Opposition Brief — Philippines, Micronesia & Orient Navigation Co. v. NYSA-ILA Pension Trust Fund

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No. 90-576~

Supreme Court, U.S.

IN THE

Supreme Court of the United Saiteys +”

OCTOBER TERM, 1990

i in ae le ee

NOV 1 lou

RK

PHILIPPINES, MICRONESIA & ORIENT NAVIGATION COMPANY,

—vV.—

Petitioner,

NYSA-ILA PENSION TRUST FUND, THE BOARD OF TRUSTEES OF THE

NYSA-ILA PENSION TRUST FUND, THE NEW YORK SHIPPING ASSOCI-

ATION, THE NYSA-ILA FRINGE BENEFIT ESCROW FUND, THE INTER-

NATIONAL LONGSHOREMEN’S ASSOCIATION (AFL-CIO),

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

BRIEF IN OPPOSITION

C. Peter Lambos

Donato Caruso

(Counsel of Record)

Nicholas G. Maglaras

LAMBOS & GIARDINO

Attorneys for Respondent New

York Shipping Association, Inc.

and Co-Counsel to Respondents

NYSA-ILA Pension Trust Fund

and its Board of Trustees and

Ni SA-ILA Fringe Benefits

Escrow Fund

29 Broadway, 9th Floor

New York, New York 10006

(212) 943-2470

Thomas W. Gleason

Ernest L. Mathews, Jr.

Attorneys for Respondent

International Longshoremen’s

Association, AFL-CIO, and

Co-Counsel to Respondents

NYSA-ILA Pension Trust Fund

and its Board of Trustees and

NYSA-ILA Fringe Benefits

Escrow Fund

26 Broadway, 17th Floor

New York, New York 10004

(212) 425-3240

N)

TABLE OF CONTENTS

PAGE

TAREE GP PC eo oe cc cc ccvcvccccicecses ii

JV yp ae By GE |. _ 2

PM&O Was A Party To The Collective Bar-

FEET ER EP EEOC ETO ETE TEE 2

The Labor Contract Imposed On PM&O The

Obligation For Pension Contributions........ 4

The NLRB Did Not Find That PM&O Was

Not A Longshore Employer ................ 6

SUMMARY OF REASONS FOR DENYING THE

MGR eA SEN eed Redd che Od abba din vibu otha 7

REASONS FOR DENYING THE WRIT............ 7

1. The Manner In Which The Courts Below Con-

strued MPPAA Did Not Conflict With Any

Se Ge WS gn wd clo dca owassunacs 7

2. The Test For MPPAA Employer Status

Adopted Below Is Consistent With ERISA

And Is Not In Conflict With Any Case Law

Se NY 5 ids ca dae bona a wae ens xe & 11

3. The Courts Below Properly Applied Kaiser... 13

IE 6 ah aS ig-b.o cea we dened ia kane ee cecs 15

APPENDIX

TABLE OF AUTHORITIES

Cases PAGE

Bartels v. Birmingham, 332 U.S. 126 (1947) ......... 8n

Bey v. Muldoon, 223 F. Supp. 489 (E.D. Pa. 1963),

aff’d, 354 F.2d 1005 (3d Cir.), cert. denied, 384 U.S.

eS bo vd ohn oe Cedeesbe one 8n

Carriers Container Council, Inc. v. Mobile Steamship

Ass’n—International Longshoremen’s Ass’n Pension

Plan, 896 F.2d 1330 (11th Cir.), cert. denied, 59

U.S.L.W. 3294 (U.S. Oct. 15, 1990) (No. 90-323).. 10

Chapman v. Houston Weifare Rights Organization,

GE ils le Be ho 8 6h iw cnncdeissesasadseeore 8

Community For Creative Non-Violence v. Reid, 490

U.S. , 109 S. Ct. 2166, 104 L.Ed.2d 811 (1989) 7, 8

Connolly v. PBGC, 475 U.S. 211 (1986) ............ 9

Donovan v. Agnew, 712 F.2d 1509 (1st Cir. 1983)... 8n

BECO v. FLAA, 476 U.S. 19 CRB occ ccc sccccccses 12

Falk v. Brennan, 414 U.S. 190 (1973)............... 81.

Goldberg v. Whitaker House Cooperative, Inc., 366

Sy St PEED 6.0'ssaa Gaede beens eke eeeen ies Mlees 8n

Hoke v. Retail Credit Corp., 521 F.2d 1079 (4th Cir.

1975), cert. denied, 423 U.S. 1087 (1976).......... 8-9n

IUE AFL-CIO Pension Fund v. Barker & Williamson,

Ie. Fae ae Be C6 CAR Ts 6k aeececnczexses 8

Kaiser Steel Corp. v. Mullins, 455 U.S. 72 (1982) .7, 13, 14

Korea Shipping Corp. v. NYSA “ILA Pension Trust

Fea, Gee Fie 1Ge) Gok Car. TOR cc cc dcccanccan passim

iil

PAGE

Laborers Health and Welfare Trust Fund v. Advanced

Lightweight Concrete Co., 484 U.S. 539 (1988) .... 14n

Massachusetts Laborers’ Health and Welfare Fund v.

