Petition for Writ of Certiorari — Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal.

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1996

BOARD OF TRUSTEES, BAY AREA LAUNDRY AND

Dry CLEANING PENSION TRUST FUND,

. Petitioner,

FERBAR CORPORATION OF CALIFORNIA, INC.;

STEPHEN BARNES,

Respondents.

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

PETITION FOR WRIT OF CERTIORARI

MARSHA S. BERZON *

LOWELL FINLEY

177 Post Street

Suite 300

San Francisco, CA 94108

(415) 421-7151

GEOFFREY V. WHITE

351 California Street

Suite 650

San Francisco, CA 94104

(415) 362-5658

Counsel for Petitioner

* Counsel of Record

WILSON - Eras PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

oS ~

QUESTION PRESENTED

Whether a cause of action for recovery of withdrawal

liability under the Multiemployer Pension Plan Amend-

ments Act, 29 U.S.C. § 1451, arises: (a) on the date an

employer withdraws from the plan; (b) on the date the

first payment becomes overdue; (c) for each payment

due, on the date that payment becomes overdue, unless the

plan sponsor elects to invoke the statutory provision per-

mitting acceleration of the entire withdrawal liability debt

after default; or (d) on some other date.

(i)

- ee

TABLE OF CONTENTS

Page

EE i

TABLE OF AUTHORITIOG ..............:20....<-000-................ iv

PETITION FOR A WRIT OF CERTIORARI ............ 1

EEE a 1

EE SE 2

EE 2

STATEMENT OF THE CASE .................-0......0cccc000000--2-- 2

TD 2

_ ees mm 4

EE 5

REASONS FOR GRANTING THE PETITION ........ 7

a aenesseusenesoconons 19

(iii)

TABLE OF AUTHORITIES

Cases Page

Board of Trustees of the Constr. Laborers Pension

Trust v. Thibodo, 34 F.3d 914 (9th Cir. 1994),

cert. denied, 115 S. Ct. 1861 (1995) —.............. 6, 13

Board of Trustees of the Dist. No. 15, Machinists

Pension Fund v. Kahle Eng’g. Corp., 43 F.3d

FRET ee passim

Carriers Container Council, Inc. v. Mobile S.S.

Ass’n., Inc., 948 F.2d 1219 (11th Cir. 1991)... 18

Central States, Southeast & Southwest Areas Pen-

sion Fund v. Navco, 3 F.3d 167 (7th Cir. 1993),

cert. denied, 510 U.S. 1115 (1994) passim

Concrete Pipe & Prods. v. Construction Laborers

Pension Trust, 508 U.S. 602 (1993) . nen 3,9

Giroux Bros. Transp. v. New England Teamsters

& Trucking Indus. Pension Fund, 73 F.3d 1 (1st

SS ti TS 8, 13, 15

Joyce v. Clyde Sandoz Masonry, 871 F.2d 1119

(D.C. Cir.), cert. denied, 493 U.S. 918 (1989)... passim

Milwaukee Brewery Workers v. Jos. Schlitz Brew-

ing Co., —— U.S. ——, 115 S.Ct. 981 (1995)... passim

Pilot Life Ina. Co. v. Dedeauzx, 481 U.S. 41 (1987). x

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) .. s

Trustees of the Plumbers and Pipefitters National

Pension Fund v. Mar-Len, Inc., 30 F.3d 621 (5th

Statutes

oe Ie RE eS AT Pim 8 PE 16

28 U.S.C. § 1254(1) -............. isieaisiaiadeiatcentiaaiaieciatinaiiataa 2

29 U.S.C. § 1001 et seq. oon. ae 3

§ 1145 _... cE ES eee 14, 16

Ee ce nee mae Ee 2, 6,9

tt EN CAL: Ae ee " 9

§ 1883 (b) (2) (B) (ii) —........................ 12

ES. Pee ere 9

SERS Eee eee ee 9

§ 1383 (e) 13

§ 1399 (b) (1) oo OC ene eee SS ye 2, 10, 13

§ 1891 (b) (1) (C) -................. iaidelebiaiidtniaaabaciias 11

- 2 ee ee

TABL ~ OF AUTHORITIES—Continued

Page

§ 1399(b) (2) (A) (T) 3

| eA SR ee 16

ie APE TE lags 16

“ws Oe 3, 10, 16

5 SSE SARI ea 14

; at es sunsnnassnconssstnatetanesasees 16

5 ELLE eae meee 11,1

eT ne Reet iain: air

en Ras BI es 8 a 10

Fe I a SES 3,14

NA” passim

ANSI ae SP eZ 3, 10, 15

§1451(b) Sneincineitaeteinmarinniinetidiesiati es 16

; aa ro idstosnassunearsnsuncsenstnemenetheeensessadannieesmesss 14

a ee nS passim

I i ites cS us passim

ED eee eee ate 2 3, 5, 6

In THE

Supreme Court of the United States

OcTOBER TERM, 1996

No. 96- ——

BOARD OF TRUSTEES, BAY AREA LAUNDRY AND

Dry CLEANING PENSION TRUST FUND,

7 Petitioner,

FERBAR CORPORATION OF CALIFORNIA, INC.;:

STEPHEN BARNES,

Respondents.

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circult

PETITION FOR WRIT OF CERTIORARI

The Board of Trustees of the Bay Area Laundry and

Dry Cleaning Pension Trust Fund (“Trustees”), the

plaintiff in the district court and the appellant in the

Court of Appeals, respectfully petitions for a writ of cer-

tiorari to review the judgment of the United States Court

of Appeals for the Ninth Circuit in this case.

OPINION BELOW

The opinion of the United States Court of Appeals for

the Ninth Circuit is reported at 73 F.3d 971 and is re-

appears as Appendix B, at App. 6a-19a.

printed as Appendix A to this Petition (App.), at App.

la-Sa. The opinion of the United States District Court

for the Northern District of California is unreported and

JURISDICTION

The Court of Appeals for the Ninth Circuit entered an

order denying a petition for rehearing on May 13, 1996.

App. 20a. On August 1, 1996, Justice O'Connor ex-

tended the time within which to file the petition for writ

of certiorari to and including September 10, 1996.

The jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

STATUTES INVOLVED

The statutes and regulations involved are set forth in

Appendix E to the Petition, App. 30a-49a.

STATEMENT OF THE CASE

1. The Statutory Scheme

The Employee Retirement Income Security Act of

1974, (“ERISA”), 29 U.S.C. § 1001 ef seq.,' as amended

by the Multiemployer Pension Plan Amendments Act of

1980, requires an employer withdrawing from a multi-

employer pension plan to pay its share of any unfunded

vested pension obligations. § 1399(b)(1). An employer

ordinarily completely withdraws from a multiemployer

plan when it permanently ceases to have an obligation to

contribute under the plan or permanently ceases all cov-

ered operations under the plan. § 1383(a).° The amor-

tized withdrawal liability payments are calculated by the

fund and assessed to the withdrawing employer accord-

ing to a schedule set up by the fund but in large part

dictated by the statute, with payments to begin

within sixty days after the fund demands payment.

§ 1399(c)(2).°

1 All subsequent statutory citations are to Title 29 of the United

States Code unless otherwise indicated. “

2 There are special complete withdrawal provisions covering cer-

tain industries and circumstances. See n.6 and p. 12, infra.

8 The multiple and complex calculations that must be performed

by the plan’s actuary in order to assess withdrawal liability are

Ae ere

—_

ete 5

Within 90 days after 1:eceiving the plan sponsor's notice

of withdrawal liability, the employer may ask the plan

sponsor to review the determination of liability or the

schedule of payments, or both. § 1399(b)(2)(A)(i).

After this review, any dispute concerning the demand is

subject to arbitration (§ 1401(a)(1)): Within 60 days

after (a) the plan sponsor’s response to the employer's

request for review or (b) 120 days after the employer's

request for review, whichever is earlier, the employer may

initiate arbitration. § 1401(a)(1). While the arbitra-

tion proceeds, the employer must make periodic interim

payments according to the schedule set forth by the plan

sponsor. §§ 1399(c)(2), 1401(d).

If the employer does not meet its withdrawal liability

obligations, the statute provides a cause of action by the

plan trustees:

A plan fiduciary, employer, plan participant, or

beneficiary, who is adversely affected by the act or

omission of any party under this subtitle with respect

to a multiemployer plan . . . may bring an action

for appropriate legal or equitable relief, or both.

[$ 1451(a)(1)]

As to the limitations question, the critical statutory sec-

tion provides:

(f) An action under this section may not be brought

after the later of —

(1) 6 years after the date on which the cause

of action arose, or

(2) 3 years after the earliest date on which the

plaintiff acquired or should have acquired actual

knowledge of the existence of such cause of

action; except that in case of fraud or conceal-

ment, such action may be brought not later than

6 years after the date of discovery of the exist-

ence of such cause of action. [§ 1451(f)]

described in Concrete Pipe & Prods. v. Construction Laborers Pen-

sion Trust, 508 U.S. 602, 609-10 (1993).

The issue in this case is when the statute of limitations

established by § 1451(f) begins to run on a cause of

action for failure to make withdrawal liability payments.

2. Facts

Ferbar Corporation (“Ferbar” or “the employer”)

contributed to the Bay Area Laundry and Dry Cleaning

Pension Fund (“Trustees” or “Fund”) for several years

for three business locations, but ceased all contributions

on or about March 1, 1985. CR. 13 at 1-2."

On December 12, 1986, the Fund assessed withdrawal

liability against Superior French Laundry, one of the three

laundries operated by Ferbar, in the amount of

$45,580.80. CR. 13 at 2. The assessment notice gave

Ferbar a choice between a single lump-sum payment of

the total withdrawal liability by February 10, 1987, and

monthly installment payments of $345.50 commencing

February |, 1987. The notice also stated that the em-

ployer would be deemed in “default” if any delinquency

were not cured within 60 days after notice of delinquency,

and that Ferbar was required by law to make the pay-

ments as scheduled notwithstanding any request for re-

view or appeal. CR 15, Exh. 1.

By letter dated February 27, 1987, Ferbar exercised

its right to request review of the assessment by the

Trustees. CR. 16, Exh. 2. During the pendency of the

review, Ferbar made no payments on its withdrawal

liability. CR. 13 at 3.

Having received no withdrawal liability payments, the

Fund, on April 14, 1987, notified Ferbar of the delin-

quency. CR. 16, Exh. 3. The delinquency notice stated

that Ferbar had sixty days to cure the delinquency, or it

would be in “default,” in which case liability for the full

amount of outstanding withdrawal liability could be accel-

4These facts were accepted as true for purposes of summary

judsgrment.

ee Se

erated. And the notice of delinquency notified Ferbar

once again that ERISA required it to make the scheduled

payments notwithstanding any request Ferbar might make

for review or appeal of the Fund’s determination.

Ferbar did not cure its delinquency after receiving the

delinquency notice, but did, on July 8, 1987, request arbi-

tration of its disputed withdrawal liability. CR 16, Exh.

4. Ferbar made no payments of withdrawal liability at

any time.

3. Proceedings

The Trustees filed their complaint for collection of un-

paid withdrawal liability on February 9, 1993, eight days

more than six years after the first withdrawal liability pay-

ment was due under the assessment but less than six years

after any other payment of the withdrawal liability was

due, and less than six years after the entire amount of the

withdrawal liability could have been demanded under the

assessment or the statute. CR. 1. Ferbar answered on

March 23, 1993. CR. 3. Thereafter, Ferbar filed a Mo-

tion for Summary Judgment based solely on failure to

meet the appiicable statute of limitations, and the Trustees

filed a cross-motion for suiuumary judgment. CR. 10, 14.

. The District Court held that the Trustees’ action was

time-barred under the three-year “discovery” statute of

limitations set forth in § 1451(f)(2), notwithstanding the

express language in the statute providing that the appli-

cable limitations period is “the later of” the three-year

discovery period in § 1451(f)(2) or the six-year accrual

period in § 1451(f)(1). Alternatively, the District Court

held that the Trustees’ action was also time-barred under

the six-year limitations period in § 1451(f)(1), conclud-

ing that the Trustees’ cause of action arose, and the limita-

tions period on the entire amount of the withdrawal lia-

bility began to run, on February 1, 1987, when Ferbar

failed to make the first installment payment on the date

scheduled by the Fund.

On appeal, the Ninth Circuit held that the District

Court had erred by applying the three-year discovery limi-

tations period in § 1451(f)(2). The Ninth Circuit af-

rirmed the judgment, however, holding that the action was

time-barred under the six-year limitations period of § 1451

(f)(1).

Unlike the District Court, which had viewed the cause

of action as arising on the date of the first missed payment,

the Ninth Circuit ruled that a cause of action under

§ 1383(a) accrues, and the limitations period of § 1451

(f)(1) begins to run, on the date on which an employer

completely withdraws from a plan. In so holding, the

court relied upon its own decision in Board of Trustees

of the Constr. Laborers Pension Trust v. Thibodo, 34

F.3d 914 (9th Cir. 1994), a case construing the relation-

ship between a different withdrawal liability subsection of

the statute, § 1383(b), and the statute of limitations pro-

vision, § 1451(f).° Because Ferbar had effected a com-

plete withdrawal from the Fund more than six years

before the Trustees’ action was filed, the Ninth Circuit

affirmed the summary judgment for Ferbar. App. Sa.

