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

IN THE

Supreme Court of the Unite

OCTOBER TERM, 1996

BOARD OF TRUSTEES, BAY AREA LAUNDRY AND

Dry CLEANING PENSION TRUST FUND,

.. Petitioner,

FERBAR CORPORATION OF CALIFORNIA, INC.;

STEPHEN BARNES,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

MOTION FOR LEAVE TO FILE BRIEF AS AMICUS

CURIAE AND BRIEF OF JOHN T. JOYCE, ET AL.,

TRUSTEES OF THE BRICKLAYERS AND TROWEL

TRADES INTERNATIONAL PENSION FUND AS

AMICUS CURIAE IN SUPPORT OF PETITIONER

IRA R. MITZNER

Counsel of Record

Woopy N. PETERSON

BRIDGET O’CONNOR

DICKSTEIN SHAPIRO MORIN

& OSHINSKY LLP

2101 L Street, N.W.

Washington, D.C. 20037-1526

(202) 785-9700

Attorneys for Amicus Curiae

John T. Joyce, et al., Trustees

of the Bricklayers and Trowel

Trades International Pension

Fund

Witson - Eras Printing Co., inc. - 789-0096 - WASHINGTON, D.C. 20001

o<a ~

»

IN THE

Supreme Court of the United States

OCTOBER TERM, 1996

No. 96-370

BOARD OF TRUSTEES, BAY AREA LAUNDRY AND

Dry CLEANING PENSION TRUST FUND,

’ Petitioner,

FERBAR CORPORATION OF CALIFORNIA, INC.;

STEPHEN BARNES,

Respondents.

On Writ of Certiorari to the

United States Court ef Appeals

for the Ninth Circuit

MOTION FOR LEAVE TO FILE BRIEF AS

AMICUS CURIAE

Pursuant to Rule 37 of the Rules of this Court, John T.

afiS

:

:

iB

228

fe)

g

oF

B

ae

victory in Sandoz, which will be turned into a de facto

defeat if this Court affirms the judgment below.

The IPF, a multiemployer ERISA pension fund that is

not “fully funded” (such that its employers may be subject

to withdrawal liability under MPPAA), operates in the

“construction industry,” within the meaning of MPPAA.

29 U.S.C. § 1383(b). The IPF receives contributions

from over 7,000 participating employers located in every

state and provides benefits to over 16,000 participants.

Over 90% of these employers have seven or fewer em-

ployees, and many operate seasonally.

It is difficult for the IPF to collect withdrawal liability

from such companies in the construction business, an in-

dustry which, as Congress has recognized, is notable for

its transitory nature. Sandoz, 871 F.2d at 1123. These

difficulties are compounded by the IPF’s status as a “con-

struction industry” fund governed by different and more

stringent rules for determining when an employer has

“withdrawn.”

The Ninth Circuit’s rule adds to these burdens by

engrafting a statute of limitations restriction that, we sub-

mit, is contrary to MPPAA’s text. The IPF’s position pre-

vailed in Sandoz, and the IPF believes that this Court

would benefit from having that position before it in pass-

ing on the merits of the present Petition.

Respectfully submitted,

IRA R. MITZNER

Counsel of Record

Woopy N. PETERSON

BRIDGET O’ CONNOR

DICKSTEIN SHAPIRO MORIN

& OSHINSKY LLP

2101 L Street, N.W.

Washington, D.C. 20037-1526

(202) 785-9700

Attorneys for Amicus Curiae

John T. Joyce, et al., Truste »s

of the Bricklayers and Trowel

Trades International Pension

July 17, 1997 Fund

_

TABLE OF CONTENTS

Page

I ii

INTEREST OF THE AMICUS CURIAE ............. 1

I 2

SUMMARY OF ARGUMENT... 3

EE ' 5

I. ERISA’S PLAIN LANGUAGE REQUIRES

SEE 6

II. EVEN IF THE ACT’S TEXT DID NOT COM-

PEL REVERSAL, THE JUDGMENT COULD

EEE i)

EEE 13

(i)

ii

TABLE OF AUTHORITIES

Cases: Page

Bay Area Laundry & Dry Cleaning Pension Trust

Fund v. Ferbar Corp., 73 F.3d 971 (9th Cir.

SSS 3,5

Board of Trustees of Construction Laborers Pen-

sion Trust v. Thibodo, *%4 F.3d 914 (9th Cir.