Starret Paving Corp., 845 F.2d 23 (ist Cir. 1988).. 11

Mednick v. Albert Enterprises, Inc., 508 F.2d 297 (Sth

cee ees eek ha sveeceeeebnese ses 8-9n

NLRB v. Hearst Publications, Inc., 322 U.S. 111}

a ers ke kek bake ae0 ob oe sees eee es 8

Operating Engineers Pension Trust v. Gilliam, 737

ee ES 2-3n

Perry v. Commerce Loan Co., 383 U.S. 392 (1966) .. 8

Real v. Driscoll Strawberry Associates, Inc., 603 F.2d

cab eeenece bes dceeecenesevens 8n

Rutherford Food Corp. v. McComb, 331 U.S. 722

ay ss aes a Pee ode tees anes cceeeeeness 8n

Superior Pocahontas Coal Co. v. Island Creek Coal

Co., 840 F.2d 11 (unpublished opinion), 9 Empl.

Ben. Cas. (BNA) 1302 (4th Cir. 1988) ............ 12

United States v. Silk, 331 U.S. 704 (1947)........... 8n

ae Ve seem, Son U.S. Zoe CIFE])... ccc ccccencs 8

Statutes

29 U.S.C.A. § 158 (West 1973 and Supp. 1990)...... 14n

an, OP OE POPS occ cc cnc c es vcemscnecs 14n

ee ee OE BOPUD 5 cece scccccencecseess 12

EE 2.) eee 10n

29 U.S.C.A. § 1002 (West 1985 and Supp. 1990)..... 10n

29 U.S.C.A. § 1053 (West 1985 and Supp. 1990)..... 10n

i ill

iv

PAGE

29 U.S.C.A. § 1301 (West 1985 and Supp. 1990) ....9, 10n

29 U.S.C.A. § 134la (West 1985 and Supp. 1990).... 10n

29 U.S.C.A. § 1342 (West 1985 and Supp. 1990)..... 10n

yp BRP Rp: eo 8. errr er errr 10n

BR Roe MP) 2” ee | ererrrrerrr rrr Try 9, 10n

er Reacts Se Re CE BI ccc ccc des ceudtesees 10n

— Pk Fo SPS Fhe. 10n

po ae Bek Se er 10n

p RS eee ere re 10n

y ik a Re ee Ok Ue, eee 10n

RR So AR OG 10n

Be aes We Me WE ID oc esac cccuncavacnee 9

BP as Fe GE FN cv ac eccccsevscsasenss 10n

ye RL MG 8 6. re 10n

y BOR Se ee a.) 10n

29 U.S.C.A. § 1398 (West 1985 and Supp. 1990)..... 10n

pe Eo WF eee 10n

yt a Oe 10n

pe Fe re 10n

8 ee ee 10n

oe Sok Te Be ee re 10n

Bt Reena, G Pe CUE BOOED oi ec cnecvewccbawncs 10n

Miscellaneous

J26 Cong. Rec. $11,672 (daily ed. Aug. 26, 1980).... 9n

136 Cong. Rec. H23,038 (daily ed. Aug. 25, 1980)... 9n

H.R. REP. No. 869 (Part IJ), 96th Cong., 2d Sess.

(1980), reprinted in PENSION PLAN GUIDE, ISSUE

No. 275, No. 266, May 7, 1960 (CCH) .........:.

JOINT SENATE REPORT ON MPPAA BILL OF 1980,

96th Cong., 2d Sess. (1980), reprinted in PENSION

PLAN GUIDE, ISSUE No. 289, No. 280 Part II,

RE Ty ee ns 4 baa aks ohh eRe ssabheuenes

Proposed Amendments to the Employee Retirement

Income Security Act of 1974: Hearing on S. 1076

Before the Senate Comm. on Labor and Human

Resources, 96th Cong., Ist Sess. (1979) ...........

SENATE COMMITTEE ON LABOR AND HUMAN

RESOURCES, S. 1086—THE MULTIEMPLOYER PEN-

SION PLAN AMENDMENTS ACT OF 1980: SUMMARY

AND ANALYSIS OF CONSIDERATION, 96th Cong., 2d

Sess. 44 (Comm. Print 1900)... ...cccccccsvccceas

PAGE

10n

10n

10n

IN THE

Supreme Court of the United States

OCTOBER TERM, 1990

No. 90-576

-

PHILIPPINES, MICRONESIA & ORIENT

NAVIGATION COMPANY,

Petitioner,

_V—

NYSA-ILA PENSION TRUST FUND, THE BOARD OF TRUST-

EES OF THE NYSA-ILA PENSION TRUST FUND, THE

NEW YORK SHIPPING ASSOCIATION, THE NYSA-ILA

FRINGE BENEFIT ESCROW FUND, THE INTERNATIONAL

LONGSHOREMEN’S ASSOCIATION (AFL-CIO),

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

—<—>

BRIEF IN OPPOSITION

Philippines, Micronesia & Orient Navigation Company

(‘““PM&O’’) seeks a writ of certiorari to review a judgment

determining (1) that PM&O is an employer subject to pension

withdrawal liability under the Employee Retirement Income

Security Act (‘‘ERISA’’), Pub. L. 93-406, 88 Stat. 829

(1974), as amended by the Multiemployer Pension Plan

Amendments Act (‘‘MPPAA’’), Pub. L. 96-364, 94 Stat.

