Court Opinion

ID: 2756013
Source: CourtListenerOpinion
Date Created: 2014-11-26 22:01:16.744525+00
Date Added: 2024-06-11T12:08:07.142137
License: Public Domain

In the

      United States Court of Appeals
                     For the Seventh Circuit
                          ____________________  

No.  14-­‐‑2512  
CENTRAL   STATES,   SOUTHEAST  AND   SOUTHWEST   AREAS   PENSION  
FUND  and  ARTHUR  H.  BUNTE,  JR.,  
                                           Plaintiffs-­‐‑Appellees,  
                                         v.  

ALLEGA  CONCRETE  CORP.,  
                                                         Defendant-­‐‑Appellant.  
                          ____________________  

            Appeal  from  the  United  States  District  Court  for  the  
              Northern  District  of  Illinois,  Eastern  Division.  
                No.  13  C  6896  —  John  J.  Tharp,  Jr.,  Judge.  
                          ____________________  

 ARGUED  NOVEMBER  12,  2014  —  DECIDED  NOVEMBER  26,  2014  
                ____________________  

    Before  EASTERBROOK,  MANION,  and  SYKES,  Circuit  Judges.  
    EASTERBROOK,  Circuit  Judge.  An  employer  that  withdraws  
from   an   underfunded   pension   plan   must   cover   its   share   of  
the   shortfall.   29   U.S.C.   §§  1381,   1391.   After   concluding   that  
Allega   Concrete   had   withdrawn,   the   Central   States   Pension  
Fund   sent   it   a   bill   for   about   $375,000.   The   Multiemployer  
Pension   Plan   Amendments   Act   of   1980   (MPPAA)   gives   an  
employer   90   days   to   ask   a   pension   plan   to   review   its   deci-­‐‑
2                                                                                No.  14-­‐‑2512  

sion.  29  U.S.C.  §1399(b)(2)(A).  If  the  plan  adheres  to  the  orig-­‐‑
inal  decision—or  if  it  does  not  act  within  120  days—the  em-­‐‑
ployer   has   a   further   60   days   to   seek   arbitration.   29   U.S.C.  
§1401(a)(1).  For  Allega,  the  last  day  was  July  16,  2013.  
    On  July  9  Allega  sent  the  Fund  a  letter  demanding  arbi-­‐‑
tration.  It  followed  up  on  July  29  with  a  notice  to  the  Ameri-­‐‑
can   Arbitration   Association.   Problem:   The   AAA’s   rules   re-­‐‑
quire   that   notices   go   to   both   the   pension   administrator   and  
the  AAA.  Privately  adopted  dispute-­‐‑resolution  rules  require  
the   approval   of   the   Pension   Benefit   Guaranty   Corporation.  
29  U.S.C.  §1401(a)(2);  29  C.F.R.  §4221.14(a).  In  1985  the  PBGC  
approved  the  AAA’s  rules  for  arbitration  under  the  MPPAA,  
50  Fed.  Reg.  38,046  (Sept.  19,  1985),  and  in  1986  it  approved  
some   amendments,   51   Fed.   Reg.   22,585   (June   20,   1986).   The  
Fund  has  adopted  those  rules,  but  Allega  did  not  notify  the  
AAA  within  the  statutory  time  limit.  
    The   district   court   concluded   that   Allega   had   waited   too  
long  to  seek  arbitration  and  must  pay  withdrawal  liability  as  
the   Fund   calculated   it.   2014   U.S.   Dist.   LEXIS   78998   (N.D.   Ill.  
June  10,  2014).  It  relied  on  §7  of  the  AAA’s  rules,  which  pro-­‐‑
vides  in  part:  
      Arbitrations   under   these   Rules   are   initiated   in   the   following  
      manner:  
      (a)(i)  The  initiating  party  gives  notice  to  the  other  party  of  its  in-­‐‑
      tention  to  arbitrate  (Demand)  which  notice  shall  set  forth  a  brief  
      description   of   the   dispute   and   shall   include   the   amount   in-­‐‑
      volved,   and   (ii)   files   at   any   Regional   Office   of   the   AAA   two   (2)  
      copies   of   said   notice,   together   with   the   appropriate   administra-­‐‑
      tive  fee  as  provided  in  the  Administrative  Fee  Schedule.  

