Court Opinion

ID: 767763
Source: CourtListenerOpinion
Date Created: 2012-04-18 08:42:17+00
Date Added: 2024-06-11T09:52:26.649071
License: Public Domain

204 F.3d 736 (7th Cir. 2000)
CENTRAL STATES, SOUTHEAST AND SOUTHWEST  AREAS PENSION FUND and HOWARD MCDOUGALL,    Plaintiffs-Appellants,v.HUNT TRUCK LINES, INC., an Iowa  corporation,    Defendant-Appellee.CENTRAL STATES, SOUTHEAST AND SOUTHWEST  AREAS PENSION FUND and HOWARD MCDOUGALL,    Plaintiffs-Appellants,v.HUNT TRUCK LINES, INC., an Iowa  corporation,    Defendant-Appellee.
Nos. 99-1273, 99-2385.
In the  United States Court of Appeals  For the Seventh Circuit
Argued October 27, 1999Decided February 28, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 96 C 5634--John A. Nordberg, Judge.
Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 98 C 6464--Milton I. Shadur, Judge. [Copyrighted Material Omitted]
Before HARLINGTON WOOD, JR., FLAUM, and  EVANS, Circuit Judges.
TERENCE T. EVANS, Circuit Judge.

1
This appeal  consolidates two cases arising out of  Hunt Truck Lines' refusal to make  withdrawal liability payments to Central  States under ERISA's multiemployer  pension plan provisions. In the first  case, Judge John Nordberg found that  Central States' admittedly premature fee  assessment precluded the court from  ordering Hunt to make interim payments on  its withdrawal liability while the  underlying fee assessment went through  arbitration. In the second case, Judge  Milton Shadur affirmed an arbitration  award that assumed Hunt's liability but  failed to provide for an enforceable  money judgment. Central States believes  these rulings leave it in an odd and  unjust position:  despite widespread  agreement that Hunt owes withdrawal  liability, Central States cannot collect.  It asks that we right this wrong and  force Hunt to finally pay the money it  owes.

2
Since both halves of this appeal concern  the Multiemployer Pension Plan Amendments  Act of 1980 (MPPAA), 29 U.S.C. secs.  1381-1461, it makes sense to begin with a  brief overview of the statute to put the  facts that follow in context. The MPPAA  arose out of Congress' fear that any time  an employer withdrew from a multiemployer  pension plan (MPP) under ERISA it could  set off a domino effect that, "much like  a bank run," could leave the MPP unable  to pay its vested obligations. Artistic  Carton Co. v. Paper Indus. Union-  Management Pension Fund, 971 F.2d 1346,  1348 (7th Cir. 1992); accord Milwaukee  Brewery Workers' Pension Plan v. Jos.  Schlitz Brewing Co., 513 U.S. 414, 416-17  (1995). To correct this problem the  statute provides that whenever a fund  trustee determines that an employer has  withdrawn, she can assess the employer  "withdrawal liability" of an amount that  roughly matches the employer's  proportionate share of the plan's  unfunded vested benefits. See Bay Area  Laundry and Dry Cleaning Pension Trust  Fund v. Ferbar Corp., 522 U.S. 192  (1997). The employer may contest the  trustee's assessment but, to ensure that  this will not affect the fund's ability  to pay off its obligations, only an  arbitrator can decide the merits of the  challenge, and the employer must pay  "interim withdrawal liability payments"  until the arbitrator reaches a final  decision. See id. Under this "pay now,  dispute later" scheme, if the employer  wins it recovers its interim payments; if  not, the fund collects the remainder of  the withdrawal liability. Robbins v.  Pepsi-Cola Metro. Bottling Co., 800 F.2d  641, 642-43 (7th Cir. 1986). With this  framework in place, we move on to the  facts.

3
Central States is a multiemployer  pension fund subject to ERISA. Hunt Truck  Lines is a trucking firm that was obliged  to contribute to the fund under a  collective bargaining agreement.

4
In 1994 Hunt sold its assets to Wintz  Parcel Drivers, Inc. and stopped making  contributions to the fund. Ordinarily,  this would require Hunt to pay a  withdrawal fee. However, since the sale  to Wintz satisfied the statutory  requirements of 29 U.S.C. sec.  1384(a)(1)(C), Hunt avoided payment as  long as Wintz made the required  contributions. In other words, Hunt  became secondarily liable--if Wintz  withdrew and failed to pay a withdrawal  fee, Hunt remained obligated to ante up  for its own withdrawal liability.

5
On June 3, 1996, Hunt received a notice  and demand from Central States requesting  $303,372.75 in withdrawal liability. The  fund claimed that Hunt's liability was  triggered because Wintz had "effected a  complete withdrawal." Hunt refused to pay  and asked Central States to review its  withdrawal liability assessment. Instead,  the fund filed suit against Hunt  demanding interim withdrawal liability  payments. In response, Hunt commenced  arbitration proceedings to contest the  underlying fee assessment.