Judge Trott concurred reluctantly, stating that he was

compelled to join in the judgment by the court’s previous

decision in Thibodo. In his concurrence, Judge Trott,

noting that the D.C. Circuit had, in Joyce v. Clyde Sandoz

Masonry, 871 F.2d 1119 (D.C. Cir.); cert. denied, 493

U.S. 918 (1989) decided the same statute of limita-

tions issue differently than the Ninth Circuit did in this

case, expressed the view that Joyce “does a better job of

answering the questions raised by these issues... .”

App. 5a.

5 The Thibodo opinion appears in Appendix D to this Petition,

at App. 21a.

A te ee

en a mn Mmm

REASONS FOR GRANTING THE PETITION

This case presents the Court with an opportunity to

resolve a serious and multifaceted disagreement among the

circuits on the application of the statute of limitations

governing actions by multiemployer pension benefit plans

to recover ERISA withdrawal liability payments.

The Ninth Circuit held that the § 1451(f)(1) limita-

tions period begins to run on the date that the employer

completely withdraws from a multiemployer pension fund.

It so held even though, as this Court recognized last year

in Milwaukee Brewery Workers v. Jos. Schlitz Brewing

Co., US. , 115 S.Ct. 981 (1995), the statute

does not impose any obligation on the employer to make

any payment on the date of withdrawal. Instead, the

statute simply uses that date in assessing the amount and

number of payments due to be paid by the employer con-

siderably later, after the plan calculates the total amount

due, sets out the required payment schedule, and makes

a demand for payment. 115 S.Ct. at 988. Thus, accord-

ing to the Ninth Circuit, the statute of limitations on a

suit to collect withdrawal liability begins to run well before

the plan trustees can file such a suit.

The four other circuits that have ruled on the limita-

tions period applicable to collection of withdrawal liability

all disagree with the Ninth Circuit on this point. Those

circuits hold instead that the statute of limitations begins

to run from the date when the plan trustees first can bring

suit on the claims, not months or years before that. Since,

under the complex statutory system for assessing and col-

lecting withdrawal liability reviewed in Schlitz, the right

to file a collection action arises only after withdrawal lia-

bility has been assessed and payment is due, all four of

the other circuits hold that the statute of limitations under

§ 1451(f)(1) begins to run only then. Joyce v. Clyde

Sandoz Masonry, 871 F.2d at 1123-24, Central States,

Southeast & Southwest Areas Pension Fund v. Navco, 3

F.3d 167, 172 (7th Cir. 1993), cert. denied, 510 US.

1115 (1994): Board of Trustees of the Dist. No. 15,

Machinists Pension Fund v. Kahle Eng’g. Corp., 43 F.3d

852, 859-61 (3d Cir. 1994); Giroux Bros. Transp. v.

New England Teamsters & Trucking Indus. Pension

Fund, 73 F.3d 1, 3-4 (1st Cir. 1996).

At the same time, those circuits are in discord among

themselves as to precisely how the limitations period ap-

plies once there has been the requisite statutory demand

for payment: The Seventh and Third Circuits are directly

at odds concerning whether, as the district court in this

case held, the limitations period for the entire amount of

withdrawal liability runs from the first missed payment or

whether, instead, there is a separate limitations period

running from each missed payment unless and until the

multiemployer plan exercises its statutory option to accel-

erate the withdrawal payment obligation because of de-

fault. Compare Navco, supra (single limitations period

for entire amount), with Kahle Engineering Corp., supra

(separate period for each missed payment unless the pay-

ment obligation is accelerated after default ).

The various interpretations of the statutory limitations

period adopted by the circuits yield widely varying results

on the same facts. In this case, for example, the action

for collection of withdrawal liability is timely under the

District of Columbia Circuit’s interpretation of § 1451

(f)(1) adopted in Joyce v. Clyde Sandoz Masonry and

the Third Circuit’s interpretation adopted in Kahle Engi-

neering Corp., but is untimely under the Ninth Circuit's

rule in this case and under the very different statutory

interpretation reached by the Seventh Circuit in Navco.

As Congress recognized in enacting ERISA, many funds

operate in broad geographical areas and are hampered

in their operations if subject to varying rules with regard

to such basic functions as the collection of funds necessary

to assure fund solvency. For that reason, assuring uni-

formity in the rules governing employee benefit plans is

a central purpose of ERISA. Pilot Life Ins. Co. v.

Dedeaux, 481 U.S. 41, 56 (1987); Shaw v. Delta Air

Lines, Inc., 463 U.S. 85, 98-100 (1983).

ee ee

Because of the current disarray on the MPPAA with-

drawal liability limitations issue among the circuits, the

many pension plans that operate within the jurisdiction of

more than one of the five circuits which have spoken to

this issue must have administrative systems in the various

circuits operating under different time lines for the pur-

pose of assessing and collecting withdrawal liability. To

eliminate this disruptive disparity in the application of

§ 1451(f), this Court should grant certiorari and, as it

has in two other recent cases raising issues concerning the

assessment and collection of withdrawal liability under

the MPPAA (Schlitz, supra and Concrete Pipe & Prods.

v. Construction Laborers Pension Trust, 508 U.S. 602

(1993)), announce a uniform rule applicable to all multi-

employer pension plans wherever they operate.

1. The Ninth Circuit, alone of the five circuits that

have addressed the issue, holds that for purposes of the

time limitations governing actions for recovery of with-

drawal liability, a Fund’s cause of action arises under that

section on the day the employer permanently withdraws

from the plan. App. Sa. As the other four circuits that

have addressed the question have recognized, this result

simply cannot be squared with the statutory scheme as a

whole.

A. As Schlitz explained, the MPPAA “imposed a with-

drawal charge on all employers withdrawing from an

underfunded plan . . . [aJ]nd set forth a detailed set of

rules for determining, and collecting, that charge.” 115

S.Ct. at 985. The calculation of that charge is triggered

once there has been a “complete withdrawal from a multi-

employer plan,” which occurs ordinarily when an employer

“permanently ceases to have an obligation to contribute

under the plan, or . . . permanently ceases all covered

operations under the plan.” 29 U.S.C. § 1383(a); Con-

crete Pipe, 508 U.S. at 610.°

® There are special provisions for determining complete with-

drawal in certain industries. § 1383(b), (c), (d) and (f); see

p. 12, infra.

No obligation to pay wtihdrawal liability arises, how-

ever, on the date the withdrawal is deemed to occur.

Rather, as this Court noted in Schlitz, while “[t]he statute

.. . might make the withdrawing employer pay (or begin

payment) on the date the employer actually withdraws

.. . it does not do so.” 115 S.Ct. at 987. Instead, the

language in § 1399(b)(1) and (c)(2) “makes clear that

the withdrawing employer owes nothing until its plan

demands payment... .” /d. at 988; see also id. at 987

(noting that “[t}he statute says that a plan must draw

up a schedule for payment and ‘demand payment’ as

‘soon as practicable’ after withdrawal . . . [and] adds

that ‘[w]ithdrawal liability shall be payable . . . no more

than 60 days after the date of the demand.’ 29 U.S.C.

§ 1399(c)(2).”)*

It is only once the withdrawal liability payments are

“due and owing on the schedule set forth by the plan

sponsor” that “[t]he plan sponsor may bring an action

in a State or Federal court of competent jurisdiction for

collection.” § 1401(b)(1). Section 1451, in turn, pro-

vides that a plan fiduciary “adversely affected by the act

or omission of any party . . . with respect to a multi-

employer plan . . . may bring an action . . . six years

after the date on which the cause of action arose.” 29

U.S.C. § 1451(a)(1) and (f)(1).

7 As Schlitz also explains, the statute requires that the plan

permit the withdrawal liability to be paid either in a lump sum

or in equal installments, and prescribes the method according to

which the amount of each installment and the number of install-

ments is to be calculated. Then, to be more precise than the Court

had reason to be in Schlitz, the statute provides that “{w]ithdrawal

liability shall be payable in accord with the schedule set forth by

the plan .. . beginning no later than 60 days after the date of

the demand.” 29 U.S.C. § 1399(c)(2). As we explain later, the

employer has no obligation to pay the total amount of the with-

drawal liability any sooner than the mandatory installment plan

payment schedule provides, unless the plan elects to accelerate the

payment schedule to demand full payment because of payment

default. See pp. 15-19, infra.

Given this statutory scheme, it is clear that “[t)he stat-

ute carefully distinguishes between the circumstances that

define complete withdrawal and those which give rise to a

cause of action.” Joyce v. Clyde Sandoz Masonry, supra,

871 F.2d at 1123. The function of delineating the date

of complete withdrawal is simply “to demarcate or to

allow calculation of the employer's share, if any, of the

plan’s unfunded vested liability.” Jd. No “cause of action”

“arises” on the date that complete withdrawal occurs be-

cause no employer payment obligation of any kind,

capable of being breached, exists until well after that

date."

Instead, as the D.C. Circuit went on to explain in

Joyce:

The statute itself . . . indicates that the plan is

“adversely affected” (and thus that a “cause of ac-

tion” arises) when the plan has not received pay-

ments which are due and owing. The language of

the statute (including the terms of section 145!

itself) points firmly in the direction of the conclu-

sion that [the employer's} uncured failure to pay

the sum demanded adversely affect{s] the plan, thus

giving rise to a cause of action. See 29 U.S.C.

$§ 1399(c)(5), 1401(b). .. . Withdrawal, in itself,

does not visit any adverse effect upon the plan that

gives rise to the cause of action. [871 F.2d at 1122-

23, footnotes and citations omitted. ]}

In short, the Court of Appeals’ analysis in this case

fails because, »nlike the D.C. Circuit's reasoning in Joyce,

the Ninth Cir uit ignored critical statutory language per-

mitting plans to bring suit for withdrawal liability only

after payments are “due and owing.”

® Indeed, on the date of complete withdrawal, neither the plan

sponsor nor the employer knows the amount of withdrawal! lia-

bility or even whether the employer will owe anything. See

§ 1391(b) (1) (employer’s proportional share of the plan’s unfunded

vested benefits may be “zero.”)

B. This statutory language and structure analysis is

more than sufficient to demonstrate why the D.C. Cir-

cuit was right ard the Ninth Circuit wrong on the

question here presented. Additionally, the D.C. Circuit's

application of § 1451 in Joyce yields a result that ac-

counts for the pertinent practical considerations, while

the Ninth Circuit’s statute of limitations theory is based

on practical concerns that ae fully met by statutory pro-

visions quite separate from the limitations section.

On the one hand, the Joyce approach takes account, as

the Ninth Circuit interpretation does not, of the fact that

it is sometimes impossible to determine whether a com-

plete withdrawal has occurred until years after the fact,

as in cases of plant shutdowns or bargaining impasse.

“This determination cannot necessarily be made upon

complete withdrawal; rather it requires a post hoc deter-

mination of when a particular cessation of covered opera-

tions, for example, actually signaled a permanent halt to

(rather than a lull in) operations.” Joyce v. Clyde Sandoz

Masonry, 871 F.2d at 1123.

In the building and construction industry, the uncer-

tainty is exacerbated. The MPPAA provides that com-

plete withdrawal occurs on the date such an employer

“ceases to have an obligation to contribute under the

plan,” but only if the employer “resumes such work within

5 years after the date on which the obligation to con-

tribute under the plan ceases, and does not renew the

obligation at the time of the resumption.” § 1383(b)(2)

(B) (ii). As a result,

the plan sponsor (or any other party) may not be

able to establish that the building or construction

industry employer has completely withdrawn until

as much as five years after what the parties eventually

determine to have been the date of complete with-

drawal. To conclude that an event requiring such

a post hoc (and belated) determination triggers the

limitations bar would create, at the least, an un-

wieldy statutory collection mechanism. [Joyce v.

Clyde Sandoz Masonry, 871 F.2d at 1123-24.]°

On the other hand, while the Ninth Circuit thought that

its construction of § 1451 was necessary to assure that

pension plan trustees promptly assess and collect with-

drawal liability (App. 27a), MPPAA provisions entirely

apart from the running of the statute of limitations pro-

vide powerful incentives for plan sponsors to expedite the

process of assessing withdrawal liability.

Section 1399(b)(1) requires the plan sponsor to as-

sess, schedule and demand withdrawal liability payment

“fa]s soon as practicable after an employer’s complete

or partial withdrawal.” § 1399(b)(1). An employer may

defend in arbitration against paying withdrawal liability

on the ground that the plan sponsor failed to satisfy

the “as soon as practicable” requirement. Giroux Bros.

