Opinion ID: 2951014
Heading Depth: 1
Heading Rank: 5

Heading: the surcharge

Text: The remaining issue which we must resolve is whether “the highest contribution rate at which the employer had an obligation to contribute” includes the 10 percent surcharge imposed by Section 1085(e)(7)(A).12 As discussed above, the District Court concluded that the surcharge should not be included in the annual withdrawal liability payment. Section 1392(a) expands on the sources of the “obligation to contribute,” stating: “the term ‘obligation to contribute’ means an obligation to contribute arising-- (1) under one or more collective bargaining (or related) agreements, or (2) as a result of a duty under applicable labor-management relations law . . . .” Thus, we must decide if the surcharge arises under either the CBAs or an “applicable labor-management relations law.” We conclude that the surcharge does not arise under either.
The Board argues that, because Section 1085(e)(7)(B) makes surcharges “due and payable on the same schedule as the contributions” and provides that “failure to pay a surcharge shall be treated as a delinquent contribution” under Section 1145, the “statute regards both CBA and PPA12 The parties do not dispute that the pension plan was in critical status and the surcharge is 10 percent of the contributions otherwise required under the applicable collective bargaining agreement. 16 mandated employer contributions, and their respective rates, in an identical manner.” Appellant Br. 26. Section 1145 governs delinquent contributions and states that “[e]very employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall . . . make such contributions in accordance with the terms and conditions of such plan or such agreement.” As the Supreme Court has observed, “[t]he text of [29 U.S.C. § 1145] plainly describes the employer’s contractual obligation to make contributions but omits any reference to a noncontractual obligation.” Laborers Health & Welfare Tr. Fund for N. Cal. v. Advanced Lightweight Concrete Co., Inc., 484 U.S. 539, 546 (1988). Because surcharges are noncontractual obligations created by Section 1085(e)(7), they are not within the scope of Section 1145. Indeed, this is precisely why Section 1085(e)(7)(B) is necessary to ensure that surcharges are treated similarly to contributions when delinquent. In addition, the phrase “treated as” in Section 1085(e)(7)(B) is telling. Congress would hardly need to inform a plan’s actuaries that surcharges are to be “treated as” contributions when delinquent if surcharges and contributions were already identical for all purposes, including calculating annual withdrawal payments. In other words, if surcharges were contributions already, then Section 1085(e)(7)(B) would be rendered redundant and meaningless. It is well established, however, that “legislative enactments should not be construed to render their provisions mere surplusage.” Dunn v. Commodity Futures Trading Comm’n, 519 U.S. 465, 472 (1997). In order to give effect to Section 1085(e)(7)(B), surcharges cannot be treated as contributions except when delinquent. Thus, the surcharge established in Section 1085 does not arise under the CBAs.
Contribution Rate” Under Section 1392(a)(2), an “obligation to contribute” may also arise “as a result of a duty under applicable labor-management relations law.” Woodbridge argues that the only “applicable labor-management relations law” is the National Labor Relations Act (“NLRA”). The 17 Board contends that Section 1085 is also such a law.13 Woodbridge also argues that the Board waived this argument. Assuming arguendo that the issue is not waived, the Board’s position is not persuasive because it fails to distinguish between contributions and contribution rates. Even if, as the Board argues, the surcharge arises under the PPA and assuming that the PPA is an “applicable labor-management relations law,” the surcharge cannot be added to Woodbridge’s annual payments unless it is part of the highest contribution rate. 13 Woodbridge is correct that the Supreme Court has concluded that the NLRA is an “applicable labor- management relations law.” See Advanced Lightweight Concrete Co., 484 U.S. at 545-46 (“[Obligation to contribute] is defined for the purposes of the withdrawal liability portion of the statute in language that unambiguously includes both the employer’s contractual obligations and any obligation imposed by the NLRA.”) (emphasis added). The Court has not concluded, however, that the NLRA is the only such law and indeed, has suggested that the phrase “applicable labormanagement relations law” is meant generally. Cf. Bay Area Laundry, 522 U.S. at 196 