Petition for Writ of Certiorari — Central States, Southeast & Southwest Areas Pension Fund v. Crown Cork & Seal Co.

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Text

92-1671

No, -———

IN THE

Supreme Court of the United States

OCTOBER TERM, 1992

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS

PENSION FUND, et ai.,

Petitioners,

CROWN CorRK & SEAL COMPANY, INC.,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

PETITION FOR A WRIT OF CERTIORARI

THOMAS C. NYHAN *

General Counsel

TERENCE G. CRAIG

NEAL 8S. DEODHAR

CENTRAL STATES, SOUTHEAST

AND SOUTHWEST AREAS

PENSION FUND

9377 West Higgins Road

Rosemont, Illinois 60018-4938

(708) 518-9800

Attorneys for Petitioners

* Counsel of Record

WILSON - EPES PRINTING CO INC. - 789-0096 - WASHINGTON, D.C. 20001

QUESTIONS PRESENTED

The court below found it necessary to interpret provi

sions of two statutes in reaching its decision. If the literal

ruage of either statute were followed, respondent would

liable to petitioner. Rejecting statutory literalism, the

ourt looked in one case to “legislative history” to find

ternative mesning to the words of the statute and looked

in the other case to “statutory purpose,” holding that Con

ress had not intended to impose liability on respondent

hea . \t nNrece “xd tar > > .

The guestions presented for review are

her a court may disregard the words of a statute

when the court believes those words do not best represent

Congress’ intent in enacting the statute? Specifically

|. Do the statutory words “permanently ceases all

overed operations’ mean the same as a “substantial

cessation of normal! business operations” where the sole

basis for the interpretation is snippets of legislative

history

2. Are the statutory words “binding agreement to with

draw’ so devoid of meaning that transactions that~ are

er binding nor agreements to withdraw may none-

theless satisfy the statute under a_ statutory purpose

alysis’?

(i)

TABLE OF CONTENTS

QUES’‘IONS PRESENTED

TABLE OF AUTHORITIES

OPINIONS BELOW ]

JURISDICTION -

STATUTORY PROVISIONS INVOLVED 2

STATEMENT OF THE CASE 2

1. The Parties 2

2. The Statute 3

3. Facts and Proceedings Below 4

SUMMARY OF REASONS FOR GRANTING THE

WRIT 7

REASONS FOR GRANTING THE WRIT 9

I. THE DECISION OF THE COURT BELOW

CONFLICTS WITH A SEVENTH CIRCUIT

DECISION INTERPRETING THE SAME

LEGISLATIVE TEXT 9

Il. BY ALLOWING LEGISLATIVE HISTORY

EXCLUSIVELY TO DEFINE CONGRES-

SIONAL INTENT AND OVERRIDE THE

EXPRESS TERMS OF A STATUTE, THE

DECISION OF THE COURT BELOW CON

FLICTS WITH THIS COURT’S DECISIONS

REGARDING THE SCOPE OF JUDICIAL

[INTERPRETATION OF A STATUTE 15

A. The Plain Meaning Rule: Caminett

‘nited States 16

[7 Ss ] f l

B. Agency Interpretation: Chevror NRDC 20

TABLE OF CONTENTS—Continued

C. This Case Is A Paradigm For The Unrelia-

bility of Legislative History; The Legislative

History Relied Upon By The Court Below

Advanced An Agenda Apart From The

Statute It Purported To Explain

Il. THE COURT BELOW EXPANDED THE

STATUTE TO IMPLEMENT “CONGRES-

SIONAL INTENT” CONTRARY TO THIS

COURT’S RULING IN WEST VIRGINIA UNI-

VERSITY HOSPITAL v. CASEY

IV. THE THIRD CIRCUIT’S DECISION CRE-

ATES A PROBLEM OF NATIONAL IMPOR-

TANCE BECAUSE MULTIEMPLOYER PEN-

SION PLANS ARE LEFT TO GUESS WHAT

LAW APPLIES; THE THIRD CIRCUIT’S

RULING LACKS ANY MEANINGFUL

STANDARD FOR DETERMINING WHEN A

WITHDRAWAL OCCURS

CONCLUSION

Page

TABLE OF AUTHORITIES

SES Page

(‘an in tt; 1. T7nited States, 242 TJ 4 470, 37 S Ct.

192, 61 L.Ed. 442 (1917) 8, 15, 16, 25

Carpenters Local Union 953 v. Mar-Len of Lou-

y isiana, Inc., 906 F.2d 200 (5th Cir. 1990) 19

Central States Pension Fund v. Lady Baltimore

Foods, 960 F.2d 1339 (7th Cir.), cert. denied,

- U.S. ——, 118 S.Ct. 1791, 21 L.Ed.2d 125

(1992) 27

Central States Pe ns on Fund v. PTL T rminal

Services, Inc., 92 C 4392 (N.D. Ill.) 12

Central States, Southeast and Southwest Areas

Pension Fund v. Slotky, 956 F.2d 1369 (7th Cir.

1992) 12

Chevron, U.S.A. v. NRDC, 467 U.S. 837, 104 S.Ct.

2778, 81 L.Ed.2d 694 (1984) passim

Concrete Pipe and Products v. Construction La-

borers Pension Trust, No. 91-904 (U.S.) 20

Conroy v. Aniskoff, —— U:S. ; S.Ct.

— , 61 U.S.L.W. 4301 (1993) 22

Continental Can Co. v. Chicago Truck Drivers

Union Pension Fund, 916 F.2d 1154 (7th Cir.

1990) 13, 22, 29

Crown Cork & Seal Co. v. Central States, South-

east and Southwest Areas Pension Fund, 881

F.2d 11 (3d Cir. 1989) 4

Flanigan v. Truck Drivers Local 671, 942 F.2d 824

(2d Cir. 1991) 19

Flying Tiger Line v. Teamsters Pension Trust

Fund, 830 F.2d 1241 (3d Cir. 1987) 10

General Truck Drivers Local 957 v. N.L.R.B., 934

F.2d 732 (6th Cir. 1991) 19

Griffin v. Oceanic Contractors, Inc., 458 U.S. 564,

102 S.Ct. 3245, 73 L.Ed.2d 973 (1982) 15

In Re - Pe nnsylvania Truck Lines, Ine.., 150 B.R.

595 (E.D. Pa. 1992) 12

Iselin v. United States, 270 U.S. 245, 46 S.Ct. 248,

70 L.Ed. 566 (1926) 28

TABLE OF AUTHORITIES—Continued

Page

Laborer’s Health and Welfare Trust Fund v.

Kaufman & Broad of Northern California, Inc.,

707 F.2d 412 (9th Cir. 1983) 19

Mead v. Tilley, 490 U.S. 714, 109 S.Ct. 2156, 104

L.Ed.2d 796 (1989) 21

NLRB v. Allis-Chalmers, 388 U.S. 218, 87 S.Ct.

2001 (1967) 22

NLRB v. Amax Coal Co., 453 U.S. 322, 101 S.Ct.

672, 69 L.Ed.2d 672 (1981) ... bisa 28

Patterson v. Shumate, —— U.S. ——, 112 S.Ct.

2242, 119 L.Ed.2d 519 (1992) 15, 17

PBGC v. LTV Corp., 496 U.S. 633, 110 S.Ct. 2668,

110 L.Ed.2d 579 (1990) 21

PBGC v. Ouimet Corp., 6380 F.2d 4 (1st Cir.

1980) 12

PBGC v. R.A. Gray, 467 U.S. 717, 104 S.Ct. 2709,

81 L.Ed.2d 601 (1984) 3, 5, 26

Sheet Metal Workers v. 2300 Group, Inc., 949 F.2d

1274 (3d Cir. 1991) 19

Solar v. Pension Benefit Guaranty Corp., 504 F.

Supp. 1116 (S.D.N.Y. 1981) Aff’d 666 F.2d 28

(2d Cir. 1981) 23, 24, 25

Toibb v. Radloff, ——- U.S. - 111 S.Ct. 2197,

115 L.Ed.2d 145 (1991) 18

Trustees of Iron Workers Local 473 Pension Trust

v. Allied Products Corp., 872 F.2d 208 (7th

Cir.) cert. denied, 493 U.S. 847, 110 S.Ct. 143,

107 L.Ed.2d 102 (1989) 7,9

Trustees of Iron Workers Fund v. A & P Stee!

Inc., 812 F.2d 1518 (10th Cir. 1987) 19

U.S. v. Ron Pair Enterprises, 489 U.S. 235, 109

S.Ct. 1026, 103 L.Ed.2d 290 (1989) 15

Waggoner v. C & D Pipeline Co., 601 F.2d 456 (9th

Cir. 1979) 20

West Virginia University Hospitals, Inc. v. Casey,

U.S. ——, 111 S.Ct. 1188, 113 L.Ed.2d 68

(1991) 15, 27

vii

TABLE OF AUTHORITIES—Continued

STATUTES Page

29 U.S.C.

1002 (2) iis 2

1002 (16) (B) 2

1002 (35) 2

29 U.S.C. § 1002 (37) ‘ 2

29 U.S.C. § 1145 17, 20

29 U.S.C. § 13801 (a) (3) 2

29 U.S.C.

1301 (a) (10)

1301 (b) (1)

1363

§ 1881-145]

1382

1383 9,17,

1383 (a) 16

1383 (a) (1) 20

1383 (a) (2) 20

1383 (d) 19

1383 (d) (:

1384 19

1385 12, 19, 24

1385 (a) 18

1385 (b) (1) 11, 28

nm =

m= Www kW LY

—

or“

Iho

Awe)

—

~e)

29 U.S.C. 386 (a) (2) (A) 11, 28

29 U.S.C. § 1388 (d) 18,19

29 U.S.C. § 1892 (c) 19

29 U.S.C.

1399 (b) (1) 3

1399 (b) (2) 3

1401 (a) 3

1401 (a) (1) 5

1401 (b) (2) 3,6

1451 (d) 11

1461 (h) (1) 27

1485 (b) (1) 1]

(On CO? 0 DR? SP LK YR SR SP Sr SH SR Uf SR SRP SR LR LHP Lr Cr OP LR De OP COP COR GL

Cnr worn LN

viii

TABLE OF AUTHORITIES—Continued

OTHER AUTHORITIES

Deficit Reduction Act of 1984, Section 558

Hearings on the Multiemployer Pension Plan

Amendments Act of 1979: Hearings on H.R.

8904 Before the Taskforce on Welfare and

Pension Plans of the Subcommittee on Labor-

Management Relations of the Committee on Ed-

ucation and Labor, 96th Cong. 1st Sess. (June 5

and 7, 1979). sarees ORE eae? ~

H. Rep. No. 96-869, Pt. 1, 96th Cong. 2d Sess. 73,

reprinted in 1980 U.S.C.A.N. at 2936

IN THI

Sigrenw Court of thy United States

OCTOBER TERM. 1992

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS

PENSION FUND, ef al

Petitioners.

= Vv.

CROWN CORK & SEAL COMPANY, INC..,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

PETITION FOR A WRIT OF CERTIORARI

OPINIONS BELOW

The opinion of the United States Court of Appeals fo

the Third Circuit is reported at 982 F.2d 857 and

reproduced as Appendix A, infra, pp. la-19a. The un

published district court opinion Is reproduced at Append)»

The following Central State

J. Baker, Howard McDougall, Arthur H. Bunte, Jr.. R.V. Pulliar

Sr., R. Jerry Cook, and Harold D. Leu. Loran W. Kobbins, a di

fendant in Case No. 84-5737 (E.D. Pa.), and Robert C. Sansone :

Marion M. Winstead, defendants in that case and plaintiffs in Ca

91-4423 (E.D. Pa.), are no longer

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JURISDICTION

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b ’e Ss. p. ihe judgement ot t

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of appeals affirming the district court was terec

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: tered on January 19, 1993. This Court's juris

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hee 4A

STATEMENT OF THE CASE

l. The Parties

l j \ | S T

I C ent Stat or Pen mn i d Ss mult

mplover pension plan within the meaning of Section:

3(2), (35). (37) and 4001(a)(3) of ERISA, 29 U.S.C

1002(2). (35) 37) and !1301(a)(3)." The trustees

of Central States are collectively the ‘“‘plan sponsor

within the meaning of 29 U.S.C. SS 1002(16)(B) and

| 30] a | 1Q) ( | Wh ( ( rk & Se i] ( ompany Inc

(“Crown Cork’) is a Pennsylvania corporation, which

}

l'} yrvity, ? \? \ y é ri " et ray hetweer thy,

( Yr conce) cre Sry ‘ The ,

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( oul } red or vecen ©) ) 19OX® I} ‘

1 tne rt i 1 actiol is rted t 881] F.9d 1]

i ( ) LORD ( ; ‘ the Apper x ) } ( if te hh) |

previously made pension fund contributions to Central

States pursuant to the terms of a collective bargaining

agreement between itself and a local union affiliated with

the International Brotherhood of Teamsters, Chauffeurs.

Warehousemen and Helpers of America

2. The Statute

fitle IV of the Employee Retirement Income Securit

\ct of 1974 (“ERISA”), 29 U.S.C. § 1301 et seg. was

amended by the Multiemployer Pension Plan Amendments

\ct of 1980 (“MPPAA”), which was codified in relevant

part at 29 U.S.C. $$ 1381-1451. Under the MPPAA

Iti

employer pension plan is liable to the plan for its share

j ] 2 | . + ’

imendments, an employer that withdraws from a mu

of the plan’s unfunded vested benefit liability... The em

ployers share is called its “withdrawal liability.” 29

U.S.C. § 1381. Upon determining that a withdrawal has

occurred, the plan sponsor is required to notify the em

accordance with the statute and “demand pavment i!

accordance WIL

399(bd) (1)

] ] if thea nilon’ latarmin

lf the employer disputes the plan’s determination of

h ] . lenlaty linh; . ‘ rite

ithdrawal or the calculation of liability, the stati le p

7 | ’

vides a two-step review process. First, the employer may

ren

request review by the plan itself within 90 davs of t

ltial plan notice. 29 U.S.C. § 1399(b)(2). Tf the em

ployer still disputes the liability assessment following the

plan's review, it may initiate arbitration within 60 davs

of the plan’s response (01 if earlier 1270 d

request for review). 29 U.S.C 1401(92). Within 30

days of the imsSUAaANnCEe OT the arbit itor s final d ej h .

party may bring an action in the United States distri

court to enforce, vacate, or modify t

29 U.S.C. §$ 1401(b) (2).

3. Facts and Proceedings Below

his case arose from Crown Cork & Seal Company,

Inc. (“Crown Cork”) closing of its St. Louis facility.

Production, maintenance and some clerical employees at

the plani were represented by Local Union 688 which ts

with the International Brotherhood of Teamsters.

Crown Cork & Seal Co. and Central States Pension Fund,

No. 51-621-0022-89V (Amer. Arb. Assn. 1992), App. C,

at 44a... Crown Cork’s collective bargaining agreement

with the locai union obligated Crown Cork to remit pen

sion contributions to the Central States for work per-

formed by the covered employees. Specifically, Article 2’

of the agreement required that Crown Cork contribute to

Central States for each employee, which the contract de

fined in Article 1. Section 2 as “‘all production and main

tenance employees”. In 1980 Crown Cork decided to

close the St. Louis plant.

As of March, 1980, there were 148 production and

maintenance employees and 12 clerical employees on

whose behalf Crown Cork remitted pension contributions

to Central States. By September 25, 1980, these numbers

had fallen to 44 production and maintenance employees,

and 4 clerical employees. On July 28, 1980, Crown Cork

announced that it intended to close the St. Louis plant and

on September 23, 1980, Crown Cork entered into a list

ing agreement with Turley Martin Company, a real estate

broker, to sell the St. Louis facility. (The plant was even-

tually sold by a sale agreement executed June 3. 1982.)

By December 31, 1980, 3 members of Local 688’s pro-

duction and maintenance unit and | member of the cleri

cal unit were still employed at the plant and as a result

Crown Cork continued to remit pension contributions on

their behalf. The !ast employee covered by the collective

bargaining agreement was terminated on November 6,

The fe ts of this Case art alse set ut In Cre n ( y} wo Se | (¢

nt Stat Vout / WY, Sout Lire Per , }

881 F.2d 11, 15 (3d Cir. 1989

1981: thereafter Crown Cork’s contributions to Central

States ceased

rhe Pension Fund determined Crown Cork had effected

‘Omplete withdrawal hen 1 yYrmanentlv ceased yn

a compiete withdrawal when it permanently ceased con

tributions in November, 1981. On November 2. 1983,

Crown Cork received the Pension Fund's notice and de

nand for payment of withdrawal liability. Crown Cork

requested review of the Pension Fund's withdrawal liabil-

mination by letter dated December 30, 1983

The Pension Fund responded to the review request on

March 23, 1984, and affirmed its assessment of liability.

Crown Cork then filed a declaratory action in the United

States District Court for the Eastern District of Pennsyl-

vania in November, 1984. Crown Cork sought, inter alia

a declaration that under the Deficit Reduction Act of

1984 (“DEFRA”) it owed no withdrawal liability to the

Pension Fund because (it argued) it had a binding agree-

ment to withdraw and did in fact completely withdraw in

1980. The Pension Fund filed a motion to dismiss, which

was granted in part and denied in part.

The case was then stayed because questions regarding

the constitutionality of MPPAA were pending in Pension

Benefit Guaranty Corp. v. R.A. Gray & Co., 467 USS.

717, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984) After this

Court upheld the statute, the parties filed cross-motions

for summary judgment. On December 30, 1988, the dis-

trict court issued an order granting Crown Cork’s sum-

mary judgment motion and denying the Pension Fund's

cross-motion.

The Pension Fund appealed to the United States Court

of Appeals for the Third Circuit. On July 14, 1989, the

court reversed that part of the December 30, 1988 order

granting Crown Cork’s summary judgment motion and

affirmed that part of the order that denied the Pension

Fund’s cross-motion on the ground that 29 U.S.C.

S$ 1401(a)(1) required arbitration of the dispute. In re-

sponse to Crown Cork’s contention that arbitration may

be bypassed in a case involving solely questions of statu

interpretation, the court held ERISA’s arbitration

lent applies even when only issues of statutory

tation are involved and that, in the present case,

number of factual issues existed which further wat

On remand to arbitration the parties stipulated to the

underlying facts of the case and submitted the case on

riefs to a neutral arbitrator. On January 15, 1991, the

arbitrator issued his decision in favor of the Pension

lund, ruling that Crown Cork did not completely withdraw

before September 26, 1980, and specifically finding that

neither the plant closing announcement nor the real estate

isting constituted a “binding agreement to withdraw” as

of September 26, 1980. App. C, at 4la-Sla. Therefore,

Crown Cork could not avoid its withdrawal liability by

operation of the Deficit Reduction Act of 1984. On June

1991, the arbitrator determined that Central States

was entitled to a judgment of $2,072,247.08 pursuant to

the original assessment schedule.

Crown Cork filed a motion to vacate the arbitrator’s

lecision with the district court under Case No. 84-5737

in order to comply with 29 U.S.C. § 1401(b)(2), which

requires an “action” to enforce an arbitration award, the

Pension Fund filed a new case, No. 91-4423, seeking

enforcement of the arbitrator’s award. On July 19, 1991,

the new action was reassigned (pursuant to a prior agree

ment) as a related case to Judge McGlynn and the cases

re consolidated.

