Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

Flying Tiger Line v. Teamsters Pension Trust Fund of Philadelphia and Vicinity

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT


filed: September 30, 1987.

THE FLYING TIGER LINE, A DELAWARE CORPORATION, TIGER INTERNATIONAL, INC., A DELAWARE CORPORATION, WARREN TRANSPORT, INC., AN IOWA CORPORATION, PLAINTIFFS & COUNTERDEFENDANTS
v.
TEAMSTERS PENSION TRUST FUND OF PHILADELPHIA AND VICINITY, A/K/A TEAMSTERS PENSION PLAN OF PHILADELPHIA AND VICINITY, AND CHARLES J. SCHAFFER, JR., COUNTERPLAINTIFFS V. CENTRAL STATES, SOUTHWEST AND SOUTHEAST AREAS PENSION FUND, A MULTIEMPLOYER PENSION PLAN, TEAMSTERS PENSION TRUST FUND OF PHILADELPHIA AND VICINITY, A MULTIEMPLOYER PENSION PLAN, WESTERN PENNSYLVANIA TEAMSTERS AND EMPLOYERS PENSION FUND, A MULTIEMPLOYER PENSION PLAN, TEAMSTERS LOCAL 641 PENSION FUND, A MULTIEMPLOYER PENSION PLAN, AND CENTRAL PENNSYLVANIA TEAMSTERS PENSION FUND, A MULTIEMPLOYER PENSION PLAN, EACH SUED INDIVIDUALLY AND AS A MEMBER OF A CLASS OF SIMILARLY SITUATED MULTIEMPLOYER PENSION PLANS WHO ASSERT WITHDRAWAL LIABILITY, AGAINST HALL'S MOTOR TRANSIT COMPANY, UNDER THE MULTIEMPLOYER PENSION PLAN AMENDMENTS ACT OF 1980, THE FLYING TIGER LINE, INC., TIGER INTERNATIONAL INC. AND WARREN TRANSPORT, INC., APPELLANTS

On Appeal from the United States District Court for the District of Delaware, D.C. Civil Action No. 86-304.

Higginbotham, Becker, and Hunter, Circuit Judges.

Author: Higginbotham

Opinion OF THE COURT

A. LEON HIGGINBOTHAM, JR., Circuit Judge

These appeals require us to determine whether a federal district court or an arbitrator should resolve the question whether a corporate entity is an employer subject to the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA" or " the Act"), 29 U.S.C. §§ 1381-1461 (1982 & Supp. I 1983 & Supp. II 1984 & Supp. III 1985). This employer status question arises in the context of a dispute concerning MPPAA section 1392(c), the so-called "evade or avoid" provision. The district court concluded that, pursuant to 29 U.S.C. § 1401(1982), this question initially must be decided by an arbitrator. Appellants argue that their legal status -- whether they are a MPPAA "employer" -- is a predicate issue that must be resolved by a federal district court before an arbitrator can assert jurisdiction under MPPAA. Because we conclude that these appeals involve provisions of the Act that prescribe arbitration as the appropriate method of dispute resolution, we will affirm the district court's order staying its proceedings pending arbitration.

I. OVERVIEW OF MPPAA

Under the Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406, 88 Stat. 1020 ("ERISA"), as amended by MPPAA, employers may make contributions to one or more pension plans on behalf of all their employees who belong to a participating union. Congress enacted MPPAA in particular because it found that existing legislation "did not adequately protect plans from the adverse consequences that resulted when individual employers terminate[d] their participation in, or withdr[e]w from, multiemployer plans."*fn1 Pension Benefit Guar. Corp. v. R. A. Gray & Co., 467 U.S. 717, 722, 81 L. Ed. 2d 601, 104 S. Ct. 2709 (1984) ("R.A. Gray"); accord IUE AFL-CIO Pension Fund v. Barker & Williamson, Inc., 788 F.2d 118, 127 (3d Cir. 1986)("The MPPAA was designed '(1) to protect the interests of participants and beneficiaries in financially distressed multiemployer plans, and (2) . . . to ensure benefit security to plan participants.'") (original ellipses) (quoting H.R. Rep. No. 869, 96th Cong., 2d Sess. 71 (1980), reprinted in 1980 U.S. Code Cong. & Admin. News 2918, 2939) ("Barker & Williamson"). The Act addressed this problem by assessing such employers with withdrawal liability, defined in the statute as the employer's adjusted "allocable amount of unfunded vested benefits." 29 U.S.C. § 1381(b)(1) (1982).

We will briefly outline the MPPAA provisions that are relevant to this case. The Act requires that "all . . . trades or businesses (whether or not incorporated) [that] are under common control", as defined in regulations issued by amicus curiae the Pension Benefit Guaranty Corporation ("PBGC"), "shall be treated . . . as a single employer."*fn2 29 U.S.C. § 1301(b)(1) (1982). Since a controlled group is to be treated as a single employer, each member of such a group is liable for the withdrawal of any other member of the group. See Barker & Williamson, 788 F.2d at 127-28. In determining whether a withdrawal has occurred, MPPAA explicitly provides that any transaction designed to "evade or avoid" withdrawal liability should be ignored: "if a principal purpose of any transaction is to evade or avoid liability under this part, this part shall be applied (and liability shall be determined and collected) without regard to such transaction." 29 U.S.C. 1392(c) (1982).