n.1 (“An ‘obligation to contribute’ arises from either a collective-bargaining agreement or more general labor-law prescriptions. See 29 U.S.C. § 1392(a).” (emphasis added)). Furthermore, nothing in ERISA suggests that this Court should restrict the phrase “applicable labormanagement relations law” to the NLRA. Indeed, had Congress meant only the NLRA, we presume it would have specified that Act. As the statutory background above makes clear, the PPA does address labor-management relations by specifying what employers must do—e.g., comply with rehabilitation plans, or have the default schedules imposed upon them—when they underfund pension plans. Cf. also 29 U.S.C. § 1001a(a)(4)(A) (discussing congressional finding that “withdrawals of contributing employers from a multiemployer pension plan frequently result in substantially increased funding obligations for employers who continue to contribute to the plan, adversely affecting the plan, its participants and beneficiaries, and labor-management relations[.]”) (emphasis added). 18 Section 1399(c)(1)(C)(i)(II), specifies that the annual payments be based on the highest contribution rate at which an employer has an obligation to contribute under the CBAs. “Contribution rate” is widely used throughout the statute, but never explicitly defined. See, e.g., 29 U.S.C. §§ 1396(a)(1), 1425(f), & 1426(c)(2). It is clear, however, as a matter of common sense that contributions are distinct from contribution rates. As the District Court aptly explained: [T]he “contribution rates” set forth in an employer’s CBAs with a multiemployer pension plan are distinct from the “contributions” that the employer generally pays to the plan. Although the contribution rates help determine the total value of the contributions, the contributions do not determine the contribution rates. IBT Local 863 Pension Fund, 5 F. Supp. 3d at 722. A close reading of ERISA further reinforces our conclusion that contributions are not to be conflated with contribution rates. For example, Section 1085(e)(3)(C)(iii) states that “[a]ny failure to make a contribution under a schedule of contribution rates provided under this subsection shall be treated as a delinquent contribution under section 1145 of this title and shall be enforceable as such.” (emphasis added). Were contributions the same as contribution rates, that provision would be redundant. Thus, the correct question is whether surcharges are part of contribution rates (not whether they constitute contributions) and we conclude that they are not. This distinction is also evident from the fact that contribution rates are set by CBAs while surcharges are set by statute. Nothing in the statutory scheme suggests that surcharges, when applicable, amend the underlying terms of employers’ CBAs. Yet, that is the result of considering surcharges as contribution rates set in the CBAs. In fact, the statute distinguishes between surcharges and contribution rates. See, e.g., 29 U.S.C. § 1085(e)(7)(B) (making surcharges “due and payable on the same schedule as the contributions on which the surcharges are based”) (emphasis 19 added); Id. § 1085(e)(7)(A) (obligating employers to pay a surcharge based on “10 percent of the contributions otherwise so required”) (emphasis added). Furthermore, ERISA is a “comprehensive and reticulated” statute. Nachman, 446 U.S. at 361-62 (explaining at length that Congress passed ERISA “following almost a decade of studying the Nation’s private pension plans” and making “detailed findings”). We appreciate that ERISA is not a model of clarity. It is, in fact, a bewilderingly complex statute. However, despite its many obfuscations, it is clear that Congress intended to distinguish between contribution rates and contributions, and we are not convinced by the Board’s arguments to the contrary. The Board notes that Section 1085(e)(9)(B) provides that “[a]ny surcharges under paragraph (7) shall be disregarded in determining the allocation of unfunded vested benefits to an employer” under Section 1391. Citing Russello v. United States, 464 U.S. 16, 23 (1983), the Board contends that the negative implication of this provision is that surcharges should not be disregarded for any other purpose and, consequently, they should be factored into annual withdrawal liability payments. In Russello, the Supreme Court explained that when Congress includes language in one section of a statute, but omits it in another, Congress is presumed to have acted intentionally. Id. at 23. The Board’s reliance on this case is misplaced, however. As discussed above, surcharges are not part of the highest contribution rate on which the annual withdrawal