1994), cert. denied, 514 U.S. 1017 (1995)... passim

Board of Trustees of District No. 15 Machinists’

Pension Fund v. Kahle Engineering Corp., 43

I x 5, 8

Central States, Southeast & Southwest Areas Pen-

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

cert. denied, 510 U.S. 1115 (1994) 0 5

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

ee es ee 5, 11, 12,13

Inter-Modal Rail Employees Ass'n v. Atchison,

Topeka & Santa Fe Ry., 117 S. Ct. 1513 (1997). &

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

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

Ludington News Co., 9 Employee Benefits Cas.

(BNA) 1913 (1988) (Cornelius, Arb.) ........... 7,12

Mertens v. Hewitt Associates, 508 U.S. 248

SE Se ee 3-4, 8,9

Milwaukee Brewery Workers’ Pension Plan v. Jos.

Schlitz Brewing Co., 513 U.S. 414 (1995)... passim

Rawlings v. Ray, 312 U.S. 96 (1941) —............... 5, 10, 11

Teamsters Joint Council No. 83 v. CenTra, Inc.,

947 F.2d 115 (4th Cir. 1991) A 7

United Steelworkers of America v. Warrior & Gulf

Navigation Co., 363 U.S. 574 (1960) ............... 13

Statutes:

Emplovee Retirement Income Security Act of 1974,

gy Gf OP Fe 2

Multiemplover Pension Plan Amendments Act of

1980, 29 U.S.C. §§ 1281-1461 ...... 1 a 1

TE EE I vs 2

8 EE SE rane 2,3

iii

TABLE OF AUTHORITIES—Continued

Page

I 7

TT 6, 7,13

29 U.S.C. § 1899(b) (2) (A) ................................ 6

29 U.S.C. § 1399(b) (2) (B) -.............~............... 6-7

aT 7

I 7

ee 12

a 7

LL ae 5, 7, 8, 12

CS 7, 8,12

CC 4,9

ESE 4,9

TT a

Legislative Material:

H.R. Rep. No. 96-869, pt. 1 (1980), reprinted in

TC 2

Senate Comm. on Labor and Human Resources,

96th Cong., Summary and Analysis of Consider-

ation of S. 1076 (Comm. Print 1980)... 3

In THE

Supreme Court of the United States

OcTOBER TERM, 1996

No. 96-370

BOARD OF TRUSTEES, BAY AREA LAUNDRY AND

Dry CLEANING PENSION TRUST FUND,

. Petitioner,

FERBAR CORPORATION OF CALIFORNIA, INC.;

STEPHEN BARNES,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF OF JOHN T. JOYCE, ET AL.,

TRUSTEES OF THE BRICKLAYERS AND TROWEL

TRADES INTERNATIONAL PENSION FUND

AS AMICUS CURIAE

IN SUPPORT OF PETITIONER

INTEREST OF THE AMICUS CURIAE *

John T. Joyce and the other Trustees of the Bricklayers

and Trowel Trades International Pension Fund (“IPF” or

“Fund”) successfully litigated Joyce v. Clyde Sandoz

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

U.S. 918 (1989). Sandoz presented a question that was

then of first impression: when does a cause of action

“arise” (29 U.S.C. § 1451(f)(1)) for statute of limita-

tions purposes in a MPPAA'’ withdrawal liability case?

* This brief was authored in whole by counsel for amicus curiae.

No person or entity other than amicus curiae made a monetary

contribution to the preparation or submission of this brief.

1“MPPAA” or the “Act” refers to the Multiemployer Pension

Plan Amendments Act of 1980, 29 U.S.C. §§ 1381-1461, which

2

Sandoz’s answer to that question—the one advanced by

the IPF—was explicitly rejected by the Ninth Circuit be-

low. The IPF and its participants have an interest in pre-

serving their 1989 victory in Sandoz, which will be trans-

formed into a de facto defeat if this Court affirms the

judgment below.

INTRODUCTION

The IPF is a multiemployer ERISA pension fund that

provides pension and other benefits to over 16,000 partici-

pants. It has offices only in Washington, D.C., but receives

contributions from over 7,000 participating employers

located in every state. Over 90% of these employers have

seven or fewer employees, and many operate seasonally,

resulting in a constant fluctuation of hours reported to the

IPF upon which contributions must be paid.

