Amicus Curiae Brief — Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal.

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wd JUL 17 1997

No. 96-370

Supreme Court, U.S.

In the Supreme Court of the United States

OCTOBER TERM, 1996

BAY AREA LAUNDRY AND Dry CLEANING

PENSION TRUST FUND, PETITIONER

FERBAR CORPORATION OF CALIFORNIA, INC.,

AND STEPHEN BARNES

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONER

WALTER DELLINGER

Acting Solicitor General

General Counsel Deputy Solicitor General

JEFFREY B. COHEN LISA SCHIAVO BLATT

Deputy General Counsel Assistant to the Solicitor

ISRAEL GOLDOWITZ General

Assistant General Counsel Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

KAREN L. MORRIS

Attorney

Pension Benefit Guaranty

Corporation

Washington, D.C. 20005-4206

QUESTION PRESENTED

Whether the statute of limitations for an action to

collect withdrawal liability under Section 104(2) of the

Multiemployer Pension Plan Amendments Act of 1980, 29

U.S.C. 1451(f), begins to run on the date an employer

withdraws from a pension plan or instead on the date the

employer fails to make a scheduled withdrawal liability

payment.

(I)

OS gt le ed i nn eee Le

TABLE OF CONTENTS

Page

Interest of the United States ................cccccccceceeceeeeeeeeeees l

EEL 2

EE TO 10

EE 12

A. A plan sponsor’s cause of action for collection

of withdrawal liability arises on the date the

employer fails to make a withdrawal liability

B. Petitioner’s cause of action is timely as to pay-

ments falling overdue within six years before

the filing of the complaint ........................000 23

SII eeisirtiesinniitcnteeeteeenctennnscendesennesesesnccsccesecesneccececcece 28

TABLE OF AUTHORITIES

Cases:

Ashley v. Boyle’s Famous Corned Beef Co., 66 F 3d

eT 23

Board of Trustees of Constr. Laborers v. Thibodc,

34 F.3d 914 (9th Cir. 1994), cert. denied, 514 U.S.

an 9, 19, 21, 22

Borer v. Chapman, 119 U.S. 587 (1887) ............... 17, 27

Central States Pension Fund v. Central Transp.,

ee 22

Central States Pension Fund v. Navco, 3 F.3d 167

(7th Cir. 1993), cert. denied. 510 U.S. 1115

ee TT 12, 26, 27

Chardon v. Fumero Soto, 462 U.S. 650 (1983) ........ 18

Clark v. Iowa City, 87 U.S. (20 Wall.) 583 (1874) .... 14

Concrete Pipe & Prods. of Cal., Inc. v. Construc-

tion Laborers Pension Trust for S. Cal., 508 U.S.

I ietiatitiertietenternesnencenmnngesnnncansncssesnccasseceseesseese 20

(III)

Cases—Continued: Page

Crown Coat Front Co. v. United States, 386 U.S.

BE Ge cenennccsacecsmensmnecesinnaiittitiniiiiimiiienns 10, 13, 27

Crown, Cork & Seal Co v. Parker, 462

yy “ 21

Davis vy. Alabama Power Co., 383 F. Supp. 880 |

(N.D. Ala. 1974), aff'd, 542 F.2d 650 (5th Cir. 1976),

OGG, G8 DEE. GER CRUE) ccccevsccsscesccsssesncssasscnsssesces 25

Davis v. Michigan Dep't of Treasury, 489 U.S. 803

COBTEED caccanscnssensaneseareemmeennitneninmcniiineenines 13

Debreceni v. Merchants Terminal Corp., 889 F.2d 1

tt nee 18

FDIC v. Henderson, 61 F.3d 421 (5th Cir. 1995) ..... 22

Hallstrom vy. Tillamook County, 493 U.S. 20

(a re 16

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

(D.C. Cir., cert. denied, 493 U.S. 918 (1989) ........ 9, 10,

12, 15, 17, 19, 21, 22, 23

King v. St. Vincent's Hosp., 502 U.S. 215 (199) ..... 13

Klehr v. Smith Corp., No. 96-663 (June 19, 1997) . 21, 23

Knight v. Columbus, Ga., 19 F.3d 579 (11th Cir.),

cert. denied, 513 U.S. 929 (1994) ...........cccccceeeeeeeeeees 23

Machinists’ Pension Fund v. Kahle En’g Corp.,

43 F.3d 852 (3d Cir. 1994) ............ccccereeeeeeereeeeees 12, 24, 27

Milwaukee Brewery Workers’ Pension Plan v.

Jos. Schlitz Brewing Co., 513 U.S. 414 (1995) ........ 3, 15,

16, 26

Owens v. Okwure, 488 U.S. 235 (1989) .............cccceeeeee 18

PBGC v. R.A. Gray & Co., 467 U.S. 717 (1984) ....... 2

Rawlings v. Ray, 312 U.S. 96 (1941) .................00000 14

Reading Co. v. Koons, 271 U.S. 58 (1926) ................ 13

Reiter v. Cooper, 507 U.S. 258 (1993) .............cccc0e0es 17

RTC vy. Koock, 867 F. Supp. 284 (E.D. Pa. 1994) .... 25

Robbins v. Pepsi-Cola Metro. Bottling Co., 636

F. Supp. 641 (N.D. Til. 1986) ...............cescsssesssssseseees 20

Cases—Continued: Page

Robbins v. Pepsi-Cola Metro. Bottling Co., 800

ee es GD eecisiitiieticnneieccnitentiecttnntenasenne 18

Russell v. United States, 314 F.2d 809 (Ct. Cl.

TEIN cocteheocsdedubdesdubentessstesenescasnnemsinesneemmunptecuncevessvese 24

Snyder v. Madera Broadcasting, Inc., 872 F. Supp.

ee 25

State Farm Mut. Auto. Ins. Co. v. Ammann,

ee ET 23

Trustees for Alaska Laborers v. Ferrell, 812 F.2d

Sy ITED cxcnsensnsrennsscsscntnnensatiiintinimattamintdzents 24

Unexcelled Chem. Corp. v. United States, 345

Cs PEED. cnnasunesensesnsessesnsetneenntititentntagatansnccess 14

United States v. Alessi, 599 F.2d 513 (2d Cir.

STUD dsntminsanncsecnnsssesintenssunesniggatiniantineninmeedetesemeseenee 25

United States v. Chemical Found., Inc., 272 U.S. 1

GENEID Uistilesldstaccndtuntntsiinnintininnstnmnidlainbiimmmegsatusgremscces 22

United States v. Dos Cabezas Corp., 995 F.2d 1486

Se Es SEED wrmrectesensencreantnctastsnssstsememeatestpamenscess 25

United States v. LaFrance, 728 F. Supp. 1116

Fie Fa Se crccenscensensserensserenmmnnnguaiinaprietnaeessenese 25

United States v. Lindsay, 346 U.S. 568 (1954) ........ 14

United States v. Morton, 467 U.S. 822 (1984) ......... 13

Waggoner v. Dallaire, 649 F 2d 1362 (9th Cir.