On April 1, 1992, the district court granted Crown

Cork’s motion to vacate and denied the Pension Fund’s

request for enforcement. App. B, at 20a-38a. The dis-

trict court determined that the crucial issues of the arbitra-

tion involved mixed questions of fact and law. The court

decided to separate the legal and factual questions, and

ipply a de novo standard of review to the arbitrator’s

legal determinations and a “‘clearly erroneous” standard

to the arbitrator’s factual determinations. Applying these

tandards, the district court held that while the arbitrator

rectly determined Crown Cork had not completely

withdrawn by September 26, 1980, the arbitrator was

‘rrect when he found that Crown Cork’s announce-

nt of its plant closing and its real estate listing agree-

Hd constitute < D nd vy avreement to vith

v’’ pursuant to § 55 f DEFRA. The district court

Q n dl inal US Crown Ce rk nad Ce< d

O b ess OP ns bv De ber 31. I198O, it

| ed O] tron | ie! the pi i] nd

is effected a complete withdrawal within the period for

ich DI I R \ excused liability.

[he Pension Fund appealed to the [Third Circuit on

tiv

\pril 27, 1992. The issues presented to the court were

‘ssentially the same as those presented in the instant peti

nn. The court of appeals affirmed the district court in

espects on December 23, 1992. Rehearing was de

‘don January 19, 1993 (with three judges voting in

favor of rehearing in banc).

SUMMARY OF REASON FOR GRANTING THE WRIT

[he Third Circuit held that Crown Cork effected a

‘complete withdrawal” from Central States before De-

‘mber 31, 1980, even though some of its employees con-

tinued to work (and Crown Cork continued to remit

eir behalf pursuant to the collective

bargaining agreement) until November, 1981, and not-

withstanding that the statute requires that “all covered

vy i

‘Nerations” nermanent! ._ACP This letern tiol di-

nerations’ permanently cease. his determination di

rectly conflicts with the Seventh Circuit’s earlier ruling

that when Congress specified that “all covered operations

VITUl

must cease it meant 100 and not

tally all” covered

operations Trustees 1 ie d Pr ducts € Oorp.., 872 I 2d

208 (7th Cir. 1989). The court below did not follow the

Seventh Circuit because it believed the statutory terms

‘covered” and “operations” were ambiguous. Noting that

recourse to legislative history was thus mandated, the

court found suggestions there that covered operations

Meant only “normal business operations” and that “‘vir-

mplete” was the same as “all.” Confronted

with the sume arguments, the Seventh Circuit had re

jected recourse to legislative history because the meaning

ft the statute was evident on its face

There is, thus, a conflict between two circuits on this

point—a conflict that places muitiemployer pension plans

I'ke ( entral States mn cl

n untenable position. Central

states, headquartered in Chicago, covers many employers

who do business in more than one federal appeals circuit.

Venue for litigation is generous under ERISA, hence Cen

tral States often cannot know in advance which law to

follow. If it follows the Third Circuit rule that with-

drawals occur before the last contribution is made, dis-

lvantaved employers will sue in Chicago. Conversely,

t Central States follows the Seventh Circuit rule, most

Central States contributors can find venue in a different

circuit, as did Crown Cork, through a declaratory action.

The Third Circuit also disregarded this Court’s rulings

on the plain meaning rule, by turning to legislative history

to muddy the meaning of an otherwise unambiguous stat-

ute. Caminetti v. United States, 242 U.S. 470, 37 S.Ct.

192. 61 L.Ed. 442 (1917). Further, even if there were

ne ambiguity in the statute, the Pension Benefit Guar-

nty Corporation (“PBGC”), the government agency re-

sponsible for the statute, had rendered an interpretation

that the court completely disregarded contrary to Chevron,

U.S.A. v. NRDC, 467 U.S. 837, 104 S.Ct. 2778, 81

lL .Ed.2d 694 (1984). Finally, even if resort to legisla-

tive history were appropriate, the portions relied upon

by the court below were an unreliable barometer of

In further disregard of statutory plain meaning the

rt below disregarded the statutory language “binding

nent to withdraw,” which it held lacked meaning.

The court then rejected any help from the legislative his

tory and case law that provided examples of such agree

ments, ignored the PBGC’s views, and went directly to

congressional purpose. Ruling that Congress intended to

relieve employers like Crown Cork from withdrawal liabil-

ity, the court held that circumstances that were not bind

ing agreements to withdraw but had a similar effect were

sufficient to meet the statutory requirement. The court

was wrong as a matter of law to go outside of the statu

tory language. Moreover the arbitrator, examining all of

the facts. found that Crown Cork had no binding agree

ment, a ruling that was entitled to deference unless re-

butted by a “clear preponderance of the evidence.”

REASONS FOR GRANTING THE WRIT

I. THE DECISION OF THE COURT BELOW CON-

FLICTS WITH A SEVENTH CIRCUIT DECISION

INTERPRETING THE SAME LEGISLATIVE TEXT.

Che United States Courts of Appeals for the Third

Circuit and the Seventh Circuit have now considered the

meaning of the statutory text of 29 U.S.C. § 1383(a).

In pertinent part that text provides:

A complete withdrawal from a multiemployer plan

occurs when an employer

(1) permanently ceases to have an obligation

to contribute under the plan, or

(2) permanently ceases all covered operations

under the plan.

The Seventh Circuit held this language to be unambigu-

ous and refused to consider legislative history purporting

to explain the statutory meaning in a manner inconsistent

with the statute’s words. Trustees of Iron Workers Local

473 Pension Trust vy. Allied Products Corp., 872 F.2d

208 (7th Cir.), cert. denied, 493 U.S. 847, 110 S.Ct.

143. 107 L.Ed.2d 102 (1989). Specifically the court

held that “permanently ceases all covered operations under

the plan” requires a 100% cessation of the work which

gives rise to the employer’s obligation to contribute to

the plan.

In the present case the Third Circuit expressly re-

jected the reasoning of the Seventh Circuit, ruling that

two terms, “covered” and “operations,” cannot be defined

without resort to legislative history. The court rejected

the Seventh Circuit’s conclusion that “all covered opera-

tions under the plan” means 100% of bargaining unit

work that gives rise to the obligation to contribute to the

plan and adopted another view—that “all” may mean

something less than all, and that covered operations are

only the “normal” business operations of a company

(whether or not the company contributes for other opera-

tions). Thus, according to the Third Circuit, a complete

withdrawal occurs upon a “substantial cessation of normal

business operations” of the employer. App. A, at 18a.

The Seventh Circuit and the Third Circuit are thus in

conflict over the meaning of “all covered operations under

the plan,” and consequently over what constitutes a com-

plete withdrawal from a multiemployer pension plan like

Central States. This Court should issue a writ of certiorari

to the Third Circuit in order to resolve the split of

authority.

The problem created by this split is significant and will

affect most, if not every, determination of withdrawal

liability by multiemployer pension plans, particularly large

plans like Central States that are left to guess, case by

case, which rule applies. Central States operations are

nearly countrywide. Many other plans, particularly in

the trucking industry, span several circuits.° Venue for

® The Teamsters Pension Trust Fund of Philadelphia and Vicin-

ity, the North Jersey Teamsters Pension Trust, the Central Pennsyl-

vania Teamsters Pension Fund, and the Western Pennsylvania

Teamsters Pension Fund are several of the plans administered

within the Third Circuit hut Which cover employers with broader

operations. See Flying Tiger Line v. Teamsters Pension Trust

Fund 830 F.2d 1241 (3d Cir. 1987).

litigation is appropriate where either the pension plan

or the employer does business. 29 U.S.C. $ 1451(d).

If Central States had sued Crown Cork first in Illinois, it

would have won under the Seventh Circuit rule. But if

Crown Cork (or another employer) finds an earlier date

of withdrawal convenient, it may bring a declaratory

action in a district court within the Third Circuit (as

Crown Cork did in this case) to achieve a different result.

The circumstances leading to this problem—where a

contributing employer substantially reduces its opera-

tions——are not rare, and the date of withdrawal can sig-

nificantly affect the amount of liability. Certain partial

withdrawals span several years. 29 U.S.C. § 1485(b) (1).

The amount of unfunded vested benefits (and thus the

amount of withdrawal liability) under a plan varies from

year to year. Where liabilities are rising, withdrawing

employers may wish to have the withdrawal date occur in

earlier years by claiming their partial withdrawal is really

4 substantial cessation of “normal business operations’ —

i.e., a complete withdrawal under the Third Circuit rule.

Pension plans may also be encouraged to forum shop.

A plan must wait four years from the onset of a 10%

decline partial withdrawal before it can issue a partial

withdrawal liability assessment. 29 U.S.C. §§ 1385

(b)(1) and 1386(a)(2)(A). In cases of “substantial

cessations,” however, the plan can immediately bill for

a complete withdrawal under the Third Circuit rule.’

By acting early the plan reduces collection risks and gains

immediate payment.

Even as the Third Circuit’s opinion was rendered, Cen-

tral States was already embroiled in multi-circuit litigation

7Of course if Central States were to issue an assessment to a

Pennsylvania company, it could expect the company to file a declara-

torv action in Illinois upon receipt of the assessment. Central

States might counter this tactic by filing its own declaratory action

in Pennsylvania before or simultaneous with the employs r’s receipt

f the assessment.

that presented this very problem. Pennsylvania Truck

Lines, Inc. ceased contributing to Central States and filed

for bankruptcy in the Eastern District of Pennsylvania.

In re: Pennsylvania Truck Lines, Inc., No. 92-12370S

(Bkrtcy., E.D. Pa.). Central States filed a withdrawal

liability claim for approximately $1.7 million. Central

States also sued several non-bankrupt affiliates of Pennsyl-

vania Truck Lines in the Northern District of Illinois to

collect the same liability, which was joint and several.°

Central States, Southeast and Southwest Areas Pension

Fund, et al. v. PTL Terminal Services, Inc., et al., 92

C 4392 (N.D. Iil.).. The bankrupt company, which

continued to operate under Chapter 11 of the Bankruptcy

Code, then entered into a new collective bargaining agree-

ment requiring contributions to Central States. The new

level of covered operations was only about 10% of pre-

petition levels.

The principal defense of these companies (in both

proceedings) was that the resumption of contributions

obviated the “complete withdrawal.” If the companies

were successful in that argument, they would escape lia-

bility—at least until the time required under 29 U.S.C.

$1385 to establish partial withdrawal liability had

elapsed. In the Pennsylvania action, however, the de-

fense might fail. Under the Third Circuit rule a 90%

decline in normal operations probably constitutes a “sub-

stantial cessation of normal business activity.”*° Thus,

Pennsylvania Truck Lines wou!d appear to have had an

immediate withdrawal based on its substantial cessation

8 The joint and several liability arises from 29 U.S.C. § 1301

(b)(1). See Central States Pension Fund v. Slotky, 956 F.2d 1369

(7th Cir. 1992); PBGC v. Ouimet Corp., 630 F.2d 4, 11-22 (1st Cir.

1980).

® Indeed the new contracts did not cover any of the former opera-

tions (or employees) of the company, which permanently ceased

(at a 100% level), but were entirely new and covered a different

kind of work.

of “normal business operations.” The affiliates’ defense

in the Illinois action, under Allied Products, is stronger.

Thus the split in circuits leads to the incongruous result

that members of the same control group will have differ-

ent liability determinations for the same event.

Of course Central States cannot be sure that it would

prevail against Pennsylvania Truck Lines, or any other

employer, in the Third Circuit because of the ambiguity

of the new standard. The court has rejected the bright

line “all equals 100%” rule of the Seventh Circuit in

favor of an inherently subjective rule that “all equals

a substantial cessation of normal business operations.”

The Court did not, however, define normal business oper-

ations, suggest what normal business operations are for

a given employer, or establish what percentage of such

operations must cease to meet the substantiality require-

ment for a complete withdrawal.”

For example, suppose a trucking company of 100 em-

ployees contributes to Central States only for its janitorial

crew of 2 employees. If the company ceases trucking

operations but continues to employ and contribute on

behalf of its janitorial crew, has it withdrawn because it

has a “substantial cessation of normal business opera-

10 Does it mean “substantially all’ operations? Case law and

legislative history hold 85% to constitute substantially all. See

Continental Can Co. v. Chicago Truck Drivers Union Pension Fund,

916 F.2d 1154 (7th Cir. 1990). Since an employer has a substantial

cessation when only 15% of its normal operations remain and a

partial withdrawal when only 30% remain, it appears that at least

hall of all 70% decline partial withdrawals are eligible for early

assessment under the Third Circuit rule. This conflict with the

partial withdrawal rules is not at all surprising, however, because

the partial withdrawal rules were Congress’ response to the problem

of substantial cessations of contributions by employers. The Third

Circuit’s interpretive fix, thus, is redundant. See Section II, 3,

infra.

tions”? ‘' May Central States anticipate the ultimate ces-

sation of janitorial work (in say, 1994) and assess the

employer immediately although there is no decline in

contributions? May the employer insist on it? The fact

of the matter is that the statute focuses on contribution

levels, not operational levels. There is no withdrawal if

contributions continue to be made on behalf of the jani-

torial crews as long as the level of contributions does

not decline to partial withdrawal levels.'* Indeed, Crown

Cork did not go out of business (or substantially cease

normal business operations); it only closed a plant. If

Crown Cork had contributed to Central States for work

performed at another of its plants under a different col-

lective bargaining agreement, the fact that it closed the

St. Louis plant would not constitute a withdrawal of

any kind. This example not only underscores the am-

biguity of the Third Circuit rule, but demonstrates its

unworkability. Pension plans, employers and arbitrators

are left to assert their own interpretations of these terms,

which, of course, must ultimately be resolved by the

courts. Given the vagueness of these new standards the

courts will no doubt be forced to revisit this issue re-

peatedly. This Court should grant the petition for cer-

tiorari, reverse the Third Circuit, and adopt the Seventh

Circuit holding.

11 Under labor law and under the terms of Central States Pension

Plan, if the janitorial work is covered under a collective bargaining

agreement under which contributions are due Central States. ther

the work is covered operations notwithstanding what the empioyer

characterizes as “normal.” See Section II, A, infra.

12 The partial withdrawal rules are themselves simply mathemati

cal constructs derived solely from contribution levels, not opera-

tional levels. That the two are ofteff related does not mean that one

may be substituted for the other, as the Third Circuit did.

Il. BY ALLOWING LEGISLATIVE HISTORY EXCLU-

SIVELY TO DEFINE CONGRESSIONAL INTENT

AND OVERRIDE THE EXPRESS TERMS OF A

STATUTE, THE DECISION OF THE COURT BE-

LOW CONFLICTS WITH THIS COURT’S DECI-

SIONS REGARDING THE SCOPE OF JUDICIAL

INTERPRETATION OF A STATUTE.

Where the meaning of a statute is plain by its own

terms. the courts are not free to substitute a different

meaning derived from non-statutory sources. Caminetti

v. United States, 242 U.S. 470, 37 S.Ct. 192, 61 L.Ed.

442 (1917) (holding when a statute’s language is plain,

sole function of the courts is to enforce the statute accord-

ing to its terms); U.S. v. Ron Pair Enterprises, 489 U.S.

235. 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989); West Vir-

vinia University Hospitals, Inc. v. Casey, —— U.S. ——-,

111 S.Ct. 1138, 113 L.Ed.2d 68 (1991); Patterson v.

Shumate, —— U.S. ——, 112 S.Ct. 2242, 119 L.Ed.2d

519 (1992). Yet this is precisely what the court below

did. As this Court’s decisions make clear, only in limited

circumstances may a court look behind the statute to

legislative history. Griffin v. Oceanic Contractors, Inc.,

458 U.S. 564, 575, 102 S.Ct. 3245, 3252, 73 L.Ed.2d

973 (1982) (literal construction of statute is conclusive

unless such an interpretation produces an absurd and

unjust result). Even if a court deems a statute ambigu-

ous, resort to legislative history is often not the best

(or even an appropriate) source of clarification. See

Chevron, U.S.A. v. NRDC, 467 U.S. 837, 104 S.Ct.

2778. 81 L.Ed.2d 694 (1984). Nonetheless, to resolve

this case the Third Circuit looked first to legislative his-

tory to develop a meaning that is contrary to the literal

language of the statute and contrary to the interpreta-

tion of the agency entrusted to administer the statute.

In reaching its decision, the Third Circuit disregarded

the statutory context, including related statutory provi-

sions and analogous use in related statutes.

Further. this case demonstrates the dangers of resort-

ing to isolated portions of legislative history. The state-

ite a ADEA AIRS LE ASA SIO IE eae oe

ments that the court relied upon not only conflict with

the words of the statute, but also conflict with other

portions of the legislative history. Further, the concern

addressed by the legislative history relied upon by the

court below was ultimately resolved by adding special

rules in another section of the statute," and the legisla-

tive history was apparently modified and retained in an

effort to influence then-pending litigation

A. The Plain Meaning Rule; Caminetti v. United

States.

his Court has expressed the plain meaning rule in

Caminetti v. U.S., 242 U.S. 470, 37 S.Ct. 192, 61 L.Ed.

442 (1917) and countless other cases numbering per-

haps a dozen last term alone. Under that rule the lan

guage of the statute is the starting point for statutory

interpretation and, if the language is clear, is the ending

point also. The first statute at issue here, 29 U.S.C

§ 1383(a) provides

For purposes of this part, a complete withdrawal

from a multiemployer plan occurs when an em-

ployer

(1) permanently ceases to have an obligation to

contribute under the plan, or

(2) permanently ceases all covered operations

under the plan.

The Third Circuit believed this language was not clear

enough for it to require that a// activity giving rise to an

employer's obligation to contribute to the plan pursuant

)

to a collective gargaining agreement cease before a com

plete withdrawal occurs."

We find that the statutory language “all covered

operations” is not sufficiently clear and free from

13 These points were made to the court but are whollv absent

from the de cision

14 It is undisputed that Crown Cork continued to have an obliga

tion to contribute until November, 1981, and therefore did not with

draw under paragraph (1

ambiguity as to stand on its own. Resort to legisla

tive history is thus mandated. Indeed, we find that

two of the terms contained in that phrase, specill

cally “covered” and “operations,” cannot be defined

without resort to it. Our examination of the legis-

lative history leads us to conclude that substantial

cessation of normal business activity meeis the com

plete withdrawal standard.

App. A, at 18a (emphasis added). The court reached

this conclusion only after considering certain legislative

history to create the ambiguity, giving no consideration

to the words of the statute in their own context. If by

singling out a word or two and declaring their meaning,

out of context. unclear, mandates resort to legislative his-

tory, then no statute is unambiguous (or safe from jud!

cial intrusion). Legislative history must not be allowed

to first create ambiguity and then resolve it.

If the words “covered operations” are read in context,

it is clear a complete withdrawal occurs when an employe!

permanently ceases all operations that give rise to the

hligation to contribute to the plan. Can it be said that

Crown Cork’s withdrawal was “complete” although it con-

tinued (as required by the collective bargaining agree-

ment) to contribute to the plan? Is a cessation “per

manent” with respect to “all” covered operations although

contributions continue for some employees? Is it concelv-

able that Congress meant an employer could effect a col

plete withdrawal under one ERISA section (S$ 138

while still obligated to make contributions under another

ERISA section (§ 1145)? Under the plain meaning rule

the court’s analysis should have stopped with the statute

for its words are clear.

This Court had an opportunity just last term to apply

the plain meaning rule to a case involving the Bank

ruptcy Code and ERISA in Patterson y. Shumate,

U.S. 112 S.Ct. 2242, 119 L.Ed.2d 519 (1992).

There the district court had concluded that Congress

intended a narrower reading of the statute than its literal

statement. The court of appeals reversed and this Court

affirmed the reversal. “In our view, the plain language

of the Bankruptcy Code and ERISA is our determinant.”