6
Cental States then filed a motion for  summary judgment on its claim for the  interim payments. The fund argued that  because any dispute over the merits of a  withdrawal assessment must be settled in  arbitration, and 29 U.S.C. sec. 1401(d)  mandates that a court order interim  payments to an MPP pending the outcome of  arbitration, it was entitled to collect.  Hunt, in turn, filed a cross-motion for  summary judgment. It asserted that since  Cental States' "Statement of Material  Facts to Which There Is No Material  Issue" revealed that it sought withdrawal  liability payments from Hunt before Wintz  withdrew, and Hunt's secondary liability  for the withdrawal payments could only be  triggered after a Wintz withdrawal, the  fund had no right to demand withdrawal  liability payments when it did.

7
Before addressing these arguments, Judge  Nordberg laid out the relevant dates. He  first noted that both sides conceded that  Hunt received Central States' demand on  June 3, 1996. Deciding on the timing of  Wintz' final withdrawal proved slightly  more difficult. In its memo in support of  summary judgment, Central States attested  to the fact that Wintz withdrew "on or  about July 20, 1996." But after Hunt  seized upon this date to argue that it  had been billed prematurely, the fund  claimed that Wintz had actually withdrawn  in May. Central States argued that this  date was consistent with its prior filing  because its "on or about" language was  not sufficiently specific to tie the fund  to the prior date. Judge Nordberg found  this argument "unbelievable" and  concluded that, based on their initial  filings, both parties agreed to the basic  time frame. He then settled on July 27,  1996, as the date for the Wintz  withdrawal since the parties stipulated  to that date in their arbitration  proceedings.

8
With the dates set, Judge Nordberg  turned to the question of whether Hunt  was required to make interim withdrawal  liability payments. Looking to the text  of the MPPAA, the judge determined that  the Act implicitly required that a plan  sponsor could only issue notice of  withdrawal liability after the event  triggering liability occurred.1 He then  found that, because this requirement was  a statutory prerequisite to bringing a  lawsuit to recover withdrawal liability  and Cental States billed Hunt before its  liability came due, the fund could not  collect interim payments. Judge Nordberg  underlined that his decision was not  based on Hunt's likelihood of success  but, rather, on Central State's failure  to fulfill the MPPAA's statutory  requirements.

9
Meanwhile, back at the arbitration  proceedings, arbitrator Ira Jaffe also  concluded that Hunt had been billed  prematurely. Nevertheless, he found that  this did not require Central States to  rescind its withdrawal liability  assessment. Instead, he directed the fund  to "revise the assessment to comport with  Section 4204,2 not to void the  assessment and . . . begin anew the  demand, request for review, and  arbitration process." To this end, he  ordered Central States "to issue a  revised Demand, including a revised  payment schedule, based upon the fact  that Wintz did not miss a payment to the  Fund until August, 1996."

10
Central States immediately sued to  affirm and enforce this award, and Judge  Shadur promptly granted its motion for  summary judgment. Yet, despite this  victory, at some point during the two  weeks following Judge Shadur's decision  Central States began to worry that its  arbitration award did not specify that it  recover any money. Thus, it filed a last-  minute Rule 59(e) motion arguing that to  truly enforce the arbitrator's award the  court needed to modify its ruling and  enter a money judgment.

11
Judge Shadur refused the request. He  stated that the only question he was  asked to decide was whether the award  should be enforced, and that he answered  the question affirmatively. To grant the  fund's Rule 59(e) motion, according to  Shadur, would require him to step beyond  a simple endorsement of the award--a  question he was not asked to decide and  one that he did not think he could  appropriately address on a Rule 59(e)  motion.

12
Central States now appeals both Judge  Nordberg's and Judge Shadur's summary  judgment rulings, as well as Judge  Shadur's denial of its Rule 59(e) motion.  We will address each in turn.

13
We begin with the fund's challenge to  Judge Nordberg's ruling. As this decision  granted Hunt's motion for summary  judgment, our review is de novo, and we  resolve any factual disputes in the light  most favorable to Central States, the  nonmoving party. See Russo v. Health,  Welfare & Pension Fund, 984 F.2d 762, 765  (7th Cir. 1993).