1208 (1980), and (2) that PM&O is not entitled to a retund of

employee benefit assessments paid by it during the period

2

when it engaged in vessel carrier operations in the Port of

New York. None of the grounds urged by PM&O warrants

review by this court.

STATEMENT OF THE CASE

PM&O’s petition depends upon a wholesale revision of the

facts in this case. Citing to material that is not before this

Court,’ PM&O makes assertions that are simply not true.

Rather than burden the Court with a complete counterstate-

ment of the case, respondents’ wi!l focus on the more egre-

gious misstatements.

PM&O Was A Party To The

Collective Bargaining Agreement

PM&O claims that it was not bound to the New York

longshore labor contract, known as the General Cargo Agree-

ment (‘‘GCA’’). It argues that it did not become a signatory

to the GCA, since it only signed subscriptions that did not

adequately disclose what it was agreeing to. Hence, it claims

that it ‘‘never understood and was never told that it was

undertaking any obligation to contribute to the pension

rund.’’ See PM&O’s Petition for Certiorari (hereinafter

‘“*Pet,’’) at 5.°

1 PM&O’s record citations are to the joint appendix in the court of

appeals, which PM&O has failed to include in the appendix to the peti-

tion filed with this Court, Thus, PM&O is at liberty to make assertions

and characterizations which this Court has no opportunity to verify.

2 Respondents are the NYSA-ILA Pension Trust Fund and its Board

of Trustees, which will be collectively referred to as ‘‘PTF’’, New York

Shipping Association, Inc. (‘‘NYSA’’), NYSA-ILA Fringe Benefits

Escrow Fund (“‘Escrow Fund’’), and the International Longshore-

men’s Association, AFL-CIO (‘‘ILA’’). Pursuant to Rule 29.1 of the

Rules of this Court, counsel for respondents certify that none of the

respondents has a corporate parent or any subsidiaries.

3. ~=If PM&O was in fact ignorant, it was a direct result of PM&O’s vol-

untary choice not to examine the labor contract it subscribed. This

(footnote cont’d on succeeding page)

The contract executed by PM&O with its stevedore, Maher

Terminals, Inc., contained a provision requiring PM&O to

become a party to the New York longshore labor contract

and to agree to pay directly fringe benefit and other contrac-

tual assessments. Without ever examining this labor contract,

PM&O executed both the stevedoring contract and three suc-

cessive subscription agreements binding PM&O to the GCA

for three successive three-year terms.* The subscription agree-

ments left no doubt that by subscribing PM&O was agreeing

to become a party to the collective bargaining agreement.

Each subscription was co-signed by the ILA. PM&O knew

from the face of the subscriptions that it was agreeing with

the union to pay contributions pursuant to the underlying

collective bargaining agreement.

For the five-year period prior to its withdrawal PM&O

paid in excess of $2 million in assessments. PM&O well knew

that the assessments it was paying were destined for long-

shore benefit funds. Its stevedoring contract made clear that

the assessments ‘‘are to be paid by the Line [PM&O] directly

to the NYSA-ILA funds. . . [for] Fringe Benefits.’’ Indeed,

in its complaint in this case, PM&O admitted thrice that it

made contributions to PTF and other longshore employee

(footnote cont’d from preceding page)

omission, however, would not relieve PM&O of its obligations to PTF.

*“*[A] party who signs a written agreement generally is bound by its

terms, even though he neither reads it nor considers the legal conse-

quences of signing it.’’ Operating Engineers Pension Trust v. Gilliam,

737 F.2d 1501, 1504 (9th Cir. 1984). In any event, PTF’s assessment of

withdrawal liability should not have come as a surprise to PM&O.

More than three years earlier PTF had apprised PM&O of the amount

of its potential withdrawal liability as it existed at that time. At no time

prior to its leaving the port did PM&O disavow either its employer sta-

tus or its obligation to pay withdrawal liability.

4 PM&O’s accusation that respondents did not allow PM&O to see the

labor contract, see Pet. at 7, is preposterous. Nothing prevented

PM&O from obtaining a copy from respondents or from its own steve-

dore. The fact is that PM&O voluntarily chose not to examine the

labor contract. It cannot now blame respondents for its own ostrich-

like stance.

4

benefit funds. The fact of the matter is that PM&O was not

concerned about assuming the obligation for longshore pen-

sion and other fringe benefit assessments because any

amounts it paid were recouped dollar for dollar from Castle

& Cook, the customer for whom PM&O carried on its trans-

port operations.

The Labor Contract Imposed On PM&O The

Obligation For Pension Contributions

PM&O asserts that it had no obligation to contribute to

PTF under the labor contract. See Pet. at 7-9. PM&O

attempts to characterize the labor contract as placing upon

NYSA the obligation for pension contributions and upon the

stevedoring companies, like PM&O’s stevedore, Maher, the

responsibility for paying assessments to NYSA to meet the

association’s obligations. PM&O’s assertions fly in the face

of the clear language of the labor contract and were flatly

rejected by the Second Circuit not only in this case but in an

earlier withdrawal liability case involving PTF, Korea Ship-

ping Corp. v. NYSA-ILA Pension Trust Fund, 880 F.2d 1531

(2d Cir. 1989).