Id. at 2246 (citing Toibb v. Radloff, —— USS.

l11 S.Ct. 2197, 2199, 115 L.Ed.2d 145 (1991)). The

Court looked first to the natural reading of the provision

and then to whether it comports with other references in

the Bankruptcy Code. “The Code reveals, significantly,

that Congress, when it desired to do so, knew how to

restrict the scope [of the statute].” /d. The same may

ly”

in certain provisions of ERISA when it meant less than

all

be said of Congress’ use of the modifier “substantial

Thus, even if the phrase “all covered operations under

the plan” were not clear, the court should have ex-

amined related provisions of the same statute to pro-

vide further context. This approach also reveals that a

complete withdrawal requires either the cessation of the

obligation to contribute or 100% cessation of the activity

that gives rise to the obligation to contribute. The statute

provides partial withdrawal rules to cover those circum-

stances where some, but not all, of an employer’s cov-

ered operations cease. 29 U.S.C. § 1385(a). Crown

Cork was covered by these rules, its contributions (or in

the vernacular of ERISA, its contribution base units)

having declined by more than 70% in !981. Had it

continued contributions at that reduced level through

1982 and 1983, it would have become liable for a partial

withdrawal on December 31, 1983. /d. Only its 100%

decline in November 1981, converted the impending par-

tial withdrawal into a complete withdrawal. Obviously,

Congress knew how to write partial withdrawal rules

that covered employers like Crown Cork and in fact did

so. Further, Congress also wrote a special rule to cover

construction employers who reduce covered operations but

employ a token workforce to avoid liability. 29 U.S.C.

$ 1388(d). So Congress obviously knew how to deal with

severe declines like Crown Cork’s if it wished. If Con-

gress made § 1385, and not § 1388(d), applicable to

Crown Cork, the Third Circuit may not infer an inadvert-

ent omission and fill the gap through legislative history.

lo the contrary, it must infer deliberate action—that

Congress meant precisely what it wrote.

Other sections of ERISA provide additional relevant

context. The statute uses the terms “substantially all”

(29 U.S.C. § 1383(d)) and “substantially the same” (29

U.S.C. § 1384) where Congress meant less than all. Why

then would Congress rely on legislative history rather

than text to make the “all” in § 1383 the equivalent of

less than all? '° The obvious inference is that if Congress

meant “substantial cessation” instead of “all” it would

have written it that way, and that when it used “all” it

meant precisely that.

Next, the court might (and should) have turned to

other labor statutes and judicial decisions in the labor law

context for clarification of “covered operations under the

plan.” Under labor law, ‘covered work”’ means work de

scribed in (covered by) a collective bargaining agree

ment. See Sheet Metal Workers v. 2300 Group, Ini

949 F.2d 1274 (3d Cir. 1991); Flanigan v. Truck Drivers

Local 671, 942 F.2d 824 (2d Cir. 1991): General Truct

Drivers Local 957 v. N.L.R.B., 934 F.2d 732 (6th Cir.

1991): Carpenters Local Union 953 v. Mar-Len of Louts

iana, Inc., 906 F.2d 200 (Sth Cir. 1990): Trustees of

Iron Works Fund v. A & P. Steel, Inc., 812 F.2d

1518, reh’e denied, 824 F.2d 817 (10th Cir. 1987):

Laborers Health and Welfare Trust Fund v. Kaufman &

} In fact it can be shown that these partial withdrawal rules wer

Congress’ response to concerns over employers avoiding lial 1]

maintaining small workforces following large declines in contrit

tions. See Section C, infra. Congress also provided 29 U.S.f

§ 1392(c) to allow plans to disregard transactions intended to ¢

or avoid withdrawal liability (e.g., maintaining token workforce:

The Third Circuit has undertaken to use the legislative histor

fix the same problem (to Crown Cork’s benefit) that Cong)

already fixed, apparently because the statute, in the

did not do full justice to the legislative history.

Broad of Northern California, Inc., 707 F.2d 412 (9th

Cir. 1983); Waggoner v. C & D Pipeline Co., 601 F.2d

456 (9th Cir. 1979). Consistent with this the Central

States Pension Plan defines “covered employment” as that

which contributions are required to be made on behalt

of an “employee,” which, in turn, is defined as one em

er the terms of a collective bargaining agree

nent. See Excerpts of Central States Pension Plan, App

G, at 68a. Indeed, ERISA itself recognizes that both doc-

vern. See 29 U.S.C. §$ 1145. With this back

ground in mind, “covered operations” clearly means those

operations that give rise to the obligation to contribute,

which in this case is defined by the collective bargaining

reement. Crown Cork’s 1981 operations were plainly

covered under the plan in this context

The Third Circuit did not address any of this. Instead

it leaped immediately to portions of the legislative his

tory, which it uncritically adopted in violation of the plain

meaning rule. Because the Third Circuit disregarded this

Court's decisions establishing the proper scheme of statu

tory interpretation, this Court should issue the writ of

certlorart.

B. Agency Interpretations: Chevron v. NRDC.

The Third Circuit's decision is also in conflict with this

Courts decision in Chevron, U.S.A. v. NRDC. 467 U.S.

Crown Cork and the Third Circuit were concerned that 138

i ? Oot be IDSsSuMmeda nae) 138 i ] don if i iit

If i Z were nly i cl I I 1] redut | f Oo! VI CT there ir’ no

shortages in our legal culture) that insures that an employer d

ne id hability with an open-ended contract—a continuing

gation” to contribute but no covered work being performed, it

would contain substance enough. If ‘a)(2) disc rages unintended

parsing of the term “obligation to contribute the it {

nulli In fact a Recall Agreement, a plant closing agr ent

evel collective ba) ning reement ma nd often do, in

n obligation upon the emp! r to contribute shoul “k

resume at the facility but would not under 2), defeat a th

drawal if there were in reality a permanent cessati f «

the statute. the court should defer

pretation. 104 S.Ct. at 2781-82. In this case a gov-

ernment agency. the Pension Benefit Guaranty Corp.

(“Fa examin ‘d the statute

| les ] ‘ ‘Tf » anit ras! . . 7.

cluded that a complete withdrawal does not occur unt

in question and con

all contributions cease and all operations giving rise to

the contribution obligation cease. App. F, at 60a. More-

ver, this court has particularly underscored the impor-

tance of PBGC’s views in interpreting Title IV of ERISA

PBGC v. LTV Corp., 496 U.S. 633, 110 S.Ct. 2668, 110

| .Fd.2d 579 (1990): Mead v. Tilley, 490 U.S. 714, 109

S.Ct. 2156, 104 L.Ed.2d 796 (1959).

Here, not only did the Third Circuit fail to defer to the

PBGC’s interpretation, it did not even acknowledge the

PRGC’s view.” Under Chevron, before the court could

formulate its own interpretation, it must find that the

agency interpretation was not based on a permissible stat-

utory construction. By ignoring this step the Third Cir-

cuit has placed itself squarely in conflict with Chevron.”

This Court should, therefore, issue the writ of certiorari.

oh,

C. This Case Is A Paradigm For the Unreliability of

Legislative History; The Legislative History Re-

lied Upon By The Court Below Advanced An

Agenda Apart From The Statute It Purported To

Explain.

nherent dangers of relying on legislative history

sted in this case.’” Even if the Third Circuit

to turn to the legislative history (i.e., if the

d no valid interpretation), the court did not look

ee that the legislative history it chose

upon was flawed and thus a poor indicator of

ntent. For several reasons the court should

rejected the legislative history as inaccurate and

First. the two committee reports the Third Circuit re-

he reports of the first committees to con-

(the House Education and Labor Committee

Senate Labor and Human Resources Committee ).

In both cases the bill was passed to another committee

House Ways and Means Committee and the Senate

Finance Committee. respectively), and both of the latter

littees issued reports amending the bill and omitting

he legislative history the Third Circuit relied upon. Thus

cannot be said that all (or even a majority) of the

committee members intended that “all” mean something

less than all. The Congress as a whole and the President,

relying if at all on the final Committee reports and the

Conference Report, had literally not a clue that the Labor

Committees might have intended this atypic meaning.

Second, if the Third Circuit had looked one level

deeper, it would have seen the origin of the legislative his-

19 See Conroy v. Aniskoff, — US ; S.Ct. 61

U.S.L.W, 4301 (1993 Sealia, J. concurring); NLRB v. Allis-

Chalmers, 388 U.S. 213, 217, 87 S.Ct. 2001, 2025 (1967) (White, J.

rl! y Se f also Contine ntal Can 0. Inc. v. Ch ICYO Truck

Lt ‘ inhy

Drivers Union Pension Fund, 916 F.2d 1154 (7th Cir. 1990

Easterbrook, J. rejecting another piece of MPPAA legislative

tory and realized its interpretation of the history was

erroneous.” Hearings on the Multiemployer Pension Plan

Amendments Act of 1979: Hearings on H.R. 3904 Before

the Taskforce on Welfare and Pension Plans of the Sub-

committee on Labor-Management Relations of the Com-

mittee on Education and Labor, 96th Cong. Ist Sess.

(June 5. 1979) (“House Labor Hearings”). Excerpted,

App. H, at 74-892! The bill originally proposed by

PBGC and introduced in Congress contained no partial

withdrawal rules. Several witnesses described abuses, cit-

ing a “virtually complete” withdrawal by a company

called Kollsman Instrument Company and pointing out

that under existing law employers like Kollsman could

escape liability even after severe declines in contributions

to the plan.” PBGC had taken the position even then

that “withdrawal” meant “complete withdrawal,” 1.¢.,

100%. The witnesses were concerned that pension plans

and PBGC were at risk while employers escaped liabil-

ity through the technical loophole of keeping a token

workforce active while curtailing most operations. See

House Labor Hearings (Statement of Don Seifman, Coun-

sel. Retail Clerks International Union) (noting PBGC's

opinion that present statute did not cover partial with-

20 If the Third Circuit were right to look at the legislative history

in the first place, was it entitled to rely only on the plain meaning

of the language of that history, or must It peal back each layer

until the whole is exposed? Ironically the legisltaive history of thi

legislative history reveals a two-] ronged intent of Congress, as this

and the next paragraph show, and neither prong supports tl Third

Cireuit’s view.

214 similar hearing was held by the S te with n

same witnesses and statements. Hearings Before the Committee on

Labor and Human Resources I'nited States Senate, 96th Cong 1st

sess June 26 and 27, 1979

22 The witnesses generally referred to lug the 4

against Kollsman by its ! imed plaintiff, 5 r. ratl }

defendant Kollsman. See S lay PBGC and Kollsman Inst nt

‘o. 504 F. Supp. 1116 (S.D.N.1 1981), aff'd 666 F.2d 28 (2d Cir

drawals and need for partial withdrawal rules).* In

response to these concerns the committees wrote the par-

tial withdrawal rules now found in 29 U.S.C. § 1385.”

Since the concern expressed in the legislative history was

addressed by adding what later became 29 U.S.C. § 1385,

it was wrong of the Third Circuit to resurrect the history

to apply it to § 1383 as if Congress had not acted.

Third, the court below could have asked why the legis-

lative history it relied upon stated that the concept of a

“virtually complete” withdrawal was “consistent with ex-

isting !aw” when it demonstrably was not in accord with

the existing law. See H. Rep. No. 96-869, Pt. I, 96th

Cong. 2d Sess. 73, reprinted in 1980 U.S.C.A.N. at 2936.

The then-existing law is reflected in Solar v. Pension

Benefit Guaranty Corp., 504 F. Supp. 1116 (S.D.N.Y.

1981) aff'd, 666 F.2d 28 (2d Cir. 1981). PBGC initially

took the position in So/ar that a virtually complete with-

drawal could not occur zinder section 4063 of ERISA

(the pre-MPPAA version of withdrawal liability), then

codified at 29 U.S.C. § 1363 (1976). Id. This should

have been enough of a warning for the court to re-

ject the legislative history out of hand. A bit more

investigation, however, reveals another purpose behind

this “legislative history.” In mid-litigation, PBGC

changed its mind and informed the Solar court that

Kollsman, whose participants had fallen to about 1%

of prior levels, had withdrawn after all in a “virtu-

ally complete” withdrawal. /d.°’ Virtually simultaneous

“3 Excerpts of Mr. Seifman’s testimony are set out in the App. H,

pp. 79a-8la. Also excerpted are similar statements of Robert

Georgine on behalf of the National Coordinating Committee of

Multiemployer Plans and other witnesses. App. H, at 82a-89a.

“4 The original bill Section 4201(b)(6), App. H, at 74a, allowed

PBGC to provide partial withdrawal rules by regulation. Following

these hearings the bill was amended to provide specific rules. Sec-

tion 4201(b)(6), App. H, at 77a.

25 PBGC’s brief to the Second Circuit contained a succinct history

of its position in its Statement of the Case. App. E, at 54a-59a.

with PBGC’s change of mind (it notified the district

court on March 27, 1980), the first Committee Report

(the House Labor Committee Report issued April 2,

1980) changed the legislative history from complaining

of existing law where there were no virtual withdrawals,

to supporting “existing law” where there were virtual

withdrawals. Thus the legislative history, far from ac-

curately reflecting the state of the law or congressional

intent, appears to be at best a predecessor to the partial

withdrawal rules, and at worst an effort to influence the

pending Solar case.”

As this case demonstrates, recourse to legislative his-

tory is inherently risky, particularly where, as here, the

legislative history is an unreliable indicator of congres-

sional intent. It is a worthy text-book sagen demon-

strating the merits of legislative text ove legislative his-

tory as a basis of statutory siden: By failing to

follow this Court's direction in Camineiti and in Crevron,

and instead following legislative history, the Third Cir-

has left the field in disarray. Pension plans and em

‘saat

Cuil Vit

ployers are left to guess as to what constitutes a complete

withdraw al.

III. THE COURT BELOW EXPANDED THE STATUTE

TO IMPLEMENT “CONGRESSIONAL INTENT”

CONTRARY TO THIS COURT’S RULING IN WEST

VIRGINIA UNIVERSITY HOSPITAL v. CASEY.

By amendment to ERISA Congress repealed some of

MPPAA’s retroactivity. Section 558 of the Deficit Re-

duction Act of 1984 (“DEFRA”). In chief the amend-

ment brought the effective date of MPPAA forward to the

26 PRGC lost the case. The Second Circuit, like the district court,

y } =. Row - ~ } ] —— —

pparently never found or, wisely, ignored the legislative history.

Solar. 666 F.2d 28, (2d Cir. 1981)

Solar was a uniquely pre-MPPAA case where there were no

statutory partial withdrawals. In the post-MPPAA and post-Solar

ld of 70% decline partial withdrawals, “virtually complete”

withdrawals (and potential for emp ployer manipulation) ceased to

1 to PBGC

September 26, 1980 enactment date thereby relieving em-

ployers who had withdrawn prior to the enactment date

of any withdrawal liability. In addition Congress ex-

cepted from withdrawal liability certain other employers

who withdrew after September 25, 1980, and before De-

cember 31, 1980, if the employer had entered into a

“binding agreement to withdraw” before September 26,

1980.°° DEFRA § 558(d). Thus even if the Third Cir-

cuit were right that Crown Cork “virtually withdrew”

before December 31, 1980, it was still necessary to find

a binding agreement to withdraw if Crown Cork were to

escape liability.”

The Third Circuit’s analysis is curious. It began with

the proposition that the statutory phrase “binding agree-

ment to withdraw” is ambiguous (as it must if it is going

to depart from the words of the statute), but the court

could not have meant ambiguous in the usual sense of the

word—possessing more than one meaning. To the con-

trary the court Was concerned that the term was too nar-

row—possessing too littk meaning. App. A, at Ila.

Yet the court did not find that the statute was meaning-

less or absurd. Indeed it found relevant legislative his-

tory and case law giving examples of binding agreements

to withdraw. The court determined, however, that these

examples were too unlikely to occur and thus did not pro-

vide sufficient substance to Congress’ intent.

[W]e do not believe that Congress intended to limit

DEFRA’s application to those situations in which

“7 MPPAA was enacted on September 26, 1980, but was originally

made effective April 29, 1980. See PBGC v. R. A. Gray, 467 U.S.

717, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984 DEFRA was enacted

one month after the R. A. Gray decision.

28 The arbitrator, who was factfinder below, found that Crown

Cork had no binding agreement to withdraw. The district court

recharacterized the question as purely legal and reversed. T

court of appeals also disregarded the arbitrator’s findings. 1

arbitrator’s findings should have been presumed correct by bo

courts. Only, as the Third Circuit ruled, if there is no need for a

real binding agreement may the arbitrator’s findings be bypassed.

a union, or any other party, had consented to the

employer’s withdrawal from the plan.

We believe that Congress, in requiring some type

of “binding agreement to withdraw,” intended to

exclude from withdrawal liability those employers

whose actions effectively and irrevocably committed

thein to withdrawing from a multiemployer plan be-

fore September 26, 1980.

\pp. A, at 12a-14a. Where did the Third Circuit find this

standard? It cites absolutely no authority except for its

own belief in what Congress meant.“ On this basis the

court held that while Crown Cork had no binding agrec

ment to withdraw, its plant closing notice and listing

agreement served a sufficiently similar purpose to satisfy

the statute.

In West Virginia University Hospitals, Inc. v. Casey

OB. , 111 S.Ct. 1138, 113 L.Ed.2d 68 (1991),

this Court rejected the notion that it is the court's duty

o ask how Congress would have decided a question had

Congress actually considered it. “This argument pro

foundly mistakes our role... . [I]t is not our function

to eliminate clearly expressed inconsistency of policy. i

Jd. at 1148. Similarly this Court has stated:

(The statute’s] language is plain and unambiguous

What the Government asks is not a construction of a

statute, but, in effect, an enlargement of it by the

court, so that what was omitted, presumably by

29 While Congress could have used those words, it did not. Maybe

Congress intended that its exception be very narrow—-pernaps

limited to only a single employer (and not Crown Cork). This, afte

all, is precisely what Congress did in adding 29 U.S.C. § 1461 h)(1

to benefit only Lady Baltimore Foods, Inc. See Central States Pen

on Fund v Lady Baltimore Foods, 960 F.2d 1339 (jth Gir.). cert

denied, U.S 118 S.Ct. 179, 121 L.Ed.2d 125 (1992

There is no rule of construction that disfavors a narrow constru

tion. Moreover, a narrow construction is also consistent with the

rule of construction that ¢ xceptio! to a remedial statute MPPAA

are read narrowly

inadvertence, may be included within its scope. To

upply omissions transcends the judicial function

/ ( bry) / nited States 270 [ S 245, 250-251, +6 > .

248, 250, 70 L.Ed. 566 (1926)

Moreover, the Third Circuit had, but ignored, the

agency s views on this question as well. PBGC had urged

the court not to expand the scope of the statute. App r;

at 60a. [ts ignoring of the agency interpretation was thus

in conflict with Chevron

In sum, the court below tgnored the plain meaning

rule and without turning to any legitimate rule of con

truction simply announced Congress’ intent and supple

mented the statutory text with it. This Court should issue

the writ of certiorart to correct the Third Circuit’s error

IV. THE THIRD CIRCUIT'S DECISION CREATES A

PROBLEM OF NATIONAL IMPORTANCE) BE-

CAUSE MULTIEMPLOYER PENSION PLANS ARE

LEFT TO GUESS WHAT LAW APPLIES; THE

THIRD CIRCUIT’S RULING LACKS ANY MEAN.