Transportation, Inc. v. New England Teamsters & Truck-

ing Industry Pension Fund, 73 F.3d at 2, 4; see Joyce v.

Clyde Sandoz Masonry, 871 F.2d at 1126-27. Thus, a

* The Ninth Circuit purported to avoid this problem in Thibodo

by holding that the statute of limitations runs not from the date

defined by the statute as the “date of complete withdrawal” —

namely, the “date of the cessation of the obligation to contribute or

the cessation of covered operations” (§ 1383(e))—but, instead,

from “the date on which the conditions for complete withdrawal!

... have been met”—that is, in the case of a construction industry

employer who returns to the jurisdiction within five years, the

date of that return. 34 F.3d at 917. In this case, however, the

Ninth Circuit lost sight of that distinction, and instead construed

and applied Thibodo as holding that “[i)n other words, the limita-

tions period begins to run from the date of complete withdrawal.”

App. 4a.

If anything, Thibodo adds to the disarray in the courts of appeals

in determining when a cause of action arises within the meaning

of § 1451(f) (1), by suggesting that sometimes a cause of action

arises after the date on which complete withdrawal is deemed to

occur under the statute but still before the

plan that is dilatory in assessing the withdrawal liability

and demanding payment risks losing the right to collect

the amount due.

Moreover, “(t]he plan sponsor that unduly delays in

taking appropriate action . . . may invite a claim for

breach of fiduciary duty.” Joyce, 871 F.2d at 1126.

Putting off the assessment and collection of withdrawal

liability causes the plan to lose the investment value of

money due to it, and may threaten the solvency of the

fund.” Plan beneficiaries therefore could sue procrastinat-

ing trustees under ERISA, seeking to recover for the

fund the earnings the withdrawal funds could have gener-

ated for the beneficiaries had those funds been timely

assessed, collected and invested. See §§ 1145, 1399

(c)(3), 1401(d), 1451(d).

Because other provisions of ERISA adequately assure

timely assessment of and demand for withdrawal liability,

there is no reason to contort the provisions governing the

statutory limitations period on filing collection lawsuits,

as the Ninth Circuit did here, in order to serve ends for

which those provisions were not intended.

2. While disagreeing uniformly with the Ninth Cir-

cuit’s erroneous interpretation of § 1451(f)(1), other cir-

cuits have adopted at least two other inconsistent and

incompatible interpretations of that provision:

The Seventh Circuit holds that once there is the requi-

site demand for payment of withdrawal liability and the

employer fails to make a single installment payment under

the schedule set out by the plan sponsor, the limitations

period on the entire withdrawal liability begins to run.

According to the Seventh Circuit, unless the plan sues for

” The amount of the amortization interest built into the pay-

ment schedule is fixed by the statute no matter when collection

actually occurs. Schlitz, 115 S.Ct. at 990. Consequently, if the

plan trustees do not promptly assess withdrawal liability, the plan

will not collect interest for the period of the delay.

the entire amount within the statutory limitations period

as figured from the first missed payment, it loses the right

to sue for any of the installments due later. Central

States Pension Fund v. Navco, supra, 3 F.3d at 172.

The Third Circuit, in Dist. 15, Machinists Pension

Fund v. Kahle Engineering Corp., supra, expressly re-

jected the Navco approach as “unpersuasive.” 43 F.3d

at 858. Kahle holds instead that, unless the plan chooses

to accelerate the entire debt after a missed payment

under § 1399(c)(5), as it “may” do, the limitations

period runs from each missed installment payment, with

respect to collection of that payment."'

On the facts of this case, the difference between the

Third and Seventh Circuit positions is determinative. The

collection suit in this case was filed more than six years

(by eight days) after the first missed payment was due,

but less than six years after every other installment pay-

ment (as well as the alternative, lump sum payment) was

due, and less than six years before the plan could have

insisted on accelerating payment of the entire debt under

the statute had it wished to.” Under the Seventh Cir-

'! Neither the D.C. Circuit in Clyde Sandoz Masonry nor the

First Circuit in Giroux squarely addressed the question on which

the Naveco and Kahle Engineering opinions are in conflict. The

reasoning of Clyde Sandoz Masonry, however, favors the Kahle

Engineering approach. 871 F.2d at 1124 (the cause of action arises

“based on the adverse effect on the plan of failure to receive

demanded payment,” and the plan may, but need not, make demand

for “the entire amount of withdrawal liability,” but only after

default on a payment); see Kahle Engineering, 43 F.3d at 860

(reading Clyde Sandoz Masonry as supporting the Kahle Engineer-

ing interpretation).

12 Under the statute and implementing regulations, the plan may

not accelerate the payment schedule and demand payment in full!

during the period allowed for appeals and arbitration challenging

the liability assessed. § 1451(a)(1); Kahle Engineering Corp.,

43 F.3d at 855 (“[i]f an employer misses a scheduled [interim]

payment, the fund may seek to collect by filing a collection action

cuit’s Navco interpretation of the statute, the suit is barred

(as the District Court in this case alternatively held);

under the Third Circuit’s Kahle Engineering analysis, the

only possible impact of § 1451(f)(1) would be to bar

collection of the first unpaid installment payment.

The Kahle Engineering analysis is faithful to the statu-

tory scheme, as a whole, while that of the Seventh Circuit

in Navco is not.

The premise of the Navco holding is that “[a]lthough a

fund may permit an employer to amortize [withdrawal

liability] over twenty years . . . the whole amount is pre-

sumptively due at the outset.” 3 F.3d at 172 (emphasis

supplied). That premise is simply wrong.

As this Court made clear in Schlitz, the statute itself

establishes the installment payment option for employers,

the amount of each annual payment, and the number of

such annual payments that may be required. 115 S.Ct.

at 986; § 1399(c)(1). Under the statute, the only statu-

tory obligation of the employer at the time of the first

missed payment was to pay that installment. The plan

therefore could not sue at that juncture, even if it wished

to, for more than that single payment. See &§ 1399(c)

(1)(A), (2), and (4) (obligation is to pay acvording to

the installment schedule); 1451(b) (in an action to com-

pel payment of withdrawal liability, “any failure of the

employer to make any withdrawal liability payment shall

be treated in the same manner as a delinquent contribu-

tion (within the meaning of section 1145 of this title).”)

It is true, of course, that the MPPAA ailows, but does

not require, a plan sponsor faced with the default of a

withdrawing employer on one or more scheduled pay-

but it may not accelerate the balance during that protected arbitra-

tion period.”) See also Trustees of the Plumbers and Pipefitters

National Pension Fund v. Mar-Len, Inc., 30 F.3d 621, 624 (5th

Cir. 1994).

: 17

ments to accelerate the employer's obligation to pay the

full amount of withdrawal liability." Such default and

acceleration “provide[] the predicate for a plan sponsor's

suit” for the full amount of withdrawal liability (Joyce v.

Clyde Sandoz Masonry, 871 F.2d at 1123), but only

if the plan sponsor elects to accelerate."

By insisting that “the whole sum becomes due and the

whole claim accrues when the first payment is missed”

Navco “in effect imposes a compulsory acceleration

clause,” although the statute in terms provides a discre-

tionary one, and one that can be invoked necessarily only

after the first payment is due under the plan’s demand.

Kahle Engineering, 43 F.3d at 859. The Navco holding

is therefore at odds with the statute’s plain language.

The Kahle Engineering analysis, in contrast, gives effect

to both the obligation to permit installment payments

18 Section 1399(c) (5) provides:

In the event of a default, a plan sponsor may require imme-

diate payment of the outstanding amount of an employer's

withdrawal liability, plus accrued interest on the total ovt-

standing liability of the employer from the due date of the

first payment which was not timely made. For purposes of this

section, the term “default” means— -

(A) the failure of the employer to make, when due, any

payment under this section, if the failure is not cured

within 60 days after the employer receives written notifi-

cation from the plan sponsor of such failure, and

(B) any other event defined in rules adopted by the plan

which indicates a substantial likelihood that ar employer

will be unable to pay its withdrawal liability.

14 The analysis in the text is intentionally simplified to apply to

any missed payment. We reiterate, however, that at the outset

of the payment schedule the Seventh Circuit’s interpretation is

particularly untenable, since the option the plan otherwise has to

accelerate the entire debt if it wishes to and demand payment of

all of the withdrawal liability does not come into existence until

after the period for demanding arbitration has passed—which it

had not as of February 1, 1987 in this case. See n.12, supra.

and the optional nature of debt acceleration when one of

the payments is missed. As the Third Circuit explained:

the employer’s obligation to make the scheduled

payments is akin to the obligation to make install-

ment payments. In an installment payment contract,

a new cause of action arises from the date each

payment is missed. [43 F.3d at 857].

See also Carriers Container Council, Inc. v. Mobile S.S.

Ass'n., Inc., 948 F.2d 1219, 1223 (11th Cir. 1991)

(“with respect to each withdrawal liability installment, the

right to sue [under 29 U.S.C. § 1451] is triggered by the

failure to pay the installment within the prescribed time,”

i.e., at the due date of each installment).

The Kahle interpretation is not only more consistent

with the statutory language and structure but also avoids

“perverse incentives” that the Navco rule creates. Kahle

Engineering, 43 F.3d at 859. Maintaining the flexibility

of the plan not to accelerate the debt when a payment is

missed “[en]courages amicable resolution of disputes and

. . reentry into the fund as a contributing employer.”

Id. To force acceleration of the debt when the first missed

payment occurs would preclude an accommodating fund

from suing on any payment missed more than six years

after the first, and could require a plan to sue for the

'’ As Kahle went on to note, where there is an installment sales

contract, the statute of limitations begins to run separately against

each installment when that installment becomes due, whether or

not the debtor has the option to pay the entire indebtedness at

any time and whether or not the creditor has “ ‘the right upon

certain contingencies to declare the whole sum due... unless the

creditor exercises his option to declare the whole indebtedness due,

in which case the statute begins to run from the date of the exercise

of his option.’” Kahle Engineering, 43 F.3d at 857, quoting 51

Am.Jur.2d: Limitations of Actions § 133; see Carriers Container

Council, Inc. v. Mobile S.S. Asa’n., Inc., 948 F.2d at 1222-24.

This Court in Schlitz confirmed that the method of paying with-

drawal liability under the statute is akin to contractual installment

payments. 115 S.Ct. at 988.

entire amount rather than for the past overdue payments

alone even where doing so would make the employer in-

solvent (and therefore unable to make the later payments

as they become due). Insisting upon draconian enforce-

ment of the obligation to pay withdrawal liability does

not benefit any of the potentially affected parties—the

employer, the plan, or the plan beneficiaries.

CONCLUSION

The question presented here—when a cause of action

for an employer’s failure to fulfill its withdrawal liability

obligation arises—affects employers, pension plans, and

employees throughout the nation. The Courts of Appeals

are in disarray on these issues, taking several inconsistent

and incompatible positions. This case is well-suited for

a definitive decision by this Court, because the facts of the

case raise every one of the various interpretive permuta-

tions adopted by the courts of appeals. This Court should

therefore grant this petition for writ of certiorari to the

Court of Appeals for the Ninth Circuit.

Respectfully submitted,

MARSHA S. BERZON *

LOWELL FINLEY

177 Post Street

Suite 300

San Francisco, CA 94108

(415) 421-7151

GEOFFREY V. WHITE

351 California Street

Suite 650

San Francisco, CA 94104

(415) 362-5658

Counsel for Petitioner

* Counsel of Record

_ APPENDICES

APPENDIX A

UNITED STATES COURT OF APPEALS

NINTH CIRCUIT

No. 94-15976

Bay AREA LAUNDRY & Dry CLEANING PENSION

TRUST FUND,

Plaintiff-A ppellant,

Vv.

FERBAR CORPORATION OF CALIFORNIA, INC., a California

Corporation; FERREIRA FARMS, INc., a California

corporation; STEPHEN J. BARNES, and RosBerRT J.

FERREIRA,

Defendants-A ppellees.

Appeal from the United States District Court

for the Northern District of California

Argued and Submitted Nov. 16, 1995

Decided Jan. 17, 1996

Before: NORRIS, BEEZER, and TROTT, Circuit

Judges.

PER CURIAM:

This case arises from an action filed on February 9,

1993, by the Bay Area Laundry and Dry Cleaning Pen-

sion Trust Fund against Ferbar Corp. and Stephen J.

Barnes (“Ferbar”) to collect withdrawal liability under

29 U.S.C. §§ 1381-1461, the Multi-Employer Pension

Plan Amendments Act of the Employee Retirement In-

come Security Act. The district court granted summary

judgment for Ferbar on the ground that the Fund’s suit

for withdrawal liability was barred by the applicable

statute of limitations set forth in 29 U.S.C. § 1451(f).

This statute provides in relevant part:

§ 1451. Civil Actions...

(f) Time limitations. An action under this section

may not be brought after the later of—

(1) 6 years after the date on which the cause

of action arose, or

(2) 3 years after the earliest date on which

the plaintiff acquired or should have acquired

actual knowledge of the existence of such cause

of action;....