RED cemenpennpuntnenenssnenecssncocncvessustsintetnscimtastecsssusevssseese 24

Wilson v. Garcia, 471 U.S. 261 (1985) .................. 18, 21

Zenith Radio Corp. v. Hazeltine Research, Inc.,

EE 23

Employee Retirement Income Security Act of 1974,

29 U.S.C. 1001 et seq.:

ee 15

29 U.S.C. 1002(IGKBMA) .........0cesceercssesssecessseesees 3

a (i Oe 21

BP GORE cettnreccemncsssecscsusssssevenscnsnsemensesseses 23, 24

AD GN SEEEEEED censvecsccscnssnsntessnsnesusmrestssesesseess 20

VI Vil

S RBEVaL aL SRO BR

Statutes and regulations: Page Statutes and regulations—Continued: Page

nk ae ee ae es 2, 3, 15 AONE ncn ee ea ones

29 U.S.C. 1381-1399 0... eeseesseesecseesseenecenecnnseneens 4 a AAA 16

£9 U.S.C. 19BI-100G -nnnnnnenseeeoncoceeernnnnnesescroosesernnon 2 nae eanenneseaammntemannasitaee

Fl tie Bical Mai 22 en.

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29 U.S.C. 1383(a) ......--seeeeeeveerseerseeseernecsesensseess 2, 9, 18 ia NNR eRe

29 U.S.C. 1383(b(2)(B) ....--.---rseesseerseeesseeseesesesesess 19 Ree

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PS NRE TTI HABE ELE h: 20 a aepcmmaeeas Aa dind tata

2 AT RT RT is ee

is a a 19 5 > tagagmemeaee aap manammeaennes

SR ARIES 3 ua ‘try e

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NIRA IEEE ENE 2, 16 ap Seeeeemeen Eehetinan Aan, 640iga, 2 GBC.

29 U.S.C. 1390 ......-eeesserseesseesesseenrscncsnesnnsnnensnens 16 ee

iit A er a 2 eats tmcien ton ag yr

iia RR 8 Acai 16 1908, Pub: L. No. 98-364 Ameen ag onetell is

29 U.S.C. 139 2(a) -....---eeseerseersserseerseeenesensseneenncens 2 mm 27

<a C RE... ITTR 19 -CPe:

29 U.S.C. 13898 0... eeeeeeseeseeseesseeneeneenncnnrsetsnssseces 19 gion lia eee 5

SS SRE Le 5, 15 gh

29 U.S.C. 1399(D)(1) «....---+--0-e0eereee 3, 4, 5, 11, 15-16, 21 AE Tee 20

29 U.S.C. 1B9RDM2MKA) cevecccecceeseeecceesseesneesneen 4, 6, 18 —

29 U.S.C. 1399 D2) B) «.......---creeveeseeeseeesesssessenees 4 Section 4219.31(8) ...ccscceccecscosscecccescesesescessseseesones 6, 18

29 U.S.C. 1399 CUM AMI) -..------r-eveeeeereeeeeeneseneens 3, 16 Section 4219.31(CM1) .eccecceccesccessesssesseseeeseeeseeeees 25, 27

29 U.S.C. 1399 CHUM B) -...------reereeereereesrreenseens 3, 17, 26 Section 4219.31(b)(1Mi) ..cccececcceccsescvecseeseesseeeneeees 5, 26

29 U.S.C. 139M CMM CHA) -------rersereereeeeeeeeeerenenes 3 Section 4219.31(b)\I)Gi) ...cccescoeccesceessecseeceeeseeseeees 6

29 U.S.C. 139HCM IMD) -...--.--seeeeeeeseeeeerneenseressnns 3 Section 4219.B1(OM2) .ccecccecceccceccoescecssessesssecseeeeees 5, 27

29 U.S.C. 1399(C)2) -...-.--seereeceereereereeseceess 4, 16, 18, 24 ne cenesiees 6, 27

29 U.S.C. 1399(CHB) .-----o-erveereerseererererenrennsenecens 3, 26 Section 4219.B1(CM2) ...ccccccccccsvesccecsuecseesseeeseeesees 6, 18

29 U.S.C. 139(CHA) ...-----seerverveerreererenesenesensenerens 3, 26 Section 4219.32(a)(1) .ccccceosccecceccieccecceesseesesevecseeees 6

29 U.S.C. 139WA( CHS) «....--+--eseerveerseeserereeeres 5, 25, = = a 6

29 U.S.C. 1399 CMBMA) cecccvecsecsvecsvesseeesueeseeeseee ' .

ESAT 6 Miscellaneous:

BD UBC. BOGE cccccccecccccccccsccccccssscsccsccsssqsecccsscssocess 20 51 Am. Jur. 2d Limitation of Actions (1970) ..... 17, 24, 25

LS 4, 5, 18 4 A. Corbin, Contracts (1951) ....c.cececececececcececececeeseeees 25

29 U.S.C. 1401BM1) ceccccccececcecsescsecseesseeceesseeceeeseee 4,6 1 C. Corman, Limitation of Actions (1991) ............. 24, 25

BD UBC. 14B1BM1) ...222222202cccccccccccccccsccoscccccssssecee 5 .

Vill

Miscellaneous—Continued:

18 S. Williston, A Treatise on the Law of Contracts

(3d ed. 1978)

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In the Supreme Court of the Gnited States

OCTOBER TERM, 1996

No. 96-370

Bay AREA LAUNDRY AND Dry CLEANING

PENSION TRUST FUND, PETITIONER

Vv.

FERBAR CORPORATION OF CALIFORNIA, INC.,

AND STEPHEN BARNES

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONER

INTEREST OF THE UNITED STATES

The Pension Benefit Guaranty Corporation (PBGC) is

the federal agency responsible for administering and en-

forcing Title IV of the Employee Retirement Income

Security Act of 1974 (ERISA), 29 U.S.C. 1301 et seq., in-

cluding the provisions added by the Multiemployer Pen-

sion Plan Amendments Act of 1980 (MPPAA), Pub. L. No.

96-364, 94 Stat. 1208. PBGC has an interest because this

case requires an interpretation of 29 U.S.C. 1451(f), which

governs the time for filing a civil action under MPPAA.

As we explained in our amicus brief at the petition stage

(at 11, 14-15), the date on which the statute of limitations

begins to run under 29 U.S.C. 1451(f) for an action to col-

lect withdrawal liability has significant ramifications for

the administration of multiemployer plans. In addition,

PBGC has an interest in this case because petitioner is an

insolvent multiemployer pension plan entitled to receive

financial assistance from PBGC under 29 U.S.C. 1431. If

(1)

petitioner prevails in this litigation, the PBGC’s obliga-

tions under 29 U.S.C. 1431 could be reduced.