INGFUL STANDARD FOR DETERMINING WHEN

A WITHDRAWAL OCCURS.

Multiemployer pension plans can no longer be certain

it constitutes a complete withdrawal and when it o¢

curs. If the Third Circuit is right, then a plan need not

walt until the last contribution is made before it assesses

for a complete withdrawal. But when should it act? Is

a “substantial cessation” a 70% decline? 90%°? 98%”?

Plan trustees are fiduciaries whose sole duty is to partici

pants. NLRB v. Amax Coal Co., 453 U.S. 322, 101

S.Ct. 672, 69 L.Ed.2d 672 (1981). The pressure

upon trustees to assess as soon as possible will be im

mense, particularly considering the usual alternative—the

four-year wait imposed by the partial withdrawal rulk

Of course potential withdrawal lability varics year to

year with the fortunes of the plan. In some cases the

\ 3-year testing period, 29 U.S.4 § 1285 (b 1), plus another

year to establish the pro-ration fraction, 29 U.S.C. § 1386(a) (2 A)

habilit ( QO]

Case Thay '’

int to wait until January 1 to assess a larger

may hurry to assess by December 31, as t

be). Obviously the price of the Third Circuit's

high considering potential litigation alone

suidance for the meaning of “substantial ces

the test afforded by “substantially all” under

1383(d)(2)."' The Seventh Circuit has ap

85% test to define that inherently ambiguous

term See Continental Can, 916 k.2d 1154. Coinciden

tally that

delining a

(100%) d

all par!

drawal [

tually all 4

timely colle

falls halfway between the minimum decline

nartial withdrawal (70% ) and the maximum

‘cline. Thus, if that is the test, fully half ol

withdrawals may actually be complete with

nder the Third Circuit rules, trustees of vir

nultiemployer plans have routinely failed to

ct in half of their partial withdrawal

a Chilling thought for a fiduciary

Adding

Operation

the inherent ambiguity of “normal busin

to the flexible term “substantial” invites con

tinuing conflicts. Combining these problems with those

created by

supra), i

uncommon

tantial nu

drawal Cx

the conflict in the Circuits (Section |

is evident the problern is neither trivial nor

Virtually all multiemployer plan

mber of their partial (and complete) with

posed to hopeless uncertainty to be resolved

ise by case (and surely in almost every case) by the

courts

Multiemployer plans should not be Ieft to flound Th

problem is urgent (as the Pennsylvania Truck Lines ca

sh ). Plans make daily decisio1 n whom and

to withdrawal lability Ihe problem cannot be

further case by case development of the

cult iv Fach new decision would only add = furthe

complications and new forums for attack by one or the

['} | (i { ? } )

( rie¢ ed r

mn ( tnd? al

we -

ultimately to tne

dal tic]

was designed to protect. us ¢

tly needed now. The petition for

wuld be granted and the Third Circuit

CONCLUSION

ited

order to resolve the conflict between it

ircuit. This Court should also grant

petition because the Third Circuit decision conflicts

with this Courts rulin mandating deference to plain

meaning and deference to agency interpretations of

Statutes

Respectfully submitted

THOMAS C. NYHAN *

General Counsel

TERENCE G. CRAIG

NEAL 8S. DEODHAR

CENTRAL STATES, SOUTHEAST

AND SOUTHWEST AREAS

PENSION FUND

9377 West Higgins Road

Rosemont, Illinois 60018-4938

(708) 518-9800

1 ttorne ys for Py fationers

* Counsel of Record

APPENDICES

APPENDIX A

Filed December! 23, 1992

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

PENSION FUuNbD, a Federal multiemployer employes

pension benefit plan; LoRAN W. RoBBINS: MARION M

WINSTEAD; ROBERT C. SANSONE, ROBERT J. BAKE!

Howard McDouGaLyt; ARTHUR H. BUNTE: R. JERRY

Cook and R. V. PULLIAM, its present trustees in theit

PENSION FUND, a pension trust; MARION M. WIN

STEAD; ROBERT C. SANSONE: RoperRT J BAKER

HowaRD McDouUGALL: ARTHUR H. BUNTE. Jr.: R

PrpRRY Cook: R. V. PULLIAM. SR HAROLD D. Let

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS

PENSION FUN ion trust. and its trustees. includ

Ing MARION M. WINSTEAD, ROBERT C. SANSONE, ROB

ERT J. BAKER, HOWARD MCDOUGALL, ARTHUR H.

BUNTE, JR... R. JERRY Cook, R. V. PULLIAM, Sr. and

HAROLD D. LEt

oT Yas

pp Liants

\ppeal from the United States District Court

for the Eastern District of Pennsylvania

Argued

November 16, 1992

Before: MANSMANN,. HUTCHINSON and GARTH

Circuit Judeges

(Filed: December 23, 1992)

OPINION OF THE COURT

MANSMANN, Circuit Judee.

Crown Cork & Seal Compa [In cought to obviate.

under the Deficit Reduction Act of 1984 (“DEFRA”),

its withdrawal liability to its multiemployer pension plan

when it ceased production at its St. Louis Plant in 1980.

In order to seck the benefits of DEFRA, the company

must show that (1) it had a binding agreement to with

draw from a multiemployer plan as of September 26,

1980 and (2) that it effectuated a complete withdrawal

om the plan by December 31. 1980.

In this appeal we must interpret the term, a “binding

agreement to withdraw,” within the meaning of Section

558(d) of DEFRA and must determine whether a ces

sation of virtually all covered operations satisfies the com

plete withdrawal requirement oj 13%3(a)(2) of the

Multiemployer Pension Plan \mendments \ct

(“MPPAA”) to ERISA.

We hold that an employer’s actions committing tt to

withdraw from a multiemployer pension plan by announ

iny its plant closing, bargaining with its unions over the

effects of that closing and signing a listing agreement

placing its plant for sale satisfy the. language and siatu

tory purpose of DEFRA’s requirement of a “binding

agreement to withdraw.” We further hold that an em

ployer has completely withdrawn when it ceases Its nor

mal business operations in preparation for a shutdown.

Accordingly, we will affirm the judgment of the district

court exempting Crown Cork from withdrawal lhabilit n

closing its St. Louis Plant.

In 1980. economic conditions and decreased demat

for three piece cans convinced Crown Cork to close 1

St. Louis can manufacturing plant. On July 28. 1980

Harold Abrams. Crown Cork’s Director of Industrial

Relations. sent a letter to each o

represented employees at the St

them that the company had made

close the plant. In those letters Abrams stated that ¢

Cork “expected that the closing [would

end of September, 1980.”

Produc tion nd maintel

cleric ] »T Fal Weer were renre nt ih [ ©

Clerical emplovees VOUT 1 ( CM CU

n i] Brot rhnoOoOod | ] t ; } f

On July 31, 1980, Local 688’s business representative,

Ken DeGrande, sent a Ietter acknowledging receipt of

Abrams’ letter “regarding the closing of the St. Louts

plant” and requesting that Abrams meet with him “as

rapidly as possible to negotiate the effects of the closing.”

On August 13, 1980 and several occasions thereafter,

Abrams met with DeGrande to negotiate the effects of

the closing, including severance pay, vacation pay and

related matters. Local 688 did not, however, challenge

the company’s decision to close the plant.

Crown Cork proceeded to implement its decision by

a massive reduction in its work force. As a result of lay

offs, terminations and transfer, only 9 of Crown Cork’s

29 management employees remained at the St. Louis

Plant after September 26th; 44 of the 148 production

and maintenance workers remained; of 12 clerical work-

ers, only 4 remained.

On September 16, 1980, Crown Cork’s Director of

Production Control, Donald Kirkpatrick, issued an in

ternal mailgram to managers notifying them that the St.

Louis plant would close at the end of business on Sep-

tember 26, 1980, and that all orders placed at the St.

Louis plant should be switched to another point of manu

facturing before then. After this date, there was no new

can production at the St. Louis plant. Finish-up work

consisting of assembling remaining materials into cans

amounting to a field of 265 production line-hours was

performed in October. This “finish up” work was com

pleted by October 10, 1980; thereafter, the only work

performed at the St. Louis plant consisted of tasks inci

dental to the final closing of the plant; dismantling, main

tenance, clean-up and disposal of equipment and property.

On September 23, 1980, Crown Cork entered into a

listing agreement with Turley Martin, a real estate broker,

to sell the plant. The St. Louis plant was ultimately sold

on June 3, 1982.

WGN

poe)

Additional layoffs and terminations followed and by

December 3!, 1980, only three members of Local 688s

production and maintenance unit and only one membet

of Local 688’s clerical unit were still employed at the

St. Louts Plant, performing shut down work. Crown

Cork’s last production and maintenance employee was

placed on layoff on November 6, 1981. From October.

1980 through November, 1981 Crown Cork continued to

submit employee work history reports for these few re

maining employees and continued to contribute to the

Pension Fund on their behalf. -

In a letter dated October 26, 1983, pursuant to 29

U.S.C. §$ 1399(b)(1), the Pension Fund sent Crown

Cork a notice and demand for the payment of withdrawal

liability in the amount of $31,802.75 monthly, beginning

January 1, 1984 or alternatively as a lump sum amount

of $1,319,859.30 (based upon a withdrawal date of No-

vember 28, 1981). On December 20, 1983 the Pension

Fund sent Crown Cork a “past due” notice. Subsequently,

on December 30, 1983, Crown Cork requested that the

Pension Fund review its withdrawal liability determina

tion in accordance with 29 U.S.C. § 1399(b)(2)(A)

On March 23, 1984, pursuant to 29 U.S.C. § 1399(b)

(2)(B), the Pension Fund responded to Crown Cork’s

review request.

In November, 1984, after exhausting review with the

Pension Fund, Crown Cork filed suit in the United States

District Court for the Eastern District of Pennsylvania.

seeking a declaration that it did not owe the Pension

Fund withdrawal liability because it was exempt from

such liability under DERFA. On December 30, 1988.

the district court granted summary judgment in Crown

Cork’s favor based upon its DEFRA defense. The dis-

trict court found that Crown Cork had a “binding agree-

ment to withdrawal” in effect before Sentember 26. 1980

and had accomplished a complete withdrawal by Decem-

ber 31. 1980. The Pension Fund appealed.

On July 14, 1989, we held that Crown Cork’s DEFRA

claim should be submitted to arbitration before being

subject to judicial review. Accordingly, we reversed the

order granting Crown Cork summary judgment and re

manded the case to the district court for entry of an

order to “defer the matter to arbitration” pursuant to 29

U.S.C. § 1401(a)(1) (1982). Crown Cork & Seal Co.

Inc. v. Central States Southeast and Southwest Areas

Pension Fund, 881 F.2d 11, 19-20 (3d Cir. 1989)

(“Crown Cork TI’).

\fter some procedural maneuvering,” the case was

ultimately submitted to arbitration on the basis of a stipu-

lated record. Arbitrator James Clair Duff issued an Opin-

ion and Award on January 15, 1991 in which he rejected

Crown Cork’s DEFRA defense and found, instead, in

favor of the Pension Fund. Arbitrator Duff retained

jurisdiction to determine any amounts due and owing,

issuing his final award on June 7, 1991 in which he

assessed Crown Cork $2,072,247.08 in withdrawal lia-

bility.”

-On September 13, 1989 the Pension Fund filed an action in th

[ ed State D ri¢ ( rt NO? n Distri I

Central Stat ete et C) ( & Ss ( No. 89-694

(N.D a March 7 1990 O ree i cl m t had I I

I iyvment Tt I]] O01 ( I Vas Ss ,

t he Eastern Dist P

On October 23, 1989, the United States District Cou

Easter District of P S i ente ? } ( rer

whl i directed tl il eS COE al ( > .

tne 4 ? ni d .

ce Illinois. The Pe ind

( ij i vas é | hich ‘

IY Sa nat a { ( & ( ( f Q

Southeast f No. 89-20] QO NI (

M 25, 1991 \ ( (

m } Py ( | |

199!

T rbitrato1 DEFRA’s 1 rel

Subsequently, Crown Cork filed a motion to vacate the

arbitration award. The Pension Fund responded with

a motion for summary judgment to enforce the award.

On March 30, 1992, the district court granted Crown

Cork’s motion to vacate the arbitration award, holding

that Crown Cork was exempt from withdrawal liability

because it had met DEFRA’s requirements.

i district court had jurisdiction under 29 U.S.C.

1401(b)(2) (1988) (any party to an arbitration -

ceeding can request judicial review no later than thirt

days after issuance of an arbitrator’s award in ap need

federal district court). In such cases, the district court

presumes that the arbitrator’s factual findings are correct

unless they are rebutted by a clear preponderance of the

evidence. 29 U.S.C. § 1401(c); Huber v. Casablanca

Industries, 916 F.2d 85, 89 (3d Cir. 1990), petition for

cert. filed (Jan. 9, 1991). The arbitrator’s legal conclu-

sions are reviewed de novo. Id.

We have jurisdiction over appeals from final judgme nts

of district courts pursuant to 28 U.S.C. §$ 1291. In Crown

Cork I, we characterized the questions of whether Crown

Cork had a binding +e to withdraw and whether

covered operations at the St. Louis plant had permanently

ceased as mixed questions of law and fact. Crown Cork

J, 881 F.2d at 18 n.19. In reviewing mixed questions

such as these. we apply a clearly erroneous standard to

findings of lact and conduct plenary review of conclusions

of law, applying the appropriate standard to each com-

ponent. /n re Sauron Steel Corp., 871 F.2d 1217, 1222

3d Cir. 1989)

Multiemployer pension plans such as the Pension Fund

are subject to the provisions of the Employee Retirement

Income Security Act, (“ERISA”), 29 U.S.C. § 1001 ef

seq. (1974). ERISA’s central purpose is to protect the

security of employee pension plans and to insure that

benefits which have vested are paid to employees. Pension

Benefit Guaranty Corp. v. R. A. Gray & Co., 467 US.

717 (1984).

Under ERISA, an employer who withdrew from a

multiemployer pension plan could be liable in some cir-

cumstances for a share of the unfunded portion of vested

benefits in the plan. 29 U.S.C.S$ 1363-64. ERISA pro-

vided, however, that if the pension plan survived for five

years after an employer withdrew, the employer would

not be liable for any unfunded benefits should the plan

fail sometime after five years. 29 U.S.C. 88 1363(c)

(1982). Acting at least partly out of a concern that

many employers were withdrawing from multiemployer

plans on the gamble that the plan would survive for five

years after their departure, and to ensure that the plans

had sufficient funds to pay benefits which had already

vested, Congress enacted the Multiemployer Pension Plan

Amendments Act, 29 U.S.C. § 1381 et seg. Central States

Southeast & Southwest Areas Pension Fund vy. 888

Corp., 813 F.2d 760 (6th Cir. 1987) (citing H.R. Rep.

No. 96-869, 96th Cong., 2d Sess. 52-57 (1980), re-

printed in 1980 U.S. Code Cong. & Admin. News 2918,

2920-25). |

Under the MPPAA, an employer who withdraws from

a multiemployer pension plan becomes obligated to pay

a proportionate share of the plan’s unfunded vested bene

liability. Al

though MPPAA was enacted on September 26, 1980,

ts ihis debt is known as withdrawa

Congress gave the statute retroactive effect in order to

“prevent employers from taking advantage of a lengthy

legislative process and withdrawing while Congress de

I —

bated necessary revisions in the statute.” Pension Benefit

Gud f COFrp. RR. 1. Gra & Co., 467 USS. Tile

723 (1984).

The U.S. Supreme Court held MPPAA’s retroactive

provision constitutional, Pension Benefit Guaranty Corp.

v. R. A. Gray & Co., supra. One month later, however,

Congress passed the Deficit Reduction Act of 1984, which

included a provision that amended MPPAA’s effective

date. Congress’ reasons for legislatively eliminating

MPPAA’s retroactive effect were twofold. The Senate

Finance Committee found that the retroactive application

of MPPAA had an unduly burdensome effect on empioy-

ers that withdrew between April and September, 1980

and was unnecessary to preserve the financial integrity

of multiemployer plans. Long Island Oil Products Co. v.

Local 553 Pension Fund, 775 F.2d 24, 27 (2d Cur.

1985).

Section 558 of DEFRA, entitled “Elimination of Retro-

active Application of Amendments Made by Multi-

ipnlover Pension Plan Amendments Act of 1980.” pro-

vides in section (a)(1) that any withdrawal liability

incurred by an employer as a result of a partial or com-

plete withdrawal before September 26, 1980 is void. For

lovers who have not completely withdrawn by

September 26, 1980, DEFRA contains a special provision

for transactions in which a binding agreement to with-

draw from a multiemployer plan was entered into before

September 26. 1980, giving employers until December 31,

980 to effectuate a complete withdrawal.* See Section

SRid).

{;

ii}

T> ‘ ; .

WErKA to t is of this case raises

| . | } vate

( ( A LC Ort Nave 1 DINGINY

| 5 !

| Lh sepnten Vor fh 1YSO? If re

' ,

; st . , +} _F | ’

( ( \W 2 I bet ITC LINC Cnd O}

‘ ‘

( nN ‘ \ LL. LO)

i Sl bsequent “elfects

th 1 real estate listing agreement met

and ftatutory purpose of} DEFRA and thus

( vn Cork had a binding agreement to

ore September 26, 1980. In so finding, the

held that the true purpose behind § 558\

; to allow exemptions trom withdrawal lia

1) ‘hy 7 } 1 fet bea »|

\ CTAPLlOVers WhO il VOOd faith, eHnective ly

hh | ii , wT | the wit ly Wine tT TY)

L} I WEIL U4 PLdLEE LA iA VILNGTAWI irom cl

" ’ , . , 4

pension plan betore September 26, 1980

' , 4 .

vl I I *. \ Lod4 } ‘

T> I . | ; T ‘

a ( \¢ }

y ] ry } y 1QR |

| fo! > 1 , ’ ’ vy ,

} } T) , } 1O&

i i I

«TY ‘ >; Las

> 4%} Rk NT ’ 194 ROG }] N

As) ~ \ ] | TORS

} I not rea U! lt r whet! !

} 1 +} { wy (*, } }

en { ' had) ' } ‘ ‘

y tt, ; +} C I>

¥ ) LORY \ ] 12

lla

Interpreting the meaning of DEFRA’s requirement of

a “binding agreement to withdraw” is not an easy task

DEFRA does not contain a definition of a “binding

.ereement to withdraw” and the legislative history of this

provision is scant. The only reference in the legislative

story to what might qualify 1s a reference made to

binding sale[s] agreement.

In the few cases which have come before the courts, the

aning of “binding agreement to withdraw” has been

rued narrowly. For example. the statute was deemed

itisfied where an executed agreement of sale existed prior

Se itembel 6 ( enti I Crates Southeast rat \ nthwest

{reas Pension Fund v. 888 Corp., 813 F.2d 760 (6th

( 1] 1987) Sec also De brecent v. Outle [ Company, 784

Fd 13. 17 (Ist Cir. 1988) (agreement of sale dated

before, but executed after, September 26, 1980 did not

constitute a binding agreement as to that date and thus

did not satisfy DEFRA): Salem Laundry Co. v. New

Fneland Teamsters and Tru kine Industry Pension Fund

899 F.2d 278 (Ist Cir. 1987) (conduct of the parties

through negotiations supported an inference that they did

' ] , | la ]

bound until a formal contract [OF saie}

not intend to be

was executed

]

Here. the district court fund that a literal reading of

“binding agreement to withdraw from a multiemployet

plan” would create an ambiguity because an employer

‘ . _— ~ lan ee ] on .

it eX to withdraw from a plan Rather. the

nlover mav take definitive action, such as discontinu

’ - . ort — . 1, se :

operations, which results in withdrawa Opinion at

’ ] ] Wir ~*~ >,

} +! ; t; ; } ) " } } d

] 1QX() Q ft | ( r nittes | /

2 ( n. ( eral Ext OY t} R e P}

} | Oo! \ ( 1984 av 198 \y CTa

12a

p. 15. Therefore, the district court held that a more

expansive reading of the language was required.