The GCA expressly provides that the contractual commit-

ments are those not of NYSA but of ‘‘each contracting steve-

dore and vessel carrier who directly or indirectly utilizes the

services of any employees covered by this agreement.’’ The

contract provides that by its execution a vessel carrier, like

PM&O, binds itself ‘‘to each and every term and condition

of the agreement, including, without limitation, the contribu-

tion of its proportionate share of the hourly, tonnage and

other supplemental and fringe benefit contributions provided

herein.’’ These provisions are sufficient in and of themselves

to lay to rest PM&O’s canard. They establish that it is not

NYSA but the individual carriers who are contractually obli-

gated to make fringe benefit contributions.

The analysis of the labor contract could end here, but its

other terms confirm where the contractual obligation lies.

GCA’s pension provisions leave no doubt that the obligation

5

to fund PTF is that of the contracting employers, not NYSA.

The GCA provides that ‘‘the employers’ [plural] contribution

to the NYSA-ILA Pension Trust Fund shall be as set forth in

. . . Part V1(6) hereafter,’’ which, in turn, speaks of pension

guarantees to ‘‘be contributed by the employers [plural].’”°

The express language of the labor contract also dispels

PM&O’s other canard, that the obligation for assessments is

that of the stevedores, not the carriers. The tonnage assess-

ment portion of the GCA defines precisely which employers

are responsible for the contributions. It states that the ton-

nage assessment is designed ‘‘to meet obligations arising

under collective bargaining agreements between New York

Shipping Association, Inc. (‘NYSA’) and International Long-

shoremen’s Association, AFL-CIO (‘ILA’) for pension, wel-

fare and clinics, guaranteed annual income (‘GAI’),

vacations, holidays, and the minimum guarantees for pen-

sions, welfare and clinics, supplemental cash benefits, as well

as administrative support of NYSA.’’ (emphasis supplied). 5

Then, it states that ‘‘each vessel carrier (both private and

governmental) shall be responsible for an assessment amount

per ton’’ calculated by dividing the estimated liabilities for

the above obligations by the estimated tonnage to be loaded

or discharged in the port (emphasis supplied). The GCA’s

tonnage assessment thus provides the mechanism for generat-

ing the monies needed to fund the contractual pension obliga-

tions and imposes the responsibility for those assessments not

on the stevedores but on the carriers. See Korea, 880 F.2d at

5 The fatuity of PM&O’s case is evident from the fact that PM&O

must resort to an alteration of the dispositive language of the contract.

Whereas the GCA refers to the ‘‘employers’ ’’ contribution to PTF,

PM&O’s version, which purports to be a direct quote, changes this to

the singular: ‘“‘employer’s.’’ See Pet. at 8. Whereas the preamble to the

GCA refers to ‘‘Contracting Stevedores,’? PM&O’s version, which

again purports to be a direct quote, uses the term ‘‘member steve-

dores.’’ Appended to this brief are copies of the pertinent pages of the

GCA as they appeared in the joint appendix in the court of appeals,

which PM&O has not furnished to this Court.

6

1539.° PM&O cites a provision in the GCA which it reads as

placing the responsibility for paying assessrnents on the steve-

dores. See Pet. at 9 n. 9. The cited provision, however, deals

only with the assessment collection mechanism.’ The obliga-

tion for assessments is spelied out in the provision discussed

above, which places it squarely upon ‘‘each vessel carrier.”’

~The NLRB Did Not Find That PM&O Was Not A Longshore

Employer

PM&O brandishes a letter from a Regional Director of the

National Labor Relations Board which refused to process a

complaint filed by the ILA against PM&O. See Pet. at 10.

The Regional Director’s refusal was based upon his fii ing

that PM&O was not a joint employer required to bargain~

over the effects on longshore workers of PM&O’s cessation

of shipping operations. In PM&O’s view this determination

resolves PM&O’s employer status under MPPAA. Apart

from the fact that a Regional Director’s determination is not

a decision of the NLRB and is devoid of any precedential or

preclusionary value, a determination of joint employer status

under the National Labor Relations Act, which depends upon

considerations akin to the common law, has no bearing upon

employer status under MPPAA. See Korea, 880 F.2d at 1537.

6 Under the GCA the only way that a stevedore can be liable for the

payment of assessments is if it services a carrier which is not a party to

the collective bargaining agreement. It is for this reason that PM&O’s

stevedore, Maher, had a provision in its standard stevedoring contract

requiring PM&O to subscribe to the New York contract.

7 PM&O’s claim that it paid monies only to NYSA and not to 2 multi-

employer pension plan is but a variation of its claim that NYSA was

the contributing-obligor. PM&O tries 10 bolster its argument by mis-

characterizing the words of others. It points to a stipulation from

respondents’ counsel that ‘‘no payments were ever made by PM&O to

the ILA Pension Fund.”’ Obviously, what counsel was referring to was

the fact that PM&O never remitted payments directly to PTF but made

its contributions via the contractual collection mechanism.