STATEMENT

1. Under the Multiemployer Pension Plan Amend-

ments Act of 1980 (MPPAA), an employer that withdraws

fsom a multiemployer pension plan is required to pay

“withdrawal liability,” calculated pursuant to one of four

statutory methods for determining the employer’s alloc-

able share of the plan’s unfunded vested liabilities. 29

U.S.C. 1381, 1391. Withdrawal liability protects the finan-

cial stability of multiemployer plans and the retirement

income of millions of participants by requiring with-

drawing employers to pay a “proportionate share of the

plan’s ‘unfunded vested benefits.’” Connolly v. PBGC,

475 U.S. 211, 217 (1986) (quoting PBGC v. R.A. Gray

& Co., 467 U.S. 717, 725 (1984)). By requiring withdraw-

ing employers to pay their fair “share of the plan

obligations,” Connolly, 475 U.S. at 225, Congress ensured

that those obligations would not fall on the remaining

employers, and thereby discourage new employers from

joining the plan or encourage existing employers to

withdraw. Gray, 467 U.S. at 721-723. Withdrawal liability

is thus the cornerstone of Congress’s efforts to protect

multiemloyer plan participants against benefit losses.

A “complete withdrawal” fron: a multiemployer pension

plan generally 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. 1383(a).! When an employer withdraws

from a multiemployer plan, MPPAA requires the plan

sponsor (usually a joint labor-management board of trus-

' An “obligation to contribute” may arise “under one or more

collective mma od (or related) agreements” or “as a result of a duty

under applicable labor-management relations law.” 29 U.S.C. 1392(a).

tees, 29 U.S.C. 1002(16)(B)) to “(1) determine the amount of

the employer’s withdrawal liability, (2) notify the em-

ployer of the amount of the withdrawal liability, and (3)

collect the amount of the withdrawal liability from the

employer.” 29 U.S.C. 1382.

“As soon as practicable” after an employer’s complete

withdrawal, the plan sponsor must notify the employer of

“the amount of the liability” and “the schedule for liability

payments,” and must “demand payment in accordance with

the schedule.” 29 U.S.C. 1399(b\(1).2. The schedule must

amortize the amount of withdrawal liability in “level an-

nual payments” in accordance with a statutory formula,

based roughly on the employer’s previous annual con-

tributions to the plan. 29 U.S.C. 1399(c)(1)(A)(i) and (Ci).

For amortization periods that exceed 20 years, the em-

ployer’s liability usually is limited to the first 20 annual

payments. 29 U.S.C. 1399(c)(1)(B) and (D). Each annual

paymest, in turn, “shall be payable in 4 equal installments

due quarterly, or at other intervals specified by plan

rules.” 29 U.S.C. 1399(c)(3). The Act also permits the ém-

ployer “to prepay the outstanding amount of the unpaid

annual withdrawal liability,” plus any accrued interest. 29

U.S.C. 1399(c)(4). See Milwaukee Brewery Workers’

Pension Plan v. Jos. Schlitz Brewing Co., 513 U.S. 414,

418 (1995).

Within 90 days after the employer receives the plan

sponsor’s notice and demand for payment, the employer is

entitled to ask the plan sponsor “to review any specific

matter relating to the determination of the employer’s

2 MPPAA also imposes withdrawal liability following an em-

ployer’s “partial withdrawal.” 29 U.S.C. 1381, 1386, 1288(d), 1399(b)(1).

Generally, a partial withdrawal occurs on the last day of a plan year if

for such plan year “there is a 70-percent contribution decline” or “there

is a partial cessation of the employer's contribution obligation.” 29

U.S.C. 1385(a).

liability and the schedule of payments.” 29 U.S.C.

1399(b)(2)(A). The employer may also “identify any inaccu-

racy in the determination of the amount of the unfunded

vested benefits allocable to the employer,” and “furnish

any additional relevant information to the plan sponsor.”

Ibid. “After a reasonable review of any matter raised,” the

plan sponsor must notify the employer of “(i) the plan

sponsor’s decision, (ii) the basis for the decision, and (iii)

the reason for any change in the determination of the em-

ployer’s liability or schedule of liability payments.” 29

U.S.C. 1399(b)(2)(B).

MPPAA then provides that “[aJny dispute between an

employer and the plan sponsor of a multiemployer plan

concerning a determination made under [29 U.S.C. 1381-

1399] shall be resolved through arbitration.” 29 U.S.C.

1401(a)(1). Either party may initiate arbitration within a

60-day period after the earlier of (1) 120 days after the date

of the employer’s request for review under 29 U.S.C.

1399(b)(2)(A), or (2) the date of notification to the employer

of the plan sponsor’s decision on the employer’s request

for review. See 29 U.S.C. 1401(a)(1).°

Pursuit of the foregoing statutory remedies does not,

however, excuse the employer from making periodic

payments as they become due in the meantime. To the

contrary, the Act specifically provides that, “notwith-

standing any request for review or appeal of determina-

tions of the amount of [withdrawal] liability or of the

schedule,” the employer’s withdrawal liability is “payable

in accordance with the schedule set forth by the plan

sponsor” beginning no later than 60 days after the date of

the plan sponsor’s demand. 29 U.S.C. 1399(c)(2). The same

point is reiterated in 29 U.S.C. 1401(d), which provides

3 The parties also may jointly initiate arbitration within the 180-

day period after the date of the plan sponsor’s demand under 29 U.S.C.

1399(b)\(1). See 29 U.S.C. 1401(a)(1).

that “until the arbitrator issues a final decision with

respect to the determination submitted for arbitration,”

the employer is required to make payments in accordance

with the plan sponsor’s schedule of payments, subject to

“any necessary adjustments in subsequent payments for

overpayments or underpayments” arising from the

arbitrator’s decision. If no arbitration proceeding has

been initiated within the period prescribed by 29 U.S.C.

1401(a), “the amounts demanded by the plan sponsor under

[29 U.S.C. 1399(b)(1)] shall be due and owing on the

schedule set forth by the plan sponsor,” and “[tJhe plan

sponsor may bring an action in a State or Federal court

of competent jurisdiction for collection.” 29 U.S.C.

1401(b)(1).

In the event of “default,” “a plan sponsor may require

immediate payment of the outstanding amount of an em-

ployer’s withdrawal liability, plus accrued interest on the

total outstanding liability from the due date of the first

payment which was not timely made.” 29 U.S.C. 1399(c)(5).

A PBGC regulation further provides that, upon default, a

plan sponsor may require immediate payment of only a

portion of the outstanding amount of the employer’s liabil-

ity. 29 C.F.R. 4219.31(b)(2).4 If the plan sponsor chooses

the latter course, the sponsor must establish a new sched-

ule of payments for the remaining amount. /bid.