We agree with the district court that this phrase is

ambiguous.’ Any attempt to interpret literally the lan-

guage of this phrase raises several questions about the

nature of the agreement itself: Who would be the parties

to a binding agreement to withdraw? A union? A pen-

sion fund? What provisions would underlie such an

igreement?

[he Pension Fund asserts that an employer and a un-

ion could enter into an agreement which provides that

on a certain date an employer's contributions to a multt-

employer pension plan would cease and cites Robbins

v. Lady Baltimore Foods, 868 F.2d 258 (7th Cir. 1989).

There, DEFRA’s “binding agreement to withdraw” re-

quirement was satisfied by a provision in the parties’

collective bargaining agreement which called for the ces-

sation oi contributions to the pension fund on a specified

date. That such an agreement actually existed in Lad)

Baltimore Foods does not convince us that this is the

only type of agreement that satisfies DEFRA and “binds”

an employer into withdrawing from a multiemployer pen-

sion plan. We do not believe that Congress intended to

limit DEFRA’s application to those situations in which

an employer's withdrawal was foreseeable and the em-

ployer had executed an agreement with its union in ac

vance of the situation. Economic reality indicates that.

In many situations, an employer may not anticipate hav

ing to close its business, with the consequence of with-

drawing from a multiemployer pension plan. Moreover,

we do not believe that Congress intended to limit

The issue is not only whether an employer “could” form an

agreement to withdraw from a plan, but whether it is likely that

inyone would agree to be bound by it. Counsel for the Pension

Fund conceded as much at oral argument when he noted that it

was inlikely that the Pension Fund would have signed such an

agreement had Crown Cork presented it.

DEFRA’s application to those situations in which a un

ion. or any other party, had consented io the employer's

vithdrawal from a plan. Thus “consent”, by either a

union or a pension fund, is not required as a condition

precedent to an employer's prerogative to make a busi

ness decision simply because that decision results in the

empleyer’s withdrawal from a multiemployer pension

We thus turn to Congress’ intent in enacting DEFRA.

In enacting DEFRA, Congress had concluded that

MPPAA’s retroactive effective date was unduly harsh be

cause it imposed significant unexpected liability on em-

ployers who withdraw before the statute was enacted.

Moreover, it was discovered that retroactive application

of MPPAA was unnecessary to preserve the financial in

tegrity of the plans.” In enacting DEFRA, Congress

singled out a group of employers it believed was treated

unfairly under MPPAA. We believe that Congress, in

requiring some type of “binding agreement to withdraw,”

intended to exclude from withdrawal liability those em

ployers whose actions effectively a

= aah |

nd irrevocably com

8 Congress made two findings in enacting DEFRA and removing

MPPAA’s retroactivity provision. First, Congress recognized

most of the employers who withdrew between April 29 and S

tember 26. 1980 would have done so regardless of the effective

date of MPPAA because these employers had valid reasons extrinsi

to MPPAA for withdrawing from their multiemployer pension

plans. Congress further recognized that many employers who wit}

drew during the period of retroactivity not only did not do

anticipation of MPPAA, but were instead surprised by its enactmen

Because these employers had failed to anticipate the retroactive

withdrawal provisions, they were exposed to large unexpected la

bilities. Long Island Oil Products Co. v. Local 553 Peo ion Fund,

775 F.2d 24, 28 (2d Cir. 1985). Here too, Crown Cork’s July, 1980

decision to close the St. Louis Plant was a legitimate business

decision based on decreased demand for its product. Indeed, the

district court found that there were no bad faith attempts on the

part of the company to alter its course of conduct to avoid wit

drawal liability. Opinion at p. 17%.

l4a

mitted them to withdrawing from a muitiemployer pen

sion pin before September 26, 1980.

Crown Cork’s actions prior to September 26, 1980, to

accomplish this objective are undisputed. Its announce

ment of its plant closing occurred in July. Immediately

thereafter Crown Cork’s unions were notified, negotia

tions over the effects of the closing were held, massive

layoffs and transfers occurred, and work already in prog

ress was “finished up” in preparation for a complete shut

down. In sum, a total liquidation was in progress. These

actions carried with them legally binding obligations and

ramifications, such as Crown’s duty to bargain over the

effects of its closing with its unions. First National Main

tenance Corp. v. NLRB, 452 U.S. 666, 676 n.15 (1981

In addition to these commitments Crown Cork had

red into a listing agreement with Turley Martin, a

c | ite bri {ix wr ob I; 0 ating Crown ( ork to sel]

]

produced a ready, willing and able

buyer. If Crown Cork did not go through with the sale

it would suffer substantial financial penalties. These ac

tions “bound” Crown Cork to withdraw as ef

as any contractual agreements

We cannot ignore the economic reality that factory

facilities are not readily sold. Most commercial or busi

ness transactions are not simple, one-step transfers, but

multi-step arrangements beginning with an agreement and

ending with a final closing, often many months later

C States, S« cast «& Southwest {reas Pension

Fi v. SSS Corp., 813 F.2d 760, 765 (6th Cir. 1987).

In this case, Crown Cork’s listing agreement with Turley

Martin resulted in an agreement of sale executed on June

3. 1982. close to two years after Crown Cork’s decision

to sell the — and terminate operations. We see no

reason to Stinguish between those employers who,

ugh eee fortun e or favorable market conditions

were able to conclude their business through a sale to a

ready, willing and able buyer, and those who had made

an economic decision to close their business and had

taken concrete steps to accomplish this objective but were

unable to secure a ready Duyer.

Having concluded that Crown Cork satisfies DEFRA 's

first requirement, we turn now to the issue of whether a

complete withdrawal occurred before December 31, 1980.

Under the MPPAA, a complete withdrawal occurs in one

of two separate and distinct ways, when an employer

either: “permanently ceases to have an obligation to con

tribute under the plan, or (2) permanently ceases all

covered operations under the plan.” 29 U.S.C. § 1383

(a)(2). The first test focuses on the employer's con-

tribution of funds to a multiemployer pension plan. The

second test defines withdrawal based on the status of an

employer’s “covered operations.” Admittedly Crown

Cork does not meet the contributions test for withdrawal

because Crown Cork continued to make contributions

to the Pension Fund until November, 1981. The date

of a complete withdrawal is defined as “the date of the

cessation of the obligation to contribute or the cessation

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

The district court found that, for all practical put

poses, Crown Cork had suspended its operations by De

cember 31, 1980, thus effecting a complete withdrawal!

The district court acceptec these undisputea ractS: Crown

Cork had terminated or transferred most of its employees

he “2 the ea - Vante her | t's . . nek L,

before the end of September, 1980; those employees who

remained at the plant were engaged in “‘finishing up”

work of a de minimis nature: production line-hours in

October. 1980 totalled 265 line-hours, representing roughly

$°% of a typical pre-closure monthly total of 4,419 line

hours: as of September 26, 1980 no new orders we!

processed at the St. Louis plant; after October 10, 19380

Wl production activity ceased and the only remaining ac

tivities at the plant consisted of tasks incidental to clos-

loa

Ing, after December 31, 1980 the only employees remain

ing at the plant were three production and maintenancs

workers, one clerical worker and four management em

pl wWVeCReS

In its appeal, the Pension Fund argues that Crown

Cork did not completely withdraw from the Pension Fund

until November 6, 1981, when its last production and

maintenance employee was laid off and it ceased making

any contributions on behalf of this employee to the Pen

sion Fund.” The Pension Fund relics on the decision of

the United States Court of Appeals for the Seventh Cir

cuit that a complete withdrawal does not occur until all,

that is, one hundred percent of an employer’s covered

operations, cease. In Trustees of Tron Workers Local 473

Pension Trust v. Allied Products Corp., 872 #.2d 208

(7th Cir.). cert. denied, 493 U.S. 847 (1989). the Court

of Appeals held that 13% 3(a)(2)'s clear and unam

biguous language required that a// (100% ) of the cov

cred operations must permanently cease before an em

ployer has completely withdrawn from a plan. The court

reversed the decision of the district court which held it

sufficient if “virtually all” covered operations came to a

halt. §72 F.2d at 212. The Court of Appeals interpreted

“covered operations” under ERISA as referring to those

ad The Pension Fund a ert that because Crow: {or} Wa (

vated to contribute to the plan until November, 1981 t did not

effect i co lets thdrawal until these ontrit Lior ( f

ie, vn Cork counter LnNAL. } rder for a n of rat

to | ( r i rate from ce ihior | nt

l tL be « 1? d to meu the ct t ( } | the

(°) r) ( rk maint l het { ce t l | i I

to Oe ! the 4 } qd] s¢ if ! ( i (

1 re ? Tye . Tio; ( (¢ iboutie to t} ! B

fata ting @) Lior T¢ ty t } ryee t }

( tributior th Pens Fund I } t f I

ay T1¢ to cont) te th 1 Oo} Vitnad) fe

y ( ty of Lis QO] \ il h u 1 ry l the Tie

( tior Tl} Hit

l/7a

operations covered by the collective bargaining agreement

for which the employer must contribute to the pension

plan. $72 F.2d at 214 n.10. The issue was « haracterized

as “whether bargaining unit work is being performed fo

which contributions are being made,” not simply whethe!

production work is being performed

We are influenced again by the legislative history ol

these statutes, In the Report of the House Committce on

education and Labor discussing MPPAA’s section 1565

(a)(2). the following statement ts instructive

It 4s intended nowevel that a complete vithd

rawdi

occurs as under current law, where an employer has

ceased virtually all operations at the facility Tor

which the employer makes contributions to the plan

H Rep NO Q6-%69 Pt [ QOHth ( ong ad Se

reprinted in 1980 US.C.C.A.N. at 2936 (empha

added ) In addition a report drafted by the Senat

Labor and Human Resources Committee, discu th

requirement that a cessation of operations be per

indicates that when Congress used the term “operati

it meant normal business activit'

The committee intends that covered operations ¢

treated as having permanently ceased wl

activity substantially ceases or wl t con ies b

no ionger give rise to yntripbutuion Q

18a

S. Rep. 1076, 96th Cong., 2d Sess. at 12, 13. And from

the Report of the House Commitee on Education and

! Labor discussing MPPAA:

Current law does not define a withdrawal. As under

current law, a virtually complete cessation of con-

tributions, e.g., a 98 percent reduction, that has the

same effect on the plan as a complete cessation of

contributions is a complete withdrawal.

H.R. Rep. No. 96-869, Pt. I, 96th Cong., 2d Sess. 73,

reprinted in 1980 U.S.C.C.A.N. 2918, 2941.

We find that the statutory language “all covered opera-

tions” is not sufficiently clear and free from ambiguity

as to stand on its own. Resort to legislative history is

thus mandated. Indeed, we find that two of the terms

contained in that phrase, specifically “covered” and

“operations,” cannot be defined without resort to it. Our

examination of the legislative history leads us to con-

clude that substantial cessation of normal business activ-

ity meets the complete withdrawal standard.

We also join those district courts which have focused

on the type of work in which the employer was normally

engaged—its true operations. Where it was clear that

an employer had ceased its normal business operations in

preparation for a shut down, these courts have held that

the performance of non-operational tasks incidental to

a total closing of the facility does not prevent the court’s

finding that a complete withdrawal has occurred." Thus,

11 See, e.g., Speckman v. Barford Chevrolet Co., 535 F. Supy

488 (E.D. Mo. 1982) (a complete withdrawal can occur even if

the employer retains employees on its payroll to terminate the

business, thus a car dealership which had terminated all but one

of its employees from a preclosure work force of 18, to assist the

employer in the winding up of the employer’s automobile dealer-

ship business and whose remaining employee was not engaged in

selling cars had completely withdrawn); Tertile Workers Pension

Fund v. Standard Dye & Finishing Co., 607 F. Supp. 570 (S:D. N.Y

1985) (employer was not obligated to pay withdrawal assessments

19a

we find the district court did not err as a matter of law

{

in finding a complete withdrawal had occurred for

DEFRA purposes.

We conclude that the district court did = n

inding Crown Cork exempt from) withdrawal

because it complied with DEFRA \ccordingly,

affirm the decision of the district court

\ True Copy:

Teste:

20a

APPENDIX B

UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF PENNSYLVANIA

Civil Action No. 84-5737

CROWN CORK AND SEAL COMPANY. INC..

laintif? and

Counter-Defendant,

VS.

CENTRAL STATES, SOUTHEAST AND SOUTHWEST

AREAS PENSION FUND, ef al.,

Defendants and

Counter-Plaintiffs.

Civil Action No. 91-4423

CENTRAL STATES, SOUTHEAST AND SOUTHWES1T

AREAS PENSION FUND, et al..

Plaintiff,

CROWN CORK AND SEAL, IN«

dD. ? ndant

MEMORANDUM OF DECISION

[Filed Mar. 31, 1992]

McGlynn, J. March 30, 1992

Before the court is plaintiff Crown Cork & Seal Com-

pany, Inc.’s (“Crown Cork”) motion, pursuant to 29

2la

U.S.C. § 1401(b)(2), to vacate an arbitration award

entered on January 15, 1991 and supplemented on June

7, 1991, by Arbitrator James Clair Duff. Defendant

Central States, Southeast and Southwest Areas Pension

Fund (“Fund”) moves for summary judgment to enforce

the arbitration award and opposes Crown Cork’s motion

to vacate. For the reasons that follow, Crown Cork’s mo-

tion to vacate the arbitration award will be GRANTED.

I. FACTUAL BACKGROUND '

Crown Cork is a Pennsylvania corporation with its

principal place of business in Philadelphia. Crown Cork

manutactures and sells cans, closures, and machinery. It

previously operated a plant for such purposes in St. Louis.

Missouri. In early 1980, Crown Cork’s management con-

sidered closing the St. Louis plant because of outmoded

facilities and economic conditions. In July, 1980, Crown

Cork informed the Director of Industrial Relations, Har-

old Abrams, that management had made a final decision

to close the St. Louis plant.

Defendant Fund is a multiemployer pension plan within

the meaning of $$ 3(2), (35) and (37)(A) of ERISA,

29 U.S.C. § 1002(2), (35), and (37)(A), as amended

by the Multiemployer Pension Plan Amendments Act

(“MPPAA”), $$ 207(a) 302(a).” Employees at the St.

1 The parties have stipulated to the facts underlying this cass

“Under ERISA, an employer withdrawing from a multiemploye:

pension fund could escape withdrawal liability if the plan sur-

ived for five years after the withdrawal. 29 U.S.C. § 1364 (1982

On September 26, 1980, Congress enacted the MPPAA which im

posed “withdrawal liability” on any employer who withdrew fron

a multiemployer plan after April 29, 1980. Congress was concerned

hat employers were withdrawing from multiemployer plans, betting

that the plans would not fail for five years. If so, the employers

ould not be liable for unfunded benefits under ERISA. H.R. Rey

No. 869. 96th Cong... 2d S« ss., 54-55, reprinted in 1980 U.S. Cod

2918, 2922-23

aia

Louis plant were represented by four separate unions.

Production, maintenance and some clerical employees at

the St. Louis plant were represented by Locai 688 of the

Brotherhood of Teamsters (“Local 688”). Under an

agreement with Local 688, Crown Cork made pension

contributions to the Fund for those union employees.

Crown Cork’s Director of Production Control notified

all of Crown Cork’s Vice-Presidents for Sales, Plant Man-

agers, Production Managers, and all Sales Office Man-

agers, as well as other senior management personnel,

that the St. Louis plant would close at the end of busi-

ness, on Friday, September 26, 1980.

On July 28, 1990, Abrams, the Director of Industrial

Kelations, sent a letter to Ken DeGrande, Local 688’s

Business Representative, informing him that “it is ex-

pected that the closing will occur by the end of September

1980.” (Mem. of Law in Supp. of Pl.’s Mot. to Vacate

Arb. Award, App. 1. Ex. B) (hereinafter “Mot. to Va-

cate”). DeGrande acknowledged receipt of Abrams’ let-

ter. Abrams and DeGrande met on August 13, 1980, and

on several occasions thereafter to negotiate aspects of the

plant closing, including severance pay, vacation pay, and

other related matters. As of March 1980, 148 main-

tenance and production employees from Local 688

worked at the plant. After layoffs and terminations,

forty-four employees remained as of September 25, 1980.

Of the clerical unit employees of Local 688, twelve were

employed at the St. Louis plant as of March 1980. That

number was reduced to four employees as of September

25, 1980.

of a ik gthy legislative proces il withdraw } ( g

d ted necessary re ns ne s Pp ky (

nty Corp RA G & ¢ is7 t).S. 717. 737 1984 4 ;

+} Sayre ( . } oa ,

Id., Congre 1 §558 of DEFR

retroact Sl ( he MPPAA

23a

Crown Cork put the St. Louis plant up for sale by

listing it with a real estate broker, Turley Martin Com-

pany. According to the listing contract, if a qualified

buyer was produced, Crown Cork was obligated to pay

a commission whether or not a sale came to fruition.

\s of October 10, 1980, production activities at the

plant had ceased. The remaining work at the p

sisted of final clean-up, maintenance, dismantling, and

ant con-

disposal of equipment and property. By December 31,

1980, only four Local 688 member employees remained:

three from production and maintenance, and one member

from the clerical unit. The last production and main-

tenance unit employee was laid off on November 6, 1981.

If, PROCEDURAL HISTORY

On November 2. 1983, the Fund asserted that Crown

Cork owed over $1.3 million in withdrawal liability, pur-

suant to the MPPAA. Denying any withdrawal liability,

Crown Cork filed this suit for declaratory judgment in

November, 1984. Crown Cork asserted that the Deficit

Reduction Act of 1984 (“DEFRA”), Pub. L. No. 98-

369, § 558(a) & (d), 98 Stat. 494 (1984), reprinted at

29 U.S.C. § 1381 Note.” exempted it from withdrawal

T "TDA — > y ° a wt «

DEFRA provides in pertinent part

biUiiil

24a

liability. Crown Cork maintained that it had an egree

ment to withdraw and that all normal operations ceased

before September 26, 1980, thereby complying with the

exemntion terms of the statute. In the alternative, Crown

Cork argued that it had made a “binding agreement to

withdraw” by September 26, 1980, even if it had not

withdrawn by that date. On the absence of disputed

facts, both parties filed motions for summary judgment

This court granted Crown Cork’s motion for summary

judgment and denied the Fund’s cross motion in an order

issued on December 30, 1988

The Fund appealed to the United States Court ol

\ppeals for the Third Circuit. Crown Cork & Seal Co

v. Central States. Southeast and Southwest Areas Pension

Fund, 881 F.2d 11 (3d Cir. 1989). The Third Circuit

affirmed the order denying the Fund’s cross motion and

i tha

reversed

the order granting Crown Cork’s summary judg

ment motion. The Court remanded the case to the district

court with instructions to “defer the matter to arbitra

tion” pursuant to 29 U.S.C. § 1401(a)(1) (1982). Id

at 19-20

Within sixty days of the Third Circuit's decision, the

Fund demanded interim payments of withdrawal liability

pursuant to 29 U.S.C I401(d) (1982)° and also de

manded that Crown Cork initiate arbitration

On September 13, 1989, the Fund initiated an act

in the United States District Court for the Northern Dis

trict of Illinois, Central States, et v. Crown Cork &

Seal Co., No. 89-6943 (N.D.IIl March 7. 1990). to en

force its claim for interim payments. On October 22

1989, this court entered an Order on Remand which di

rected the parties to proceed promptly to arbitration

‘The MPAA eempow h rt to order

) thst ling rat ) S )

Vercl r ( , 889 F.2d 1 (1 198

Tiger I ] ( Stat S & S

Per ; 704 F. Supp. 1277 (D. Del. 1989

‘

25a

stayed this matter pending arbitration, and enjoined fur-

ther proceedings in the lawsuit filed in the Northern Dis-

trict of Illinois. The Fund also was granted leave to

request interim payments for the alleged withdrawal lia-

bility from this court

The Fund appealed this order to the Third Circuit.