7

Summary of Reasons For Denying the Writ

In adopting the contributing-obligor test for determining

MPPAA employer status the courts below construed

MPPAA in a manner which effectuates the broad remedial

purposes of the statute. Their approach conformed to well-

settled principles of statutory construction and did not con-

flict with any decision of this Court.

The common law test urged by PM&O for determining

MPPAA employer status would totally frustrate the purposes

of MPPAA by enabling those who have promised to fund

pension benefits to escape from a pension plan without pay-

ing their share of the plan’s unfunded vested benefits. The

courts below properly refused to endorse this common law

approach.

The contributing-obligor test does not conflict with any

other case law or statute. Indeed, the cases which PM&O

claims are in conflict actually support the test, since the

touchstone for liability in those cases is the obligation to con-

tribute.

In dismissing PM&O’s claim for a refund of all fringe ben-

efit assessments paid, the courts below correctly concluded

that the relief sought by PM&O is prohibited by this Court’s

decision in Kaiser Steel Corp. v. Mullins, 455 U.S. 72 (1982).

REASONS FOR DENYING THE WRIT

1. The Manner In Which The Courts Below Construed

MPPAA Did Not Conflict With Any Decision Of This

Court

PM&O contends that in adopting the contributing-obligor

test for determining MPPAA employer status, the courts

below failed to abide by this Court’s holding in Community

For Creative Non-Violence v. Reid, 490 U.S. , 109 S.Ct.

2166, 104 L.Ed.2d 811 (1989). In PM&O’s view Reid stands

for the broad proposition that in construing a statute, a court

must look solely to the common law or dictionary meaning

of the language used by Congress. PM&O’s formulation is an

overstatement of the teachings of Reid.

Reid did not disturb the settled rule of statutory construc-

tion that a term must have the meaning intended within the

context of the particular statutory regime in which it appears.

NLRB v. Hearst Publications, Inc., 322 U.S. 111, 124 (1944);

see also Reid, 104 L.Ed.2d at 824 (citing Hearst for ‘‘reject-

ing agency law conception of employee for purposes of the

National Labor Relations Act where structure and context of

statute indicated broader definition’’). Nor did Reid overrule

this Court’s holding in Chapman v. Houston Welfare Rights

Organization, 441 U.S. 600, 608 (1979), that statutory lan-

guage must be interpreted to effectuate the purpose and pol-

icy of the legislation. See also Watt v. Alaska, 451 U.S. 259,

266 (1981); Perry v. Commerce Loan Co., 383 U.S. 392, 400

(1966). Hence, Reid’s resort to the common law to define the

term ‘‘employee’’ in the Copyright Act of 1976 has no appli-

cability to the proper construction of the term ‘‘employer’’ in

MPPAA, a remedial statute which must be liberally con-

strued to accomplish the congressional objective of protecting

workers’ retirement benefits and the fiscal soundness of

multiemployer pension plans. JUE AFL-CIO Pension Fund y.

Barker & Williamson, Inc., 788 F.2d 118, 127 (3d Cir. 1986).°

8 In defining ‘‘employer’’ for purposes of federal labor legislation, the

courts refuse ‘‘to adhere to the rigid, conceptualistic notion of the

employer-employee relationship.’’” They look to realities, not

‘‘vacuum-packed concepts.’’ Bey v. Muldoon, 223 F. Supp. 489, 494

(E.D.Pa. 1963), aff’d, 354 F.2d 1005 (3d Cir.), cert. denied, 384 U.S.

987 (1966). The touchstone for employer status is not some technical

common law label, but rather the performance of those acts and func-

tions regulated by the federal legislation. Fa/k v. Brennan, 414 U.S.

190, 195 (1973) (Fair Labor Standards Act (‘‘FLSA’’)); Goldberg v.

Whitaker House Cooperative, Inc., 366 U.S. 28, 33 (1961) (FLSA);

Bartels v. Birmingham, 332 U.S. 126, 130 (1947) (Social Security Act);

Rutherford Food Corp. v. McComb, 331 U.S. 722, 726-30 (1947)

(FLSA); United States v. Silk, 331 U.S. 704, 711-12 (1947) (Social

Security Act); NLRB v. Hearst Publications, Inc., 322 U.S. 111, 120-

29 (1944) (National Labor Relations Act); Donovan v. Agnew, 712

F.2d 1509, 1510 (Ist Cir. 1983) (FLSA); Real v. Driscoll Strawberry

Associates, Inc., 603 F.2d 748, 754-56 (9th Cir. 1979) (FLSA); Hoke v.

(footnote cont’d on succeeding page)

a

9

The courts below construed MPPAA in a manner consis-

tent with the rules of statutory interpretation enunciated by

this Court. They adopted a definition of employer wiich |

effectuated the purpose and policy of MPPAA.’ As this |

Court has noted, the purpose of MPPAA is to assure that

the parties who undertake to fund a multiemployer plan do

not impair the fiscal soundness of the plan or shift their obli-

gations to others by walking away from the plan without

having satisfied their portion of the plan’s unfunded vested

benefits. Connolly v. PBGC, 475 U.S. 211, 216-17 (1986).