The Act defines “default” to include “the failure of an

employer to make, when due, any payment under [29

U.S.C. 1399], if the failure is not cured within 60 days after

the employer receives written notification from the plan

sponsor of such failure.” 29 U.S.C. 1399(c)(5)(A); see also

29 C.F.R. 4219.31(b)(1)(i).° In addition, PBGC regulations

* Prior to July 1, 1996, regulations promulgated under MPPAA by

PBGC appeared at 29 C.F.R. Pts. 2640-2677.

5 The term “default” also includes “any other event defined in rules

adopted by the plan which indicates a substantial likelihood that an

set forth rules that apply to an employer’s obligation to

make withdrawal liability payments during the period for

plan sponsor review and arbitration. In those instances, a

default triggered by a failure to make payments does not

occur until the sixty-first day after the last of (1) the

expiration of the 90-day period within which the employer

may request review under 29 U.S.C. 1399(b)(2)(A); (2) if

review is requested within those 90 days, the expiration of

the period within which arbitration may be initiated under

29 U.S.C. 1401(a)(1); or (3) if arbitration is timely initiated,

the date the arbitrator issues a decision. 29 C.F.R.

4219.31(¢)(1).°

MPPAA authorizes civil actions to enforce its various

provisions. It provides that a plan fiduciary, employer,

plan participant, or beneficiary “who is adversely affected

by the act or omission of any party” under MPPAA with

respect to a multiemployer plan “may bring an action for

appropriate legal or equitable relief” in federal court. 29

U.S.C. 1451(a)(1) and (c). Such an action is barred, how-

ever, “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 concealment,

such action may be brought not later than 6 years after

the date of discovery of the existence of such cause of

action.” 29 U.S.C. 1451(f).

employer will be unable to pay its withdrawal liability.” 29 U.S.C.

1399(c5)\(B); see also 29 C.F.R. 4219.31(b)(1 (ii).

6 Installments due before the expiration of the period described in

29 C.F.R. 4219.31(c)(1) must be paid in accordance with the schedule

established by the plan sponsor. 29 C.F.R. 4219.31(c2). Any payment

not so made is “overdue,” and interest accrues from the date of the

missed payment. /bid.; see also 29 C.F.R. 4219.31(a), 4219.32(a)(1) and

(d).

2. For several years, respondent Ferbar Corpora-

tion (Ferbar) contributed to the Bay Area Laundry and

Dry Cleaning Pension Trust Fund (Fund). In March 1985,

Ferbar ceased making contributions to the Fund. On

December 12, 1986, the Fund sent Ferbar a notice assess-

ing a withdrawal liability obligation of $45,580.80. Pet.

App. 2a. The notice stated that Ferbar could discharge its

withdrawal liability obligation by paying the total amount

within 60 days of receipt of the letter, or by making

monthly installment payments of $345.50 for 240 months

(with a final payment of $344.96), beginning February 1,

1987. Jd. at 2a-3a; Compl. 4 14; C.A. E.R. Tab 13. Ferbar

made no payments in response to the Fund’s demand.

In a letter dated February 27, 1987, Ferbar requested

that the Fund review its assessment of withdrawal liabil-

ity. In a letter dated April 14, 1987, the Fund notified

Ferbar that its first payment was delinquent and that

Ferbar had 60 days from the date of that notice to cure the

delinquency, or it would be considered in default. Pet. App.

3a. Ferbar failed to cure its delinquency. In a letter dated

April 28, 1987, however, Ferbar referred to its previous

response and asked when the Fund’s answer would be

forthcoming. /bid.; Br. in Opp. 6. In a letter dated July 8,

1987, Ferbar requested arbitration of its disputed with-

drawal liability. Pet. 5. No arbitration proceedings were

held, and Ferbar did not make any withdrawal liability

payments. Pet. App. 7a; Br. in Opp. 6.

On February 9, 1993, petitioner, the Board of Trustees

of the Fund, filed a complaint against Ferbar and its

principal shareholder, Stephen J. Barnes, in the United

States District Court for the Northern District of

California to collect the employer’s withdrawal liability.’

7 Petitioner also sued Ferreira Farms, Inc., and Diablo Cleaners,

Inc., two dry cleaners, and Robert J. Ferreira, a shareholder in

Ferreira Farms, Diablo Cleaners, and Ferbar. Compl. 44 7-10. On

The parties filed cross-motions for summary judgment on

whether the statute of limitations had expired. Pet. App.

6a-7a. On May 9, 1994, the district court granted summary

judgment in favor of respondents. Jd. at 6a-19a. The court

first held that the suit was barred by the three-year

limitations period set forth in 29 U.S.C. 1451(f)(2), because

“plaintiffs knew a cause of action existed no later than

1987, yet filed their complaint in excess of three years of

that time.” Pet. App. lla (citation omitted). In the alter-

native, the court held that the Fund’s action was barred by

the six-year limitations period set forth in 29 U.S.C.

1451(f)(1). Pet. App. 1la-18a. The court reasoned that the

Fund was “adversely affected when the first monthly pay-

ment was not made” by the February 1, 1987 due date and,

therefore, that the Fund’s “cause of action arose and, con-

comitantly, the statute of limitations began running,” on

February 1, 1987. Jd. at 13a. Because February 1, 1987,

“preced[ed] the filing of the lawsuit by more than six

years,” the court concluded that the action was time-

barred. Jd. at 18a. ;

3. The court of appeals affirmed, but on different

grounds. Pet. App. la-5a. The court of appeals first held

that the district court erred in relying on the three-year

limitations period set forth in 29 U.S.C. 1451(f)(2). The

court explained that “[tJhe district court misread the plain

language of [29 U.S.C.] 1451(f), which clearly directs

courts to apply ‘the later of’ the two periods of limita-

tions.” Pet App. 3a. “On the facts of this case,” the court

concluded, the later limitations period “is six years from

the date the cause of action arose.” Jbid.

Turning to the district court’s alternative holding that

the Fund’s cause of action became time-barred six years

after February 1, 1987, the date on which the employer

June 3, 1994, those defendants were dismissed from the complaint. C.A. |

E.R. Tab 31.

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drawal liability as required by the Act. And, unless a plan

sponsor accelerates the entire debt following an em-

ployer’s default, the plan sponsor has a separate cause of

action on the date each payment becomes due. That is the

usual rule for installment payments in other settings, and

there is no reason for a different rule under MPPAA.

In this case, beginning on February 1, 1987, respondent

failed to pay its monthly withdrawal liability installments

as required by the plan sponsor’s schedule, and respon-

dent’s debt has not been accelerated under the Act. Thus,

petitioner’s complaint, filed February 9, 1993, is time-

barred with respect to respondent’s first missed install-

ment payment on February 1, 1987, but is timely with

respect to installment payments falling due thereafter.

A. A Plan Sponsor's Cause of Action For Collection of

Withdrawal Liability Arises on The Date The Em-

ployer Fails to Make a Withdrawal Liability

Payment

1. “It is a fundamental canon of statutory construction

that the words of a statute must be read in their context

and with a view to their place in the overall statutory

scheme.” Davis v. Michigan Dep't of Treasury, 489 U.S.