At the urging of the Third Circuit panel hearing oral

. + > ? ! , ) "c+ ec> "“s> , ‘

argument. a stipulation was agreed to, resulting in a

licmissal of the appeal. Crown Cork & Seal Co. \ C en-

il i /}

tral States Southeast, etc., et al., No. 89-2014, Order and

Motion (3d Cir. May 25, 1990), and provided, inter alia,

that: arbitration, conducted de novo, would proceed in

Chicago; this court would retain jurisdiction over this

matter pending arbitration and any appeals from the ar-

bitration process; and the lawsuit for interim payments

filed in the Northern District of Illinois would be dis-

missed. /d. Furthermore, Crown Cork agreed to com-

mence interim payments on June 1, 1990, without for-

feiting any of Its claims or defenses.

rhe Arbitrator’s Award

The parties submitted a stipulation of facts to Arbitra-

1. James Clair Duff.’ In an opinion issued January 15,

9) rator decided in favor of the Fund, reject-

Crown Cork’s DEFRA defense. To clarity the hia-

bility payment schedule, Arbitrator Dufl retained juris

yriefs submitted by the parties. His

final decision, rendered June 7, 1991, declared Crown

Cork liable in the amount of $2,072,247.08 in principal

ebruary 20, 1991. for withdrawal lia-

uff found

The facts on record do not warrant any conclusion

that covered operations at the Company's St. Louis

September 26, 1980 within

26a

the meaning of § 558(a)(1). In addition, there 1s

no evidence capable of sustaining a finding that as

of that date Crown had a binding agreement to with

draw from the Plan within the meaning of § 558(d)

Crown Cork & Seal Co. v. Central States Southeast and

Southwest Areas Pension Fund, (Amer. Arb. Assoc.) Case

No. 51 621 0022 89 V, p. 5 (1991) (Duff, Arb.) Chere

inafter ““Award”). Crown Cork’s appeal and motion to

vacate followed

[1] JURISDICTION AND STANDARD OF REVIEW

Jurisdiction of this court is predicated upon 29 U.S.¢

S$ 1401(b)(2) (1988) Cany party to an arbitration pro

ceeding can request judicial review no later than thirty

days after issuance of arbitrators award in appropriate

federal district court). The court may enforce, vacate,

or modify the arbitrator's award. /d.

In an MPAA arbitration appeal, the arbitrator's factual

findings “are presumed to be correct and are ‘rebuttable

only by a clear preponderance of the evidence. ~ Hube)

Casablanca Indus., Inc., 916 F.2d 85, 89 (3d Ci

1990). petition for cert. filed, (Jan. 9, 1991) (quoting

29 U.S.C. § 1401 (c)). The arbitrator's legal conclusions

: ,

ro re TAL > j , j

C reviewed ade hHovo., Id.

It is Crown Cork’s position that the Arbitrators award

upon a misinterpretation of MPPAA and

DEFRA §$ 558, and thus his misreading of the statutory

] 5

guage “complete withdrawal” and “binding agreement

to withdraw permit de novo review. (Crown Cork &

Seal’s Reply Mem. of Law in Supp. of Mot. to Vacate.

¢ , Tha . . > 1a 1 > ra ; 7.

c. p. 4-10) [he Fund contends the issues are mixed

questions of law and fact, and posits that “[t]hese factua

4 } I rely ni g tito? ntey

IT Mi 17 \

Lic } i j rl \ f / f f

4 r . .ORRF

; f 4 f if Ni S)-25 { | |

» Pel: ( 4 } ) RP5 | ’d 415 i) 4

1Q8

findines must be presumed correct and can only

butted by a clear preponderance of the evidence.” (en

phasis added) (Central States Br. in Supp. of Summ

1 for Enforcement of Arb. Award and in Opp n. to Mot

to \ ite Av ip. 13)

\ C TIX } questions of tact ind law Ih 4 estion Ol

view het Whether cred operations at the St. Lou

Mant nad ceased before Sep ber 26, i980 and whet

Crown Cork had a binding agreement to withdrayv

e characterized by tl lhird ¢ |

ng areuende that some sort of agreement

| Ajssum

iS In fact necessary to sausly sec

agreement to withdraw” requirement, it would ap

pear to be a mixed question of law and fact whether

Crown Cork’s “agreement” with Local 688 to clo

the plant. or its listing agreement with Turley Mar

tin. satisfy the statutory dictates, and a predon

nantly factual question whether the partic tended

to be bound in the requisite fashion as of September

26. 1980. See. Warner-Lambert Co. v. United Re

tail & Wholesale Emplovee’s Teamster Local Ne

Q :

3 IRT-BR (3d (

Zsa

, huestic ,{ het Crown (

nent! [d vered operations under

Prem purstiant tron 1 3A (2) by D

1 1980 t characterized a mixed

lactual and legal ons

Cork &

Southwest

(3d ¢ IT

Crown Seal Co. v. Central States

Pension / TAAL ~ x | |

Southeast and

{reas 2d 11, 18 n

1OK9)

Standard of Review

Ihe MPPAA

mixed

articulate no standard of review

and fact \

cribed al al

questions of law

law and fact is de

Pacts Ate

mixed question. of

question in which historical

established, the

the issue is whether

admitted of

rule of law is not

In dispute,

Stati

and the Pacts

Saursty th

whether the rule of

law as applied to the established facts is or IS not violated

Standard. Di of I rnc \

tory standard. In other words.

Pullman. Swint

In an appea

m irbitration iward ind

MPPAA, the Seventh Circuit opted for a ir] r

roneous” standard Of review for mixed (J 1] QO} la

i ract ( Ty ich Dri Cc) el | Lou Jah

Drug Co., 890 F.2d 1405. 1411 (7th Cir 1980 |

f the MPPAA r ( t

rejected the clearly erroneous standard fo mixed q

to of law and fact 5 ' Fields \ 1/ Gren. 4

OL)AAOS

1992 U.S

( 2 1992): United Stat

199? US (

$0005 \pp. LEXIS 1999 (9th Cir. J

RP f ny ‘ r] reo? }

, r? T the } i

4 b 4 lef t, y firm ¢ et } ‘ ‘

t lilegheny Int'l. Ir Synade No, 9 1

1] Bet Jey 2] 199? moti / fed Stat

Cs 264 G5 1948 q led an And

f y hie CM ¢ f fay A] 17 om 764 7 74 19%

aT, ob

Vi BY, BAL

1992 U.S

Loe khart. 7)

thod of fF ¥ to the matter sub

f ' amnciat rit r 7; , cl ty

l ) ) j f Mea }

| |

huttal Corny a) j f if DrepDor

’ ;

iT irhitrator bye ih t I) de

r) cor rina)

; ' , Wis tir +} ry : cj

rl SI | yt] }?| rit bysy { j

) { Hf rie | +} ; ‘ ovr ,

IV. DISCUSSTIO’

’

we)

gave rise to contributions to the plan.” The preponderance

of these facts bolsters the Arbitrator’s conclusion that cov

ered operations had not ceased before September 26,

L9OS8Q.

2. Crown Cork’s Binding Agreement to Withdraw

DEFRA sets forth another special rule which exempts

an employer from withdrawal liability. If the employer

has a “binding agreement to withdraw” in place by Sep-

tember 26, 1980, then cemplete withdrawal may occur

before December 31, 1980. Pub. L. No. 98-369, Q 558

(aj) & (d), 98 Stat. 494 (1984), reprinted at 29 U.S.C.

1381 Note (1984). Thus, a two-step inquiry ts neces-

sary: 1) Did Crown Cork have a binding agreement to

withdraw; and if so, 2) Did a complete withdrawal occur

before the end of i980.

In his decision, Arbitrator Duff reasons, “the statute

[DEFRA] contains neither a definition of a ‘binding

agreement to withdraw’ nor an explanation of the phrase.”

Award at 6. Citing no authority, he then interprets the

language of “binding agreement to withdraw” as:

[An] agreement of sale that would lead to a with

drawal from a multiemployer pension plan. This

Arbitrator is not authorized to expand exceptions to

withdrawal liability that Congress did not fashion.

The existence of an enforceable agreement on or

before September 26, 1980 committing Crown to sell

its assets would relieve Crown of its withdrawal lia-

bility, but the mere fact that de facto Crown was

committed to its plan to close the St. Louis Plant is

not enough to satisfy the statute's literal require

ments.

Award at 6-7 (emphasis added ) Reviewed de novo, the

\rbitrators legal interpretation equating “binding

—

33a

ment to withdraw from a multiemployer plan” with

“agreement of sale” is unpersuasive and contrary to the

spirit in which DEFRA was enacted. A literal reading of

“binding agreement to withdraw from a multiemployer

plan” creates an ambiguity. An employer cannot “agree”

to withdraw from a multiemployer plan. Rather, the em-

ployer may take definitive action, such as discontinuing

operations, which results in withdrawal. Therefore, a

more expansive reading of the language is required. “In

1984, Congress concluded that MPPAA’s retroactive ef-

fective date was unduly harsh towards employers who

withdrew from multiemployer plans after April 29 but

before September 26, 1980 and unnecessary to preserve

the financial integrity of multiemplo,c: plans.” Central

States, Southeast & Southwest Areas Pension Fund v.

888 Corp., 813 F.2d 760, 765 (6th Cir. 1987) (citing

Staff of Joint Comm. on Taxation, 98th Cong., 2d Sess.

General Explanation of the Revenue Provisions of the

Deficit Reduction Act of 1984, at 893 (Joint Comm.

Print 1985)). To remedy this, DEFRA repealed the

retroactive provisions of MPPAA._ Section 558 ol

DEFRA mandates September 26, 1980 as the new effec-

tive date of complete or partial withdrawal in order to

avoid withdrawal liability. Crown Cork argues effectively

that it falls within the ambit of Congress’ goal to alleviate

harsh consequences for such employers.

Crown Cork announced on July 28, 1980 that the St

Louis plant would close. Employees and their union

representatives were notified, massive lay-offs and_ trans

fers occurred. and finish-up work and liquidation began

Moreover, Abrams and DeGrande met on August 13

1980 and several times thereafter to negotiate certain

ispects of the closure, including severance pay. vacation

pay. and related matters.’ As Crown Cork was obligated

34a

to bargain with Local 688 over the ramifications of the

Plant closing, the actual steps toward final closing were

not executed unilaterally. The Fund itself recognizes

that the key to a pre-DEFRA commitment which would

lead to withdrawal is “the irrevocability of the employ-

ers commitment. Otherwise the employer could simply

alter its conduct and avoid a withdrawal by continuing

to contribute.” (Central States’ Br. in Supp. of Summ.

J. at 30). The true purpose, then, behind § 558 is to

allow exemptions from liability to those employers who

in good faith effectively and irrevocably were committed

to withdrawing from a multiemployer plan ‘before Sep-

tember 26, 1980. Crown Cork’s determination to close

the St. Louis Plant in July was a business decision based

upon economic realities. The effects of closing were

finalized through bargaining with the unions. Clearly

no bad faith attempts by Crown Cork to alter its course

of conduct to avoid withdrawal liability were at issue.

The logical and practical consequences of Crown Cork’s

actions resulted in a withdrawal.

To comport with his legal interpretation of “binding

agreement to withdraw.” the Arbitrator also found that

Crown Cork’s agreement with Turley Martin, a_ real

estate broker, was not a “vehicle to force Crown to sell

its plant if it chose not to.” Award at 7. However, a

more equitable and practical view of the statutory lan-

guage and Congress’ intent in enacting DEFRA negates

the Arbitrator’s narrow interpretation that only an irre-

vocabie contract of sale complies with the statute. In

l.e. misrepresentation, breach of implied contract, estoppel. Pur

suant to the NLRA, an emplover is required to bargain in good

faith regarding the cessation of operations. See, e.g., First Nat

Maintenance Corp. v. NLRB, 452 U.S. 666, 676 n. 15, 69 L. Ed. 2d

118, 101 S. Ct. 2573 (1981); NLRB v. Nat. Car Rental System, Inc.,

672 F.2d 1182, 1188 (3d Cir. 1982). In addition, Crown Cork was

yally obligated to ensure the honesty of its claims to the unions

See, NLRB v. Truitt Mfy. Co., 351 U.S. 149, 152, 100 L. Ed. 1027,

76 S. Ct. 753 (1956); Parker v. Connors Steel Co., 855 F.2d 1510

lith Cir. 1988), cert. denied, 490 U.S. 1066 (1989).

35a

addition to the above commitments by Crown Cork to

withdraw, the company entered into a listing contract

with Turley Martin on September 23, 1980. (Mot. to

Vacate, App. 1, Ex. F). The contract bound Crown

Cork to sell the Plant if the broker produced a “ready,

willing, and able” buyer. /d. If Crown Cork did not

complete the sale, the broker, nevertheless would be

entitled to a fee of $90,000. Given the substantial penalty

provision in the agreement, Crown Cork had a binding

agreement. Also of significance is the economic reality

that factory facilities are not readily sold. One court

has pointed out that:

Most commercial transactions are not simple, one-

step transfers but multi-step arrangements beginning

with an agreement and ending with a final closing,

often months later. Section (d) [of § 558 DEFRA]

is a recognition of this fact and represents a policy

choice by Congress to treat alike both employers

with binding agreements to withdraw before the new

effective date and who do withdraw within the few

months provided, and employers who in fact with-

drew before the effective date, for purposes of cal-

culating lability under MPPAA.

Central States v. 888 Corp., 813 F.2d at 765 (footnote

omitted ).

Therefore, this court finds that the contract between

Crown Cork and Turley Martin falls within the language

and statutory purpose behind “binding agreement to

withdraw.”

3. Complete Withdrawal by December 31, 1980.

Since Crown Cork’s activities constituted a binding

agreement to withdraw, the next inquiry is whether a

complete withdrawal occurred before December 31, 1980.

Under the statute a complete withdrawal occurs when an

employer “permanently ceases all covered operations un-

the plan.” 29 U.S.C. §$ 1383(a)(2). The date of

de r

36a

a complete withdrawal is declined as “the date of . . . the

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

Arbitrator Duff did not reach this inquiry, as he found

no binding agreement to withdraw. See, Award.

Courts have held that an employer is not involved in

“covered operations” when it performs “work activities”

that are “incidental to cessation of normal business ac

tivities.” Textile Workers Pension Fund v. Standard Dye

& Finishing Co., 607 F. Supp. 570, 572, 573 (S.D.N.Y.

1985). See also, Speckman vy. Barford Chevrolet Co.,

535 KF. Supp. 488, 491 (E.D. Mo. 1982) (°An em

ployer ‘ceases covered operations’ if it ceases the busi-

ness activity that gave rise to contributions to the plan.”’).

In the pre DEFRA case of JT. Cobb v. New York State

Teamsters Conference Pension & Retirement Fund, 584

F. Supp. 1181 (N.D.N.Y. 1984), the court found that

Cobb ended its covered operations when it ceased all of

its regular business operations, sold its assets and termi-

nated all of its employees but for a few retained to pe:

form “tasks incident to the closure of operations.” /d.

at 1184. Though Cobb retained between 5% and 9%

of the pre-closure workforce for two months to perform

tasks related to the closure, the court d that a com

plete cessation of covered operations with the meaning

of the MPPAA had occurred. /d. at 1185.

In the more recent case of Connors vo. Economy Blde

Systems, Inc., 651 KF. Supp. 849 (D.D.C. 1986), the

court followed a practical approach in construing “cessa

tion of operations.”” The employer, Economy. contracted

to build mine service facilities tor a coal company. The

project began in 1978 and was completed in late 1980.

During the height of construction, Economy employed

as many as fifteen workers; by August 6, 1980, the las

five employees were laid off. In October 1980, Economy

rehired two employees to do a general clean-up and to

install door hardware. /d. at 850. In that month, em

ployees performed sixty-six hours of work for which the

37a

employer paid $49.50 into the fund. Disputing the Pen

sion Plan’s assessment of $62,389.22 in withdrawal lia

bility, Economy argued that it completely withdrew from

the Plan before September 26, 1980. The court found

that the sixty-six hours of work performed was “‘inci-

dental to the real business of Economy and not of the

sort that will defeat a good faith claim that ‘covered’

operations had ceased.” /d. at 854 (footnote omitted).

Moreover, the court held that to find for the Pension

Plan would “offend the concept of proportionality” and

to hold the employer liable in the amount of $62,389.22

for a minimal amount of clean-up work performed two

months after the company had ceased its basic operations

would be “grossly inequitable.” /d.

Phe Fund, however, relies on Trustees of Iron Workers

Local 473 Pension Trust v. Allied Products Corp., 872

F.2d 208 (7th Cir. 1989), cert. denied, 493 U.S. 847

(1989). There the court found that “all”’—100 percent

Of covered operations must cease permanently before

finding that an employer has completely withdrawn from

a multicmployer plan. Thus, any bargaining unit work

being performed, whether clean-up work or de minimus

finish-up work, precludes complete withdrawal. /d. at

Other courts have rejected a literal construction § of

the language in 1383(a)(2). See, Combs, 691. F.

Supp. at 430-31; Connors, 651 F. Supp. at 853-54:

ILGWU National Retirement Fund v. Weatherall Fash

ions, Inc., No. 84 Civ. 9772, slip op., 1986 WL 2757

(S.D.N.Y. 1986); Cobb, 584 F. Supp. at 1183; Speck-

man, 535 Fk. Supp. at 491. I am persuaded that the less

restrictive interpretation of the applicable statutes by

these cases 1S more in keeping with the intent of Congress.

[he undisputed facts show that Crown Cork had

terminated or transferred most of its employees before the

end of September, and the employees who remained were

involved in “‘finish-up” work. Only nine of the twenty-

nine Ma a} ement Cll! ibys inde YU Ol Ne produc-

tion and maintenance employees and one (tnira oF the

clerical stafl stayed on to vrap thi s up i iS pal

ent that the Plant was incapable of engaging In any

thing resembling normal operations. Some de minimus

work continued until October 10, 1980, in order to dis

pose of partially completed cans which otherwise would

have been scrapped. The production line-hours in Oc-

tober 1980 totalled 265 hours which was only 5% olf

a typical pre-closure monthly total of 4419 line hours

Thereafter, production had ceased and the only employees

who remained in the Plant after December 31, 1980 were

three production and maintenance workers, one clerical

worker and four management employees performing only

tasks incidental to plant clos

For all practical purposes, Crown Cork had suspended

its operations by December 31, 1980, thus effecting a

complete withdrawal and exempting it from withdraw:

lability.