The class Congress sought to regulate is manifestly those who

undertake to fund multiemployer plans. Congress denomi-

nates this undertaking as the ‘‘obligation to contribute.’’

This obligation is expressly defined as one arising under a

collective bargaining agreement. 29 U.S.C.A. § 1392(a)(1)

(West 1985). The walking away, or withdrawal, occurs when

the obligation to contribute ceases. 29 U.S.C.A. § 1383(a)(1)

(West 1985). This obligation relates solely to multiemployer

plans, which are expressly defined as plans maintained pursu-

ant to collective bargaining agreements. 29 U.S.C.A.

§ 1301(a)(3) (West 1985 and Supp. 1990). All the signposts of

MPPAA, then, point to the collective bargaining agreement

as the foundation for the entire statutory edifice.

From among those parties who are employers by virtue of

their collective bargaining agreements MPPAA regulates only

those who contractually commit themselves to contribute. |

Thus, the party to a collective bargaining agreement who has |

the obligation to contribute to a plan is the MPPAA

(footnote cont’d from preceding page)

Retail Credit Corp., 521 F.2d 1079, 1082 n.7 (4th Cir. 1975), cert.

denied, 423 U.S. 1087 (1976) (Fair Credit Reporting Act); Mednick vy.

Albert Enterprises, Inc. , 508 F.2d 297, 299-300 (Sth Cir. 1975) (FLSA).

9 Senator Williams, one of the principal sponsors of MPPAA,

explained to the Senate, ‘‘We intend that the term ‘employer’ be con-

strued in a manner consistent with the bill and its purposes.”’ 126

Cong. Rec. $11,672 (daily ed. Aug. 26, 1980). See also 136 Cong. Rec.

H23,038 (daily ed. Aug. 25, 1980) (statement of Rep. Thompson).

seni

10

employer upon whom Congress has imposed withdrawal

liability. Indeed, virtually every provision of MPPAA con-

joins ‘“‘employer’’ with the obligation to contribute.’® This

same coupling pervades MPPAA’s legislative history."

It would totally frustrate the purpose and policy of

MPPAA, then, to define the term ‘‘employer’’ without refer-

ence to the obligation to contribute. The courts below amply

guarded against such a result by defining the MPPAA

employer as the entity with the obligation to contribute.

Their approach comported with established principles for

construing broad remedial statutes. Nothing in Reid suggests

that their approach was improper. Not surprisingly, no court

has refuted the Second Circuit’s contributing-obligor test; the

Eleventh Circuit expressly adopted it. See Carriers Container

Council, Inc. v. Mobile Steamship Ass’n—lInternational

Longshoremen’s Ass’n Pension Plan, 896 F.2d 1330, 1343

(11th Cir.), cert denied, 59 U.S.L.W. 3294 (U.S. Oct. 15,

1990) (No. 90-323).

It is the common law test, which PM&O espouses, see Pet.

at 13-18, that would frustrate the legislative goal of MPPAA.

The common law test would render MPPAA meaningless in

those industries in which the obligation to contribute is borne

by other than the common law employer. In the longshore

10 = See, e.g., 29 U.S.C.A. §§ 1001a(aX(4)(A); 1002(37)(a)(i); 1053(aX2)(A);

1053(b)(3)(D)(iii);_ 1301(a)(2)-(3); 1341a(a)(2); 1341la(e); 1342(d)(2)(E);

1365(3XC); 1383(a)-(d); 1384(a)(1)(b); 1385(a)-(b); 1387(a)-(b); 1388(a)-(d);

1390(a)-(b); 1391(b)-(c); 1394(b); 1396(c); 1397(a); 1398; 1399(c)(1)-

(C)(i); 1403(b)(4)(A); 1405(c); 1412(e)(2); 1422(aK2KA); and 1425(b\1}

(A)(ii) (West 1985 and Supp. 1990).

11 See, e.g., Proposed Amendments to the Employee Retirement

Income Security Act of 1974: Hearings on S. 1076 Before the Senate

Comm. on Labor and Human Resources, 96th Cong., Ist Sess. 114,

115, 137, 170, 592 (1979); H.R. REP. No. 869 (Part II), 96th Cong., 2d

Sess. (1980), reprinted in PENSION PLAN GUIDE, ISSUE No. 275, No.

266, May 7, 1980 (CCH) at 4-7, 9, 27, 30, 31, 33, 35, 37-39, 44, 45, 48,

51-54, 60, 64-67, 72, 73; JoINT SENATE REPORT ON MPPAA BILL OF

1980, 96th Cong., 2d Sess. (1980), reprinted in PENSION PLAN GUIDE,

ISSUE No. 289, No. 280 Part II, August 8, 1980 (CCH) at 5-15, 17-19,

21, 24, 28, 29, 31-35, 37-39, 41, 50, 56, 58.

11

industry in New York only steamship carriers pay pension

contributions; stevedores do not. Under PM&O’s view of

employer status, the persons having the obligation to contrib-

ute are not employers and the common law employers have

no obligation to contribute. Under this theory, no one in the

longshore industry in the Port of New York would bear any

responsibility for withdrawal liability, despite the unequivocal

commitment of the New York labor contract to provide

defined pensions to longshore employees. The longshore

industry, therefore, would be removed from the protective

aegis of MPPAA—a result hardly intended by Congress.