liability payment is based under Section 1399(c)(1)(C)(i)(II). Accordingly, when Congress added Section 1085(e)(9)(B), there was no need for it to specify that surcharges are to be excluded from determining the annual withdrawal liability payment. The only issue before the Court was whether the calculation of unfunded vested benefits allocated to the employer contained in Section 1391 includes surcharges. Congress needed to clarify that surcharges are not included in that calculation because some of that section’s provisions refer to “the total amount contributed under the plan” and “any amount contributed by an employer.” In contrast, Sections 1392 and 1399 contain the phrase “obligation to contribute.” Thus, Congress provided clarification in Section 1085(e)(9)(B). Therefore the discussion in Russello does not advance our inquiry here. 20 The Board also points to a 2008 amendment that changed the language of Section 1085(e)(9)(B) from “[a]ny surcharges . . . shall be disregarded in determining an employer’s withdrawal liability under section 1391 of this title,” 29 U.S.C. § 1085(e)(9)(B) (2006) (emphasis added), to “[a]ny surcharges . . . shall be disregarded in determining the allocation of unfunded vested benefits to an employer under section 1391 of this title,” 29 U.S.C. § 1085(e)(9)(B) (2008) (emphasis added). The Board again relies on negative implication in arguing that this change reveals that surcharges should be included in the annual withdrawal liability payment. However, the District Court’s explanation is far more plausible. The court reasoned that since Section 1391 repeatedly speaks in terms of determining the employer’s allocable “amount of unfunded vested benefits,” Congress amended Section 1085(e)(9)(B) to match this language and eliminate any confusion. IBT Local 863 Pension Fund, 5 F. Supp. 3d at 724. This reasoning is reinforced by the text of Section 1381. That provision states: “[t]he withdrawal liability of an employer to a plan is the amount determined under [29 U.S.C. § 1391] to be the allocable amount of unfunded vested benefits, adjusted [in accordance with other provisions of ERISA.]” In other words, an employer’s withdrawal liability and allocable amount of unfunded vested benefits are not synonymous. It is likely that Congress enacted the amendment in an effort to clarify this very difficult statute. The Board also points to the MPRA which, as noted earlier, became effective as of December 16, 2014. It amends Section 1085 to require that automatic surcharges “be disregarded in determining the allocation of unfunded vested benefits to an employer under [29 U.S.C. § 1391] and in determining the highest contribution rate under [29 U.S.C. § 1399(c)].” 29 U.S.C. § 1085(g)(2) (2014) (emphasis added). The Board argues that the prospective, rather than retroactive, nature of the MPRA amounts to a repeal of existing law. Thus, it contends that the amendment would not have been necessary if Congress believed that the pre-MPRA provisions excluded surcharges in calculating annual withdrawal liability payments. 21 However, as the Supreme Court has cautioned: “we [must] begin with the oft-repeated warning that the views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one.” Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 117 (1980) (internal quotation marks omitted). Indeed, the weight given subsequent legislation and whether it constitutes a clarification or a repeal is a context- and fact-dependent inquiry. See Miss. Poultry Ass’n, Inc. v. Madigan, 31 F.3d 293, 302-03 (5th Cir. 1994) (“Although subsequent legislation has been characterized as being anything from of ‘great weight’ or having ‘persuasive value,’ to being of ‘little assistance’ to the interpretative process, resolution of the proper weight to be accorded such legislation depends on the facts of each case.”) (footnotes omitted). Here, because of the dearth of legislative history for the MPRA and lack of clear statutory language, it would be a hazardous venture for us to draw any conclusions from the enactment of the MPRA. The Board argues that the Congress that enacted the MPRA included an effective date provision because it interpreted Section 1085(e)(9)(B) as not excluding surcharges from Section 1399(c)(1)(C)(i)(II)’s “highest contribution rate.” Despite the Board’s arguments, “it [remains] the function of the courts and not the Legislature . . . to say what an enacted statute means.” Pierce v. Underwood, 487 U.S. 552, 566 (1988). We therefore conclude that the District Court correctly held that the 10 percent surcharge should not be included in Woodbridge’s annual payment of its withdrawal liability.