Appeal from an order of the United States District Court for the Southern District of New York (Broderick, J.) that granted summary judgment to appellee Local 1730 International Longshoremen's Association and directed appellant TIME-DC, Inc., which was seeking a declaration of rights under the Multiemployer Pension Plan Amendments Act, to proceed to arbitration regarding its withdrawal liability. Vacated and remanded.
Before: Newman, Cardamone and Davis,*fn* Circuit Judges.
CARDAMONE, Circuit Judge:
In 1980 Congress enacted the Multiemployer Pension Plan Amendments Act (MPPAA or the Act) to shore up the finances of multiemployer plans and encourage their growth. An employer presently a member of one such plan has transferred some employees to a different location and has become liable to make contributions on their behalf to a new plan. The old plan has demanded payment of the employer's withdrawal liability. The employer refuses to pay until the old plan advises it of the amount of assets the old plan proposes to transfer to the new plan. Hence, there is a standoff because -- like Alphonse and Gaston -- neither will go first.
T.I.M.E.-DC, Inc. (TIME-DC) has sued the Management-Labor Welfare & Pension Funds of Local 1730 International Longshoremen's Association (ILA Fund) to prevent assessment of its withdrawal liability until the ILA Fund has transferred appropriate assets and liabilities into the Teamsters Trucking Employees of North Jersey Welfare Fund (Teamsters Fund). The Act provides that disputes over withdrawal liability should be resolved by arbitration, 29 U.S.C. § 1401, (MPPAA sections hereinafter referred to by sections of Title 29, U.S.C.) and that disputes over transfers should be resolved by appeal to the Pension Benefit Guaranty Board, § 1415(b). Since the parties cannot agree on what the Act requires, those administrative proceedings have not yet begun. To break the impasse, we undertake to interpret the controlling legislative provisions so that the withdrawal liability and interplan transfer disputes can be resolved. I
Appellant TIME-DC is an interstate freight motor carrier that operates throughout the United States. The ILA Fund, an unincorporated association, is a multiemployer pension plan within the meaning of §§ 1002(37) (A), 1301(a) (3). Until December 15, 1980 TIME-DC maintained a terminal at Carteret, New Jersey. Local 1730 of the International Longshoremen's Association (ILA Local 1730) was the collective bargaining representative for a number of TIME-DC platform employees at the Carteret terminal. Under its collective bargaining agreement TIME-DC contributed on behalf of these employees to the ILA Fund.
When business at the Carteret facility slowed, TIME-DC closed the terminal on December 15, 1980. It transferred approximately 19 employees represented by ILA Local 1730 to its terminal at North Bergen, New Jersey. There, Local 641 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers (Teamsters Local 641) represented a unit comprised of TIME-DC drivers and platform workers. Under its collective bargaining agreement with that Local, TIME-DC contributed on behalf of those employees to the Teamsters Fund. After a union jurisdictional battle, the NLRB ruled on March 12, 1981 that the platform workers transferred from Carteret to North Bergen would be subject to the jurisdiction of Teamsters Local 641. The Regional Director concluded "that the transferred platform employees constitute[d] an accretion to the existing driver-platform unit." This ruling prompted TIME-DC to withdraw from the ILA Fund and assume new responsibility toward the Teamsters Fund.
By letter dated March 30, 1981 TIME-DC notified the ILA Fund that because of a "certified change of collective bargaining representative" it would cease making contributions. The letter requested that the ILA Fund fulfill its duty under the MPPAA § 1415 and transfer assets and liabilities to the Teamsters Fund. Three days later the trustees of the ILA Fund notified TIME-DC that they would undertake to calculate its withdrawal liability as required under the Act. In September 1982 the ILA Fund advised the employer that its withdrawal liability under a three-year payment schedule amounted to $228,000 and that the first quarterly payment was due October 1, 1982, later extended to October 11.
On October 7, 1982 TIME-DC filed a complaint in the Southern District of New York seeking declaratory and injunctive relief from the "threat of prosecution, enforcement, or collection" of the claim made against it under the withdrawal liability provisions of the MPPAA. TIME-DC challenged the constitutionality of the employer withdrawal liability provisions. It also claimed that the ILA Fund's assessment of withdrawal liability was without effect because the Fund failed to first comply with § 1415, the MPPAA's transfer of assets and liabilities provisions. In its answer the ILA Fund asserted that the employer was precluded from bringing suit until it exhausted its administrative remedies, as required by § 1401.
