Amicus Brief — Pension Benefit Guaranty Corporation v. RA Gray & Co.

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No. 83-245 Pop ae :

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Supreme Court of the Wnited States

October Term, 1983

PENSION BENEFIT GUARANTY CORPORATION,

Appellant

.

R. A. GRAY & COMPANY,

Appellee

On APPEAL FROM THE

UNITED STATES COURT OF APPEALS

For THE NINTH CIRCUIT

~~

Brief of Amicus Curiae

National Steel Service Center, Inc.

RALPH T. DESTEFANO*

RICHARD R. RIESE

THORP, REED & ARMSTRONG

One Riverfront Center

Pittsburgh, PA 15222

(412) 394-7776

*Counsel of Record

TABLE OF AUTHORITIES

CASES:

Allied Chemical & Alkali Workers of Am.,

Local No. 1 v. Pittsburgh Plate Glass Co.,

eS By i 2 | Bae ey ener eee

Arizona Grocery Co. v. Atchison, T. & S.F.R. Co.,

I I en it a cs ss a'b.w ox ee

Columbia Broadcasting System, Inc. v.

United States, 316 U.S. 407 (1942).............

Franks v. Bowman Transportation Co.,

Se I yo i 00S cap new oab ae we

R. A. Gray & Co. v. Oregon-Washington

Carpenters-Employers Pension Trust Fund,

549 F.Supp. 531, (D.Ore. 1982), rev'd,

705 F.2d 1502 (9th Cir. 1983), prob. juris.

noted sub nom. Pension Benefit Guaranty Corp.

v. R. A. Gray & Co., 52 U.S.L.W. 3308

(Oct. 17, 1983) (Nos. 83-245, 83-291)...........

Jewel Ridge Coal Corp. v. Local No. 6167, UMWA,

po BO ee ee eee

Local 24, Int'l Bhd. of Teamsters v. Oliver,

SS ie buch ek SSR 6 ead viwn ed

Morton v. Ruiz, 415 U.S. 199 (1974) ...............

NLRB vy. American Nat'l. Ins. Co.,

Pe See CU i dav cake sss adda ds vensawes

NLRB y. Insurance Agents’ Union,

ee ee ee Cs cb iv iknendsacvacaetacces:

NLRB vy. Jones & Laughlin Steel Corp.,

Be ee, CRUE cde vhs eeada sb cksubhacere

NLRB vy. Katz, 369 U.S. 736 (1962)..........+45-

Nachman Corp. v. Pension Benefit Guar. Corp.,

errr rer err eee

National Steel Service Center, Inc. v. Central

States, Southeast and Southwest Areas Pension

Fund et al., No. 82C-5315 (N.D. Ill. E.D.,

November 23, 1983) appeal pending

GPa hes PO ED Gas Bc niccccceenscdenas

Peick v. PBGC, No. 82-2081

nk cdiewoecee’

Raley v. Ohio, 360 U.S. 423 (1959) ..........08.

Thorpe v. Housing Authority, 393 U.S. 268 (1969) ....

United States vy. Peltier, 422 U.S. 531 (1975).......

Usery v. Turner Elkhorn Mining Co.,

he ea dias i's caren oud

Welch v. Henry, 305 U.S. 134 (1938)............4.

STATUTES:

Employee Retirement Income Security Act of 1974

88 Stat. 829 as amended by Multiemployer

Pension Plan Amendments Act of 1980,

94 Stat. 1209, 29 U.S.C. §§1001-1461

CRS te EF BME R cbc ccd cavnccsvcssas

29 U.S.C. §1002(37) ......... < aun eaaaecanae

Be Ee EOD 65h. v's Wenecvvedacnceas

Se as SEED kdkerAewk bases cnekuce

OTHER AUTHORITIES:

L. Tribe, AMERICAN CONSTITUTIONAL LAW

ORG a I ge i a

gn the

Supreme Court of the Wnited States

No. 83-245

October Term, 1983

PENSION BENEFIT GUARANTY CORPORATION,

Appellant

V.

R. A. GRAY & COMPANY,

Appellee

I, INTEREST OF AMICUS CURIAE

Amicus Curiae National Steel Service Center, Inc.

writes in support of the position of the Appellee R. A. Gray

& Company.' Written consent of the parties to Case No.

83-245 has been obtained for this appearance in accor-

dance with United States Supreme Court Rule 36.2 and

such written consent has been filed of record with the

Clerk.

‘Amicus Curiae National Steel Service Center, Inc. is plaintiff/

appellee in National Steei Service Center, Inc. v. Central States, South-

east and Southwest Areas Pension Fund et al., No. 82C-5315 (N.D. Ill.