803, 809 (1989); see also King v. St. Vincent’s Hosp., 502

U.S. 215, 221 (1991); United States v. Morton, 467 U.S. 822,

828 (1984). Thus, “when a ‘cause of action’ first ‘accrues’”

for purposes of a statute of limitations must be determined

“in the light of the general purposes of the statute and of

its other provisions, and with due regard to those practical

ends which are to be served by any limitation of the time

within which an action must be brought.” Crown Coat

Front Co. v. United States, 386 U.S. 503, 517 (1967)

(quoting Reading Co. v. Koons, 271 U.S. 58, 62 (1926)). It

is also settled that statutes of limitations do not begin to

run until there is “a complete and present cause of action.”

Rawlings v. Ray, 312 U.S. 96, 98 (1941);* see also Clark v.

lowa City, 87 U.S. (20 Wall.) 583, 589 (1874) (“All statutes

of limitation begin to run when the right of action is com-

plete[.J”). “A cause of action is created when there is a

breach of duty owed the plaintiff.” Unexcelled Chem.

Corp. v. United States, 345 U.S. 59, 65 (1953). See also

United States v. Lindsay, 346 U.S. 568, 569 (1954) (“a right

accrues when it comes into existence”).

MPPAA authorizes a plan fiduciary to file suit when-

ever the plan is “adversely affected by the act or omission

of any party” and permits such suits to be filed within “6

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

29 U.S.C. 1451(a) and (f)(1).’ In an action by a plan sponsor

to collect withdrawal liability payments, it is the em-

ployer’s failure to make a scheduled payment that is the

“act or omission” that “adversely affect[s]” the plan in the

relevant sense and thus gives rise to the cause of action

under Section 1451. Respondent argues (Br. in Opp. 14-15)

that a plan sponsor’s cause of action arises on the date of

an employer’s withdrawal because the fund is “adversely

affected” by the withdrawal. Respondent points to a con-

gressional finding under MPPAA that “withdrawals of

8 In Rawlings, the Court held that a bank receiver’s cause of action

to collect an assessment by the Controller of the Currency against one

of the bank stockholders accrued not on the date of assessment but “the

date fixed for payment.” 312 U.S. at 98. The Court explained that “the

statute of limitations did not begin to run” until the debt was actually

due because “prior thereto suit could not be maintained against him.”

Ibid.

® A suit also is timely under the Act if it is brought within “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)2). Because Section 1451(f)’s time-bar ap-

plies “the later of” the periods set forth in Section 1451(f)1) and

Section 1451(f)2), the six-year accrual provision applies in this case.

Pet. App. 3a.

contributing employers * * * frequently result in

substantially increased funding obligations for employers

who continue to contribute to the plan, adversely affecting

the plan.” 29 U.S.C. 100la(a(4)(A). MPPAA addresses

that very problem, however, by imposing withdrawal liabil-

ity according to a prescribed formula and procedures. See

29 U.S.C. 1381, 1399; Connolly v. PBGC, 475 U.S. 211, 214-

217 (1986). If the employer makes scheduled payments to

the plan as required by the Act, the plan is not “adversely

affected” within the meaning of 29 U.S.C. 1451(a). A plan

is “adversely affected” under the statutory scheme, and a

cause of action therefore accrues, only when the employer

fails to make scheduled payments when they fall due.

“Withdrawal, in itself, does not visit any adverse effect

upon the plan that gives rise to the cause of action,” but

“merely sets in motion the usual (and routine) process of

calculation, notification, schedule, possible request for

review or arbitration, and payment.” Joyce, 871 F.2d at

1123, 1124. That is so because an employer does not owe

any withdrawal liability on the date of its withdrawal from

the plan. See Milwaukee Brewery Workers’ Pension

Plan v. Jos. Schlitz Brewing Co., 513 U.S. 414, 423 (1995)

(“[T}he statute makes clear that the withdrawing em-

ployer owes nothing until its plan demands payment.”)."

MPPAA provides that, “[aJs soon as practicable” following

a withdrawal, the plan sponsor must establish a schedule

of payments in accordance with the Act. 29 U.S.C.

In Milwaukee Brewery, the pension plan argued that an em-

ployer’s withdrawal liability payment schedule included interest for

the year in which withdrawal occurred. In rejecting that contention,

the Court observed that the “withdrawing employer's debt does not

arise” at the time of withdrawal, because “the statute makes clear that

the withdrawing employer owes nothing until its plan demands pay-

ment.” 513 U.S. at 423.

1399%(b)(1)."" The first payment is not due until as much as

60 days after the plan sponsor sets that schedule. 29

U.S.C. 1399(c)(2); see 29 U.S.C. 1399(c)(1)(A)i) (“Actual

payment shall commence in accordance with paragraph

(2).”). Thus, “MPPAA contemplates that an employer

sometimes may pay its actual first installment long after

the withdrawal year.” Milwaukee Brewery, 513 U.S. at

426.

An employer’s withdrawal by itself does not breach any

statutory duty owed to the plan or violate MPPAA, and

petitioner does not claim otherwise. Rather, petitioner

filed suit to collect payments of Statutory withdrawal

liability that were not made. Thus, the employer’s failure

to pay its withdrawal liability, as required by 29 U.S.C.

1399(c)(1)(A)(i) and (¢)(2), constitutes the breach of duty

and the “violation giving rise to the action.” Hallstrom v.

Tillamook County, 493 U.S. 20, 27 (1989). Accordingly, it

is not until an employer fails to pay its withdrawal

liability when due that a plan sponsor is “adversely

affected” by an “act or omission” of the withdrawing

employer, 29 U.S.C. 1451(a), and it is only then that the

plan sponsor has a cause of action to collect the with-

drawal liability.

2. Under the Ninth Circuit’s analysis, the statute of

limitations always begins to run before the plan is entitled

to file suit. The Ninth Circuit’s decision is therefore in-

consistent with the established principle that “the statute

| MPPAA imposes withdrawal liability only for the employer's

allocable share of the plan's “unfunded vested benefits,” which may be

zero. 29 U.S.C. 1391(b). Moreover, other provisions of the Act reduce

or eliminate the amount of the employer’s withdrawal liability. For

instance, in certain cases, withdrawal liability is not imposed for

temporary contribution obligation periods, 29 U.S.C. 1390, and liability

is reduced upon certain asset sales or the employer’s insolvency, 29

U.S.C. 1405. See also 29 U.S.C. 1389 (de minimis rule).

of limitations will [not] be allowed to commence to run

against a right until that right has accrued in a shape to

be effectually enforced.” Borer v. Chapman, 119 U.S. 587,

602 (1887). See also Reiter v. Cooper, 507 U.S. 258, 267

(1993) (“While it is theoretically possible for a statute to

create a cause of action that accrues at one time for the

purpose of calculating when the statute of limitations

begins to run, but at another time for the purpose of

bringing suit, we will not infer such an odd result in the

absence of any such indication in the statute.”); see

generally 51 Am. Jur. 2d Limitation of Actions § 107

(1970) (“no limitation commences to run against any

demand until the obligation or demand is due and payable,

in the sense that it is defined sufficiently to be capable of

enforcement”).