\ CONCLUSION

For the aforementioned reasons. the arbitration award

will be \ \¢ ATT ») An appr

. . rier 1]

riate OTUC! I¢ LOWS

39a

UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF PENNSYLVANIA

Civil Action No. 84-5

CROWN CorRK AND SEAL COMPANY, IN¢

Plaintif} and

Counter-De fendant,

CENTRAL STATES. SOUTHEAST AND SOUTHWES7

AREAS PENSION FUND, ef al.,

Civil Action No. 91-4423

Cy NTRAL S1 ATES. SOUTHEAST AND SOUTHWEST

AREAS PENSION FUND, et al.,

Plaintiff,

°- « VS.

CROWN CORK AND SEAL, INC.,

Defendant.

Clerk of the United States Court of Appeals

for the Third Circuit

ORDER

[Filed Mar. 31. 1992]

AND NOW, this 30th day of March 1992, upon con-

sideration of Crown Cork and Seal, Inc.’s Motion to

Vacate the Arbitration Award and defendant's opposition

thereto, it 1s

40a

ORDERED

that plaintiffs motion is GRANTED. The arbitration

award is VACATED. It is further

ORDERED

that defendant's Motion for Summary Judgment is

DENIED.

By THE CourRT:

s/ Joseph L. McGlynn, Jr.

JOSEPH L. MCGLYNN, JR.

4la

APPENDIX C

AMERICAN ARBITRATION ASSOCIATION

MULTIEMPLOYER PENSION PLAN

ARBITRATION RULES

Case Number: 51 621 0022 89 V

IN THE MATTER OF THE ARBITRATION BETWEEN

CROWN CorK & SEAL COMPANY, INC.

and

CENTRAL STATES SOUTHEAST AND

SOUTHWEST AREAS PENSION FUND

AWARD OF ARBITRATOR(S)

I (WE) THE UNDERSIGNED ARBITRATOR(S),

having been designated in accordance with the Arbitra-

tion Agreement entered into by the above-named Parties,

and dated — —— and having been duly sworn and

having duly heard the proofs and allegations of the

Parties, AWARD as follows:

AWARD

Crown Cork’s reauest to be found to be exempt from

withdrawal liability based upon § 558 of DEFRA lacks

merit and is denied.

The undersigned retains jurisdiction to finally deter

mine any amounts owing.

42a

FINAL AWARD

The undersigned finds that Crown owed $2,072,247.08

‘5

in principal and interest as of February 20, 1991 for

withdrawal liability.

Crown does not owe the Fund for any Attorney's fees

June 7, 199]

Pittsburgh, Pennsylvania

January 15, 199]

s/ James C. Duff

JAMES C. DUFI

Arbitrator

43a

ARBITRATION OPINION AND AWARD

JAMES C. DUFF

ARBITRATOR

IN THE MATTER OF ARBITRATION BETWEEN

CROWN CorkK & SEAL COMPANY, INC.

AND

CENTRAL STATES SOUTHEAST AND SOUTHWEST

AREAS PENSION FUND

SUBJECT: WITHDRAWAL LIABILITY

CASE ADMINISTERED BY

AMERICAN ARBITRATION ASSOCIATION

CHICAGO REGIONAL OFFICE

APPEARANCES BY BRIEF

For the Company

Steven B. Feirson

Alan D. Berkowitz

Jerome M. Marcus

DECHERT PRICE & RHOADS

Attorneys for the Company

For the Fund

Thomas C. Nyhan

Terence G. Craig

Neal S. Deodhar

Attorneys for the Pension Fund

44a

APPOINTMENT

The ur ‘ersigned Arbitrator was selected by representa-

tives of Cork Crown & Seal Company, Inc. and of Cen-

tral States Southwest and Southwest Areas Pension Fund,

from a panel furnished by the American Arbitration

\ssociation, to hear and decide a pension dispute pend-

ing between the Parties. The matter was ultimately sub-

mitted for an arbitration ruling on the basis of stipula-

tions, written arguments and associated documents. After

reviewing the complete evidentiary record thus compiled,

the undersigned now enters the following disposition of

this controversy.

()r

BACKGROUND FACTS

The stipulation of facts contained the following:

|. Plaintiff Crown Cork & Seal Company, Inc.

(“Crown”) 1s a Pennsylvania corporation with its

principal place of business in Philadelphia, Pennsy]l-

vania. Crown is engaged in the business, among

other things, of manufacturing and selling cans,

closures, and machinery. As part of that business,

Crown previously operated a plant in St. Louis, Mis-

souri (“the St. Louis Plant’).

2. Defendant Central States, Southeast and South-

west Areas Pension Fund (“the Fund”) is a multi-

employer pension plan within the meaning of §§ 3

(2), (35) and (37)(A) of ERISA, 29 U.S.C.

1002(2), (35), and (37)(A), as amended by the

Multiemployer Pension Plan Amendments Act

(“MPPAA”), §§ 207(a) and 302(a).

3. Employees at the St. Louis Plant were repre-

sented by four unions. Production and maintenance

employees, as well as some clerical employees, were

represented by Local 688 of the International

Brotherhood of Teamsters (“Local 688”) in separate

bargaining units. [148] Employees represented by

45a

Local 688 were employed in job classifications for

production and in job classifications for maintenance

in March, 1980.

4. Under Crown’s collective bargaining agreement

with Local 688, Crown was obligated to make pen-

sion contributions to the Fund.

5. In early 1980, Crown Cork’s management began

to consider seriously the possibility of closing the St.

Louis Plant primarily due to the out-dated capability

of the Plant compared to more modern facilities.

In or about July, 1980, Harold Abrams, Director of

Industrial Relations, was informed by Crown man-

agement that a final decision had been made to close

the St. Louis Plant.

6. On July 28, 1986, Abrams sent a letter to each

of the four unions that represented employees at the

St. Louis Plant, officially informing them of the Com-

pany’s decision to close the St. Louis Plant.

7. By letter dated July 31, 1980, from Ken De-

Grande to Harold Abrams, DeGrande acknowledged

receipt of the July 28, letter.

8. Abrams first met with DeGrande on August 13,

1980, and on occasions thereafter, to negotiate. The

negotiations with Local 688 focused exclusively on

the “effects” of closing, i.e., severance pay, vacation

pay, and related pension contributions.

9. Local 688 (or any other Union representing em-

ployees of the St. Louis Plant) did not at any time

file a grievance, lawsuit, or any other claim chal-

lenging Crown’s decision or right to close the St.

Louis Plant.

10. Local 688 filed an unfair labor practice charge

against Crown with the NLRB on June 21, 1982,

regarding Crown’s failure to bargain in good faith

over the “effects” of the closing. The transcript of

46a

proceedings before the NLRB is attached hereto as

Exhibit I. The NLRB’s decision was reviewed by

the U.S. Court of Appeals for the Eighth Circuit in

a decision reported at 756 F.2d 659 (8th Cir.

1985).

11. As of March 1980, there were 29 management

employees at the Plant. As a result of layoffs,

terminations, and transfers, that number was _ re-

duced to 9 management employees (31% of the

‘rf number) at the Plant as of September 25,

at the St. Louis Plant who were members of the pro-

duction and maintenance unit of Local 688. As a

result of the layoffs and terminations, that number

was reduced to 44 employees (30% of the earlier

number) as of September 25, 1980.

13. As of March 1980, there were 12 employees at

the St. Louis Plant who were members of the clerical

unit of Local 688. As a result of layoffs and termina-

tions, that number was reduced to 4 employees

(33% of the earlier number as of September 25,

1980.

14. On September 16, 1980, Donald Kirkpatrick,

Crown’s Director of Production Control, issued an

internal mailgram to all of Crown’s Vice-Presidents

for Sales, all Plant Managers, all Production Control

Managers, and all Sales Office Managers, as well as

other senior management personnel at Crown, con-

cerning the St. Louis Plant (known within the Com-

pany as Plant 12).

IS. On September 23, 1980, Crown put the St.

Louis Plant up for sale by entering into a listing

agreement with Turley Martin Company, a real estate

broker, for the sale of the St. Louis Plant. ... The

Plant was later sold by an agreement executed as of

June 3, 1982.

47a

16. Production activities ceased at the St. Louis

Plant by October 10, 1980. After October 10, 1980

the only work performed at the St. Louis Plant con-

sisted of dismantling, maintenance, clean-up, and dis-

posal of equipment and property.

17. Production records indicate that total produc-

tion line hours were 4,419 in April, 1980; 265 hours

in October, 1980; and zero in November, 1980 and

thereafter. The 265 production line hours in Oc-

tober, 1980 were performed by the following depart-

ments: lithography—76 line hours; can assembly—

122 line hours; and packing—67 line hours. No

line hours were performed in October, 1980 by the

coil sheeting and punch press departments. These

departments perform the initial production steps in

the process of producing cans: the coil sheeting

department cuts steel coils into sheets and the punch

press department punches out the shapes for the can

tops and bottoms. Thereafter, the lithography de-

partment imprints the cans with words and design

and can assembly puts the component pieces of the

cans together.

18. On October 15, 1980, the Plant Manager,

Paul A. Westoff, sent a letter to Ken DeGrande con-

cerning the St. Louis Plant.

19. On October 22, 1980 Crown’s Insurance Ad-

ministrator, Joseph W. Albrecht, sent a letter to one

of Crown’s insurance carriers, Insurance Company of

North America.

20. Additional layoffs and terminations followed, so

that, by December 31, 1980, only [3] members of

Local 688’s production and maintenance unit and

only [1] member of Local 688’s clerical unit were

still employed at the St. Louis Plant. As shown on

Exhibit D-2 the last production and maintenance

unit employee was laid off on November 6, 1981.

48a

21. Crown submitted employee work history reports

to the Fund for employees covered by the Local 688

Agreement for the months of October, 1980, through

November, 1981, for work performed during that

period. These reports were used to calculate the con-

tribution obligation of Crown Cork for this period.

22. On November 2, 1983, Crown received from

the Pension Fund a notice and demand for payment

of withdrawal liability in the amount of $31,802.75

monthly beginning January |, 1984, or, alternatively

as a lump sum amount of $1,319,859.30.

23. On December 20, 1983 the Pension Fund is

sued a past due notice which was received by Crown.

24. By letter. dated December 30, 1983, Crown re-

quested review of the withdrawal liability determina

tion of the Pension Fund.

25. The Pension Fund responded to the review re-

quest on March 23, 1984.

26. Crown Cork commenced interim payments of

$31,802.75 per month in June, 1990.

The Parties respective Briefs and Reply Briefs are volu-

minous and complex in this case. No useful purpose

would be served by attempting to reiterate them in detail

here, but they are incorporated in full into the record

here by reference.

CONTENTIONS OF THE PARTIES

The Company insists that it had ceased covered oper-

ations by September 26, 1980 and is therefore not sub-

ject to withdrawal liability under the Multi-Employer

Pension Plan Amendment Act (‘““MPPAA”), 29 U.S.C.

S$ 1381-1461. In any event, it contends that it is not

subject to withdrawal liability because it was allegedly

49a

committed as of September 26, 1980 to withdrawal from

the Plan and in fact withdrew by year end.

The Fund maintains that Crown Cork did not com

pletely withdraw from the Pension Fund until after the

end of 1980. Alternatively, it takes the position that the

Company did not have a binding agreement to withdraw

within the meaning of $ 558 of the Deficit Reduction Act

of 1984 on September 26, 1980.

DISCUSSION AND FINDINGS

After a protracted review of all of the evidence and

repeated scrutiny of all of the arguments advanced by

Counsel for both Parties in this case, the undersigned

finds that $558 of the Deficit Reduction Act of 1984

(“DEFRA”) does not insulate the Company from the

withdrawal liability assessed by the Fund. The facts on

record do not warrant any conclusion that covered opera

tions at the Company’s St. Louis Plant had ceased before

September 26, 1980 within the meaning of 5 588(a) (1).

In addition, there is no evidence capable of sustaining

a finding that as of that date Crown had a binding agree-

ment to withdraw from the Plan within the meaning of

S$ 558(d). -

Nothing on record persuades the undersigned that he

should overlook the literal meaning of the statutory lan-

guage as applied to the facts prevailing on September 26,

1980. An interpretation. of the language here in focus

equating a cessation of “most” covered operations, a

cessation of “normal operations,” a cessation of “regular

business operations,” or a cessation “when business ac-

tivity substantially ceases” with a complete withdrawal

departs from the language chosen by Congress The fact

that Congress left the language it selected unqualified

must be presumed to be meaningful.

On September 26, 1980 covered operations at the Com

pany’s St. Louis Plant had most emph tically not ceased

despite the obvious fact that they were indeed winding

50a

down. The undersigned is not at liberty to adopt a

“practical approach” so as to achieve under the guise of

interpretation a result that is at odds with what the

statutory language generates through its straightforward

application to the facts. The vague standards the Com-

pany argues in favor of would confer far greater latitude

and discretion on arbitrators than the prescribed stand-

ard on its face suggests that Congress ever intended them

to have with respect to deciding withdrawal disputes.

As the Company points out, DEFRA of course also

exempts from liability those employers who had a “bind-

ing agreement to withdraw” in place by September 26,

1980 if the employer in fact withdrew by year end. It

goes on to argue that this really translates into just a

requirement of a definite commitment to withdraw from

the Fund before that same date. Unfortunately, the stat-

ute contains neither a definition of a “binding agreement

to withdraw” nor an explanation of the phrase.

So far as the undersigned can ascertain, this language

refers to an agreement of sale that would lead to with-

drawal from a multiemployer pension plan. This Arbi-

trator is not authorized to expand exceptions to with-

drawal liability that Congress did not fashion. The ex-

istence of an enforceable agreement on or before Sep-

tember 26, 1980 committing Crown to sell its assets

would relieve Crown of its withdrawal liability, but the

mere fact that de facto Crown was committed to its plan

to close the St. Louis Plant is not enough to satisfy the

Statute’s literal requirements.

The listing agreement that Crown entered with a real

estate broker had none of the indicia of a legally enforce-

able sales agreement. That agreement was a promise to

pay a commission or a penalty under certain contingen-

cies. It could not be used as a vehicle to force Crown

to sell its plant if it chose not to.

The undersigned is likewise not persuaded that Local

688 did anything that gave rise to a “binding agreement”

Sla

or that the Company was legally bound to go forward

with its announced intentions of closing the plant in some

way that satisfied DEFRA.

It must be concluded that the escape provisions of

DEFRA’s §$ 558 do not purport to be as flexible as the

Company believes they were intended to be. Against this

backdrop, the undersigned is of the opinion that it is

not an arbitrator's proper province to go on a frolic into

either his own or the Company's view of Congress’ sup-

posed intent in the specific contexts at hand.

( ITED STATES COURT OF APPI ee

FOR THE THIRD CIRCUTI

No. 92-1345

CROWN CoRK & SEAL COMPANY, IN¢

CENTRAL STATES SOUTHEAST AND SGUTHWEST AREAS

PENSION | 1 Fede it plo. oyee p

S| benefit plan: LORAN W. ROBBINS: MARION \M

WINSTEAD: | sERT { SANSONE, ROBERT J. BA

HOWARD MCDOUGALI ART 2 H. BUNTE: R. JERR

( dK V. PULLIAN truste

fiduciary capacity(ies ey eee | No. 84-05 ]

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS

PENSION FUND, a pension trust; MARION M. WINSTEA

ROBERT ( SANSONE: ROBERT J. BAKER lOW

McDOUGALL: ARTHUR H. BUNTE, JR.: RK. JERRY ¢ )K

R. V. PULLIAM, SR.; HARotpd D. Let pl

trustees ;

CROWN CORK & SEAL COMPANY, IN¢

D.C. Ci 0. 91-04423

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS

PENSION FUND, a pension trust, and its truste

cluding MARION M. WINSTEAD, ROBERT C. SANSON]

ROBERT J. BAKER, HOWARD MCDOUGALL, ARTHUR H

BUNTE, JR., R. JERRY Cook, R. V. PULLIA S! 1d

HAROLD D. Lt

APPENDIX D

SUR PETITION FOR REHEARING

Present: SLOVITER, Chief Judge,

BECKER, STAPLETON, MANSMANN, GREENBERG,

HUTCHINSON, SCIRICA, COWEN, NYGAARD, ALITO, ROTH,

Lewis and GARTH,* Circuit Judges.

[he petition for rehearing filed by appellants in the

been submitted to the judges

who participated in the decision of this court and to all

other available circuit judges of the circuit in regular

active service, and no judge who concurred in the decision

having asked for rehearing, and a majority of the cir-

cult judges of the circuit in regular active service not

having voted for rehearing by the court in banc, the peti-

tion for rehearing is denied. Judges Greenberg, Nygaard,

\lito and Roth would have granted rehearing.

above entitled case having

By THE CouRT.

s/ Carol Los Mansmann

Circuit Judge

District No

I 1)

CIR

\ ‘

| RN

' s ‘

APPENDIX E

LTES COURT OF APPBRAI

lH SECOND CIRCUTI

No “| { fy

No. &§1-6036

S! | VIN r REGA

\1 \1 I Proust yf

nists Pension Fund

»] " fy j spor

Plaintif}-A ppellants

C ross {ppe lle

N STON 13) NE FT] C3] .RANTY ( ORPORATION ind

KOLLSMAN INSTRUMENT COMPANY,

De fendants

KOLLSMAN INSTRUMENT COMPANY

FOR

(;|

Di. [eh 1ppe erg

1/1 /) f

Raa?

N STON Ry NE FIT GhUARANTY ( ORPORATION

Defendant-A ppellee

VRANTY (

JAN

\ | } [ 5 ( f \ f | \ | OM

r Con

tributes occu nly w there is a 100 cessation of

participation by a contrib employe

low a | 1 by United States

1) trict hud Milton pP y| | K re) | the So ithern District Ol

; X X

NJ poy | in ' -anr , f . ,

New York [he opinion, reproduced in the Joint Ap

: ,; ‘F A 9) S798 SOE ;

pendix (hereinafter, “J.A.”)} at pp 5-295. is reported

at 504 F.Supp. 1116

STATEMENT OF THE CASI

These consolidated appeals involve a dispute betwee!

the Trustees of a pension fund known as the District N

1S Machinists Pension Fund (the “Fund”), an employer

which has contributed to the Fund, the Kollsman Inst

ment Company (“Kollsman”), and a United States G

ernment corporation, the Pension Benefit Guaranty Cor

poration (the “PBGC”) The Trustees and

contend that Kollsman withdrew from the Fund

| 2 - savulsrairraa VW atirar

the meaning of Sectin 4063 of the Emplovee Retiren

Income Securitv Act of 1974 (“ERISA’ QO UT Sc

]

1363 (1976). Section 4063 provides |! ce eme

dies to protect pension plans from the “w

OT the \ itl ly i mr ) ' kK

d 1 not l rom tf I d

The Fund ts maintained jointly by the D ct N S

( the Trt + Tale. \ if Ot Vi < \ .

S6a

Kollsman is a division of Sun Chemical Corporation

(J.A. 29). It manufactures aircraft instruments (J.A.

31-32).

Prior to 1968, Kollsman maintained a pension plan for

certain Kollsman employees (the “Kollsman Plan”). In

July 1968, the Fund and Kollsman agreed to merge the

Kollsman Plan into the Fund. (J.A. 83.) The Fund

agreed to assume all of the pension obligations of the

Kollsman Plan, and Kollsman agreed to transfer ali the

assets of the Kollsman Plan to the Fund (J.A. 80-81,

YQ0-91).

Pension benefits to Kollsman employees under the Fund

were greater than those provided by the Kollsman Plan

(J.A. 83). Kollsman employees cbtained credit for past

service to Kollsman, and more liberal or equal vesting,

eligibility, and benefit levels (J.A. 85-89). This added

an immediate and substantial unfunded liability to the

Fund.