Because the IPF is not “fully funded,” its employers

may be subject to certain MPPAA liabilities that the Act

requires the IPF to collect upon an employer’s “with-

drawal” from the Fund. A MPPAA “withdrawal” occurs

in most industries when an employer “permanently ceases

to have an obligation to contribute” to the plan or “per-

manently ceases all covered operations under the plan.”

29 U.S.C. § 1383(a). However, for “construction indus-

try” funds like the IPF, the MPPAA rule is more complex

and stringent: a construction industry employer “with-

draws” from such a plan only if it (1) “ceases to have an

obligation to contribute under the plan” and (2) “con-

tinues to perform work in the jurisdiction . . . of the type

for which contributions were previously required, or . . .

resumes such work within 5 years.” 29 U.S.C. § 1383(b).

amended the Employee Retirement Income Security Act of 1974,

29 U.S.C. §§ 1001 et seq. (“ERISA”).

2 Congress enacted this provision in order to accommodate con-

struction industry employers that moved from one locality to the

next, depending upon work demand, H.R. Rep. No. 96-869, pt. 1,

at 75-76 (1980), reprinted ir 1980 U.S.C.C.A.N. 2918, 2943-44;

3

IPF employers report their level of employment, and

resulting contribution obligations, on standard forms sub-

mitted to the Fund. When an employer ceases to report

contributions, the IPF does not know if the employer

has “withdrawn” from the IPF within the meaning of

§ 1383(b), or has merely moved on to a construction

project in another state." As a result of the restrictive

statutory definition of “withdrawal” in the construction

industry, it is usually impossible for the IPF to impose li-

ability on an employer unless the Fund receives informa-

tion that the company has gone “non-union” in the juris-

diction—refuses to sign a collective bargaining agreement

and continues to do the same type of work (e.g., brick or

tile laying) in the same jurisdiction.

SUMMARY OF ARGUMENT

Sandoz held that an ERISA plan’s “cause of action” for

collection of withdrawal liability for MPPAA statute of

limitations purposes “arises” only after the plan unsuccess-

fully demands that the employer pay its withdrawal lia-

bility. The Ninth Circuit here, following its prior decision

in Board of Trustees of Construction Laborers Pension

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

denied, 514 U.S. 1017 (1995), rejected Sandoz and held

instead that the statute of limitations begins to run on the

date of an employer’s “withdrawal” from the plan. Bay

Area Laundry & Dry Cleaning Pension Trust Fund v.

Ferbar Corp., 73 F.3d 971 (9th Cir. 1996). Sandoz (but

not the Ninth Circuit) faithfully adhered to “the words of

[ERISA’s] text regarding the specific issue under consid-

eration” (Mertens v. Hewitt Associates, 508 U.S. 248, 261

Senate Comm. on Labor and Human Resources, 96th Cong., Sum-

mary and Analysis of Consideration of S. 1076 at 13 (Comm.

Print 1980) ; see also Sandoz, 871 F.2d at 1123.

* Even if that employer operates without a collective bargaining

agreement in another state, there is no “withdrawal” because of the

“continues to perform work in the jurisdiction” requirement of

29 U.S.C. § 1383(b).

4

(1993) (emphasis in original) ), and remained true to the

plain meaning of MPPAA’s language (Milwaukee Brew-

ery Workers’ Pension Pian v. Jos. Schlitz Brewing Co.,

513 U.S. 414 (1995) (“Schlitz”) ).

MPPAA contains a carefully crafted and precise with-

drawal liability scheme that culminates in arbitration.

Contrary to the Ninth Circuit’s approach, “withdrawal,”

without more, does not require an employer to pay any-

thing. Schlitz, 513 U.S. at 423. Nor does it in any way

“adversely affect” the plan (the statutory precondition for

a plan’s suit against the employer); rather, it simply sets

in motion MPPAA’s procedural machinery. Sandoz, 871

F.2d at 1124.