14
The fund believes that the MPPAA plainly  forbids Judge Nordberg's ruling. Its  argument works in three steps. First, it  points to a section of the MPPAA stating  that any dispute between an employer and  a plan sponsor concerning a determination  made under secs. 1381 through 1399  must be resolved through arbitration. 29  U.S.C. sec. 1401(a)(1). Second, it states  that the statutory range of arbitrable  issues involved in this case includes  sec. 1383(a) (defining a complete  withdrawal), sec. 1383(e) (defining the  date of a complete withdrawal), and sec.  1384(a)(2) (establishing the liability of  the seller of assets in an "exempt" asset  sale). Finally, it cites a series of  cases where we have held that once a plan  sponsor has requested withdrawal  liability payments, an employer must  either pay the whole liability or make  interim payments regardless of any  pending dispute on the merits of the  assessment. See, e.g., Trustees of  Chicago Truck Drivers v. Central Transp.,  935 F.2d 114, 118 (7th Cir. 1991). Adding  together these steps, according to  Central States, leads to the conclusion  that Judge Nordberg blew it by sticking  his nose into an issue that was reserved  for arbitration and by failing to order  the interim payments plainly called for  under the statute.

15
Hunt does not so much respond to this  argument as offer a defense of Judge  Nordberg's reading of the MPPAA. Hunt  begins by noting that all parties agree  that under sec. 1384 it retained  secondary liability to Wintz. It then  contends that this section contains two  conditions that needed to be fulfilled  before it could be assessed a withdrawal  fee: (1) Wintz had to withdraw; and (2)  Wintz had to ignore Central States'  request that it pay a withdrawal fee. 29  U.S.C. sec. 1384(a)(2). Hunt maintains  that since the parties agreed that Wintz  withdrew from the plan after Central  States billed Hunt, the fund failed to  make a statutorily valid assessment of  withdrawal liability. Hunt acknowledges  that if the dates were in dispute the  case should have been decided by an  arbitrator. But since all the facts were  uncontested, Hunt believes that when  Central States asked the court to enforce  the statute it was well within the  court's authority to determine that the  fund had not sufficiently complied with  the statute to obtain the interim  payments. See Galgay v. Beaverbrook Coal  Co., 105 F.3d 137, 140 (3d Cir. 1997)  (deciding a different issue, but while  laying out the mechanics of the MPPAA  stating that "[o]ur jurisdiction is  limited to ordering the employer to make  interim payments once the pension fund  has demonstrated that it complied with  the statutory requirements for  calculating liability and notifying the  employer"); see also, e.g., Canario v.  Lidelco, Inc., 782 F. Supp. 749, 753  (E.D.N.Y. 1992) (holding that notifying a  withdrawing employer of its withdrawal  liability is a statutory precondition to  collecting interim payments).

16
As the parties frame the issue, choosing  between these two arguments puts us in a  lose-lose situation. If we find for  Central States we would sanction a  scenario whereby an MPP could declare  that an employer had withdrawn because  the Cubs lost, and if the employer  refused to begin interim payments while  it challenged the assessment, a court  would be obliged to force it to pay  liquidated damages and make interim  liability payments that could not be  recovered until the arbitration was  complete. If we find for Hunt it would  mean that every time an employer  withdraws from a fund, it could frustrate  the purpose of the MPPAA's "pay now,  dispute later" system by forcing a court  to address the merits of the trustee's  assessment of the withdrawal date before  interim liability kicks in.

17
Fortunately, we face no such dilemma.  Because Judge Nordberg's opinion hinged  on the parties agreement that Central  States jumped the gun, we can endorse it  without undercutting the statute's  dispute resolution scheme. This becomes  apparent when one considers what would  happen if a similar case were to arise  after we issued an affirmance of Judge  Nordberg's decision. In such a case, the  fund would merely have to plead that it  assessed liability after the employer  withdrew to ensure that the court would  back off the underlying dispute, order  interim withdrawal payments, and leave  the contested issues to arbitration. How  ever, if the fund could not honestly  plead that it assessed the employer's  liability after withdrawal, it could not  enforce an assessment that was not  envisioned by the statute. In sum, any  disagreement on the face of the pleadings  would cause the MPPAA to kick in in its  current form full force.

18
Thus, since we can avoid reading the  MPPAA to allow funds to arbitrarily  assess withdrawal liability without  undercutting the statute's dispute  resolution mechanism, our choice becomes  clear:  if, as Judge Nordberg concluded,  the underlying facts are undisputed, we  must affirm; if they are contested, the  MPPAA dictates a reversal.

19
As to this question, we again side with  Judge Nordberg. Central States' effort to  back away from its statement that "on or  about July 20, 1996, Wintz effected a  'complete withdrawal'" is unpersuasive.  Indeed, the fund never actually said that  this statement was incorrect. Instead, it  attempted to slip around the language by  stating that the date of Wintz's  withdrawal was the subject of a separate  arbitration between Central States and  Wintz. This fact is neither here nor  there. If Hunt could have honestly pled  that Wintz effected a complete withdrawal  in May, it would have. Judge Nordberg  correctly found that the parties agreed  on the underlying dates.