29 U.S.C. § 1451(f). The district court applied the

three-year statute of limitations set forth in § 1451(f)(2),

but in the alternative held that the action would never-

theless be barred under the six-year statute of limitations

set forth in § 1451(f)(1), reasoning that the cause of

action arose on the date that Ferbar missed its first with-

drawal liability installment payment. On appeal the par-

ties contest, first, whether the three-year or the six-year

period applies, and second, the date on which the limita-

tions period began to run.

BACKGROUND

In March, 1985, Ferbar effected a complete withdrawal

from the Fund. On December 12, 1986, the Fund sent

Ferbar a notice assessing a withdrawal liability obligation

of $45,580.80. The notice provided that Ferbar could

pay off its withdrawal liability in one of two ways: (1)

it could either make a single lump-sum payment of the

total liability no later than 60 days after receipt of the

demand, or (2) it could begin making installment pay-

-ments according to a schedule established by the Fund,

with the first payment due on February |, 1987. Ferbar

did not pay the first installment, but rather on February

27, 1987, exercised its right to request review of the

assessment by the Board of Trustees. On April 14, 1987,

the Fund notified Ferbar that Ferbar’s first payment was

delinquent, and informed Ferbar that it had 60 days from

the notice to cure the delinquency, or it would be con-

sidered in default. Ferbar did not cure its delinquency.

APPLICABLE LIMITATIONS PERIOD

The district court held that the Fund’s action was time-

barred because it was filed more than three years after the

Fund acquired knowledge of the cause of action, citing

§ 1451(f)(2). The Fund argues that the action could

not be time-barred until six years after the cause of action

arose.

We agree with the Fund. The district court misread

the plain language of § 1451(f), which clearly directs

courts to apply “the later of” the two periods of limita-

tions. On the facts of this case, “the later of” the two

periods is six years from the date the cause of action

arose. We now turn to the question when the cause of

action arose.

Ill

WHEN THE CAUSE OF ACTION AROSE

In its alternative holding, the district court determined

that the cause of action arose on February 1, 1987, the

date on which Ferbar missed its first installment payment

for the assessed withdrawal liability. The Fund argues

that the cause of action arose on June 14, 1987, the date

of default.’ Ferbar argues that the cause of action arose

1 Default occurs when the employer has received notice that it

has missed a payment and has failed to cure the delinquency within

60 days. See 29 U.S.C. § 1899(c) (5) (defining “default’’).

in March, 1985, the date of complete withdrawal, or

alternatively on the date of the first missed payment.

Our court has recently spoken dispositively on this

issue. In Board of Trustees of the Constr. Laborers Pen-

sion Trust v. Thibodo, 34 F.3d 914 (9th Cir.1994), we

held that “for actions to recover withdrawal liability in-

curred as a result of complete withdrawal under 29 U.S.C.

§ 1383(b), the limitations period begins to run from the

date that the conditions for withdrawal specified under

that section are met.” /d. at 916-17. In other words, the

limitations period begins to run from the date of complete

withdrawal—in this case, March 1985.

It is true that Thibodo by its terms applies only to ac-

tions arising under 29 U.S.C. § 1383(b), which defines

the conditions for complete withdrawal only in the build-

ing and construction industry.*. The conditions for com-

plete withdrawal in most other industries are defined by

2 § 1383 (b) provides:

§ 1383. Complete Withdrawal...

(b) Building and construction industry.

(1) Notwithstanding subsection (a) of this section, in the

case of an employer that has an obligation to contribute under

a plan for work performed in the building and construction

industry...

(2) A withdrawal occurs under this paragraph if—

(A) an employer ceases to have an obligation to contribute

under the plan, and

(B) the employer—

(i) continues to perform work in the jurisdiction of the

collective bargaining agreement of the type for which con-

tributions were previously required, or

(ii) resumes such work within 5 years after the date on

which the obligation to contribute under the plan ceases,

and does not renew the obligation at the time of the

resumption.

29 U.S.C. § 1383 (b).

§ 1383(a), which governs the present action.* However,

we see no basis for distinguishing an action brought under

§ 1383(a) from one brought under § 1383(b) for the

purpose of applying the statute of limitations set forth in

§ 1451(f). Indeed, the Fund makes no attempt to dis-

tinguish Thibodo from the present action for statute of

limitations purposes. Accordingly, we hold that Thibodo

controls actions arising under § 1383(a) as well as ac-

tions arising under § 1383(b).

Under Thibodo, the period of limitations began running

in March, 1985, when Ferbar effected a complete with-

drawal from the Fund.* Because the Fund filed the

present action on February 9, 1993, more than six years

later, we AFFIRM the summary judgment for Ferbar on

the ground that the action is time-barred.

TROTT, Circuit Judge, concurring.

I concur in Judge Norris’s opinion because I believe

Thibodo compels this result. I believe, however, that

Joyce v. Clyde Sandoz Masonry, 871 F.2d 1119 (D.C.

Cir.) does a better job of answering the questions raised

by these issues, but we do not have authority to ignore

our own decisions.

% § 1383 (a) provides:

(a) Determinative factors.

For purposes of this part, a complete withdrawal from a multi-

employer plan occurs when an employer—

(1) permanently ceases to have an obligation to contribute

under the plan, or

(2) permanently ceases all covered operations under the

plan.

29 U.S.C. § 13883 (a).

*Ferbar never agreed to the installment plan proposed by the

Fund and made no installment payments. As a result, it appears

that no new contract to pay off the withdrawal liability could have

been formed. See 1A Arthur L. Corbin, Corbin on Contracts § 211

(1963). Had such a contract been formed, the Fund might have a

separate claim, with its own statute of limitations, for breach of

that contract.

APPENDIX B

[Filed May 9, 1994]

No. C-93-0489 DLJ

BOARD OF TRUSTEES, BAY AREA LAUNDRY AND _

Dry CLEANING PENSION TRUST FUND,

Plaintiffs,

FERBAR CorP., FERREIRA FARMS, INC., DIABLO

CLEANERS, INC., STEPHE*. BARNES and

ROBERT FERREIRA,

Defendants.

ORDER

Following oral argument and the submission of supple-

mental briefing on December 22, 1993, the parties’ cross-

motions for summary judgment in this matter were before

the Court. Geoffrey White represented plaintiffs; defend-

ants Ferbar Corporation and Stephen Barnes were repre-

sented by William Terheyden of Littler, Mendelson,

Fastiff, Tichy & Mathiason. Having considered the papers

submitted and the applicable law, the Court now finds

the applicable statute of limitations has lapsed, and grants

summary judgment in favor of defendants Ferbar and

Barnes. :

BACKGROUND

I. Factual Background and Procedural History

Plaintiffs bring this action under 29 U.S.C. §§ 1381-

1461, ERISA’s Multi-Employer Pension Plan Amend-

ments Act. It is defendants’ position that they were not

obligated under a collective bargaining agreement to con-

tribute to an employee trust fund. For purposes of this

summary adjudication, however, defendants acknowledge

making contributions for several years to a Fund for the

benefit of three business locations—Superior French

-Laundry, One Hour Martinizing and Diablo Cleaners.

These contributions were discontinued to Diablo Cleaners

in February of 1983, at which time Ferbar no longer

owned Diablo Cleaners. Defendants’ Mot. for Sum.

J. at 2.

In March of 1985, Ferbar ceased altogether to make

contributions to the remaining locations, following sub-

mission of a petition by a majority of the employees work-

ing at Superior French Laundry and One Hour Martiniz-

ing which indicated they no longer wanted union repre-

sentation. Plaintiffs’ Opp’n Mot. at 2; Defendants’ Mot.

for Sum. J. at 2.

On December 12, 1986, plaintiffs sent a notice to Su-

perior French Laundry, asserting a withdrawal liability

obligation of $45,580.80. Plaintiffs’ Opp’n Mot. at 2.

That notice provided that Superior French would be able

to satisfy this debt in one of two ways: Superior French

could (1) make a single lump-sum payment of the total

withdrawal liability no later than sixty days after the

demand; or (2) begin making installment payments of

withdrawal liability pursuant to a schedule set forth by

the Trust Fund, with the first monthly payment due on

February |, 1987. Plaintiffs’ Opp’n Mot. at 2.

Defendants since then have made no payments on the

withdrawal liability. On February 27, 1987, Ferbar re-

quested a review of the plaintiffs’ assessment. Plaintiffs’

Opp’n Mot. at 2. By letter dated April 14, 1987, the

Fund notified Ferbar it was delinquent, and that Ferbar

had sixty days from the date of notice to cure the de-

linquency, or it would be considered in default. /d. Plain-

tiffs filed this lawsuit on February 9, 1993.

Il. Legal Standard

The Federal Rules of Civil Procedure provide for sum-

mary adjudication where “the pleadings, depositions, an-

swers to interrogatories, and admissions on file, together

with the affidavits, if any, show that there is no genuine

issue as to any material fact and that the party is entitled

to a judgment as a matter of law.” Fed. R. Civ. P. 56(e).

In a motion for summary judgment, “[i]f the party

moving for summary judgment meets its initial burden of

identifying for the court those portions of the materials

on file that it believes demonstrate the absence of any

genuine issues of material fact,” the burden of production

then shifts so that “the nonmoving party must set forth,

by affidavit or as otherwise provided in Rule 56, ‘specific

facts showing that there is a genuine issue for trial.’ ”

T.W. Electric Service, Inc. v. Pacific Elec. Contractors

Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (citing Celotex

Corp. v. Catrett, 106 §. Ct. 2548, 2553 (1983)).

In contrast to a plaintiff's motion for summary judg-

ment, a defendant's motion for summary judgment faces

a lighter burden. Because the defendant does not bear

the burden of proof at trial, the defendant need only

point to the insufficiency of the plaintiff's evidence to shift

the burden to the plaintiff to raise genuine issues of fact

as to each claim by substantial evidence. T.W. Electric

at 630, citing Celotex at 2553. If plaintiff fails to raise

a genuine issue of fact, then summary adjudication in

favor of the defendant will be granted.

DISCUSSION

The Court’s decision in this matter depends on an in-

terpretation of 29 U.S.C. § 1451, that portion of the

Multi-Employer Pension Plan Amendment Act defining

the relevant statute of limitations. That section provides:

(f) An action under this section may not be brought

after the later of —

(1) 6 years after the date on which the cause

of action arose, or

(2) 3 years after the earliest date on which the

plaintiff acquired or should have acquired actual

knowledge of the existence of such cause of

action; except that in the case of fraud or con-

cealment, such action may be brought not later

than 6 vears after the date Of discovery of the

existence of such cause of action.

A. The Applicability of 29 U.S.C. § 1451(f)(2)'s Three-

Year Statute of Limitations

Defendants argue that the shorter of the two statutes

of limitations applies—and acts as a bar—to the present

action. This shorter, three year statute of limitations, see

§ 1451(f)(2), applies to instances in which the plaintiff

has actual or constructive knowledge of the accrual of a

cause of action. Notwithstanding the scarcity of case law

invoking § 1451(f)(2) with respect to cases involving

withdrawal liability, it is the conclusion of the Court that

this section applies in the present instance.

It is a canon of statutory construction that, where pos-

sible, a statute be interpreted to give effect to all its com-

ponent parts. Reiter v. Sonotone Corp., 99 S. Ct. 2326,

2331 (1979). To give such meaning to § 1451(f), a

three-year statute is interposed in those instances where

a plaintiff does or should know of the existence of a cause

of action, except in instances of fraud or concealment.

The immediate problem with plaintiffs’ attempt to ap-

ply a six year statute to all aspects of the present action

is reflected in their assertion that the six year statute is

triggered only after their knowledge of defendants’ de-

fault. Specifically, plaintiffs argue that the statute cannot

be found to run until defendants failed to make payment_

following sixty days after they received notice of the de-

linquency. Plaintiffs’ Opp’n at 8. On its face, this argu-

ment twists the very premises of § 1451(f) by combining

10a _

the six year provision of § 1451(f)(1) with the knowl-

edge component of § 1451(f)(2). The argument is, ac-

cordingly, flawed since the six year statute cannot corre-

spond to instances in which such knowledge is conceded.

Plaintiffs attempt variously to justify their assertion of

the inapplicability of the three year statute of limitations

to the present case. Initially, plaintiffs argue § 1451(f) (2)

can be given effect since the section applies to other cases

not involving withdrawal liability. Such application, ac-

cording to plaintiffs, proves that the three year statute is

not rendered meaningless since it would continue to apply

to other causes of action under Subtitle E of Title IV

of ERISA, e.g. reorganizations, mergers, transfers of as-

sets, insolvency and termination. See Plaintiffs’ Sup. Mot.

at 10-11; see also Joyce v. Clyde Sandoz Masonry, 871

F.2d 1119, 1125 (D.C. Cir.), cert. denied, 110 S. Ct. 280

(1989). “The fact that one prong of the general statute

of limitations contained at 29 U.S.C. § 1451(f) may not

have applicability to one particular provision in the sub-

title does not mean that it is surplusage with respect to all

other provisions.” /d.

