Court Opinion

ID: 4470993
Source: CourtListenerOpinion
Date Created: 2020-01-09 21:00:32.712816+00
Date Added: 2024-06-11T12:15:41.993040
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JAN 9 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

AUTOMOTIVE INDUSTRIES PENSION                   No.    18-16170
TRUST FUND; et al.,
                                                D.C. No. 4:17-cv-04491-JST
                Plaintiffs-Appellees,

 v.                                             MEMORANDUM*

SOUTH CITY MOTORS, INC., a Delaware
corporation; et al.,

                Defendants-Appellants.

SOUTH CITY MOTORS, INC.; et al.,                No.    18-16173

                Plaintiffs-Appellants,          D.C. No. 4:17-cv-04475-JST

 v.

AUTOMOTIVE INDUSTRIES PENSION
TRUST FUND; et al.,

                Defendants-Appellees.

                   Appeal from the United States District Court
                     for the Northern District of California
                     Jon S. Tigar, District Judge, Presiding

                     Argued and Submitted December 3, 2019
                            San Francisco, California

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: SILER,** CLIFTON, and BYBEE, Circuit Judges.

        Appellants, a controlled group of seven Ford dealerships and the Ford Motor

Company (the “Dealerships”), appeal the district court’s denial of their motion for

summary judgment and granting of Automotive Industries Pension Trust Fund’s

(the “Trust”) cross-motion for summary judgment. This dispute arose after two of

the appellant dealerships—South City Motors and Capitol Expressway Ford—

withdrew from the Trust’s multiemployer pension plan and were assessed

withdrawal liability under ERISA.1 The Dealerships sought arbitration, arguing

that they did not owe withdrawal liability because they met the requirements for

the “free look” exemption. See 29 U.S.C. § 1390. The arbitrator granted summary

judgment in favor of the Trust and awarded attorney’s fees. Both parties then filed

suit in federal district court—one to challenge and the other to enforce the

arbitrator’s award.

        The Dealerships raised four issues in the district court, and raise the same

issues here: (1) whether the arbitrator erred by determining that he had the

authority to grant summary judgment and to do so without holding an evidentiary

        **
            The Honorable Eugene E. Siler, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
1
    The Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq.

                                           2                                    18-16170
hearing; (2) whether the arbitrator erred by concluding that the Dealerships did not

qualify for the free look withdrawal liability exemption; (3) whether the arbitrator

erred by concluding that a prior settlement agreement with Antioch Ford—one of

the other appellant Dealerships—was inapplicable to this withdrawal liability

dispute; and (4) whether the arbitrator erred in awarding attorney’s fees to the

Trust. The district court concluded that the arbitrator did not err. We agree and

affirm.

      We have jurisdiction pursuant to 29 U.S.C. § § 1401(b)(2), 1451(c). A

district court’s grant of summary judgment is reviewed de novo. Penn Cent. Corp.

v. W. Conference of Teamsters Pension Tr. Fund, 75 F.3d 529, 533 (9th Cir. 1996).

Likewise, the arbitrator’s conclusions of law are reviewed de novo. Id. (citation

omitted). The arbitrator’s findings of fact are presumed correct, but the

presumption is rebuttable by a clear preponderance of the evidence. 29 U.S.C. §

1401(c).

      The Dealerships first challenge the authority of the arbitrator to resolve the

arbitration on a motion for summary judgment, as well as any authority to do so

without first holding an evidentiary hearing. The arbitration was governed by the

American Arbitration Association’s (“AAA”) Multiemployer Pension Plan

Arbitration Rules for Withdrawal Liability Disputes (“MEPPA”). Nothing in

MEPPA explicitly authorizes or forbids summary judgment. But the rules give the

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arbitrator the authority to “interpret and apply [them] insofar as they relate to the

Arbitrator’s powers and duties” as well as give him the discretion to vary the

procedures provided that he affords the parties “a full and equal opportunity” to

present their evidence and arguments. MEPPA § § 24, 45. Given the discretion

granted to the arbitrator, he did not abuse it by resolving the arbitration on

summary judgment. The arbitrator allowed the Dealerships to submit evidence and

written briefs in opposition to summary judgment, and held oral argument on the

motion. This suffices as a “full and equal opportunity” for the Dealerships to

present their evidence and arguments. MEPPA § 24.