2. The Test For MPPAA Employer Status Adopted Below Is

Consistent With ERISA And Is Not In Conflict With Any

Case Law Or Statute

Contrary to PM&O’s contentions, adoption of the

contributing-obligor test does not create any internal inconsis-

tency in ERISA, nor does it conflict with any other decisional

or statutory authority. PM&O argues that the test creates ten-

sions within ERISA, see Pet. at 13-18, complaining that the

Korea court adopted the Title I definition of employer when

that definition is not applicable to Title IV. PM&O misreads

Korea. That case did not apply the Title I definition but a

definition that effectuated the policy and purpose of

MPPAA. See 880 F.2d at 1537.

PM&O also argues that the contributing-obligor test con-

flicts with the line of cases holding that shareholders and

officers of a corporation are ordinarily not subject to with-

drawal liability. See Pet. at 16-18. PM&O is wrong. The

officer/shareholder cases, see, e.g., Massachusetts Laborers’

Health and Welfare Fund v. Starret Paving Corp., 845 F.2d

23 (Ist Cir. 1988), do not involve the formulation of a

MPPAA definition of employer but a determination of the

absence of a congressional intent to remove the traditional

protections of the corporate shield and limited liability. In all

of these cases there is no doubt that the corporation is the

MPPAA employer; the only question is whether the corpora-

tion’s liability should be imposed as well on its officers and

12

shareholders. Accordingly, there is no tension between the

contributing-obligor test and holding officers/shareholders

not liable for their corporation’s withdrawal liability. Indeed,

the latter holding comports with the test. Officers and share-

holders should not be subject to withdrawal liability, since it

is their corporation, not these persons in their individual

capacities, that undertook the contractual obligation to make

pension contributions.

PM&O also insists that the contributing-obligor test con-

flicts with the holding in Superior Pocahontas Coal Co. v.

Island Creek Coal Co., 840 F.2d 11 (unpublished opinion), 9

Empl. Ben. Cas. (BNA) 1302 (4th Cir. 1988). See Pet. at 24-

26. In Superior Pocahontas a mine operator, which was a sig-

natory to the coal miners’ collective bargaining agreement,

entered into an agreement with another signatory to mine

coal at a site owned by the latter. This private agreement pro-

vided that the site owner would pay the operator’s pension

contributions required by the collective bargaining agreement.

When the mine operator subsequently incurred and paid

withdrawal liability, it sought indemnification from the site

owner. The court rejected the claim. The touchstone adopted

by the court for imposing withdrawal liability was the obliga-

tion to contribute under the collective bargaining agreement,

not under the private agreement. The labor contract imposed

that obligation on the operator, not the mine owner. The real

significance of Superior Pocahontas is that it relied on the

very same contributing-obligor test adopted below.

Finally, PM&O asserts that the contributing-obligor test

conflicts with Section 302 of the Labor Management Rela-

tions Act, 29 U.S.C.A. § 186 (West 1978). See Pet. at 20-21.

This argument, which had been raised and soundly rejected

by the Second Circuit in Korea, see 880 F.2d at 1538-39, was

never raised by PM&O in this case. Hence, PM&O is pre-

cluded from raising it for the first time before this Court.

EEOC v. FLRA, 476 U.S. 19, 24 (1986).

13

3. The Courts Below Properly Applied Kaiser

PM&O does not have the temerity to present to this Court

the argument it made below. There, PM&O sought to recover

all fringe benefit contributions it had paid pursuant to the

New York longshore labor contract during its five-year tenure

in the port on the ground that it paid those contributions

under a mistake. The courts below concluded that under the

authority of this Court’s decision in Kaiser Steel Corp. v.

Mullins, 455 U.S. 72 (1982), PM&O was not entitled to any

refund.

In its petition to this Court PM&O retreats from its refund

claim. It now urges that the putative mistake would under

Kaiser operate to shield PM&O from withdrawal liability.

PM&O just does not understand Kaiser. That case formu-

lated a limited exception to the congressional policy disfavor-

ing in contribution collection suits the assertion against

third-party-beneficiary employee benefit funds of defenses

that are available against the contracting parties.’* Kaiser held

that in an action by an employee benefit plan to collect delin-

quent contributions, the employer may raise illegality as a

defense but only when the portion of the contract containing

the obligation to contribute, and not some collateral provi-

sion, is alleged to be illegal. Kaiser, 455 U.S. at 86. The

rationale for this principle is the limitation prohibiting courts

from enforcing illegal contractual promises. Kaiser, 455 U.S.

at 77. Since withdrawal liability is not a contractual obliga-

tion but a statutory requirement, the Kaiser principle simply

does not apply. It is not a contract but the will of Congress

that the courts are being asked to enforce.

12 Funds do not negotiate and are not parties to the labor contract.

Enmeshing trust funds in disputes not their own would frustrate the

congressional policy of shielding plans from ‘‘lengthy, costly and

complex litigation concerning claims and defenses unrelated to the

employer’s promise and the plans’ entitlement to the contributions.’”’

