish retroactive payments plus interest in the event that the arbitrator affirms a finding of liability, and that pension plans, therefore, are not adversely affected within the meaning of Sec. 1451 until after the arbitrator's decision. This position requires downplaying a plan's cash/flow problems. In Pantry Pride v. Retail Clerks Tri-State Pension Fund, 747 F.2d 169, 171 (3d Cir.1984), we emphasized Congress' concern with an uninterrupted flow of pension payments, and implicitly recognized that there is a cause of action to collect interim liability pending arbitration. In that case, an employer filed suit challenging the assessment of withdrawal liability, and the plan moved for withdrawal payments during litigation. The district court limited payments to an amount less than the schedule set forth by the plan trustees. On appeal we were faced with the threshold question whether that holding was appealable as an interlocutory order. We said: 19 [T]he denial of the claim to interim withdrawal benefits is a serious one. Congress believed that it was important to insure that the flow of employer withdrawal liability payments was not delayed by an employer disputing liability.... If no interlocutory review were possible, the Fund could effectively lose its statutory protection against interruptions in the pre-arbitration flow of contributions that Congress mandated through the interim liability provisions. 20 Id. at 171 (emphasis added). 21 Because the pension plan had not filed a counterclaim, we held that the district court should not have addressed the question of interim liability payments at all. However, as the quoted passage makes clear, we implicitly recognized that there is a cause of action to collect withdrawal liability pending arbitration (Judge Hunter went further, dissenting on the grounds that MPPAA made it mandatory upon the court to order withdrawal liability payments notwithstanding deficiency in the plan's pleadings). The courts which have considered this question directly have reached the same conclusion. See Trustees of the Retirement Fund of the Fur Manufacturing Industry v. Lazar-Wisotzky, Inc., 550 F.Supp. 35 (S.D.N.Y.1982), aff'd without opinion, 738 F.2d 419 (2d Cir.1984); Commission Drivers Local 187 Pension Fund v. Hertz Corp., 3 EBC 1801 (E.D.Pa.1982). 22 On the other hand, there is strong language in the statutory scheme contradicting the apparent implication of Secs. 1399(c), 1401(d) and 1451 that there is a cause of action to collect withdrawal liability payments pending arbitration. Specifically, Sec. 1401(b) provides: 23 1) If no arbitration proceeding has been initiated pursuant to subsection (a) of this section, the amounts demanded by the plan sponsor under section 1399(b)(1) of this title shall be due and owing on the schedule set forth by the plan sponsor. The plan sponsor may bring an action in a State or Federal court of competent jurisdiction for collection. 24 2) Upon completion of the arbitration proceedings ... any party thereto may bring an action ... to enforce, vacate or modify the arbitrator's award.... 25 (emphasis added). 26 By explicitly conferring a right of action to collect payments only If no arbitration proceeding has been initiated, and Upon completion of the arbitration proceedings, Section 1401(b) can be read to imply that no such right of action exists prior to arbitration. 6 27 While the conflicting provisions within MPPAA render this question difficult, we have found strong authority for the proposition that there is a cause of action to collect withdrawal liability payments pending arbitration. In addition to the courts in Pantry Pride, Hertz and Lazar-Wisotzky, the PBGC, while acknowledging the lack of clarity on this point in the statutory scheme, has stated its view that there exists a right of action to collect payments pending arbitration. 49 Fed.Reg. 22,644 (1984). In light of Congress' obvious desire to ensure the solvency and stability of pension plans, see supra p. 130, we believe this statutory interpretation is correct. Accordingly, we will affirm the district court's grant of summary judgment for the Plan with respect to an interim liability payment. However, we hope that Congress will soon clarify the confusion resulting from conflicting provisions within MPPAA. 7 28