Thibodo also opines that “[t}here is little reason for the

second clause [of 29 U.S.C. § 1451(f), which provides

that the limitations period runs 3 years from the time the

plan acquired knowledge] if the cause of action does not

come into existence until demand for payment is made and

refused.” 34 F.3d at 918. But such a construction again

ignores the statutory text, which states that § 1451 applies

not only to withdrawal actions, but also to many other

types of suits, including transfer of plan assets, reorganiza-

tion of plans and benefits after termination. See Sandoz,

871 F.2d at 1125.

The Ninth Circuit's failure to adhere to MPPAA’s text

in the above 1espects alone warrants reversal. Beyond

that, the court of appeals’ decision is bottomed on a series

of fundamental errors. For example, the Thibodo panel's

conclusion was driven by its “view” that Sandoz “improp-

erly” places the running of the statute of limitations period

in the plan’s “control.” 34 F.3d at 917, 918 n.7. That

view rests on a misunderstanding of the statutory scheme,

because the “[a]s soon as practicable” requirement of

MPPAA means that an arbitrator, not the plan, controls

the timeliness issue. Moreover, the MPPAA statute of

limitations is no more “improper” than analogous statutes

-?

5

sustained by this Court in Rawlings v. Ray, 312 U.S. 96

(1941), and Crown Coat Front Co. v. United States, 386

U.S. 503 (1967).

ARGUMENT

Under MPPAA, an action for collection of withdrawal

liability must be brought “6 years after the date on which

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

District of Columbia Circuit, after a meticulous analysis

of the statutory language, ruled that a cause of action

“arises” only after the plan first notifies the employer of

the withdrawal liability and the employer then fails to

make the payment demanded. Sandoz, 871 F.2d at 1124.

Dismissing the employer’s argument that the statute ran

from the time of “withdrawal,” the Sandoz court concluded

that before the employer refuses to pay, no money is “due

and owing” (29 U.S.C. § 1401(b)(1)) to the plan by the

employer. 871 F.2d at 1122, 1124; accord Schlitz, 513

U.S. at 423 (“the statute makes clear that the withdrawing

employer owes nothing until its plan demands payment”).

Because no money is due upon “[t]he employer’s com-

plete withdrawal,” that event, “without more, is an occur-

rence that hardly affects the plan adversely”; until the plan

is so affected, it cannot sue the employer under MPPAA

to collect. Sandoz, 871 F.2d at 1122, 1124.*

The Ninth Circuit below rejected Sandoz on the basis

of its prior controlling decision in Thibodo.’ The Thibodo

*The Seventh and Third Circuits subsequently followed Sandoz

in Central States, Southeast & Southwest Areas Pension Fund v.

Naveo, 3 F.3d 167 (7th Cir. 1998), cert. denied, 510 U.S. 1115

(1994), and Board of Trustees of District No. 15 Machinists’ Pen-

sion Fund v. Kahle Engineering Corp., 43 F.3d 852 (3d Cir. 1994).

5 Because the Ninth Circuit deemed Thibodo to have “spoken

dispositively on this issue” (Bay Area Laundry & Dry Cleaning

Pension Trust Fund v. Ferbar Corp., 73 F.3d 971, 973 (9th Cir.

1996)) and its analysis to control this case, we discuss the two

cases interchangeably in this brief.

6

court decided that the statute of limitations “begins to run

from the date on which the conditions for complete with-

drawal specified in § 1383(b)(2) have been met,” that is,

on the day “withdrawal” occurs. 34 F.3d at 917. The

court listed several factors which led it to that conclusion.

First, even in the construction industry, determining

whether an employer has withdrawn supposedly is “rela-

tively straightforward.” Id. at 917-18. Second, the court

saw “no reason .. . to choose a date of limitations that is

in the control of the plaintiff.” Jd. at 918. Third, there

would be “little reason for” the second clause of the limita-

tions provision (3 years from discovery) if the 6-year

period were triggered by the fund’s demand. /d.

As we shall demonstrate, the Ninth Circuit’s opinion is

at odds with the plain language of the statute and is other-

wise fatally flawed.

I. ERISA’S PLAIN LANGUAGE REQUIRES RE-

VERSAL

ERISA, as amended by MPPAA, “provides an elaborate

system to ensure the financial integrity of multiemployer

pension funds.” Sandoz, 871 F.2d at 1120. MPPAA

discourages employers from withdrawing from a “finan-

cially shaky plan” by “impos[ing] a withdrawal charge on

all employers withdrawing from an underfunded plan.”

Schlitz, 513 U.S. at 416-17. And, “it set forth a detailed

set of rules for determining, and collecting, that charge.”

Id. at 417.

These rules first come into play when the plan calculates

the liability, and then “notif[ies]” the employer of (i) the

amount of the liability and (ii) the schedule for liability

payments and “demand[s] payment in accordance with the

schedule.” 29 U.S.C. § 1399(b)(1). Within 90 days of

receiving the demand, the employer may ask the plan to

review the determination. 29 U.S.C. § 1399(b)(2)(A).