Indeed, a rule that begins the statute of limitations at

the time of withdrawal would effectively prevent plan spon-

sors from collecting any unpaid installment payments that

may become due more than six years after the date of the

employer’s withdrawal. For example, under a withdrawal-

accrual rule, a plan sponsor that received timely install-

ment payments throughout the six years following the

employer’s withdrawal would be time-barred from bringing

a collection action even if the employer thereafter ceased

making payments in the seventh year. That result cannot

be reconciled with the Act’s express provision for a pay-

ment schedule that may extend as long as 20 years, 29

U.S.C. 1399(c)(1)(B), and would undermine MPPAA’s “ul-

timate aim that workers receive pension payments which

they have duly earned.” Joyce, 871 F.2d at 1126. Thus, the

limitations period in 29 U.S.C. 1451(f)(1) does not require

plan sponsors to bring an action to collect withdrawal

liability within six years following the employer’s with-

drawal from a plan.

3. The employer’s failure to pay the sum due on a date

certain as specified by the plan’s schedule under 29 U.S.C.

1399(c)(2) is a discrete event. See also 29 C.F.R. 4219.31(a)

(“a withdrawal liability payment is overdue if it is not paid

on the date set forth in the schedule of payments estab-

lished by the plan sponsor”). For that reason, a rule that

commences a plan sponsor’s collection action at the time of

the employer’s failure to pay is precisely the type of

“firmly defined, easily applied rule{}” that a statute of

limitations demands, Wilson v. Garcia, 471 U.S. 261, 266

(1985) (quoting Chardon v. Fumero Soto, 462 U.S. 650, 667

(1983) (Rehnquist, J., dissenting)), and it furthers “[p]re-

dictability, a primary goal of statutes of limitations.”

Owens v. Okure, 488 U.S. 235, 240 (1989).

By contrast, tying the statute of limitations to the

employer’s withdrawal would make the threshold determi-

nation whether the limitations period has expired turn on

the more complicated question whether and when an em-

ployer completely withdrew under the Act. Under

MPPAA, an employer’s “complete withdrawal” generally

occurs when an employer “(1) permanently ceases to have

an obligation to contribute under the plan, oF (2) perma-

nently ceases all covered operations under the plan.” 29

U.S.C. 1383(a). “(T]he date of a complete withdrawal is the

date of the cessation of the obligation to contribute or the

cessation of covered operations.” 29 U.S.C. 1383(e). The

determination whether and when a statutory withdrawal

MPPAA * * * functions to preserve plan cash flow and to thwart the

use of dilatory tactics by employers.” Debreceni v. Merchants Termi-

nal Corp., 889 F.2d 1, 5 (1st Cir. 1989) (quoting Robbins v. Pepsi-Cola

Metro. Bottling Co., 800 F 2d 641, 642 (7th Cir. 1986)).

has occurred, however, “cannot necessarily be made upon

complete withdrawal; rather, it requires a post hoc deter-

mination of when a particular cessation of covered opera-

-ions, for example, actually signaled a permanent halt to

(rather than a lull in) operations.” Joyce, 871 F.2d at 1123.

Further, the Act provides that certain cessations of opera-

tions or obligations to contribute do not result in statu-

tory withdrawals. For example, withdrawal does not occur

upon an employer’s sale of assets if certain statutory

conditions are satisfied. See 29 U.S.C. 1384. Similarly,

wit hdrawal does not occur if “an employer ceases to exist

by reason of * * * a change in corporate structure”

where the successor continues to contribute to the plan,

or if “an employer suspends contributions under the plan

during a labor dispute involving its employees.” 29 U.S.C.

1398. A plan sponsor may also disregard any transaction a

principal purpose of which “is to evade or avoid liability”

under the Act. 29 U.S.C. 1392(c).

In addition, special rules apply to particular employers

and plans. Ifa plan primarily covers work in the building

and construction industry, a construction employer with-

draws only if the employer-ceases to have an obligation to

contribute under the plan and either (1) continues to

perform work in the jurisdiction of the collective bar-

gaining agreement of the type for which contributions

were previously required, or (2) “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)(2)(B)." Employers in the entertainment industry

——

Because a plan sponsor may not be able to determine whether a

building and construction employer has withdrawn from a plan until

five years after the time of withdrawal, the Ninth Circuit's decision in

Board of Trustees of Construction Laborers v. Thibodo, 34 F.3d 914

(1994), cert. denied, 514 U.S. 1017 (1995), held that the limitations

that participate in plans primarily covering that industry

are subject to similar provisions. 29 U.S.C. 1383(c).”

The treatment of entities under “common control” fur-

ther compounds the uncertainty associated with the deter-

mination whether and when a withdrawal has occurred.

Section 1301(b)(1) of Title 29, U.S.C., provides that “all

employees of trades or businesses * * * under common

control shall be treated as employed by a single employer.”

See 29 C.F.R. 4001.3. Thus, a plan sponsor must determine

whether an employer is a member of a controlled group

and, if so, whether the controlled group as a whole has

effectuated a withdrawal under the Act. See generally

Robbins v. Pepsi-Cola Metro. Bottling Co., 636 F. Supp.

641, 648-660 (N.D. Ill. 1986).

Moreover, a plan sponsor may not securely rely on its

own determination of when an employer’s actions consti-

tute a statutory withdrawal, for the plan sponsor’s deter-

mination is subject to review by an arbitrator and then the

courts. 29 U.S.C. 1401, 1451; ef. Concrete Pipe & Prods. of

Cal., Inc. v. Construction Laborers Pension Trust for

S. Cal., 508 U.S. 602, 630 (1993) (date of an employer’s

complete withdrawal is a “mixed question of fact and law”).

Thus, the rule fashioned by the decision below would

subject parties and the courts to needless litigation over

when a cause of action under MPPAA arose, and would

period for a suit against such an employer does not begin to run until

“the statutory conditions for withdrawal are met.” Pet. App. 28a-29a.

4 In addition, if substantially all contributions to a plan are made

by employers “primarily engaged in the long and short haul trucking

industry, the household goods moving industry, or the public ware-

housing industry,” withdrawal does not occur unless PBGC “determines

that the plan has suffered substantial damage to its contribution base

as a result of [an employer’s cessation of operations or obligation to

contribute],” or the employer fails to furnish a bond “in an amount

equal to 50 percent of the withdrawal liability of the employer.” 29

U.S.C. 1383(d).