Plaintiffs further argue that “the ‘discovery’ prong of the

limitations period can also apply directly to some aspects

of collection of withdrawal liability.” Plaintiffs’ Sup. Mot.

at 11. For example, plaintiffs argue that § 1451(f)(2) is

given effect in instances where an employer's inability to

make further payments of withdrawal liability constitutes

a default under Plan regulations allowing acceleration of

withdrawal liability. /d.; see also Joyce, 871 F.2d at 1125.

These arguments are unavailing, for the reason that

plaintiffs have elicited no statutory or case law, nor any

indicia of Congressional intent, supporting such a reading.

While plaintiffs have presented the Court with scenarios in

which the three year statute might alternatively be applied,

and therefore given meaning, plaintiffs have neglected to

proffer any sufficient reasons why § 1451(f)(2) should

lla

be so limited. In the absence of such support, the Court

must assume that Congress meant what it said in deeming

the three year statute in § 1451(f)(2) applicable to all of

Subtitle E of Title IV of ERISA. See § 1451(a)(1).

The three year statute of § 1451(f)(2) thus applies to

the present action. As plaintiffs knew a cause of action

existed no later than 1987, see Defendants’ Sup. Mot. at

4 n.1, 5, yet filed their complaint in excess of three years

of that time, the present action is barred by the applicable

statute of limitations.

B. Even Were the Six Year Statute of Limitations

Deemed Applicable, the Present Case Would Still be

Barred Since the Statute Begins Running at the Date

of the First Omitted Payment

Applying the six year statute of limitations urged by

plaintiffs would not, in any event, affect the Court’s con-

clusion that the present action is statutorily time-barred.

In making the argument, whether primarily or alterna-

tively, that the six year statute applies, the point of dispute

among the parties centers upon the date the statue is

deemed triggered. Defendants argue the statute begins to

run from the moment an employer withdraws from a fund;

plaintiffs argue the statute begins to run once an employer

misses on contribution payments and then fails to cure

that failure following receipt of notice of default.

It is the conclusion of this Court that the answer falls

between these two suggestions. Although the Ninth Circuit

has not answered the question, the running of the six-

year statute is appropriately found to begin at the date

that an employer first fails to make a payment pursuant

to the governing schedule.

This outcome follows a sensible application of the stat-

ute, and the direction of applicable case law. Title 29

U.S.C. § 1399(c)(2) provides:

12a

Withdrawal liability shall be payable in accordance

with the schedule set forth by the pian’s sponsor under

subsection (b)(1) of this section beginning no later

than 60 days after the date of demand notwithstand-

ing any request for review or appeal of determinations

of the amount of such liability or of the schedule.

Here, plaintiffs had set forth a schedule under which

payment was due, at the latest, February 1, 1987. Though

defendants failed to meet that schedule, plaintiffs argue

such non-payment alone cannot give rise to a cause of

action, since the non-payment could subsequently have

been cured.’ It is the opinion of the Court, however, that

there has been sufficient adverse action at the very moment

a payment becomes overdue to trigger the statute of

limitations.

The applicable PBGC regulations distinguish between

the term “overdue” and the term “default.” Title 29

C.F.R. § 2644.2(a) provides that withdrawal liability is

“overdue” if unpaid at the date set forth in the applicable

schedule. “Default,” by contrast, is defined as occurring

sixty days after the employer receives written notification

from the plan’s sponsor that the payment is overdue. See

29 C.F.R. § 2544.2(b)(i). It is when a payment is

overdue, and not in default, that a cognizable injury occurs

which triggers the statute of limitations.

The facts of the present case well illustrate that, upon

the first payment becoming overdue, there was adverse

action. In their December 12, 1986 letter to defendants,

plaintiffs wrote that defendants would be incurring inter-

? Plaintiffs also argue that “the Plan must allow a minimum of

sixty days after the date of the demand for the employer to com-

mence making installment payments of withdrawal liability under

29 U.S.C. § 1399(c) (2).” Plaintiffs’ Sup. Mot. at 4-5. Plaintiffs

concede the absence of any supporting case law for this position.

Further, § 1399 merely provides that “[w]ithdrawal liability shall

be payable . . . no later than 60 days after the date of demand... .”

29 U.S.C. § 1399(c) (2) (emphasis added).

13a

est charges if they failed to timely make the first monthly

payment. See Defendants’ Sup. Mot. at 8-9. Further,

the letter stated that defendants might “incur liability for

liquidated damages and other sums assessed in other delin-

quency provisions of the Plan’s Trust agreement; and your

obligation may be subject to such additional steps as the

Trustees may require in accordance with the law.” /d. at

9: Barnes Decl. at Exh. A. Thus, plaintiffs were adversely

affected when the first monthly payment was not made by

the February 1 date. At that time, then, plaintiffs’ cause

of action arose and, concomitantly, the statute of limita-

tions began running.

This holding is in accord with the holdings of those

decisions involving the issue in question. In Joyce, supra,

the District of Columbia Circuit held that a cause of action

arose not on the date of the employer’s withdrawal from a

fund, but from the time a plan demanded payment and

the employer refused to comply with the demand.

When, and only when, the employer fails to meet that

demanded schedule of payments (and fails to cure

that failure) has the plan been harmed (and thus

becomes entitled to maintain its claim against the

employer ).

871 F.2d at 1124. See also ILGWU National Retirement

Fund v. Smart Modes of Calif., Inc., 735 F. Supp. 103

(S.D.N.Y. 1990) (characterizing Joyce as a “well-reasoned

and thorough opinion”). Similarly, in Chicago Truck

Drivers Pension Fund v. Van Vorst Indus., 800 F. Supp.

587 (N.D. Ill. 1992), aff'd, Central States, Southeast &

Southwest Areas Pension Fund v. Navco, 3 F.3d 167 (7th

Cir. 1993), the court concluded that the claim accrued

at the time the first payment was due. Numerous unpub-

lished opinions are also in accord. See Debreceni v. West-

fair Transport Corp., 1988 U.S. Dist. LEXIS 9527 (D.

Mass. 1988); Central States, Southeast & Southwest Areas

l4a

Pension Fund v. Cherry Branch Properties, 1991 U.S. Dist.

LEXIS 14350 (N.D. Ill. 1991).*

Plaintiffs argue the accrual of a cause of action cannot

be designated as the date of the first missed payment,

since such a decision would “create serious impediments

va because of minor delinquencies during the administra-

tive process.” Plaintiffs’ Sup. Mot. at 8. Plaintiffs pose

the specter of an employer who misses his first installment

payment, then timely pays installments for the next six

years, and thereafter stops all further payments. See id.

Plaintiffs argue that if the first missed payment triggers

the statute of limitations, then the fund would be barred

from attempting to collect the succeeding, owed payments.

This concern is unfounded, however. While the first,

missed payment in the hypothetical would be time-barred,

a new cause of action would have arisen from the time

the payments were stopped.

. The parties suggest the Court adopt other alternatives

in determining the appropriate trigger for withdrawal lia-

bility. The breadth of these proffered solutions stems

largely from a dictum in a Ninth Circuit opinion, which

inaccurately depicts the degree of difference among courts

addressing the very question now considered. In Brent-

wood Financial v. Teamsters Pension Trust Fund, 902

F.2d 1456 (9th Cir. 1990) (declining to adopt a theory

when the statute of limitations was triggered for with-

drawal liability actions), the Court wrote:

Although this court has not considered the question

of when the six-year statute of limitations begins to

run, other courts have addressed and split on this

issue. The Seventh Circuit concluded that the limita-

tions period begins to run when a ‘complete with-

* Few decisions appear to hold to the contrary. But see, €.9.,

Connors v. Peles, 724 F. Supp. 1588, 1578-79 (W.D. Pa. 1989)

(finding, without analysis, that “Plaintiffs’ cause of action accrued

on... the date at which [defendant] no longer became obligated

to contribute to the Pension Fund.”).

15a

drawal’ occurs. See Trustees of Ironworkers Local

473 Pension Trust v. Allied Products Corp., 872

F.2d 208, 213 (7th Cir.), cert. denied, 110 S.Ct.

143 (1989). The District of Columbia Circuit held,

however, that the limitation period begins to run

from the time the employer first fails to make the

withdrawal payment demanded by the Plan. See

Joyce v. Clyde Sandoz Masonry, 871 F.2d 1119,

1122 (D.C.Cir.), cert. denied, 110 S. Ct. 280

(1989).

Defendants wield this language in arguing that the

statute of limitations began running when defendants

withdrew from the Fund. Plaintiffs, however, argue cor-

rectly that the Ninth Circuit wrongly framed the issue by

inaccurately citing a Seventh Circuit case for the proposi-

tion that the limitations period begins to run when a

“complete withdrawal” occurs. Plaintiffs’ Opp’n Mot. at

7. That referenced opinion, /ron Workers, supra, does

not once cite section 1451(f) or contain any discussion

of a statute of limitations; instead, the opinion examines

an employer’s date of withdrawal from a fund only in

order to ascertain the amount of withdrawal liability in-

curred. Cf. Cherry Branch Properties, supra, 1991 U.S.

Dist. LEXIS 14350 (unpublished) (“Jronworkers . . .

does not confront the issue. . . . Thus we find the Ninth

Circuit’s recent discussion of the two cases unenlightening

[since] its recitation of the Seventh Circuit’s conclusion

.. . is flatly wrong.”). Other than the unelaborated asser-

tion “that how the Ninth Circuit reads Ironworkers Local

473 Pension Trust controls the parties in the instant case”,

Reply at 2, defendants do not defend the accuracy of the

Ninth Circuit’s characterization of Jron Workers.

Apart from the lack of supporting case law, it is clear

that the date of withdrawal would be an inappropriate

point at which to begin the running of the statute of limi-

tations for withdrawal liability cases. Defendants argue

that “{if] the statute of limitations is not deemed to run

l6a

from the time of withdrawal. . ., there is no incentive for

a trust fund to make its calculations and attempt to ob-

tain payment. It could take as long as it wants to impose

the liability if the period of limitations does not begin to

run until the imposition is made and the payment not

made .. . and a company that withdrew may be hit with

withdrawal liability many years after withdrawal and after

relying on the fact that it owed no withdrawal liability as

it never heard from the trust fund.” Defendants’ Sup.

Mot. at 6.

This argument is unpersuasive. Most important, de-

fendants have failed to cite any evidence that Congress

actually intended that the statute of limitations would

be triggered at the moment of withdrawal. Further, de-

fendants’ recitation of the evil effects which would ensue

from setting the trigger date after the time of withdrawal

is suspect, as there is not an incentive for a trustee to

postpone making a claim of withdrawal liability. To the

contrary, it is a trustee’s statutory duty to timely protect

the interests of the Plan. See § 1399(b)(1) (providing

that a fund, [a]s soon as practicable after an employer's

complete . . . withdrawal” (1) calculate the employer's

withdrawal liability, (2) set forth a schedule of payments,

and (3) demand that the employer make payments pur-

suant to that schedule). Moreover, there is obvious risk

involved in the event a trustee delays collection, and nec-

essary cost incurred by collecting later rather than sooner.

Finally, to the extent an employer is concerned about

determining the existence or extent of future withdrawal

liability, then that employer may at his own behest make

such inquiry at the onset of his withdrawal. Defendants’

concerns are thus unfounded that, if the statute is not

triggered at the moment of withdrawal, a trustee will delay

collection of payment in order to extend the statute of

limitations.

Plaintiffs’ argument as to when the statute of limitations

should be deemed triggered is similarly unpersuasive.

Plaintiffs suggest that failure to make the payment triggers

17a

liability only with respect to interest charges, but that no

default can occur until an employer fails to make pay-

ment and, after receiving notice of the delinquency, fails

to cure that delinquency within a specified period of time.

Pleintiffs’ Opp’n at 8. As applied to the present case,

plaintiffs argue that a cause of action by a fund to collect

withdrawal liability does not begin until (1) the fund has

assessed liability against the employer; (2) the employer

has failed to make a payment due on the schedule; and

(3) the employer has failed to cure its delinquency within

60 days after notice by the fund. /d. Under this theory,

since plaintiffs did not give notice to defendant of its

delinquency until a letter dated April 14, 1987, defend-

ants still had 60 days from that date to cure their failure

to pay, thereby placing the expiration date of the statute

of limitations on June 14 1993. Plaintiffs’ Opp’n at 1.

Plaintiffs argue that “the text of the Assessment plainly

states, even though the monthly payments are to begin on

February 1, failure to make the payment triggers liability

for interest charges, but no ‘default’ can occur until the

Defendants fail to make payment following 60 days after

receiving notice of the delinquency.” Plaintiffs’ Opp’n at

Plaintiffs’ interpretation is unavailing for various rea-

sons. First, it is unsupported by case law. Plaintiffs latch

on to language in Joyce that “[the] uncured failure to

pay the sum demanded [gives] rise to the cause of action.”