      The Dealerships next contend that the arbitrator erroneously concluded that

the free look exemption did not apply. The free look exemption provides that “[a]n

employer who withdraws from a plan in complete or partial withdrawal is not

liable to the plan” if the employer meets certain conditions. 29 U.S.C. § 1390.

Under ERISA, all businesses that are under common control are treated as a single

employer. See 29 U.S.C. § 1301(b)(1). The Dealerships argue that, although they

are under common control, each individual contributing employer within a

controlled group should be able to take advantage of the free look exemption even

if the controlled group of which they are part could not. But Congress enacted

section 1301(b)(1) “to prevent businesses from shirking their ERISA obligations

by fractionalizing operations into many separate entities.” Teamsters Pension Tr.

                                           4                                     18-16170
Fund-Bd. of Trs. of W. Conference v. Allyn Transp. Co., 832 F.2d 502, 507 (9th

Cir. 1987) (citation omitted). So, for purposes of the free look exemption, the

word employer refers to the Dealerships as a controlled group—not the individual

dealerships—and because the controlled group does not meet all of the

requirements to be eligible for the free look exemption, neither do the individual

dealerships.

      The Dealerships next contend that the arbitrator erred by concluding that it

was unambiguous that the 2007 settlement agreement regarding the Dealerships’

withdrawal liability based on Antioch Ford’s 2005 withdrawal from the Trust was

not applicable to this dispute. The interpretation of the settlement agreement is

governed by state law. See Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir. 1989).

Under California law, the “mutual intention of the parties at the time the contract is

formed governs interpretation” and the parties’ intent is determined “solely from

the written provisions of the contract.” ASARCO, LLC v. Celanese Chem. Co., 792
F.3d 1203, 1212 (9th Cir. 2015) (quoting AIU Ins. Co. v. Super. Ct., 799 P.2d
1253, 1264 (Cal. 1990)). No matter how broad the terms of a contract may appear,

“it extends only to those things concerning which it appears that the parties

intended to contract.” Cal. Civ. Code § 1648.

      Here, the settlement agreement is unambiguous. It releases the Dealerships

from all claims “arising out of the Dispute” where the “Dispute” is “[the Trust] has

                                          5                                     18-16170
made claims and demands against Antioch Ford and others, for ‘withdrawal

liability.’” The language of the settlement agreement released only then-existing

claims for withdrawal liability that had already been assessed against the

Dealerships based on Antioch’s withdrawal, not theoretical future withdrawal

liability that might arise from other members of the controlled group withdrawing

from the Trust. Thus, it is unambiguous that the settlement agreement does not

apply to the withdrawals at issue here.2

      Finally, the Dealerships contend that the arbitrator abused his discretion in

awarding attorney’s fees. An arbitrator’s award of attorney’s fees is reviewed for

an abuse of discretion. Penn Cent. Corp., 75 F.3d at 535. There is an abuse of

discretion if the decision is “based on an erroneous conclusion of law or if the

record contains no evidence on which [the arbitrator] rationally could have based

[his] decision.” Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 270 (9th

Cir. 1989). Because there is some evidence “on which [the arbitrator] rationally

could have based [his] decision,” the arbitrator did not abuse his discretion. Id.

      AFFIRMED.

2
  At oral argument, counsel for the Dealerships raised the issue that the arbitrator
erred in calculating the withdrawal liability the Dealerships owe by double-
counting the withdrawal liability paid by the Dealerships from Antioch Ford’s
2005 withdrawal from the Trust. But they did not raise this argument in their brief,
so it is waived. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999).

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