“create, at the least, an unwieldy statutory collection

mechanism.” Joyce, 871 F.2d at 1124; cf. Wilson, 471 U.S.

at 275 (assuming that “Congress intended the identifica-

tion of the appropriate statute of limitations [under 42

U.S.C. 1983] to be an uncomplicated task for judges,

lawyers, and litigants, rather than a source of uncer-

tainty, and unproductive and ever-increasing litigation”).

4. Accrual of a plan sponsor’s collection action at the

time of withdrawal is not necessary to advance the purpose

of a statute of limitations-to “put defendants on notice of

adverse claims and * * * prevent plaintiffs from sleeping

on their rights.” Crown, Cork & Seal Co. v. Parker, 462

U.S. 345, 352 (1983); see also Klehr v. Smith Corp., No. 96-

663 (June 19, 1997), slip op. 6-7. MPPAA mandates that a

plan sponsor notify the employer of the amount of its

withdrawal liability and demand payment according to a

schedule “{aJs soon as practicable” following the plan

sponsor’s determination that a complete withdrawal has

occurred. 29 U.S.C. 1399%(b)(1). A plan fiduciary further

must discharge its duty “solely in the interest of the

[plan’s] participants and beneficiaries.” 29 U.S.C.

1104(a)(1).

Because a plan fiduciary must act with reasonable

promptness in notifying an employer of its withdrawal

liability obligations under MPPAA, there is no force to

the Ninth Circuit’s concern (Pet. App. 27a) that a rule that

defers accrual of a collection suit until after an unmet

demand for payment “improperly places the running of the

limitations period in the control of the plaintiff.” A plan

sponsor that unduly delays in notifying the employer of its

liability “puts at risk the solvency of the plan and thus

may invite a claim for breach of fiduciary duty.” Joyce, 871

F.2d at 1126. The passage of time also makes it less likely

that a plan fiduciary will be able to collect against

insolvent or defunct employers, like respondent. See Br.

in Opp. 5. And, of course, the longer a plan sponsor waits

to collect withdrawal liability, the less investment earn-

ings the plan may obtain on the funds once collected.” In

any event, it makes little sense to craft a rule of limita-

tions predicated solely on the hypothetical possibility that

a particular plan fiduciary might not comply with its

statutory and fiduciary duties to protect the plan’s

interests. See Central States Pension Fund v. Central

Transp., Inc., 472 U.S. 559, 571 (1985) (“ERISA clearly

assumes that trustees will act to ensure that a plan

receives all funds to which it is entitled, so that those

funds can be used on behalf of participants and beneficiar-

ies”); ef. FDIC v. Henderson, 61 F.3d 421, 426 (5th Cir.

1995) (“the law usually presumes that directors will exer-

cise their fiduciary duties”); United States v. Chemical

Found., Inc., 272 U.S. 1, 14-15 (1926) (“in the absence of

clear evidence to the contrary, courts presume that [public

officers] have properly discharged their official duties”),

Accordingly, the reasons advanced by the Ninth Circuit to

support a withdrawal-accrual rule lack merit."

In addition, some courts have held that an employer that is pre-

judiced by a plan sponsor’s failure to demand withdrawal liability “as

soon as practicable” following the employer’s withdrawal may assert

the plan sponsor’s delay as a defense in arbitration. See, e.g., Joyce,

871 F.2d at 1126-1127.

three-year discovery-accrual provision, 29 U.S.C. 1451(f)(2). See note 9,

supra. The Ninth Circuit believed that “(tJhere is little reason” for the

discovery-accrual provision “if the cause of action does not come into

existence until demand for payment is made and refused.” Pet. App.

28a. Like the claim-accrual provision in 29 U.S.C. 1451(f)(1), however,

the discovery-accrual provision applies to any “act or omission of any

party under [29 U.S.C. 1381-1453].” See 29 U.S.C. 1451(a). In addition

to actions under MPPAA’s withdrawal-liability provisions, 29 U.S.C.

1381-1405, MPPAA's time-bar applies to actions under the Act’s pro-

visions for mergers and other transfers of plan assets (29 U.S.C. 1411-

1415), reorganization status and minimum contribution requirements

B. Petitioner's Cause of Action is Timely as to Payments

Falling Overdue Within Six Years Before The Filing

of The Con saint

1. Because a plan sponsor’s cause of action does not

arise on the date of the employer’s withdrawal, the Ninth

Cireuit’s decision affirming the dismissal of petitioner’s

complaint was in error. Petitioner filed its complaint on

February 9, 1993, more than six years following the em-

ployer’s first missed installment payment on February 1,

1987, but less than six years following the employer's next

scheduled payment. The fact that petitioner did not file

suit within six years after the employer’s first missed

payment on February 1, 1987, does not bar petitioner’s suit

insofar as it seeks to collect the remaining delinquent

installments.

A plaintiff generally may recover damages caused by

each statutory violation occurring within the limitations

period. See, e.g., Klehr, slip op. 8-9 (noting decisions under

civil RICO); Zenith Radio Corp. v. Hazeltine Research,

Inc., 401 U.S. 321, 338 (1971) (Clayton Act); Ashley v.

Boyle's Famous Corned Beef Co., 66 F.3d 164, 168 (8th Cir.

1995) (Title VII and Equal Pay Act); Knight v. Columbus,

Ga., 19 F.3d 579, 582 (11th Cir.) (Fair Labor Standards

Act), cert. denied, 513 U.S. 929 (1994); State Farm Mut.

Auto. Ins. Co. v. Ammann, 828 F 2d 4, 5 (9th Cir. 1987)

(Kennedy, J., concurring) (noting rule under Section 1983

actions). For example, in a plan fiduciary’s suit against an

employer for failure to make monthly contributions to a

multiemployer plan in violation of 29 U.S.C. 1145, “[t)he

limitations period runs against each monthly right of

(29 U.S.C. 1421-1424), and benefits after termination of plans (29 U.S.C.

1441). Accordingly, because the discovery-accrual provision “extends to

matters far beyond collection of withdrawal liability,” that provision

“retains independent significance” even if a collection suit accrues at

the time of nonpayment. Joyce, 871 F 2d at 1125.

action separately.” Trustees for Alaska Laborers v.

Ferrell, 812 F.2d 512,517 (9th Cir. 1987)." Similarly here,

an employer that fails to pay any installment payment

according to the schedule set forth by the plan sponsor, 29

U.S.C. 1399(c)(2), has violated MPPAA, and each missed

payment by the employer constitutes a separate violation

of the Act. A plan sponsor “adversely affected” by each

missed payment thus has a separate cause of action under

29 U.S.C. 1451(a) with respect to that payment, and ma

“recover the payments due during the six years preceding

the filing of its lawsuit.” Kahle Eng’g, 43 F.3d at 857.