E.D. November 23, 1983) (McGarr, C.J.) appeal pending (7th Cir. No.

83-3298), which action seeks declaratory and injunctive relief based on

the unconstitutionality of the retroactive effective date provisions of the

Multiemployer Pension Plan Amendments Act of 1980 on the following

facts of record therein: In November, 1978, National Steel Service

Center, Inc. negotiated a multi-year collective bargaining agreement

with the local union representing its employees which agreement called

for the company to cease contributing to the Central States, Southeast

and Southwest Areas Pension Fund effective August |, 1980 and to

begin coverage of its employees under a single employer pension plan

with retirement benefits as negotiated with the union on behalf of the

employees at its Oak Creek, Wisconsin facility.

Il. ARGUMENT

The Retroactive Application of the Withdrawal Liabil-

ity Provisions of the MPPAA Is An Unconstitutional

Denial of Due Process Assured by the Fifth Amendment.

It is important to realize that the MPPAA regulates

multiemployer plans of the “Taft-Hartley” variety. The

plans are in reality creatures of collective bargaining

between a union and several employers. Employee Retire-

ment Income Security Act of 1974 [“ERISA”] 88 Stat. 829

as amended by Multiemployer Pension Plan Amendments

Act of 1980, [“MPPAA”’] 94 Stat. 1209 at 29 U.S.C.

§1002(37); Peick v. PBGC, No. 82-2081 (7th Cir., Decem-

ber 19, 1983) Slip.Op. at p. 11.

Collective bargaining is, in turn, a statutory creation

with forty-nine years of Congressional, administrative, and

judicial precedent upon which employers, unions, and

employees regularly rely in establishing the relationships

and obligations among them. It is precedent which dictates

the process to be accorded Appellee R. A. Gray & Com-

pany and other similarly situated employers. It is that pro-

cess which has been unconstitutionally abrogated by mak-

ing the MPPAA retroactively effective.

Collective bargaining is predicated on a statutory

framework which, since its inception, has been recognized

as providing a free opportunity to negotiate without com-

pelling the content of the parties’ adjustments or agree-

ments. NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1,

45 (1937). The forum of the bargaining table and the eco-

nomic resources of the parties describe a process which

legitimizes and promotes negotiatiun between employer

and employee representatives to create their own ordering

of wages, benefits, terms, and conditions of employment,

free from government dictation of a substantive resolution

to their differences. NLRB v. Insurance Agents’ Union, 361

U.S. 477, 490 (1960); Local 24, Int'l. Bhd. of Teamsters v.

Oliver, 358 U.S. 283, 295 (1959); NLRB v. American Nat'l

Ins. Co., 343 U.S. 395, 404 (1952). Clearly included within

this bargaining process are the retirement benefits and pen-

sion rights of active employees. Allied Chemical & Alkali

Workers of Am., Local No. 1 v. Pittsburgh Plate Glass Co.,

404 U.S. 157, 180-181 (1971).

The conduct of R. A. Gray & Company in bargaining

with the union in 1980 was protected by federal labor

policy. Gray gave appropriate notice to the union of its

desire to terminate its current labor agreement upon its

expiration. (J.A. 19) Correspondence over new proposals

for a labor contract took place, including discussions of

pension matters. No agreement was reached before the

existing contract’s termination. (J.A. 105, 156, 159, 160)

Thereafter, Gray permissibly implemented its proposals

“without prejudice to such agreement as future negotia-

tions may produce.” However, the Union did not main-

tain the support of the company’s employees and no subse-

quent agreement was reached. Therefore, Gray’s obligation

to contribute to the Pension Plan permanently ceased as of

June 1, 1980. Although a new bargaining agreement did

not result, the process of good faith bargaining was

observed and no unfair labor practice asperses this conclu-

sion. Accordingly, this collective bargaining process result

deserves due process protection against the ex post facto

interference occasioned by the retroactively effective pro-

visions of the MPPAA.

“For its own purposes, a government may find it con-

venient, sometimes indeed imperative, to signal its trust-

worthiness and thus to induce the sort of reliance that it

could instead have spurned. When government makes that

choice, a powerful argument may be advanced that the

most basic purposes of the impairment clause, as well as

notions of fairness that transcend the clause itself, point to

a simple constitutional principle: government must keep its

word.” L. Tribe, AMERICAN CONSTITUTIONAL LAW

§9-7, at 490 (1978) (Emphasis in original). Transcending

the impairment clause to protect individual reliance inter-

ests On government-countenanced procedures is the Due

Process clause. See e.g., Morton v. Ruiz, 415 U.S. 199, 235

(1974); Thorpe v. Housing Authority, 393 U.S. 268 (1969);

Raley v. Ohio, 360 U.S. 423 (1959); Columbia Broadcast-

ing System, Inc. v. United States, 316 U.S. 407, 422 (1942);

Arizona Grocery Co. v. Atchison, T. & S.F.R. Co., 284 U.S.