On February 29, 1984 United States District Judge Vincent L. Broderick granted the ILA Fund's motion for summary judgment. The district judge held that the withdrawal liability provisions of the statute are constitutional, that compliance with § 1415 is not a condition precedent to the application of the withdrawal liability provisions, §§ 1381 et. seq., and that § 1401 requires the parties to resolve further disputes over withdrawal liability in arbitration. The district court further held that plaintiff was not entitled to injunctive relief.
Subsequent to the district court's ruling, the Supreme Court upheld the constitutionality of the withdrawal liability provisions. Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 104 S. Ct. 2709, 81 L. Ed. 2d 601 (1984); see also Textile Workers Pension Fund v. Standard Dye & Finishing Co., 725 F.2d 843 (2d Cir. 1984). Hence, TIME-DC no longer challenges the Act's constitutionality, but seeks review only of the statutory issues raised below. The arbitration provisions of § 1401 do not prevent a court from resolving issues of statutory interpretation. Judge Broderick correctly held that compliance with § 1415 transfer provisions is not a condition precedent to the determination and demand of an employer's withdrawal liability. Nonetheless, we remand this case to the district court so that it can direct the ILA Fund to give TIME-DC the notice required by § 1415(b)(2).II
In 1974 Congress enacted the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1381 (ERISA sections hereinafter referred to by sections of Title 29, U.S.C.). ERISA was designed to ensure that employees and their beneficiaries would not be deprived of anticipated benefits from their private retirement pension plans. See R.A. Gray & Co., 104 S. Ct. at 2713 (1984) (citing Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 361-62, 374-75, 64 L. Ed. 2d 354, 100 S. Ct. 1723 (1980)). See also § 1001(a). Congress also created the Pension Benefit Guaranty Corporation (PBGC), a wholly-owned government corporation within the Department of Labor. § 1302. The PBGC guarantees the payment of benefits to plan participants and beneficiaries, paying the plan's obligations if the plan terminates with insufficient assets to support its guaranteed benefits. R.A. Gray & Co., 104 S. Ct. at 2713. By the late 1970s Congress became aware that ERISA did not adequately provide for the continued financial growth of multiemployer pension plans. A significant number of multiemployer plans were experiencing extreme financial hardship that Congress feared would result in termination of numerous plans, forcing the PBGC to assume obligations in excess of its limits. See Textile Workers Pension Fund v. Standard Dye & Finishing Co., 725 F.2d at 847-49 (discussing the background of the MPPAA).
If an employer withdraws from a plan after its employees' benefits have vested, but before it meets all of its funding obligations, the plan may be left with sizeable unfunded vested liabilities. Prior to the MPPAA, an employer that had paid all required contributions to a multiemployer plan could withdraw from the plan, and if theplan did not terminate within five years after withdrawal, the employer had no further responsibility for the plan's unfunded liabilities. This provided an "undesirable incentive for employers to withdraw from plans and an unfair burden on the employers who continue[d] to maintain the plans." H.R. Rep. No. 96-869, Part II, 96th Cong., 2d Sess. 10, reprinted in 1980 U.S. Code Cong. & Ad. News 2993, 3001. This state of affairs strained the resources of multiemployer plans and jeopardized the financial stability of the PBGC. Had Congress permitted this stituation [situation] to continue, the burdens of plan failure ultimately would have fallen upon employees and their beneficiaries.
The policy of the MPPAA, enacted in 1980, was to protect the interests of participants and beneficiaries in financially distressed multiemployer plans and to encourage the growth and maintenance of multiemployer plans. H.R. Rep. No. 96-869, Part I, 96th Cong., 2d Sess. 65, reprinted in 1980 U.S. Code Cong. & Ad. News 2918, 2933; H.R. Rep. No. 96-869, Part II, 96th Cong., 2d Sess. 4, reprinted in 1980 U.S. Code Cong. & Ad. News 2993, 2995. Secretary of Labor Marshall testified before Congress that one of the key elements of the PBGC's legislative proposal was that an employer that leaves the multiemployer pension plan would be required to pay its fair share of the plan's vested liabilities. The objective of this element is to discourage ...