2. The law is well settled that, “[iJn the case of an

obligation payable by instalments, the statute of limita-

tions runs against each instalment from the time it be

comes due,” even though “the debtor has the option to pay

the entire indebtedness at any time.” 51 Am. Jur. 2d Limi-

tation of Actions § 138 (1970); see also 1 C. Corman,

Limitation of Actions § 7.2.9 (1991) (“Default on money

obligations that are payable in installments creates a

separate cause of action, with its concomitant statute of

limitations, against each installment as it becomes

due.”).” Moreover, “where there is an acceleration clause

' MPPAA provides that, in any action “to compel an employer to

pay withdrawal liability, any failure of the employer to make any

withdrawal liability payment within the time prescribed shall be

treated in the same manner as a delinquent contribution [under 29

U.S.C. 1145}.” 29 U.S.C. 1451(b); see also 29 U.S.C 1401(d). It therefore

is especially appropriate that the same limitations rule should apply to

delinquent contributions and delinquent payment of scheduled

withdrawal liability installments.

® That principle applies whether the obligation is imposed by con-

tract or by federal statute. See, ¢.g., Waggoner v. Dallaire, 649 F.2d

1362, 1368 (9th Cir. 1981) (suit under Section 301(a) of Labor Man-

agement Relations Act (29 U.S.C. 1144) to collect delinquent monthly

trust contributions); Russell v. United States, 314 F.2d 809, 811 (Ct. Cl.

1963) (suit to collect periodic pay claims under Officer Personnel Act of

to declare the whole indebtedness due, in which case the

statute begins to run from the date of the exercise of his

option.” 51 Am. Jur. 2d Limitation of Actions § 133 (1970);

see also 1 Corman, supra, § 7.2.9; 4 A. Corbin, Contracts

§ 951 (1951); 18 S. Williston, A Treatise on the Law of

Contracts §§ 2026C, 2027 (3d ed. 1978).

Under those principles, unless a plan sponsor has

elected to accelerate the employer’s debt under 29 U.S.C.

1399(¢)(5), a separate cause of action arises on the date

each payment becomes overdue. In this case, respondent

does not contend that its debt was accelerated by

petitioner.” Accordingly, petitioner’s suit to collect the

February 1, 1987 missed payment is time-barred, but the

1947); Davis v. Alabama Power Co., 383 F. Supp. 880, 893-894 (N.D.

Ala. 1974) (suit for wages under Military Selective Service Act of

1967), aff'd, 542 F.2d 650 (5th Cir. 1976), aff'd, 431 U.S. 581 (1977); see

also cases cited at note 19, infra.

® See, e.g., United States v. Dos Cabezas Corp., 995 F.2d 1486, 1490-

1491 (9th Cir. 1993); United States v. Alessi, 599 F 2d 513, 515 (2d Cir.

1979); Snyder v. Madera Broadcasting, Inc., 872 F. Supp. 1191, 1197

(E.D.N.Y. 1995); RTC v. Koock, 867 F. Supp. 284, 288 (E.D. Pa. 1994);

United States v. LaFrance, 728 F. Supp. 1116, 1119-1120 (D. Del. 1990)

(collecting authorities).

complaint is timely filed as to all missed installment pay-

ments falling due thereafter. Cf. Compl. 44 26, 27 (seeking

the entire amount of withdrawal liability or, alternatively,

the amount of the delinquent monthly payments owed

between February 1987 and the time of trial).

In ruling to the contrary, the court below reasoned that

because respondent “never agreed to the installment plan

proposed by the Fund and made no installment payments,”

respondent did not enter into a “new contract to pay off the

withdrawal liability.” Pet. App. 5a n.4; see also Navco, 3

F.3d at 172 (“the employer did not assent to a longer

[installment] period for payment and suit”). An employer's

lack of consent, however, cannot overcome MPPAA’s ex-

press statutory command that an employer discharge its

withdrawal liability debt “in * * * equal installments.”

29 U.S.C. 1399(c\(3). Those installments may extend as

long as 20 years. 29 U.S.C. 1399%(c)(1)(B). This Court has

explained that the “installment method” of payment fur-

thers MPPAA’s goal of “maintaining level funding for the

plan.” Milwaukee Brewery, 513 U.S. at 418-419. Thus,

unless the employer prepays its withdrawal liability debt,

29 U.S.C. 1399(c)(4), MPPAA does not permit an employer

to opt out of its installment obligations.

Similarly, the notion that a fund has “only one claim

against the employer,” Navco, 3 F.3d at 172, is incon-

sistent with the provisions of MPPAA relating to default

and acceleration. A plan sponsor may “require immediate

payment of the outstanding amount of an employer’s with-

drawal liability” only “(ijn the event of a default.” 29

U.S.C. 1399(c)(5). Default does not occur under the Act

unless the failure to pay is not cured by the employer

within 60 days after it receives written notification from

the plan sponsor that payment is overdue. 29 U.S.C.

1399(c\(5)(A); 29 C.F.R. 4219.31(b)(1\(i). Moreover, default

“shall not occur” until as much as 60 days after arbitra-

tion has concluded. 29 C.F.R. 4219.31(c)(1). Thus, unless

the employer has failed after 60 days to cure a prior

delinquency, and until the period in which arbitration may

occur has passed, the plan sponsor may neither demand

payment for the entire outstanding amount of the em-

ployer’s withdrawal liability nor bring a collection suit

under the Act for the full amount. Given those restric-

tions on demanding payment of the entire amount of unpaid

liability, a cause of action to recover the entire amount of

withdrawal liability cannot arise under 29 U.S.C. 1451(f)

at the time of the employer’s first missed installment

payment. See Borer, 119 U.S. at 602; cf. Crown Coat, 386

U.S. at 511-512 (government contractor’s claim for equita-

ble adjustment under six-year limitations period, 28

U.S.C. 2401(a), accrued only after exhaustion of admin-

istrative appeals because only then could contractor file

suit in court).”

For the foregoing reasons, unless a plan sponsor has

accelerated payment of the employer’s entire debt fol-

lowing the employer’s default, the plan sponsor’s cause of

action does not run with respect to all installment pay-

ments on the date of the first missed payment. Peti-

tioner’s suit is therefore timely as to all missed install-

ments falling due within the limitations period.

21 Even upon the employer’s default, the outstanding amount of the

withdrawal liability is not “presumptively due at the outset” (Navco, 3

F.3d at 172), because the Act places the decision to accelerate some or

all of the outstanding liability within the discretion of the plan sponsor.

29 U.S.C, 139% ¢cX5); 29 C.F.R. 4219.31(b2). Indeed, a rule that im-

poses an “[ajutomatic default on the entire balance from the date of the

first missed payment discourages amicable resolution of disputes and

discourages reentry into the fund as a contributing employer.” Kahle,

43 F.3d at 859.

CONCLUSION

The judgment of the court of appeals should be reversed.

Respectfully submitted.

WALTE« DELLINGER

Acting Solicitor General

JAMES J. KEIGHTLEY EDWIN S. KNEEDLER