871 F.2d at 1122 (emphasis added). There, however, the

District of Columbia Circuit continued that “the plan

sponsor’s demand for payment triggers the employer's

obligation to pay, and the employer’s failure to make the

scheduled payment in turn provides the predicate for a

plan sponsor’s suit. That is to say, the failure to pay

gives rise to a cause of action.” /d. at 1122-23. Most

significantly, the holding of that case does not postpone

the trigger for the statute of limitations in the manner

sought by plaintiffs.

18a

Similarly, Navco, supra, is also unsupportive of plain-

tiffs’ position. Plaintiffs cite the language of Navco that

“[aJs soon as the 60-day grace period provided by

§ 1399(c)(2) expired, the funds could have commenced

suit. They had been injured. That is the standard defini-

-tion of the ‘accrual’ of a claim.” 3 F.3d at 171. The

Court continued, however, that “the claim accrues as soon

as payment becomes overdue.” /d. at 172. Moreover,

there, too, the court did not in its holding expressly post-

pone the triggering of the statute of limitations.

No case has been cited to the Court in which a court

held the staute of limitations of § 1451(f) was tolled

until after default and subsequent expiration of a desig-

nated time period. This absence is understandable, since

the predictability sought by implementation of a statute of

limitation would be undercut by such an interpretation.

Allowing the grace period suggested would enable an

injured fund to toll a statute of limitations by virtue -of

having neglected to formally notify an employer of a

forthcoming default, though an owing payment was al-

ready overdue. The absence of case law supporting plain-

tiffs’ position is also understandable since, whether set

_ at three or six years, the governing statute of limitations

is a lengthy one, for which resort to extenuating methods-

of tolling has proved seldom necessary.

In conclusion, then, even were the six year statute to

apply, the present action would be barred. Defendants

were obligated—and failed—to make the first required

withdrawal liability payment on February 1, 1987, a date

preceding the filing of the lawsuit by more than six years.

See Defendants’ Mot. for Sum. J. at 7; Plaintiffs’ Opp’n

at 8. Accordingly, the present action is time-barred, and

summary judgment is appropriately granted in favor of

defendant Ferbar Corporation and defendant Stephen

Barnes.

CONCLUSION

For the foregoing reasons, the Court Orders as follows:

The motion for summary judgment submitted on behalf

19a

of defendants Ferbar Corporation and Stephen Barnes is

GRANTED. Partial judgment shall be entered accord-

ingly. A status conference shali occur among the re-

maining parties to this action on May 25, 1994 at 8:30

a.m.; all other dates currently scheduled are hereby

vacated.

IT IS SO ORDERED.

Dated: May 9, 1994.

/s/ D. Lowell Jensen

D. LOWELL JENSEN

United States District Judge

20a

APPENDIX C

NOT FOR PUBLICATION

[Filed May 13, 1996]

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 94-15976

D.C. No. CV-93-00489-DLJ

Bay AREA LAUNDRY & Dry CLEANING PENSION

Trust FunD,

Plaintiff-A ppellant,

Vv.

FERBAR CORPORATION OF CALIFORNIA, INC., a California

Corporation; FERREIRA Farms, INc., a California

corporation; STEPHEN J. Barnes, end Rosert J.

FERREIRA Defendants-A ppellees.

ORDER

Before: NORRIS, BEEZER, and TROTT, Circuit Judges

The panel, as constituted above, has voted unanimously

to deny the petition for rehearing. Judges Beezer and

Trott have voted to reject the suggestion for a rehearing

en banc, and Judge Norris has recommended the same.

The full court has been advised of the suggestion for

en banc rehearing and no judge of the court has requested

a vote on the suggestion for rehearing en banc. Fed. R.

App. P. 35(b).

The petition for rehearing is DENIED, and the sugges-

tion for a rehearing en banc is REJECTED.

2la

APPENDIX D

UNITED STATES COURT OF APPEALS

NINTH CIRCUIT

Nos. 93-55079, 93-55080

BOARD OF TRUSTEES OF THE CONSTRUCTION LABORERS

PENSION TRUST FOR SOUTHERN CALIFORNIA,

Plaintiff-Appellant,

Vv.

RuSSELL L. TurBpopo; Gary R. THiBopo;

THIBODO CONSTRUCTION Co. INC.;

DRAINAGE CONSTRUCTION Co.,

Defendants-A ppellees.

BOARD OF TRUSTEES OF THE CONSTRUCTION LABORERS

PENSION TRUST FOR SOUTHERN CALIFORNIA,

Plaintiff-A ppellant-A ppellee,

Vv.

RUSSELL L. THIBODO; THIBODO CONSTRUCTION Co. INC.,

Defendants-A ppellees-A ppellants.

Appeals from the United States District Court

for the Central District of California

Argued and Submitted June 8, 1994

Decided Sept. 12, 1994

Before: FLETCHER, CANBY and HALL, Circuit

Judges.

CANBY, Circuit Judge:

The Board of Trustees of the Construction Laborers’

Pension Trust for Southern California appeals the district

22a

court’s dismissal of this action in which the Trustees

sought to enforce an arbitration award. The arbitrator

had determined that Russell Thibodo was personally liable

to the Trust for ERISA withdrawal liability incurred as a

result of his construction company’s complete withdrawal

from the Construction Laborers Pension Plan in 1983.

The district court, however, held that the Trustees’ action

was barred by ERISA’s six-year statute of limitations.

We reverse and remand to the district court.’

STATUTORY BACKGROUND

ERISA, as modified by the Multiemployer Pension

Plan Amendments Act of 1980 (MPPAA), is designed to

ensure the financial integrity of multiemployer pension

funds. See generally Joyce v. Clyde Sandoz Masonry, 871

F.2d 1119 (D.C.Cir.), cert. denied, 493 U.S. 918, 110

S.Ct. 280, 107 L.Ed.2d 260 (1989) One mechanism for

attaining this goal is the Act’s requirement that employers

who withdraw from multiemployer plans remain liable

for a statutory share of the plan’s “unfunded vested bene-

fits.” See 29 U.S.C. $§ 1381, 1399; Joyce, 871 F.2d at

1120.

Much of the confusion surrounding this case is due to

the fact that, at least with regard to the construction in-

dustry, when “complete withdrawal” occurs is determined

differently under two different sections. The first deter-

mination under 29 U.S.C. § 1383(b)(2) is for the

purpose of establishing whether the employer has, in

fact, withdrawn and liability for continuing contribu-

tions has ended. The second determination is for the

purpose of establishing the amount of withdrawal lia-

bility. The former determination is made under sections

1383(b)(2)(A) and (B). An employer is deemed to

have completely withdrawn from the plan if:

1 Thibodo cross-appeals the district court’s denial of his motion

for attorneys’ fees. In light of our disposition, we dismiss the

cross-appeal as moot.

23a

(A) [the] employer ceases to have an obligation to

contribute under the plan, and

(B) the employer—

(i) continues to perform work in the jurisdic-

tion of the collective bargaining agreement of

the type for which contributions were previously

required, or

(ii) resumes such work within 5 years after the

date on which the obligation to contribute under

the plan ceases, and does not renew the obliga-

tion at the time of the resumption,

29 U.S.C. §§ 1383(b)(2)(A), (B). It may readily be

seen that conditions (A) and (B) may not be met for

up to 5 years after an employer’s duty to make regular

contributions to the fund has ceased, Indeed, as we will

see, the employer in the present case did not effectuate

“complete withdrawal” until two years after it ceased

contributions to the plan.

Different statutory provisions, however, determine the

“date of complete withdrawal” for purposes of calculating

the amount of withdrawal liability. For that purpose, the

date of “complete withdrawal” is deemed to be the “date

of the cessation of the obligation to contribute.” 29

U.S.C. § 1383(e). This date, or, more accurately, the

year in which this date falls, is instrumental in determin-

ing the amount of the employer’s withdrawal liability. See

29 U.S.C. § 1391(b)(2) (amount of unfunded vested

benefits that existed on the last date of the plan year pre-

ceding the year in which the employer withdrew is the

amount for which the employer owes a contribution).

Civil actions to collect unpaid withdrawal liability

amounts may not be brought after the later off: (1) six

years after the date on which the cause of action arose;

or (2) three years after the earliest date on which the

plaintiff acquired or should have acquired actual knowl-

edge of the existence of such cause of action, with one

—

24a

exception not relevant to this case. See 29 U.S.C.

§ 1451(f).

FACTUAL BACKGROUND

The Trust is the plan sponsor for the Construction

Laborers Pension Plan (the Plan). Thibodo Construc-

tion Co., Inc. contributed to the Plan pursuant to its col-

lective bargaining agreement (CBA) with the Laborers

Union until June 15, 1983, the date upon which the CBA

expired. In early 1984, the Trustees believed that the

company had withdrawn from the Plan and therefore

owed withdrawal liability as provided in ERISA under

the MPPAA. They sent the company an assessment notif-

ication and payment schedule. The company disputed the

assessment, however, and in July 1984 the Trustees

agreed that the assessment was erroneous because the

company had not employed any laborers since the ex-

piration of its CBA with the union. See 29 U.S.C.

§ 1383(b)(2)(B). The Trustees warned, however, that

the company would owe withdrawal liability if it resumed

hiring laborers.

In the Spring of 1985, the company resumed hiring

laborers to perform work within the jurisdiction of the

Plan. When the Trustees became aware of this resump-

tion, they reinstated the company’s withdrawal liability

assessment, but the company made no payments to the

Plan in response to the assessment. Nothing more tran-

spired until April 1986, when the Trustees notified the

company that it must begin making payments on the as-

sessment within 60 days. Having received no payments

from the company, the Trustees initiated this lawsuit in

the district court on June 20, 1989, six years and five

days after the expiration of the company’s CBA.

The district court agreed to stay its proceedings so that

the parties could submit the following issues for arbitra-

tion: (1) whether the company had completely with-

drawn from the plan in 1983; and (2) whether Thibodo,

25a

the company’s sole shareholder, was personally and indi-

vidually liable for the company’s withdrawal liability.

The arbitrator concluded that the company had with-

drawn from the plan on June 15, 1983,” and that Thibodo

was personally liable for the company’s withdrawal

liability.*

After the arbitrator’s decision, the Trustees moved the

district court to enforce the arbitration award. In opposi-

tion, Thibodo asserted that the Trustees’ district court

action had been filed beyond the limitations period pro-

vided in ERISA. The district court agreed with Thibodo

and dismissed the action.

DISCUSSION

We must decide when the statute of limitations begins

to run for actions to recover withdrawal liability payments

under ERISA and the MPPAA. We hold that, for actions

to recover withdrawal liability incurred as a result of com-

2 The Trustees dispute this determination by arguing that Thibodo

had a legal obligation to continue payments to the plan for a short

time beyond the CBA’s expiration on June 15, 1983. See 29 U.S.C.

§ 1383(e) (date of complete withdrawal is the date that the em-

ployer ceased to have an obligation to contribute to the plan).

Thus, they argue, the “date of complete withdrawal” was later

than June 20, 1983. If this argument were accepted, then the

Trustees’ action would be timely regardless of whether the limita-

tions period began to run on the “date of complete withdrawal”

as defined in § 1383 (e).

We need not address the question of when Thibodo’s obligation

to contribute ceased because we conclude that the limitations period

does not run from the date of complete withdrawal as defined in

§ 1383(e). For the same reason we need not address the parties’

contentions pertaining to: (1) whether the arbitrator improperly

decided an issue not before it when it determined an exact date

on which Thibodo withdrew; and (2) whether the district court

should have deferred to the arbitrator’s determination of the date

of complete withdrawal.

We express no opinion regarding the correctness of this

determination.

26a

plete withdrawal under 29 U.S.C. § 1383(b), the limita-

tions period begins to run from the date that the conditions

for withdrawal specified under that section are met. In this

case, that date fell sometime in the Spring of 1985, when

the company resumed work of the type for which contribu-

tions were previously requirea.

The district court concluded that the limitations period

begai running on June 15, 1983, which the arbitrator

determined to be the “date of complete withdrawal” as de-

fined in § 1383(e).* We repudiate that conclusion be-

cause, under the district court’s approach, the limitations

period was running against the Trustees before they ac-

quired a cause of action against Thibodo. For purposes of

limitations, Thibodo’s complete withdrawal from the Plan

occurred in the Spring of 1985 when his company resumed

employing laborers, because only then were the statutory

conditions for complete withdrawal met. 29 U.S.C.

§ 1383(b)(2). Before that time, the Trustees had no

right to assess or receive withdrawal liability payments

from Thibodo. Indeed, the Trustees realized as much in

1984 when they withdrew their original assessment. It is

anomalous to conclude that the limitations period of

§ 1451(f) was running against the Trustees before they

had a right to sue.