The plan shall reply “[a]fter a reasonable review.” 29

7

U.S.C. § 1399(b)(2)(B). In the interim, the employer

must begin making payments according to the schedule,

notwithstanding any dispute over the fact or amount of li-

ability. 29 U.S.C. § 1399(c)(2).* Thereafter, either party

may initiate arbitration to resolve any outstanding disputes.

29 U.S.C. § 1401(a)(1). Arbitration is central to the sta-

tutory mechanism by which an employer may challenge

the fund’s assessment of withdrawal liability.’ Only then

may the plan sue to “enforce, vacate, or modify” the ar-

bitrator’s award. 29 U.S.C. § 1401( b)(2).*

MPPAA “carefully distinguishes between the circum-

stances that define complete withdrawal and those which

give rise to a cause of action.” Sandoz, 871 F.2d at 1123.

In the construction industry, “withdrawal” occurs when an

employer oe My have an obligation to contribute” and

resumes work in that jurisdiction “within 5 years” of that

date. 29 U.S.C. § 1383(b)(2). In pen a cause of

action can “arise” under MPPAA’s withdrawal procedures

only after (1) an “arbitration proceeding” (29 U.S.C.

§ 1401(a)(1)), (2) the failure of an employer to make

mA arma st U.S.C. § 1399(c)(2)), or (3) a

efau y the employer in making a required pa

(29 US.C. § 1399(c)(5)). Until ht Py sae + coe pec

utorily defined events occurs, a plan cannot “bring an

*If the employer fails to make interim payments, the fund may

sue to compel payment, consistent with MPPAA’s “pay now, dis-

pute later” procedure. Teamsters Joint Council No. 83 v CenTra

Inc., 947 F.2d 115, 119 (4th Cir. 1991).

*MPPAA mandates that the assessment be made “[a]s soon as

practicable” (29 U.S.C. § 1399(b)(1)), a requirement a may be

raised by the employer as a defense in the statutory arbitration

See, e.g., Ludington News Co., 9 Employee Benefits Cas. (BNA )

1913, 1919 n.9 (1988) (Cornelius, Arb.). )

‘If arbitration is not initiated, the amounts demanded by the

plan ‘shall be “due and owing on the schedule set forth by the

plan,” and the plan then “may bring an action in a State or Fed-

eral court of competent jurisdiction for co “ale

§ 1401(b) (1). llection.” 29 U.S.C.

8

action” against the employer to collect withdrawal liability.

29 U.S.C. §§ 1401(b) (1), 1401(b) (2).

The text of MPPAA’s “elaborate system” compelled the

Sandoz court to conclude that it was only “Sandoz’s un-

cured failure to pay the sum demanded” that “adversely

affected the plan, thus giving rise to a cause of action.

871 F.2d at 1120, 1122.° The District of Columbia Cir-

cuit’s reliance on the statutory language comports with

ERISA’s “carefully crafted and detailed enforcement

scheme,” which requires adherence to “the words of its

text regarding the specific issue under consideration.

Mertens, 508 U.S. at 254, 261 (emphasis in original). It

is equally consistent with this Court’s teachings that it 1s

the texts of ERISA and its MPPAA amendments, not

their “basic objectives,” that control. In Schlitz, for ex-

ample, this Court concluded that the statute’s language

required interest to be calculated from the first day of the

plan year following withdrawal, despite the plan’s argu-

ment that such an “interpretation works against the basic

objective of the statute, requiring a withdrawing employer

to pay a fair share of the underfunding.” 513 U.S. at 422,

425. Likewise, in Mertens, this Court looked to “the

words of [ERISA’s] text” rather than to its “basic pur-

pose” in declining to read into the statute a cause of action

against nonfiduciaries. 508 U.S. at 261; see also Inter-

Modal Rail Employees Ass'n v. Atchison, Topeka & Santa

Fe Ry., 117 S. Ct. 1513, 1515 (1997).

The Ninth Circuit’s rationale does not rest on the

statutory language, as it must under Mertens and Schlitz.

