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A. SOLOFF & SON v. ASHER

March 19, 1985

A. SOLOFF & SON, INC., Plaintiff,
v.
Jerry ASHER, et al., Defendants.



The opinion of the court was delivered by: LASKER

LASKER, District Judge.

A. Soloff & Son, Inc. ("Soloff") sues the Trustees of the Amalgamated Cotton Garment and Allied Industries Fund ("the Fund"), challenging the Fund's claim of withdrawal liability asserted under the Employment Retirement Income Security Act of 1974 ("ERISA") 29 U.S.C. § 1001 et seq. as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("the MPPAA" or "the Act") 29 U.S.C. § 1381 et seq. Soloff moves for summary judgment challenging the constitutionality of the MPPAA on several grounds. The Fund cross-moves for summary judgment on its counterclaim that, because plaintiff Soloff failed to request arbitration within the time limit set by the Act, see 29 U.S.C. § 1401(a)(1), it is subject to withdrawal liability under the MPPAA. 29 U.S.C. § 1381 et seq.

 In two earlier decisions, we held that Soloff had not sought timely arbitration under the Act, 583 F. Supp. 1098 (S.D.N.Y. 1984), and that the Act's 60-day time limit specified for arbitration, 29 U.S.C. § 1401(a)(1), was not unconstitutional. 594 F. Supp. 724 (S.D.N.Y.1984). We reserved decision on Soloff's motion challenging the constitutionality of the MPPAA, pending the Supreme Court's determination of such questions in Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 465 U.S. 1003, 104 S. Ct. 992, 79 L. Ed. 2d 226, (1984). In R. A. Gray, the Supreme Court addressed some constitutional questions, upholding the constitutionality of the MPPAA's retrospective imposition of withdrawal liability upon multiemployer plan participants. The Court left unresolved, however, a number of issues raised by Soloff's motion which we now consider. For the reasons set forth below, we conclude, as did the Supreme Court, that the MPPAA is not unconstitutional.

 I.

 Soloff was a Massachusetts clothing manufacturer which was obligated by a collective bargaining agreement with Local 177 of the Amalgamated Clothing and Textile Workers Union ("the Union") to make employer contributions to the Fund, a multiemployer pension plan fund. In January 1980 Soloff decided to discontinue its outerwear manufacturing operations and by September 1980 its decision to terminate its business was economically irrevocable. By November 1980 Soloff ceased operating and withdrew from the Fund as a contributing employer.

 The MPPAA was enacted on September 26, 1980 and requires all withdrawing participants in multiemployer pension plans to pay a "withdrawal liability", that is, a proportionate share of their unfunded vested liability, *fn1" to the Fund. 29 U.S.C. § 1381 et seq.2 In November 1981 the Fund notified Soloff that it was in default and demanded payment under the MPPAA's installment provisions within sixty days, after which time the Fund would seek to enforce the MPPAA's acceleration provisions. 29 U.S.C. § 1399(c)(5). *fn3"

 In the aftermath of the Supreme Court's decision in R. A. Gray, supra, Soloff challenges the constitutionality of the MPPAA alleging that: (1) the MPPAA constitutes a taking of Soloff's property without due process of law in violation of the Fifth Amendment; (2) the MPPAA violates the Seventh Amendment by depriving Soloff of its right to a jury trial; and (3) the MPPAA violates the equal protection clause of the Fifth Amendment. *fn4"

 II.

 A.

 Soloff argues that the MPPAA violates its due process rights in a number of ways.It contends first that the Act constitutes a taking of its property in violation of the Fifth Amendment, by abrogating its collective bargaining agreement with the Union which limited its obigations to contribute to the Fund, and by authorizing the Fund to appropriate more than one-third of Soloff's net worth for a public purpose. *fn5"

 The Seventh Circuit considered and rejected a similar Fifth Amendment claim in Peick v. Pension Benefit Guaranty Corp., 724 F.2d 1247 (7th Cir.1983). It held that the contractual rights of employers are not analogous to the type of rights in specific property protected under the takings clause. Id. at 1276. Moreover, the Second Circuit Court of Appeals, while using a due process analysis, is in accord with this conclusion. See Textile Workers Pension Fund v. Standard Dye & Finishing Co., Inc., 725 F.2d 843, 857-58 (2d Cir.), cert. denied, 467 U.S. 1003, 104 S. Ct. 3554, 82 L. Ed. 2d 856 (1984); see also Fur Manufacturing Industry Retirement Fund v. Lazar-Wisotzky, Inc., 550 F. Supp. 35, 3 Empl. Ben.Cas. (BNA) 1977, 1979 (S.D.N.Y.1982). We find the Textile and Peick decisions dispositive of this argument and deny Soloff's motion of this ground.

 B.

 Soloff also claims that the MPPAA violates due process by requiring payment of withdrawal liability before any hearing has been held and before anyone other than the Fund itself has made any finding of liability.Under the statute, however, an employer is permitted to furnish the plan with additional information or point out inaccuracies in the Fund's determination of liability. See 29 U.S.C. § 1399(b)(2)(A). *fn6" Once the Fund is notified of such matter, it must undertake a "reasonable review" of such information and notify the employer of its decision, the grounds for its decision, and the reason for any modification in the employer's withdrawal liability. See 29 U.S.C. § 1399(b)(2)(B). *fn7" Any dispute between Soloff and the Fund concerning a determination made by the Fund concerning a determination made by the Fund of Soloff's withdrawal liability under the Act is required to be resolved first through arbitration. See 29 U.S.C. § 1401(a)(1). *fn8" If Soloff had invoked its right to arbitrate, upon completion of the arbitration proceedings either Soloff or the Fund could have come to the district court to enforce, vacate or modify the arbitrator's award. See 29 U.S.C. § 1401(b)(2). *fn9"

 The Court of Appeals for this Circuit in Textile, supra, found that the statutory scheme afforded the employer an opportunity to present its position, that the Act therefore was rational, and that it did not violate the employer's right to due process of law. Id., 725 F.2d at 854, citing, Mathews v. Eldridge, 424 U.S. 319, 96 S. Ct. 893, 909, 47 L. Ed. 2d 18 (1976); see also Fur Manufacturing Industry Retirement Fund v. Lazar-Wisotzky, supra, 550 F. Supp. 35, 3 Empl.Ben.Cas. (BNA) at 1979; Ells v. Construction Laborers Pension Trust, 539 F. Supp. 867, 3 Empl.Ben.Cass. (BNA) 1449 (C.D.Cal.1982); Republic Industries v. Central ...


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