Court Opinion

ID: 8949170
Source: CourtListenerOpinion
Date Created: 2022-11-27 08:38:12.100206+00
Date Added: 2024-06-11T17:09:55.385035
License: Public Domain

RALPH B. GUY, Circuit Judge,
dissenting.
Because I view the determination of whether the sale of the Barry Steel Division constituted a partial withdrawal as central to the resolution of this case, I must respectfully dissent.
Section 558(d) of DEFRA mandates that the relevant date for substitution in § 558(a)(1) shall be December 1, 1980, for all employers who had a “binding agreement to withdraw” from a plan by September 26, 1980. Since § 558(d) acts only to change the applicable date in § 558(a)(1), the focus of the effect of DEFRA’s elimination of withdrawal liability is clearly § 558(a)(1) which, by its express terms, voids an employer’s withdrawal liability incurred “as a result of the complete or partial withdrawal of such employer ...” (emphasis added). Accordingly, it is clear that no withdrawal liability ever arises in the absence of a finding of either a complete or partial withdrawal from a multiemployer plan.
The Fund argues persuasively that holding all employers who engage in limited sales of single facilities or divisions liable for a partial withdrawal is contrary to the intent of Congress in enacting the MPPAA. Those amendments to ERISA were intended to impose partial withdrawal liability in two situations: first, where an employer divests itself of such a substantial portion of its business that there is a seventy percent (70%) decline in its contribution rate; and second, when an employer has attempted to close a plant or transfer all the work performed under one of its collective bargaining agreements, but continues to perform that same type of work (perhaps at another location) without any pension plan obligations. See the definition and criteria applicable to a partial withdrawal in 29 U.S.C. § 1385.
Neither of those situations is present in this case. 888 underwent a contribution decline of roughly fifty percent (50%) by virtue of the sale of its Barry Steel Division, so the seventy percent (70%) figure of § 1385(b)(1)(A) is not reached. Moreover, in selling one of its two steel divisions, 888 was not attempting to divest itself of its contribution obligation under that collective bargaining agreement while at the same time performing the same type of work elsewhere without the burden of making pension contributions for those employees. § 1385(b)(2)(A)(i).
Since the majority makes no attempt to define when a partial withdrawal occurs, it is anomalous to void part of 888’s “withdrawal” liability on the basis of a partial withdrawal having occurred. Moreover, 29 U.S.C. § 1397(a), upon which the majority primarily relies, speaks explicitly of the computation of “unfunded vested benefits allocable to an employer for a partial or complete withdrawal from a plan ...” (emphasis added). Clearly, a finding that an employer has incurred withdrawal liability in the first instance is essential before § 558 of DEFRA can become operative to relieve the employer of this liability.
In actuality, the court has, by implication, held that the Barry Steel facility sale did constitute a partial withdrawal by finding that their agreement of sale constituted a partial cessation of 888’s contribution obligation; i.e., they were no longer obligated to make contributions for employees at the Barry Steel facility. However, the fact that 888 had a “binding agreement to sell ” the Barry facility is not conclusive of the question of whether that sale agreement also constituted a “binding agreement to withdraw” from the multiemployer pension plan. DEFRA § 558(d). All sales are not automatically withdrawals. In my view, based on the applicable criteria for partial withdrawal set forth in 29 U.S.C. § 1385, the sale of the Barry Steel facility by 888 did not constitute a partial withdrawal. Therefore, since 888 incurred no withdrawal liability as a result of that sale, § 558 of DEFRA, whose acknowledged purpose is to relieve employers of withdrawal liability under specified circumstances, simply has no application to this case.1

. Upon petition for rehearing by the Fund, the majority has clarified, in part III of its opinion, the reasons for permitting judicial review in the absence of prior statutorily-mandated arbitration in this case. Although the Fund expresses considerable distress over the failure to require *769arbitration here in view of the panel’s statement in Marvin Hayes Lines, Inc. v. Central States, etc., Pension Fu6nd, 814 F.2d 297, 300 (6th Cir.1987), that courts were without jurisdiction over a dispute prior to arbitration in the absence of a constitutional challenge or a showing of irreparable injury, I see no inconsistency. The factual history of this case is unique; we are dealing with a legislatively-created defense which was enacted, fortuitously for 888, during the pendency of the Fund’s collection suit. While the Fund argues that it offered to arbitrate the applicability of DEFRA subsequent to its passage, a review of the record reveals that that "offer" was contained in its response to 888’s motion for summary judgment filed with the district court. Considering the events which had already transpired and the procedural posture of the case, it was not error for the district court to decide the case as opposed to ordering arbitration at that late date. Such action, given the unusual factual circumstances of this case, does not derogate the usual rule in favor of arbitration applicable to the vast majority of cases brought under ERISA or the MPPAA.