In July 1968, immediately after the plans merged,

Kollsman contributed to the Fund with respect to 1,716

of its employees (J.A. 104). Kollsman then operated two

major manufacturing plants in the New York area, the

Elmhurst plant and the Svosset plant (J.A. 30).

In the early 1970's Kollsman decided to cease all major

manufacturing operations in the New York area and to

open a major manufacturing plant in New Hampshire

(J.A. 29, 30, 31-32). The jurisdiction of District No. 15,

and hence the Fund, does not extend to New Hampshire

(J.A. 30). Kollsman also decided to open a small repair

facility in Plainview, New York, within the jurisdiction of

District No. 15 (J.A. 32).

Kollsman closed the Elmhurst Plant in the early 1970's

(J.A. 30). On December 31, 1976, Kollsman completed

its shutdown of the Syosset plant by selling the plant and

laying off its remaining Syosset employees (J.A. 32).

Concurrently with the shutdown, Kollsman opened the

small Plainview facility (J.A. 32). In December of 1976,

Kollsman contributed to the Fund with respect to only 18

employees (J.A. 104). In 1977, Kollsman made monthly

contributions to the Fund with respect to between 12 and

17 Plainview employees ( J.A. 104).

Kollsman’s contributions to the Fund were reduced from

a high of $709,848.00 for the Fund year ending on July

31. 1973, to $53,899.00 for the Fund year ending on

December 31, 1976 (J.A. 31). For the Fund year which

ended December 31, 1977, the first Fund year which

Ms wall a

flected both Kollsman plant closings, Kollsman’s

contributions were $15,679.00 (J.A. 31).

The Fund is responsible for paying pension benefits to

former employees of Kollsman even though Kollsman has

drastically reduced contributions to the Fund (J.A. 44,

74). The continuing obligation to fund these benefits falls

almost entirely upon the other employers which contribute

to the Fund (J.A. 31, 74, 126-130), absent the applica-

tion of Section 4063 in this case. According to the Fund's

tuarial reports, as of December 31, 1976, the Fund had

pproximately $25 million in assets (J.A. 125, 128).

The Fund was liable for at least £66 million in vested

benefits in excess of those assets (J.A. 129-130). Of this

$66 million unfunded liability, the reports show that at

se to Kollsman (J.A.

}

$9.9 million was. attributal

The PBGC is a United States Government corporation

established to administer the Plan Termination Insurance

program created by Title 1V of ERISA, 29 U.S.C. § 1301

et seq. The board of directors of the PBGC consists of

the Secretary of Labor, the Secretary of the Treasury,

nal the Ve retamn of ¢ ymmerce. 9 T'S ( 1302(a).

PBGC that Kollsman had reduced contributions to

58a

the Fund, and requested the PBGC to “partition” the

Fund, pursuant to 29 U.S.C. § 1363(d) (J.A. 106-107),

a remedy provided in some cases for employer with

drawals. At that time, Kollsman still made contributions

to the Fund with respect to approximately 260 employees

(J.A. 104). The PBGC decided that Kollsman had not

withdrawn from the Fund (J.A. 110). In December

1976, the Trustees asked the PBGC to reconsider its deci

sion, and the parties submitted additional information and

documents (J.A. 33). By letter dated August I1, 1977,

eight months after the sale of the Syosett plant, the Trus

tees were notified that the PBGC again concluded that

Kollsman had not withdrawn from the Fund (J.A. 147-

148). At that time, Kollsman contributed to the Fund

with respect to 13 Plainview facility employees (J.A.

104). The PBGC’s determinations were based upon the

position that less than a total cessation of participation

does not constitute a withdrawal (J.A. 147-148).

On November 23, 1977, the Trustee filed their Com

plaint in the United States District Court for the Southern

District of New York. It requests a declaratory judgment

that Kollsman has “withdrawn” from the Fund (“Count

1”) and an injunction requiring the PBGC to partition

the Fund pursuant to 29 U.S.C. § 1363(d) (“Count 2”)

(J.A. 15-16). The District Court directed that Count 2

be held in abeyance, and requested the parties to stipulate

to facts with respect to Count 1 (J.A. 28).

On April 30, 1979, the parties filed a joint Stipulation

of Facts and Joint Exhibits (J.A. 28-148), and defend-

ants PBGC and Kollsman each filed a Motion for Sum-

mary Judgment on Count 1, both contending that Kolls-

man had not withdrawn. On June 5, 1979, the District

Court remanded the case to the PBGC to determine

whether Kollsman attempted to evade Section 4063 by

establishing the Plainview facility (J.A. 149-150).

When the case was remanded to the PBGC, intensive

study of the treatment of multiemployer pension plans

under Title

I ‘evaluated

concluded tl

IV of the ERISA was underway

Section

part

ial

may constitut i ¥,

PBGC notified the Court and the

corrected interpretation of Sectior

man had withdrawn

Phe Distri

Kollsman’s

On September

reasons and

motives

J 1dge

that

59a

its prior interpretation ofl

han a total ce

thdrawal.’ On

}

rom the Fund (J

redirected the

n establishing

1980, the PBGC

man opened the Plainview facility

the

avoidance of

a factor in Kollsman’s decision. (J

On December

Summary Judgment, reflecting it

of Section 4063, contending that Kollsman

from the

PBGC 6 Motion ror

ind {

rrustees and the

have been c

corrected interpretat

did withdraw

\. 188-197 On Jani 8)

District Court granted Kollsman’s Motion for Summar

did not “withdraw.” and denied

Summary Judgement (J.A. 295 I

PBGC have appeal d. and t ype

idated

t ,

en ele

aveney

i i

the Plainview facility

concluded tt

section

\. 180

1980, the PBGC filed

}

- eclir ry

rOr OTrainal

1063

4063, and

1e PBGC

icipaton

i9X0. 1!

PBGC's

iat Kolls

was nol

Otion for

LION, =TOT

60a

APPENDIX F

BRIEF FOR AMICUS CURIAE

PENSION BENEFIT GUARANTY CORPORATION

IN THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 89-1086

CROWN CORK AND SEAL COMPANY, INC.,

Plaintiff-A ppellee,

CENTRAL STATES SOUTHEAST AND

SOUTHWEST AREAS PENSION FUND, et al.,

Defendants-A ppellants.

Appeal from the United States District Court

for the Eastern District of Pennsylvania

CAROL CONNOR FLOWE

Acting General Counsel

PETER H. GoOuLD

Assistant General Counsel

ISRAEL GOLDOWITZ

Senior Counsel

JOHN FOSTER

Attorney

PENSION BENEFIT GUARANTY

CORPORATION

Office of the General Counsel

2020 K Street, N.W.

Washington, D.C. 20006-1806

(202) 778-8823

SECTION 558 OF DEFRA DOES NOT APPLY

TO CROWN CORK

\. Crown Cork Competely Withdrew From The Plan

When It Ceased All Covered Operations Under

The Plan.

A complete withdrawal from a multiemployer plan

occurs when an employer “permanently ceases all covered

operations under the plan.” 29 U.S.C. § 1383(a)(2)

(emphasis added). The unambiguous wording of the

language defining a complete withdrawal contrasts starkly

with the wording of related provisions of ERISA, such as

provisions that (1) provide special withdrawal rules for

employers in certain plans if “substantially all” of the

employer’s covered employees work in a given industry,

29 U.S.C. S$§ 1383(b)(1)(A), (c)(1)(A); (2) limit

the amount of certain employers’ withdrawal liability in

the case of a bona fide sale of “all or substantially all” of

their assets, 29 U.S.C. § 1405(a)(1); (3) impose special

bonding requirements on an employer seeking to avert a

withdrawal tf “all, or substantially all” of the employer's

assets are distributed, 29 U.S.C. § 1384(a)(3): and (4)

limit the application of certain relief provisions if “sub-

stantially all” employers have withdrawn from the plan

within a certain time, 29 U.S.C. §$ 1389. Congress clearly

knew how to distinguish between all and nearly all, and

it chose the former in defining a “complete” withdrawal.

Congress even specifically distinguished a “complete

withdrawal,” where there is a cessation of all covered op-

erations, from a “partial withdrawal,” where there is a

significant reduction in an employer’s obligation to con-

tribute to the plan or in its covered operations, but less

than 100 percent of covered operations cease. Compare

29 U.S.C. § 1383(a)(2) with 29 U.S.C. § 1385. Con-

gress defined a partial withdrawal in terms of either a

reduction in contribution base units (e.g., hours worked)

62a

of at least 70 percent over a three-year period, or a par

tial cessation of the obligation to contribute. 29 U.S.C

1385(a)}, (b). The 70 percent decline rule plainly evi-

dences Congressional intent to deal with a decline in

covered operations of less than 100 percent as a “partial

withdrawal” under 29 U.S.C. §$ 1385(a), rather than

as a “complete withdrawal” under 29 U.S.C. § 1383

(a)(2)

Congress gave thorough consideration to the subject of

partial withdrawals. See 29 U.S.C. $$ 1385(c) (allowing

a retail food industry plan to use a different percentage of

decline in contributions), 1338(d)(1) (varying the par-

tial withdrawal liability definition for plans in the con-

struction industry), and 1388(d)(2) (providing for no

partial withdrawals in entertainment industry plans, un

less provided for by the PBGC). And, ¢ ONLTeSS provided

for the abatement of partial withdrawal liability if an

employer's contributions should increase significantly after

the employer has been assessed liability for a partial with

drawal. See 29 U.S.C. §$ 1388. Thus, Congress consid-

ered a range of issues relating to partial withdrawals and

adopted provisions governing partial withdrawal liability

that were “comprehensive and reticulated.” See Nachman

Corp. v. PBGC, 446 U.S. 359, 361 (1980). Congress

did not. however, provide anywhere tn ERISA that a

cessation of “most” covered operations in a single plan

year (as occurred here) constitutes a complete—or even

a partial—withdrawal.

Phe district court opinion below ignores the statute and

reaches the conclusion that a complete withdrawal oc

curred in 1980. Yet, it is undisputed that bargaining

unit members worked at the St. Louis plant until No-

vember 1981 and that, throughout that time period, a

collective bargaining agreement requiring contributions

to the Fund for the work of bargaining unit members

was in effect. (App. 139.) The district court’s rationale

for contravening the express wording of MPPAA is that

(

—

63a

normal” business operations had ceased. The district

court, however, is unclear whether “normal” operations

is defined in terms of type of work (“employees that re-

mained were involved in ‘finishing-up’ work’), number of

. workers (“under 30% of the production and maintenance

employees and one third of the clerical staff’), or hours

. of work (“line-hours in October 1980 [were] 5% of a

typical pre-closure monthly total”). (App. 32-33.)

These distinctions not found in MPPAA. Rather

they are based on cases at the district court level that rely

On a single passa from the legislative history of

MPPAA, which does not accurately reflect the meaning

of the statute

The bill would treat an employer as withdrawing

from a multiemployer plan when the employer (1)

permanently ceases to h an obligation to con

tribute under the plan, or (2) permanently cease

all covered operations under the plan. Current law

| does not define a withdrawal. As under current law,

a virtually complete cessation of contributions, ¢

| 98-percent reduction, that has the sam ffect on

the plan as a complete cessation of contributions, 1s

1 complete withdrawal.

| H.R Rey No. 96-896. 96t ( 2d § 73

prin M, | 4) 19O&O [ S 4 ( le Co! ‘ l 2

IQA | 1980) ( Tt inafter Fd (Cattle a, df / IDO Rey tf)

[he passage is from only one of the four jurisdicti

committees that considered the Multiemployer Act, th

Hous Education and Labor Committee [he House

Committee. The House Committee on Ways and Mean

issued a separate report on a bill that is then subs

tuted for the bill originating in the Educati ind Labor

Committee. 126 Cong. Rec H4170 (daily e¢ Vj 2

1980). This report does not mention a irtually com-

plete cessation « ) bution t rather tracks t

bill »S d ste | bes y] p! [ \ { d l V i] TT - [

the withdra is considered to be the ! 2

64a

plan year in which the employer . . . permancntly ceased

all covered operations.” H.R. Rep. 96-869 Part II, 96th

Cong., 2d Sess. 16, reprinted in 1980 U.S. Code Cong.

& Ad. News 2918, 3005 (1980) (emphasis added).

Further, in “Joint Explanation of S.1076: Multiem-

ployer Pension Plan Amendments Act of 1980,” reprinted

in 126 Cong. Rec. 20,195 (1980), the Senate Com

inittee on Finance and the Senate Committee on Labor

and Human Resources defined a complete withdrawal

without reference to a 98-percent reduction.

The decision below and the cases on which it relies

illustrate the “slippery slope’ down which arbitrators and

courts may begin to slide if the specific quantitative iests

prescribed by the statttte are not applied. For example.

in F.H. Cobb Co. v. N.Y. State Teamsters Pension Fund,

584 F. Supp. 1181 (N.D.N.Y. 1984), a court found

that a reduction in an employer's workforce of only 91%

was sufficient to effect a complete withdrawal within a

single year. /d. at 1185. The F.H. Cobb court paid no

heed to the fact that Congress specified that a 70% de

cline in contribution base units does not effect a with

drawal until it has continued for three years. See 29

U.S.C. § 1385(b) (1).

In summary, the district court was wrong in finding

that Crown Cork withdrew during the 1980 plan year.

The decision of the district court that Crown Cork com

pletely withdrew from the Plan in 1980 while covered

operations continued through November, 1981, contra

venes the plain meaning of the MPPAA. Rather than

rely on a single snippet of legislative history, this Court

be guided by the detailed and unambigu-

ous provisions of ERISA, and reverse the district court.

should instead

B. Crown Cork Had ‘No Binding Agreement To

Withdraw.

-ACHINYG erie Ci bUViCUUs CONCIUSION Liicit rOWn

Cork completeiy withdrew before December 31, 1980,

the district court addressed the second element of Sec-

tion 558(d), whether there was a binding agreement to

withdraw as of September 26, 1980. It concluded that

such an agreement existed, although the only express

agreement it could identify was a listing agreement with

a real estate broker.’

The phrase “binding agreement to withdraw’ may re-

fer to a provision in a collective bargaining agreement

that the employer will cease contributions to a multiem-

ployer pension plan as of a given date. An example of

an agreement of this nature is found in Lady Baltimore

decision. There, the union and the employer executed

collective bargaining agreement that contained the follow

ing provision:

ARTICLE XVIII—PENSION

Section 7. Effective January 12, 1982 all con-

tributions to the Central States Southeast and South-

west Areas Pension Fund shall cease .. . and all

obligations of the Company to said Fund or under

any trust agreements shall be terminated. From that

date forward regular employees shall be eligible to

enter the Company’s pension plan pursuant to the

terms and provisions of that plan.

Lady Baltimore Foods, Inc., slip op. at 2.

Crown Cork presented no such agreement here

Rather, it relies on the legislative history of Section 558,

which adds the notion of a “binding sale agreement to

withdraw.” Other courts have applied this language and

have concluded that it requires an enforceable agree

es ,

11 The district court based its decision on what it understood

be the purpose of Section 558(d), even though it conceded that

apart from the listing agreement there was no “agreement” in t

cast App. 35.) Courts are not at liberty, however, to carve out

exceptions to MPPAA that Congress did not prescribe. Centr

State y So itheast and So tthwest Are 1s *ONSION F ‘7 d Be

Trucking, 788 F.2d 428, 433 ‘7th Cir. 1986

00a

Tal

’

- . + = -— out b } - 4

"4 ’ ~ a ie , ) > A) — ” . . ; . ~~ ‘

4 ‘ > mF vu }- y + i, & : + ~

— a c a — ome r > x -

- - J A 4 —_ a ~ c — _ - . - -j

s = os S a = me ; : ‘ . oa

“a. s c L .

os c a 4 - + - Cc

. ae - thal > = 2 - r x £ .

J - -- - aud - _ ¢ + _ rs

Sf . —_ —_ “ = > - her r J + “ : - . "

f - —_ cr _ aw - + > }

? — oo 4 ~ me .

; ¢ n= ) : / - —_ f :

‘ ~ a —_ } o— “+ a > / > a . .

= ° re A - a pau - * -

aa ie - Be s - ) as — 7) 7 a ¢ SS -

A) |

- / . _ . - + = = — ° ° +

- = = LTS. z S ail , ra : an . "

= f = J . & wo + Z - -

v1 = - f « Y — 4 > 4 ~

7 ~~ ww - , S > 3 ft :

~ = ) > - J -— - ‘ 4 ; ‘ - = .

os A) - - < - one ) 2 f -" ‘ 4 c

67a

Cork. The listing agreement, however, was merely a

promise to pay a real estate broker a commission if Crown

Cork received an offer of $1.5 million or more to pur-

chase the St. Louis plant during a given time period.

(App. 288.) It in no way obligated Crown Cork to

accept an offer to purchase the St. Louis plant that might

be tendered during the life of the listing agreement. In

short, the listing agreement did not require Crown Cork

to actually sell its plant

68a

APPENDIX G

CENTRAL STATES,

SOUTHEAST AND SOUTHWEST AREAS

PENSION FUND

SUMMARY PLAN DESCRIPTION

AND

PENSION PLAN

Effective July 1, 1980

69a

ARTICLE I. DEFINITIONS

Section 1.0] Pension Plan or Plan. as used. he rein,

Shall refer to the employee retirement benefit plan as

described herein or as. from time to time hereafter

amended

Section 1.02: Trust Agreement, as used herein. shall

refer to the Agreement and Declaration of Trust made

and entered into the sixteenth day of March, 1955. and

as amended from time to time thereafer, by and between

Central Conference of Teamsters, Southern Conference of

feamsters, and their affiliated Local Unions. and the

southeastern Area Motor Carriers Labor Relations Asso

ciation; Southwest Operators Association: Motor Carriers

Employers Conference-Central States: ¢ artage Employers

Management Association; Cleveland Draymen Associa

tion, Inc.; and Northern Ohio Motor Truck Association.

Inc.

Section 1.03: Trust Fund or Pension Fund. as used

herein, shall refer to all property of whatever nature

which shall be in the Trust created by the Trust Agr

ment.

Section 1.04: Employer, as used herein. shall mean any

Employer who is now, or shall in the future be. bound

by a Collective Bargaining Agreement, as hereinafter de-

fined, with the Union, agrees to be bound by the Trust

\greement, satisfies the requirements or participation as

established by the Trustees, and is formally accepted for

such participation by the Trustees. An Employer shall

cease such participation upon determination by the Trust

ees that said Employer has failed to comply with any of

these conditions or any such other conditions Or require

ments as may be set forth in the Trust Agreement or

promulgated pursuant thereto.

section 1.05: Union, as used herein, shall mean the

Central Conference of Teamsters, the Southern Confer

fected affiliated local

HiT

| 4:4

*,s% . ? ry | > a

ence of Teamsters, and their af

Section 1.06: Employee, as used herein, shall mean:

» }

(a;

A person (other than a person employed in a super-

visory capacity) who has been on the payroll of an

Employer for at least 30 days who is employed under

the terms and conditions of a Collective Bargaining

Agreement, as hereinafter defined, entered into be-

tween an Employer, as herein defined, and a Union,

as herein defined, and on whose behalf contributions

are made or are presently required to be made to

the Pension Fund by the Employer; or

All persons employed by the Union, as herein de-

fined, upon being proposed by the Union and

after acceptance by the Trustees, as hereinafter de-

This text is long and has been trimmed here. Open the source document for the complete record.

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