For the purpose of calculating the amount of withdrawal

liability under § 1391, it is useful to fix the “date of com-

*We note that Thibodo has been unable to cite to any federal

court opinion in which this approach has been adopted. His asser-

tion that the Seventh Circuit adopted this approach in Trustees of

Iron Workers Local 473 Pension Trust v. Allied Prods. Corp., 872

F.2d 208 (7th Cir.), cert. denied, 493 U.S. 847, 110 S.Ct. 143, 107

L.Ed.2d 102 (1989), is erroneous. That case says nothing about

when the limitations period for withdrawal liability actions begins

to run. Our statement to the contrary in Brentwood Financial

Corp. v. Western Conference of Teamsters Pension Trust Fund,

902 F.2d 1456, 1459 (9th Cir.1990), was incorrect. See Central

States, Southeast and Southwest Areas Pension Fund v. Navco,

3 F.3d 167, 170-71 (7th Cir.1998), cert. denied —— US. ——,

114 S.Ct. 1062, 127 L.Ed.2d 382 (1994).

27a

plete withdrawal” as the date when the duty of regular

contribution ceased. See 29 U.S.C. § 1383(e); Joyce,

871 F.2d at 1123. But in the case of a withdrawal in the

construction industry, selection of such a date may involve

a considerable period of relation back, as it does in the

present case. The fact that it is useful to relate back for

purposes of calculation of liability, however, does not

mean that it is useful to relate back for purposes of the

Statute of limitations. Limitations run from “the date on

which the cause of action arose.” 29 U.S.C. § 1451(f)(1).

We conclude, therefore, that the limitations period of

§ 1451(f) begins to run from the date on which the condi-

tions for complete withdrawal specified in § 1383(b)(2)

have been met—in this case, the Spring of 1985. Be-

cause the Trustees’ action was initiated within six years

of the Company’s resumption of covered work, their action

is timely and the district court erred in dismissing it.

We recognize that our approach differs from that taken

by the D.C. Circuit. In Joyce, that Circuit concluded that

the limitations period does not begin to run until the plan

makes a demand upon the employer for withdrawal liabil-

ity payments and the employer refuses that demand.’

Joyce, 871 F.2d at 1124; see also ILGWU Nat'l Retire-

ment Fund v. Smart Modes of Cal., Inc., 735 F.Supp.

103, 106 (S.D.N.Y.1990) (adopting Joyce approach in

§ 1383(a) withdrawal liability action). In our view, that

approach improperly places the running of the limitations

period in the control of the plaintiff.

In deciding that the limitations period does not begin to

run until a demand for payments goes unmet, the District

of Columbia Circuit was influenced by the difficulty of

determining when an employer had “permanently” ceased

to have an obligation to contribute or “permanently”

5 The District of Columbia Circuit’s approach would not aid

Thibodo, of course, because it selects a date even later than the

one we choose.

28a

ceased all covered operations, within the meaning of

§ 1383(a). Joyce, 871 F.2d at 4123-24. Whatever the

difficulties might be under that subsection, we conclude

that the construction industry provisions of § 1383(b) do

not lead to debilitating uncertainty concerning whether an

employer has completely withdrawn. Determining whether

an employer continues to perform work of the type for

which contributions were required, or resumes such work

within 5 years is relatively straightforward. See 29 U.S.C.

1383(b)(2)(B).° We see no reason, therefore, to choose

a date of limitations that is in the control of the plaintiff

and, theoretically at least, might not be triggered for many

years." We also consider our rule to involve a more nat-

ural construction of § 1451(f), which sets the limitation

as “6 years after the date on which the cause of action

arose, or 3 years after the earliest date on which the

plaintiff acquired or should have acquired knowledge of

the existence of such cause of action.” There is little

reason for the second clause if the cause of action does not

come into existence until demand for payment is made

and refused.

For these reasons, we decline to adopt the D.C. Circuit’s

approach—at least with respect to § 1383(b) withdraw-

als—and hold that for actions to collect withdrawal liabil-

ity incurred under 29 U.S.C. § 1383(b), the limitations

period found in 29 U.S.C. § 1451(f) begins to run on

the date that the statutory conditions for withdrawal are

ing when an employer has “permanently” ceased covered operations

under § 1383(a) warrants adoption of the D.C. Circuit’s approach

in suits seeking recovery of withdrawal liability incurred under

that section.

7 The District of Columbia Circuit opined that there were several

incentives for plan sponsors to act promptly in demanding payment

of withdrawal liability. Joyce, 871 F.2d at 1126-27. There may be,

but contro] still remains with the plaintiff.

29a

met. Because the Trustees brought this action well within

six years after that date, it is not time-barred.

No. 93-55079 REVERSED and REMANDED.

No. 93-55080 DISMISSED.

30a

APPENDIX E

STATUTES AND REGULATIONS INVOLVED

The Employee Retirement Income Security Act of 1974

(ERISA), as amended by the Multiemployer Pension

Plan Amendments Act of 1980 (MPPAA), provides in

relevant part as follows:

§ 1132. Civil enforcement

(a) Persons empowered to bring a civil action

A civil action may be brought—

(3) by a participant, beneficiary, or fiduciary

(A) to enjoin any act or practice which

violates any provision of this subchapter or

the terms of the plan, or

(B) to obtain other appropriate equitable

relief

(i) to redress such violations or

(ii) to enforce any provisions of this

subchapter or the terms of the plan;

(g) Attorney’s fees and costs; awards in actions in-

volving delinquent contributions

(1) In any action under this subchapter (other

than an action described in paragraph (2)) by

a participant, beneficiary, or fiduciary, the court

in its discretion may allow a reasonable attor-

ney’s fee and costs of action to either party.

(2) In any action under this subchapter by a

fiduciary for or on behalf of a plan to enforce

section 1145 of this title in which a judgment in

3la

favor of the plan is awarded, the court shall

award the plan—

(A) the unpaid contributions,

(B) interest on the unpaid contributions,

(i) interest on the unpaid contribu-

tions, or

(ii) liquidated damages provided for

under the plan in an amount not in

excess of 20 percent (or such higher

percentage as may be permitted under

Federal or-State law) of the amount

determined by the court under sub-

paragraph (A),

(D) reasonable attorney's fees and costs of

the action, to be paid by the defendant, and

(E) such other legal or equitable relief as

the court deems appropriate. For purposes

of this paragraph, interest on unpaid con-

tributions shall be determined by using the

rate provided under the plan, or, if none,

the rate prescribed under section 6621 of

title 26.

§ 1381. Withdrawal liability established; criteria and

definitions

(a) If an employer withdraws from a multiem-

ployer plan in a complete withdrawal or a partial

withdrawal, then the employer is liable to the plan

in the amount determined under this part to be the

withdrawal liability.

32a

§ 1383. Complete withdrawal

(a)

Determinative factors

For purposes of this part, a complete withdrawal from

a multiemployer plan occurs when an employer—

(b)

(1) permanently ceases to have an obligation

to contribute under the plan, or

(2) permanently ceases all covered operations

under the plan.

Building and construction industry

(1) Notwithstanding subsection (a) of this sec-

tion, in the case of an employer that has an

obligation to contribute under a plan for work

performed in the building and construction in-

dustry, a complete withdrawal occurs only as

described in paragraph (2), if—

(A) substantially all the employees with

respect to whom the employer has an obli-

gation to contribute under the plan perform

work in the building and construction in-

dustry, and

(B) the plan—

(i) primarily covers employees in the

building and construction industry, or

(ii) is amended to provide that this

subsection applies to employers de-

scribed in this paragraph.

(2) A withdrawal occurs under this paragraph

if-—

(A) an employer ceases to have an obliga-

tion to contribute under the plan, and

(B) the employer—

33a

(i) continues to perform work in the

jurisdiction of the collective bargain-

ing agreement of the type for which

contributions were previously re-

quired, or

(ii) resumes such work within 5 years

after the date on which the obligation

to contribute under the plan ceases,

and does not renew the obligation at

the time of the resumption.

(3) In the case of a plan terminated by mass

withdrawal (within the meaning of section

1341a(a)(2) of this title), paragraph (2) shall

be applied by substituting “3 years” for “5

years” in subparagraph (B) (ii).

(1) Notwithstanding subsection (a) of this sec-

tion, in the case of an employer that has an

obligation to contribute under a plan for work

performed in the entertainment industry, pri-

marily on a temporary or project-by-project

basis, if the plan primarily covers employees in

the entertainment industry, a complete with-

drawal occurs only as described in subsection

(b)(2) of this section applied by substituting

“plan” for “collective bargaining agreement” in

subparagraph (B) (i) thereof.

(2) For purposes of this subsection, the term

“entertainment industry” means—

(A) theater, motion picture (except to the

extent provided in regulations prescribed

by the corporation), radio, television,

sound or visual recording, music, and

dance, and

34a

(B) such other entertainment activities as

the corporation may determine to be ap-

propriate.

(3) The corporation may by regulation exclude

a group or class of employers described in the

preceding sentence from the application of this

subsection if the corporation determines that

such exclusion is necessary—

(A) to protect the interest of the plan’s

participants and beneficiaries, or

(B) to prevent a significant risk of loss to

the corporation with respect to the plan.

(4) A plan may be amended to provide that

this subsection shall not apply to a group or

class of employers under the plan.

(d) Other determinative factors

(1) Notwithstanding subsection (a) of this sec-

tion, in the case of an employer who—

(A) has an obligation to contribute under

a plan described in paragraph (2) primar-

ily for work described in such paragraph,

and

(B) does not continue to perform work

within the jurisdiction of the plan,

a complete withdrawal occurs only as de-

scribed in paragraph (3).

(2) A plan is described in this paragraph if

substantially all of the contributions required

under the plan are made by employers primar-

ily engaged in the long and short haul trucking

industry, the household goods moving industry,

or the public warehousing industry.

(3) A withdrawal occurs under this paragraph

if—

35a

(A) an employer permanently ceases to

have an obligation to contribute under the

plan or permanently ceases all covered

operations under the plan, and

(B) either—

(i) the corporation determines that

the plan has suffered substantial dam-

age to its contribution base as a re-

sult of such cessation, or

(ii) the employer fails to furnish a

bond issued by a corporate surety com-

pany that is an acceptable surety for

purposes of section 1112 of this title,

or an amount held in escrow by a

bank or similar financial institution

satisfactory to the plan, in an amount

equal to 50 percent of the withdrawal

liability of the employer.

(4) If, after an employer furnishes a bond or

escrow to a plan under paragraph (3)(B) (ii),

the corporation determines that the cessation of

the employer’s obligation to contribute under

the plan (considered together with any cessa-

tions by other employers), or cessation of cov-

ered operations under the plan, has resulted in

substantial damage to the contribution base of

the plan, the employer shall be treated as hav-

ing withdrawn from the plan on the date on

which the obligation to contribute or covered

operations ceased, and such bond or escrow shall

be paid to the plan. The corporation shall

not make a determination under this paragraph

more than 60 months after the date on which

such obligation to contribute or covered opera-

tions ceased.

(5) If the corporation determines that the em-

ployer has no further liability under the plan

either—

36a

(A) because it determines that the con-

tribution base of the plan has not suffered

substantial damage as a result of the ces-

sation of the employer’s obligation to con-

tribute or cessation of covered operations

(considered together with any cessation of

contribution obligation, or of covered op-

erations, with respect to other employers),

(B) because it may not make a determina-

tion under paragraph (4) because of the

last sentence thereof,

then the bond shall be cancelled or the escrow

refunded.

(6) Nothing in this subsection shall be con-

strued as a limitation on the amount of the

withdrawal liability of any employer.

(e) Date of complete withdrawal

For purposes of this part, the date of a complete

withdrawal is the date of the cessation of the obliga-

tion to contribute or the cessation of covered opera-

tions.

(f) Special liability withdrawal rules for industries

other than construction and entertainment industries;

procedures applicable to amend plans

(1) The corporation may prescribe regulations

under which plans in industries other than the

construction or entertainment industries may be

amended to provide for special withdrawal lia-

bility rules similar to the rules described in

subsections (b) and (c) of this section.

(2) Regulations under paragraph (1) shall per-

mit use of special withdrawal liability rules—

(A) only in industries (or portions there-

of) in which, as determined by the cor-

37a

poration, the characteristics that would

make use of such rules appropriate are

clearly shown, and

(B) only if the corporation determines, in

each instance in which special withdrawal

liability rules are permitted, that use of

such rules will not pose a significant risk to

the corporation under this subchapter.

§ 1391. Methods for computing withdrawal liability

(a) Determination of amount of unfunded vested

benefits allocable to employer withdrawn from plan

The amount of the unfunded vested benefits allocable

to an employer that withdraws from a plan shall be

determined in accordance with subsection (b), (c),

or (d) of this section.

(b) Factors determining computation of amount of

unfunded vested benefits allocable to employer with-

drawn from plan

(1) Except as provided in subsections (c) and

(d) of this section, the amount of unfunded

vested benefits allocable to an employer that

withdraws is the sum of—

(A) the employer’s proportional share of

the unamortized amount of the change in

the plan’s unfunded vested benefits for plan

years ending after September 25, 1980,

as determined under paragraph (2),

(B) the employer’s proportional share, if

any, of the unamortized amount of the

plan’s unfunded vested benefits at the end

of the plan year ending before September

ahi 1980, as determined under paragraph

(3); and

38a

the unamortized amounts of the reallocated

unfunded vested benefits (if any) as de-

termined under paragraph (4).