20
We also note that in making this  determination the court did not rely on  the arbitrator's factual findings. While  Judge Nordberg chose July 27th as the  date of Wintz's complete withdrawal  because the parties agreed to it in  arbitration, he explained that the exact  date was irrelevant so long as it  occurred after Central States billed  Hunt. Since there is no reason to  question that he relied solely on the  pleadings in determining the overall time  frame, his referral to the arbitration  proceeding was, at worst, harmless error.

21
Turning to Judge Shadur's rulings, we  again begin by noting the appropriate  standards of review. We assess the  summary judgment decision de novo. Our  review of the Rule 59(e) motion, however,  looks only for abuse of discretion.  Highlands Ins. Co. v. Lewis Rail Serv.  Co., 10 F.3d 1247, 1249 (7th Cir. 1993).

22
Cental States asserts that it is heart-  wrenchingly unjust that its victories in  front of arbitrator Jaffe and Judge  Shadur have not enabled it to collect.  The fund argues that since Hunt failed to  request arbitration as to the amount of  the assessment, Hunt's withdrawal  liability became fixed by the  arbitrator's decision. It then contends  that the award assumed that Hunt would  have to pay this amount. Since Judge  Shadur's judgment did not provide the  fund with a mechanism to collect, it  believes that he failed to give the  arbitration proceeding the force of law--  a ruling that would violate both the  MPPAA and case law holding that once a  court confirms an arbitration award it  should have the same effect as judgments  rendered by courts. See, respectively, 29  U.S.C. sec. 1401(b)(3), and Parsons &  Whittemore Alabama Mach. and Servs. Corp.  v. Yeargin Constr. Co., 744 F.2d 1482,  1484 (11th Cir. 1984).

23
While it is true that the arbitrator's  opinion assumed that Central States would  eventually collect the withdrawal  liability it originally assessed Hunt, it  is not clear how the arbitrator thought  this was going to happen. Arbitrator  Jaffe's statements that the fund should  not be required to "begin the assessment  process anew" and his order that Central  States issue a revised demand are at  odds. Perhaps Jaffe merely meant that  Central States could stick with its  underlying liability assessments when it  issued its renewed demand; perhaps he  thought his order would require Hunt to  immediately pay. We can't know. All we do  know is that Jaffe's sole affirmative  order was that Central States issue the  demand.

24
Happily, that's all we need to know to  handle the fund's appeal. Central States  could have returned to the arbitrator to  ask for a clarification of the demand  before it went to court. It also could  have raised its contention that the award  necessarily included a money judgment in  its pleadings. Instead, it went to court  the day after the arbitrator's decision  came down and simply asked that the award  be affirmed. We have held that an  arbitrator's findings of law should only  be disturbed by a reviewing court if they  appear to be arbitrary and capricious or  otherwise not in accordance with the law.  Joseph Schlitz Brewing Co. v. Milwaukee  Brewery Workers' Pension Plan, 3 F.3d  994, 999 (7th Cir. 1993), aff'd, 513 U.S.  414 (1995). To suggest that Judge Shadur  should have unilaterally changed the  order is a lot of baloney. The fund got  what it asked for.

25
Furthermore, Judge Shadur's denial of  the fund's Rule 59(e) motion to amend the  judgment did not amount to an abuse of  discretion. Rule 59(e) allows a court to  correct its own error. Since the judge  was not wrong on the merits, he had  nothing to correct.

26
Finally, we wish to make absolutely  clear that, while Central States cannot  recover on this appeal, our decision does  not preclude future recovery. In fact, it  appears certain that Central States will  (and should) receive the full withdrawal  fee to which it is entitled. As per  arbitrator Jaffe's award, the fund has  issued Hunt a renewed demand. Central  States appears to be under the impression  that either Judge Nordberg's or Judge  Shadur's opinions preclude it from  collecting on this second demand. This is  not the case. Since both judges' rulings  focused solely on the fund's prior,  premature demand, Hunt should comply with  the fund's later demand. (Indeed, it  should already be complying.) If Hunt  fails to pay on this demand, Central  States need merely file suit under the  MPPAA's enforcement scheme to ensure that  it receives interim payments. This leaves  only one question unsolved:  Why didn't  Central States save everyone a big  headache and pursue this course of action  a long, long time ago? Both judgments are  AFFIRMED.

Notes:

1
 In making this determination Judge Nordberg  relied on the following two sections of the  MPPAA:
Sec. 1381(a) If an employer withdraws from a  multiemployer plan . . . then the employer is  liable to the plan in the amount determined under  this part to be the withdrawal liability.
Sec. 1382 When an employer withdraws from a  multiemployer plan, the plan sponsor, in  accordance with this part, shall--
1) determine the amount of the employer's  withdrawal liability,
2) notify the employer of the amount of the  withdrawal liability, and
3) collect the amount of the withdrawal  liability from the employer.    29 U.S.C. secs. 1381(a) & 1382, respectively.

2
 Codified at 29 U.S.C. sec. 1384.