® Sandoz did not have to reach the subsidiary question of how

the limitations period applies once the employer fails to pay the

withdrawal liability demanded by the plan. We therefore do not

address it, except to note our agreement with Petitioner that the

Third Circuit's answer in Board of Trustees of District No. 15

Machinists’ Pension Fund v. Kahle Engineering Corp., 43 F.3d 852

(3d Cir. 1994), is the correct one under the reasoning of Sandoz.

i 7 ——

9

Thus, Thibodo baldly concluded that “the limitations pe-

riod . . . begins to run from the date on which the con-

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

have been met” (34 F.3d at 917), without identifying the

event that gives rise to a “cause of action” (29 U.S.C.

§ 1451(f)) for the purpose of computing the statute of

limitations. The Thibodo panel drew support for this

conclusion from its “view” (unsupported by anything in

the statute) that its construction avoided “improperly plac-

[ing] the running of the limitations period in the control

of the plaintiff.” 34 F.3d at 917. But under Schlitz and

Mertens, such a “view” cannot trump the statutory text.

The Thibodo court further misread the statute when it

found “little reason for the second clause [of 29 U.S.C.

§ 1451(f)] if the cause of action does not come into ex-

istence until demand for payment is made and refused.”

34 F.3d at 918. MPPAA on its face supplies the com-

plete refutation:

If the [time] bar applied only to plan sponsors’ suits

to collect delinquent withdrawal liability payments,

the argument would carry some weight. However, the

time bar applies to “[a]n action under this section.”

Section 1451, situated at the beginning of the subtitle

part entitled “enforcement,” is hardly limited to the

type of suit before us. Indeed, section 1451 applies

to suits brought by a wide variety of parties . . . [and]

extends to matters far beyond collection of withdrawal

liability [including, among other things, transfer of

plan assets, reorganization of plans and benefits after

termination of plans].

Sandoz, 871 F.2d at 1125.

Il. EVEN IF THE ACT’S TEXT DID NOT COMPEL

REVERSAL, THE JUDGMENT COULD NOT STAND

The court of appeals’ failure to give effect to the “words

of [ERISA’s] text” alone requires reversal under this

Court’s precedent. While that is dispositive, we are con-

—_—

10

strained to point out that the Ninth Circuit’s rationale fails

even on its own terms.

First, the Ninth Circuit’s conclusion that its result would

“not lead to debilitating uncertainty” (Thibodo, 34 F.3d

at 917) misapprehends the difficulty of determining when

an employer has “withdrawn” under the statutory language

governing the construction industry. Sandoz is a good ex-

ample of that very difficulty. Clyde Sandoz Masonry Con-

tractors, Inc. (“Sandoz”), a contractor located in Phoenix,

Arizona, had been a participating employer in the IPF

since at least 1975." This contractor ceased doing busi-

ness under the name “Sandoz” and stopped making con-

tributions to the IPF in 1981. A new corporation, op-

erating under the name “Griffith Masonry,” continued in

the same trade as Sandoz in the Phoenix area without be-

ing a party to a collective bargaining agreement. During

a June 1987 meeting in Phoenix, the IPF Executive Direc-

tor fortuitously learned that certain Phoenix area employ-

ers had gone “non-union”; only later did he discover

specifically that Sandoz was operating “non-union” as

“Griffith Masonry.” Promptly thereafter, the IPF calcu-

lated Sandoz’s withdrawal liability to be over $250,000,

and sent a letter to Sandoz demanding payment. As San-

doz demonstrates, it is factually incorrect to say that de-

tecting construction industry withdrawals is “straightfor-

ward” (Thibodo, 34 F.3d at 918).

Second, Thibodo deemed the Sandoz result to be “im-

proper” because it purportedly “places the running of the

limitations period in the control of the plaintiff.” 34

F.3d at 917, 918 n.7. The Ninth Circuit cited no auth-

ority for this proposition, which ignores analogous prece-

dent from this Court. When confronted with a strikingly

similar statute of limitations, this Court in Rawlings v.

Ray, 312 U.S. 96 (1941), read the operative language as

did Sandoz. In Rawlings, the Comptroller of the Currency

10 These facts are taken from the Sandoz Record on Appeal.

11

declared an Arkansas bank insolvent and imposed an as-

sessment on its shareholders on November 6, 1935, pay-

able on or before December 13, 1935. The shareholders

failed to pay and, on December 7, 1938, the receiver

brought suit. The applicable statute of limitations pro-

vided that an action must be commenced “within three

years after the cause of action shall accrue.” Jd. at 97.