SENATE COMMITTEE ON LABOR AND HUMAN RESOURCES, S. 1076—

THE MULTIEMPLOYER PENSION PLAN AMENDMENTS ACT OF 1980:

SUMMARY AND ANALYSIS OF CONSIDERATION, 96th Cong., 2d Sess. 44

(Comm. Print 1980).

14

Even if this ase involved the classic illegality defense to an

action by a fund to enforce an employer's contractual obliga-

tion to remit contributions, the claimed illegality would not

be a valid defense. PM&O does not contend that the promise

to contribute is itself illegal. Instead, it challenges another

provision of the labor contract dealing with the refusal to

work for non-signatory vessel carriers.’ Kaiser could not be

clearer: an illegality defense is permitted only ‘‘where the

defense is not directed to a collateral matter but to the por-

tion of the contract for which enforcement is sought.’’ 455

U.S. at 86.

13 PM&O claims the clause is unlawful under § 8(e) of the National

Labor Relations Act, 29 U.S.C.A. § 158(e) (West 1973). This claim

falls within the primary and exclusive jurisdiction of the NLRB and

may not be entertained by either state or federal courts. Laborers

Health and Welfare Trust Fund v. Advanced Lightweight Concrete

Co., 484 U.S. $39 (1988); Kaiser, 45S U.S. at 86. Any relief that

PM&O might seek from the Board is barred, however, by the six-

month statute of limitations. 29 U.S.C.A. § 160(6) (West 1973).

15

CONCLUSION

PM&O’s petition for certiorari is premised on conflicts that

exist only in PM&O’s fertile imagination. There are no con-

flicts for this Court to resclve.

The decisions below were ren-

dered in accordance with settled principles of law. PM&O’s

petition should be denied.

Dated: New York, New York

October 31, 1990

C. Peter Lambos

Donato Caruso

(Counsel of Record)

Nicholas G. Maglaras

LAMBOS & GIARDINO

Attorneys for Respondent

New York Shipping

Association, Inc. and

Co-Counsel to Respondents

NYSA-ILA Pension

Trust Fund and its Board of

Trustees and NYSA-ILA

Fringe Benefits

Escrow Fund

29 Broadway, 9th Floor

New York, New York 10006

(212) 943-2470

Respectfully submitted,

Thomas W. Gleason

Ernest L. Mathews, Jr.

Attorneys for Respondent

International Longshoremen’s

Association, AFL-CIO, and

Co-Counsel to Respondents

NYSA-ILA Pension Trust

Fund and its Board of

Trustees and NYSA-ILA

Fringe Benefits

Escrow Fund

26 Broadway, 17th Floor

New York, New York 10004

(212) 425-3240

APPENDIX

f 4.27)

ee te Oa FP i Oe

A-1082

CENERAL CARCO ACREEMENT

FOR THE PORT OF NEW YORK

PART | — Preambie

THrs ACREEMENT. made ind entered into br

and between the members (heremafter stomenmes

referred to as the “Emplovers” or the “Empioyer-

Members”) of the New York Shipping Assoca-

tioa, [ac (hereinafter somneimes referred to 43

the ~Assoaacon”), Deepwacer Steamship Lines and

Contracting Scevedores of che Port of Greater New

York and wecnsty, as party of the Arse part, and

the [nternaconal Longshoremen's Assocation (AFL-

CIO), and its affiliared Locals (hereinafter some

umes referred to as the “ILA™ or the ~Unica’),

as party of the second part, covers the work per-

taining to the rigging of ships, the coaling of

same, the loading ind ualoading of all cargoes.

including mail, ships stores and baggage. aad the

handling of lines ia connection with the docking

and undocking of shios in the Port of Greater

New York and vicaity.

“Wages. hourt, the amounc of coacribucoas for

welfare (including clinical services) and pensioa

benenits (bur sot the benefits to be provided by the

welfare and pension plans), containerizacoa, LASH

and the duracona of the rerm of this agreement ire

set forth im 2 separate coacract (hereinafter referred

1

* K *

A-1094

* Hk

capital attributable to the Jersey Cicy area qill be

credited co the Hoboken Medical Cencer.

(h) Carprrac Lxrtovncents

The Medical and Clinical Services Fund Trus

Agreement shall expower the Trustees to provide

foc caprtal improvements of medical clinics on 4

long-term basis under normal and prudenr business

polices.

(i) Ra-Evacvatton

The Welfare 2zad Medical and Clinical Services

Trast Agreemenss shall provide that the Trustees

of both Funds, together with their staffs, nor Lacer

chan omce within each cwo (2) year period, shall

meer jointiy for the purpose of ce-evaluating and

studying the pmgrams admuastered Sy them and

preparing a detailed written report to the parue

with respect thereto.

3. PENston Beverrrs

(a) The employers’ contributoa to the NYSA-

ILA Pension Trust Fund shail be as set

forth ia Paragraph 3 of the Master Coa-

tract (May 27, 1980) (Annex ~“G) aad

at Pact VI (6) heremafter.

(b) Under the money allocanon mencioned at

Paragraph 3 of the Master Coarcract, im-

provements would be made ia the Port of

Geeacrer New York contracts effective

October 1, 1980 as follows:

(1) Recutag Pension Becverrts:

For men cow im the indusry who

26