Allega   concedes   that   it   did   not   do   what   §7   requires.   It   con-­‐‑
tends   that   it   did   not   need   to   do   so   because   some   of   the  
No.  14-­‐‑2512                                                                       3  

AAA’s   and   the   Fund’s   procedures   and   requirements   have  
not  been  submitted  to  or  approved  by  the  PBGC.    
     In   February   2013   the   AAA   raised   the   fees   that   must   ac-­‐‑
company  a  demand  for  arbitration.  (These  fees  appear  in  the  
“Administrative  Fee  Schedule”  to  which  §7(a)(ii)  refers.)  The  
schedule   in   force   in   1985   called   for   $650   with   any   demand  
for  arbitration;  as  amended  in  2013,  the  schedule  specifies  an  
initial   payment   of   $4,350   and   a   “final   payment”   (due   at   the  
arbitration’s  close)  of  $1,750,  for  a  total  of  $6,100.  (Cases  with  
larger   stakes   may   require   higher   fees;   the   numbers   we’ve  
given   are   what   Allega   would   have   been   required   to   pay.)  
The  Fund’s  rules  provide  that  arbitration  will  be  conducted  
in   Chicago   (the   Fund’s   home   base),   while   §8   of   the   AAA’s  
rules   says   that   the   parties   and   the   arbitrator   will   select   a  
venue  jointly,  with  the  arbitrator  to  decide  if  the  parties  can-­‐‑
not  agree.  See  also  29  C.F.R.  §4221.6.  The  Fund  also  calls  for  
an  award  of  attorneys’  fees  in  its  favor  if  it  prevails.  Section  
38   of   the   AAA’s   rules,   by   contrast,   gives   the   arbitrator   dis-­‐‑
cretion  whether  to  award  fees.  See  also  29  C.F.R.  §4221.10(c).  
    According  to  Allega,  these  provisions  relieve  it  of  any  ob-­‐‑
ligation   to   serve   the   AAA   with   the   demand   for   arbitration.  
But   why?   Let   us   suppose   that   both   the   AAA’s   higher   fees  
and  the  differences  between  the  Fund’s  rules  and  the  AAA’s  
required   the   PBGC’s   approval.   (That   may   or   may   not   be  
true;   we   need   not   decide.   If   it   is   true,   then   any   conflict   be-­‐‑
tween  the  AAA’s  approved  rules  and  the  unilaterally  adopt-­‐‑
ed  regulations  of  the  Fund  would  be  resolved  in  favor  of  the  
AAA’s   rules.)   The   fact   remains   that   the   PBGC   did   approve  
the   AAA’s   rules   in   1985   and   1986.   It   is   the   approved   rules  
that  call  for  the  demand  to  be  sent  to  the  AAA  (as  well  as  the  
Fund)  during  the  60  days  allowed  by  statute.  
4                                                                 No.  14-­‐‑2512  

      If  Allega  had  sent  a  timely  demand  to  the  AAA,  together  
with  a  check  for  $650,  and  the  AAA  had  refused  to  proceed  
with   arbitration,   then   we   might   have   to   decide   whether   an  
amendment  of  the  fee  schedule  requires  the  PBGC’s  approv-­‐‑
al.   But   that’s   not   what   happened.   And   because   Allega   did  
not   make   a   timely   demand   for   arbitration,   questions   about  
venue   and   legal   fees   never   arose.   They   could   have   been   re-­‐‑
viewed  by  the  district  court  on  a  petition  to  review  an  arbi-­‐‑
trator’s   final   decision;   any   dispute   about   the   AAA’s   fees  
could  have  been  reviewed  the  same  way.  But  Allega  did  not  
take  the  essential  first  step:  a  timely  demand  for  arbitration  
sent  to  the  AAA.  
      Allega   does   not   contend   that   the   Fund   needed   the  
PBGC’s  approval  to  adopt  the  AAA’s  rules.  Nor  does  it  con-­‐‑
tend   that,   if   the   AAA’s   rules   apply,   its   demand   for   arbitra-­‐‑
tion  was  effective  nonetheless.  That  is,  Allega  does  not  main-­‐‑
tain  that  notice  to  the  Fund  but  not  the  AAA  suffices.  It  does  
argue  that  the  Fund’s  failure  to  act  within  120  days  on  its  re-­‐‑
quest   for   reconsideration   tolls   the   time   to   seek   arbitration,  
but   that   contention   boils   down   to   disagreement   with   the  
statutory  rule  that  the  60  days  to  demand  arbitration  begins  
to   run   when   120   days   have   passed   without   action.   The   dis-­‐‑
trict  court’s  judgment  therefore  is  
                                                                    AFFIRMED.