Chief Justice Hughes gave short shrift to the shareholders’

argument that the suit was time-barred by the November

6, 1935 assessment:

While the assessment was made on November 6,

1935, it was expressly made payable on or before

December 13, 1935. Respondent was allowed until

that date to pay and prior thereto suit coula not be

maintained against him. Hence the statute of limita-

tions did not begin to run until December 13, 1935

[upon failure to pay|, and the suit was in time.

Id. at 98 (emphasis added). Here, as in Rawlings, an ac-

tion does not “accrue” under MPPAA until demand has

been made on the employer and the employer fails to pay.

Crown Coat Front Co. v. United States, 386 U.S. 503

(1967), is likewise instructive in this regard. There, a

government contractor sued for wrongful denial of a con-

tract claim by the Armed Services Board of Contract Ap-

peals. The contract at issue provided for mandatory ad-

ministrative review of disputes arising thereunder, with the

final decision subject to judicial review. The contractor

sought such judicial review more than six years after he

had completed performance of the contract. The Gov-

ernment moved to dismiss, relying upon a limitations

period requiring that civil actions against the United

States be filed “within six years after the right of action

first accrues.” Jd. at 507. This Court held that the claim

“accrued” at the time of the “final decision” of the ad-

ministrative body, not at the time of contractual perform-

ance:

To hold that the six-year time period runs from the

completion of the contract, as the Government in-

ore

board of appeals. Even if he prevailed there and was

granted the equitable adjustments he sought, the Gov-

ernment would be immune from suit to enforce

award if more than six years had passed since the

completion of the contract. This is not an appealing

result, nor, in our view, one that Congress intended.

Id. at 511, 514.

Like government contract claims that “accrue” under

Crown Coat only after mandatory procedures are com-

pleted, a MPPAA cause of action “arises” only after the

statutory arbitration concludes or, if arbitration has not

been initiated, after the employer fails to make payments

within the prescribed time. 29 U.S.C. §§ 1401(b)(2),

1401(b)(1). To accept the Ninth Circuit’s contrary

reasoning would have the “unfortunate impact” of re-

quiring pension funds throughout the country to exhaust

MPPAA’s procedural requirements, only to find that the

statute of limitations had run in the interim. See Crown

Coat, 386 U.S. at 514.

Third, the Ninth Circuit’s concern as to “plan con-

trol” has no statutory basis. The issue of timeliness

under MPPAA must be presented to the arbitrator, who

has the power to sustain a laches defense. 29 U.S.C.

§ 1401(a); see Ludington News Co., 9 Employee Bene-

fits Cas. (BNA) 1913, 1919 n.9 (1988) (Cornelius,

Arb.). Thus, an employer that claims prejudice by virtue

of a plan’s undue delay in seeking to collect withdrawal

liability can put that defense before the MPPAA arbi-

trator, who is particularly qualified to decide its merits.

13

Cf. United Steelworkers of America v. Warrior & Gulf

Navigation Co., 363 U.S. 574, 582 (1960).

Crown Coat underscores the point. Echoing the Thi-

bodo apprehension that the limitations period would be

“in the control of the plaintiff,” the United States argued

that unless its reading of the statute prevailed, a contrac-

tor would have “unlimited discretion as to when to file his

claim.” 386 U.S. at 518. This Court was unpersuaded:

because the standard government contract usually has

“built-in time limits” for the processing of claims, no con-

tractor could “delay unreasonably” in presenting a claim.

Id. at 518-19 & n.13. So too does the “[a]s soon as prac-

ticable” language of MPPAA (29 U.S.C. § 1399(b)(1))

ensure that a plan does not sit on its claims to the employ-

er’s detriment.”

CONCLUSION

The judgment of the court of appeals should be re-

versed.

Respectfully submitted,

IRA R. MITZNER

Counsel of Record

Woopy N. PETERSON

BRIDGET O’ CONNOR

DICKSTEIN SHAPIRO MORIN

& OsHINSKY LLP

2101 L Street, N.W.

Washington, D.C. 20037-1526

(202) 785-9700

Attorneys for Amicus Curiae

John T. Joyce, et al., Trustees

of the Bricklayers and Trowel

Trades International Pension

July 17, 1997 Fund

™ A plan that unduly delays in taking appropriate action not

only risks losing before the MPPAA arbitrator on the grounds of

laches, but also “puts at risk the solvency of the plan and thus may

invite a claim for breach of fiduciary duty” against the trustees.

Sandoz, 871 F.2d at 1126.