# Petition for Writ of Certiorari — Central States, Southeast & Southwest Areas Pension Fund v. Crown Cork & Seal Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_2354%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1993 - **Citation:** 508 U.S. 972 ## 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 iv 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 25 30 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 vl 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. 29 U.S.C. 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. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 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) > S 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. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 29 U.S.C. 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 - > ‘5 ) 1 : > rt 13) > 1 yp ZVUa re Bite rt »> « . 1 IS Cproaucec : , , ae | ) 1¢ \ A pp tia il wre — ; JURISDICTION i CG | C11¢ (yT) . i\v< ked Inde + 4 . 7 5 ; Y >. ( l13 $U01(6b)(2) and 5 T} urisdicti yf th rt oO iD I< \ UTISCICI { t Ol] ppe 5 5 7 | b ’e Ss. p. ihe judgement ot t . : of appeals affirming the district court was terec | } 2 Oo” . i) D¢ >. 1Y9 eliitl ) 4 I qgeny i . : tered on January 19, 1993. This Court's juris ) 1s \ qu | 5 | ‘5 .( | + i ) 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 , ¢ j ; t ? T) } ( | ( 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) | we 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 l 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 6 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 rt VITUl i 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. 9 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 10 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). 11 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. 13 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. 14 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. 15 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 16 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 ) uA 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 i- ~ 4 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 18 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- 19 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 & 1% } 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. 20 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 © truly ambiguous and the government had 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 ). 1? 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 * 23 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 24 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. 5 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 26 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. 5 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 tj tion. Moreover, a narrow construction is also consistent with the rule of construction that ¢ xceptio! to a remedial statute MPPAA are read narrowly 28 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 la APPENDIX A 5 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 aa 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 4a 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. 6a 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 7a 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- Cc 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) Sa T. 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 — 9a 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). » ° {; a | 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 o 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} sw not intend to be was executed ] i 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] ] i 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. B. 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 n! 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- rr 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 ee 19a we find the district court did not err as a matter of law { in finding a complete withdrawal had occurred for DEFRA purposes. IV 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 er 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 h 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 rl 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 j 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 s — 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 oe 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, VS 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. J. 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 Pd Crown Cork’s reauest to be found to be exempt from withdrawal liability ba [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_2354%3A1. Public record. Not legal advice.