If the sums of the amounts determined with

respect to an employer under paragraphs (2),

(3), and (4) is negative, the unfunded vested

benefits allocable to the employer shall be zero.

(2)(A) An employer’s proportional share of

the unamortized amount of the change in the

plan’s unfunded vested benefits for plan years

ending after September 25, 1980, is the sum

of the employer’s proportional shares of the

unamortized amount of the cha-ge in unfunded

vested benefits for each plan year in which the

employer has an obligation to contribute under

the plan ending—

(i) after such date, and

(ii) before the plan year in which the with-

drawal of the employer occurs.

(B) The change in a plan’s unfunded vested

benefits for a plan year is the amount by

which—

(i) the unfunded vested benefits at the end

of the plan year; exceeds

(ii) the sum of—

(1) the unamortized amount of the

unfunded vested benefits for the last

plan year ending before September 26,

1980, a d

(Il) the sum of the unamortized

amounts of the change in unfunded

vested benefits for each plan year end-

ing after September 25, 1980, and

preceding the plan year for which the

change is determined.

39a

a plan’s unfunded vested benefits with respect

to a plan year is the change in unfunded vested

benefits for the plan year, reduced by 5 percent

of such change for each succeeding plan year.

(D) The unamortized amount of the unfunded

vested benefits for the last plan year ending

before September 26, 1980, is the amount of

the unfunded vested benefits as of the end of

that plan year reduced by 5 percent of such

amount for each succeeding plan year.

(E) An employer’s proportional share of the

unamortized amount of a change in unfunded

vested benefits is the product of—

(i) the unamortized amount of such

change (as of the end of the plan year

preceding the plan year in which the em-

ployer withdraws); multiplied by

(ii) a fraction—

(1) the numerator of which is the sum

of the contributions required to be

made under the plan by the employer

for the year in which such change

arose and for the 4 preceding plan

years, and

(II) the denominator of which is the

sum for the plan year in which such

“change arose and the 4 preceding

plan years of all contributions made

by employers who had an obligation

to contribute under the plan for the

plan year in which such change arose

reduced by the contributions made in

such years by employers who had

40a

withdrawn from the plan in the year

in which the change arose.

(3) An employer’s proportional share of the

unamortized amount of the plan’s unfunded

vested benefits for the last plan year ending be-

fore September 26, 1980, is the product of —

(A) such unamortized amount; multiplied

by—

(B) a fraction—

(i) the numerator of which is the

sum of all contributions required to

be made by the employer under the

plan for the most recent 5 plan years

ending before September 26, 1980,

and

(ii) the denominator of which is the

sum of all contributions made for the

most recent 5 plan years ending be-

fore September 26, 1980, by all em-

ployers—

(I) who had an obligation to

contribute under the plan for the

first plan year ending on or after

such date, and

(II) who had not withdrawn

from the plan before such date.

(4)(A) An employer’s proportional share of

the unamortized amount of the reallocated un-

funded vested benefits is the sum of the em-

ployer’s proportional shares of the unamortized

amount of the reallocated unfunded vested ben-

efits for each plan year ending before the plan

year in which the employer withdrew from

the plan.

4la

(B) Except as otherwise provided in regula-

tions prescribed by the corporation, the reailo-

cated unfunded vested benefits for a plan year

is the sum of—

(i) any amount which the plan sponsor

determines in that plan year to be uncol-

lectible for reasons arising out of cases or

proceedings urder Title 11, or similar

proceedings.

(ii) any amount which the plan sponsor

determines in that plan year will not be

assessed as a result of the operation of sec-

tion 1389, 1399(c)(1)(B), or section

1405 of this title against an employer to

whom a notice described in section 1399

of this title has been sent, and

(iii) any amount which the plan sponsor

determines to be uncollectible or unassess-

able in that plan year for other reasons

under standards not inconsistent with regu-

lations prescribed by the corporation.

unfunded vested benefits with respect to a plan

year is the reallocated unfunded vested benefits

for the plan year, reduced by 5 percent of such

réallocated unfunded vested benefits for each

succeeding plan year.

(D) An employer’s proportional share of the

unamortized amount of the reallocated unfunded

vested benefits with respect to a plan year ‘s

the product of— a

(i) the unamortized amount of the reallo-

cated unfunded vested benefits (as of the

end of the plan year preceding the plan

42a

year in which the employer withdraws);

multiplied by

(ii) the fraction defined in paragraph

(2) (E) (ii).

§ 1399. Notice, collection, etc., of withdrawal lia-

bility

(a) Furnishing of information by employer to plan

sponsor

An employer shall, within 30 days after a written

request from the plan sponsor, furnish such informa-

tion as the plan sponsor reasonably determines to be

necessary to enable the plan sponsor to comply with

the requirements of this part.

(b) Notification, demand for payment, and review

upon complete withdrawal by employer

(1) As soon as practicable after an employer's

complete or partial withdrawal, the plan sponsor

shall— :

(A) notify the employer of—

(i) the amount of the liability, and

(ii) the schedule for liability pay-

ments, and

(B) demand payment in accordance with

the schedule. Fi

ployer receives the notice described in paragraph

(1), the employer—

(i) may ask the plan sponsor to review

_any specific matter relating to the determi-

nation of the employer’s liability and the

schedule of payments,

(c)

43a

(ii) may identify any inaccuracy in the

determination of the amount of the un-

funded vested benefits allocable to the

employer, and

(iii) may furnish any additional relevant

information to the plan sponsor.

(B) After a reasonable review of any matter

raised, the plan sponsor shall notify the em-

ployer of—

(i) the plan sponsor’s decision,

(ii) the basis for the decision, and

. (ili) the reason for any change in the de-

termination of the employer’s liability or

schedule of liability payments.

Payment requirements; amount, etc.

(2) Withdrawal liability shall be payable in

accordance with the schedule set forth by the

plan sponsor under subsection (b)(1) of this

section beginning no later than 60 days after

the date of the demand notwithstanding any

request for review or appeal of determinations

of the amount of such liability or of the

schedule.

(3) Each annual payment determined under

paragraph (1)(C) shall be payable in 4 equal

installments due quarterly, or at other intervals

specified by plan rules. If a payment is not

made when due, interest on the payment shall

accrue from the due date until the date on

which the payment is made.

(4) The employer shall be entitled to prepay

the outstanding amount of the unpaid annual

withdrawal liability payments determined under

44a j

paragraph (1)(C), plus accrued interest, if any,

in whole or in part, without penalty... .

(5) In the event of a default, a plan sponsot

may require immediate payment of the out

standing amount of an employer’s withdrawal

liability, plus accrued interest on the total out

standing liability from the due date of the first

payment which was not timely made. For put

poses of this section, “default” means—

(A) the failure of an employer to make,

when due, any payment under this sectior,

if the failure is not cured within 60 days

after the employer receives written notifica-

tion from the plan sponsor of such failure,

and

(B) any other event defined in rules

adopted by the plan which indicates a sul

stantial likelihood that an employer will be

unable to pay its withdrawal liability.

§ 1401. Resolution of disputes

(a) Arbitration proceedings; matters subject to at

bitration, procedures applicable, etc.

(1) Any dispute between an employer and ‘he

plan sponsor of a multiemployer plan corcern-

ing a determination made under sections 1381

through 1399 of this title shall be resolved

through arbitration. Either party May mitiate

the ‘arbitration proceeding within a 60-day

period after the earlier of—

(A) the date of netification to the em-

ployer under section 1399(b)(2)(B) of

this title, or

(B) 120 days after the date of the

employer’ request under section

1399(b)(2)(A) of this title.

45a

The parties may jointly initiate arbitration

within the 180-day period after the date of the

plan sponsor’s demand under section 1399(b)

(1) of this title.

(b) Alternative collection proceedings; civil action

subsequent to arbitration award; conduct of arbitra-

iton proceedings

(1) If no arbitration proceeding has been ini-

tiated pursuant to subsection (a) of this section,

the amounts demanded by the plan sponsor

under section 1399(b)(1) of this title shall be

due and owing on the schedule set forth by the

plan sponsor. The plan sponsor may bring an

action in a State or Federal court of competent

jurisdiction for collection.

(d) Payments by employer prior to determination

by arbitrator; adjustments; failure of employer to

make payments

Payments shall be made by an employer in accord-

ance with the determinations made under this part

until the arbitrator issues a final decision with respect

to the determination submitted for arbitration, with

any necessary adjustments in subsequent payments

for overpayments or underpayments arising out of

the decision of the arbitrator with respect to the

determination. If the employer fails to make timely

payment in accordance with such final decision, the

employer shall be treated as being delinquent in the

making of a contribution required under the plan

(within the meaning of seciion 1145 of this title).

§ 1451. Civil actions

(a) Persons entitled to maintain actions

(1) A plan fiduciary, employer, plan partici-

pant, or beneficiary, who is adversely affected

46a

by the act or omission of any party under this

subtitle with respect to a multiemployer plan,

or an employee organization which represents

such a plan participant or beneficiary for pur-

poses of collective bargaining, may bring an

action for appropriate legal or equitable relief,

or both.

(b) Failure of employer to make timely withdrawal

liability payment within prescribed time.

In any action under this section to compel an

employer to pay withdrawal liability, any failure of

the employer to make any withdrawal liability pay-

ment within the prescribed time shall be treated in

the same manner as a delinquent contribution (within

the meaning of section 1145 of this title).

(f) Time limitations

An action under this section may not be brought

after the later of —

(1) 6 years after the date on which the cause

of action arose, or

(2) 3 years after the earliest date on which the

plaintiff acquired or should have acquired ac-

tual knowledge of the existence of such cause

of action; except that in case of fraud or con-

cealment, such action may be brought not later

than 6 years after the date of discovery of the

existence of such cause of action.

29 C.F.R. § 2644.2 Overdue and defaulted with-

drawal liability; overpayment

(a) Overdue withdrawal liability payment. Except

as otherwise provided in rules adopted by the plan

in accordance with Sec. 2644.4, a withdrawal liabil-

47a

ity payment is overdue if it is not paid on the date

set forth in the schedule of payments established by

the plan sponsor.

(b) Default.

(1) Except as provided in paragraph (c)(1), ‘de-

fault’ means—

(i) The failure of an employer to pay any overdue

withdrawal liability payment within 60 days after

plan sponsor that the payment is overdue; and

(ii) Any other event described in rules adopted by

the plan which indicates a substantial likelihood that

an employer will be unable to pay its withdrawal

liability.

(2) In the event of a default, a plan sponsor may

require immediate payment of all or a portion of the

outstanding amount of an employer's withdrawal li-

ability, plus interest. In the event that the plan spon-

(i) Expiration of

48a

(ii) If the employer requests review under section

4219(b)(2)(A) of the Act of the plan’s withdrawal

liability determination or the schedule of payments

established by the plan, expiration of the period

described in section 4221(a)(1) of the Act for init-

iation of arbitration; or

(iii) If arbitration is timely initiated either by the

plan, the employer or both, issuance of the arbitra-

tor’s decision. i

(2) Any amounts due before the expiration of the

period described in paragraph (c)(1) shall be paid

in accordance with the schedule established by the

plan sponsor. If a payment is not made when due

under the schedule, the payment is overdue and inter-

est shall accrue in accordance with the rules and at

the same rate set forth in Sec. 2644.3.

(d) Overpayments. If the plan sponsor or an arbi-

trator determines that payments made in accordance

with the schedule of payments established by the plan

sponsor have resulted in an overpayment of with-

drawal liability, the plan sponsor shall refund the

overpayment, with interest, in a lump sum. The plan

sponsor shall credit interest on the overpayment from

the date of the overpayment to the date on which the

overpayment is refunded to the employer at the same

rate as the rate for overdue withdrawal liability pay-

ments, as established under Sec. 2644.3 or by the

plan pursuant to Sec. 2644.4.

29 C.F.R. § 2644.3 Interest on overdue, defaulted

(a) Interest assessed. The plan sponsor of a multi-

employer plan—

(1) Shall assess interest on overdue withdrawal lia-

bility payments from the due date, as defined in

paragraph (d) of this section, until the date paid, as

defined in paragraph (e); and

49a

(2) In the event of a default, may assess interest on

any accelerated portion of the outstanding with-

drawal liability from the due date, as defined in

paragraph (d) of this section, until the date paid, as

defined in paragraph (e).

(4) Due date. Except as otherwise provided in rules

adopted by the plan, the due date from which interest

accrues shall be, for an overdue withdrawal liability

payment and for an amount of withdrawal liability

in default, the date of the missed payment that gave

rise to the delinquency or the default.

(e) Date paid. Any payment of withdrawal liability

shall be deemed to have been paid on the date on

which it is received.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.