370 (1932).

The decades of Congressionally, administratively, and

judicially encouraged reliance on the statutorily estab-

lished freedom of parties engaged in the collective bargain-

ing process to determine the substance of their obligations

and liabilities warrants the protection of the Due Process

clause against the ancillary assault mounted by the pree-

nactment application of the MPPAA. Congress may not

renege on its federal labor law word. Actions contem-

plated, taken, and consummated in accordance with long

established and balanced federal rights may not be the

basis for triggering extraordinary liabilities due to the ret-

roactive effective date of chronologically subsequent Con-

gressional action.

The MPPAA is primarily directed at the prevention of

future pension plan failures and at prospective improve-

ment of plan stability. Peick v. PBGC, supra, Slip.Op. at p.

36. R. A. Gray & Co. v. Oregon-Washington Carpenters-

Employers Pension Trust Fund, 549 F.Supp. 531, 535-536

(D.Ore. 1982), rev’d, 705 F.2d 1502 (9th Cir. 1983), prob.

juris noted sub nom. Pension Benefit Guaranty Corp., v. R.

A. Gray & Co., 52 U.S.L.W. 3308 (Oct. 17, 1983) (Nos. 83-

245, 83-291). Such purposes are generally insufficient bases

for retroactive legislation. Usery v. Turner Elkhorn Min-

ing, 428 U.S. 1, 17 (1976). Retroactivity therefore is predi-

cated on deterring “opportunistic” employers from with-

drawing in anticipation of legislation.? The pejorative

label, “opportunistic”, ignores the mutuality of collective

bargaining. Employers are not free to unilaterally alter

their labor agreement obligations. Nor may an employer

negotiating a new agreement act unilaterally without first

engaging in good faith bargaining to impasse. NLRB y.

Katz, 369 U.S. 736 (1962). The Congressional hypotheses

of unprincipled opportunism and massive withdrawals are

not plausible in the real world of collective bargaining.

MPPAA retroactivity is not the mere upset of other-

wise settled private expectations. Usery v. Turner Elkhorn

Mining Co., 428 U.S. at 16. For Turner Elkhorn Mining is

distinguishable and its deferential standard is inapplicable

where there is affirmative Federal endorsement of the type

?The element of reasonable anticipation is a minimally necessary,

but not sufficient, element of a retroactive enforcement scheme, Welch

v. Henry, 305 U.S. 134, 147 (1938), particularly where deterence is

intended. United States v. Peltier, 422 U.S. 531 (1975). Compare,

National Steel Service Center, Inc. v. Central States, Southeast and

Southwest Areas Pension Fund, supra.

of private conduct and expectations implicated here. Col-

lective bargaining is a special case. This is not to argue that

freedom of collective contract is inviolate. Congress has

from time to time passed ancillary laws which impinge on

the substantive terms of collective bargaining agree-

ments—but not retroactively. See e.g., ERISA, 29 U.S.C.

§1061(cX1) and §1086(c\1); see also, Nachman Corp. v.

Pension Benefit Guar. Corp., 446 U.S. 359, 382 (1980);

Franks v. Bowman Transportation Co., 424 U.S. 747

(1976); Jewel Ridge Coal Corp. v. Local No. 6167, UMWA,

325 U.S. 161 (1945).

The preenactment enforcement of the MPPAA to

assess liability upon bargaining activity otherwise federally

protected when it occurred, or upon action taken in accor-

dance with a collective bargaining agreement which has

been fully performed, does inexcusable violence to the

rights of R. A. Gray & Company and other similarly situ-

ated employers. It is this due process within the federally

demarcated bounds of the economic forum of labor rela-

tions which has been unconstitutionally abrogated by

MPPAA retroactive enforcement. Therefore, the Court

should declare null and void the retroactively effective pro-

vision of the MPPAA and uphold the half century of prece-

dent which supports the American collective bargaining

system.

Ill. CONCLUSION

Based on the argument above and the arguments of

Appellee R. A. Gray & Company and the supporting amici

curiae, the judgment of the Court below must be affirmed.

Respectfully submitted,

RALPH T. DESTEFANO

RICHARD R., RIESE

THORP, REED & ARMSTRONG

One Riverfront Center

Pittsburgh, PA 15222

(412) 394-7776