Provisions for the quick and informal resolution of withdrawal liability disputes are an integral part of MPPAA's statutory scheme. The Act requires a plan's trustees to determine initially whether a withdrawal has occurred. 29 U.S.C. §§ 1382(1), 1399(b)(1)(A)(i)(1982). When the trustees conclude that a withdrawal has taken place, they must then notify the employer of the amount of liability and demand payment in accordance with an amortization schedule. 29 U.S.C. §§ 1382(2), 1383(3), 1399(b)(1)(B) (1982). Thereafter, the employer may within 90 days ask the trustees to conduct a reasonable "review" of the computed liability. 29 U.S.C. § 1399(b)(2)(A)(i) (1982). If a dispute remains, either party may initiate arbitration proceedings. MPPAA provides that

any dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under sections 1381 through 1399 of . . . title [29] shall be resolved through arbitration. Either party may initiate the arbitration proceeding within [specified time periods].

29 U.S.C. § 1401(a)(1) (1982). Finally, "upon completion of the arbitration proceedings in favor of one of the parties," MPPAA permits "any party thereto" to bring an action "to enforce, vacate or modify the arbitrator's award" in the appropriate federal district court. 29 U.S.C. § 1401(b)(2) (1982). Regardless of whether the employer requests review by a plan's trustees or initiates arbitration, however, the employer must begin making interim payments of the withdrawal liability in accordance with the plan's schedule within 60 days of notice of liability. See 29 U.S.C. §§ 1399(c)(2), 1401(d) (1982); see also Banner Indus., Inc. v. Central States, Southeast & Southwest Areas Pension Fund, 663 F. Supp. 1292, 1297-98 (N.D. Ill. 1987) ("Congress has clearly established the balance it deems appropriate with respect to which party should have use of the money during the pendency of a dispute over withdrawal liability."); Robbins v. Pepsi-Cola Metro. Bottling Co., 636 F. Supp. 641, 677 (N.D. Ill.) ("The MPPAA contemplates a 'pay now, dispute later' procedure."), petition for supersedeas bond or entry of stay pending appeal denied, 800 F.2d 641 (7th Cir. 1986).

II. BACKGROUND OF THIS DISPUTE

Appellant Tiger International, Inc. ("Tiger"), is a holding company engaged through its subsidiaries -- which include appellants The Flying Tiger Line, Inc. and Warren Transport, Inc. -- in the air cargo, transportation, and trucking businesses. On January 2, 1980, Tiger acquired 100% of the stock of Hall's Motor Transit Co. ("Hall's"), a large interstate trucking company. Pursuant to collective bargaining agreements, Hall's had contributed for many years until early 1986 to a number of multiemployer pension plans on behalf of most of its approximately 3,500 employees. A number of factors, including deregulation of the trucking industry, caused Hall's to incur operating losses each year form 1981 though 1984. These losses occurred notwithstanding the extensive financial support Hall's received from Tiger during that time period.*fn3

In January 1985, Tiger sold 75% of its Hall's stock to Hall's Acquisition Corporation ("HAC"), a corporation wholly owned by Alvin Bodford, Hall's Chief Financial Officer. In consideration for the stock it received in this deal, HAC gave Tiger a $1 0.5 million promissory note that memorialized Hall's preexisting indebtedness to Tiger. To secure this note, Tiger received a blanket subordinated security interest in certain real and personal property of Hall's.

When HAC thus became the principal owner of Hall's, HAC agreed to honor Hall's obligations to contribute to various multiemployer pension plans. In addition, as part of its sale agreement with Tiger, HAC explicitly assumed full legal responsibility for any withdrawal liability that Hall's and/or Tiger might incur in the future.*fn4 In late 1985, with Hall's again in need of capital, Tiger agreed to transfer its remaining 25% interest in Hall's to HAC for no consideration. Tiger also agreed to restructure the $10.5 million promissory note and to release its lien of Hall's assets in an effort to help Hall's obtain additional financing. When its requests for such financing were subsequently denied, Hall's filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 1101-1174, on March 10, 1986.

Upon filing its bankruptcy petition, Hall's severely cut back its operations and stopped making its contributions to the multiemployer pension plans. In Hall's bankruptcy proceeding, twelve of these plans asserted MPPAA withdrawal liability claims aggregating in excess of $36 million. At approximately the same point in time, Tiger's management was informed that several of Hall's multiemployer pension plans intended to assert that Tiger was jointly and severally liable for Hall's withdrawal liability.

On July 2, 1986, pursuant to MPPAA section 1399(b)(2)(A),*fn5 Tiger submitted a request to appellee Central States, Southwest and Southeast Areas Pension Fund ("Central States"), one of Hall's multiemployer pension funds, to review the question of Tiger's liability for Hall's withdrawal. Central States eventually responded with a Board of Trustees' finding that, based upon available information,*fn6

a principal purpose of the Hall's divesture by the Tiger International Control Group was to avoid or evade withdrawal liability. Accordingly, the Board of Trustees . . . determined, pursuant to ERISA Section 4212(c) [29 U.S.C. § 1392(c) (1982)], that it must disregard that transaction and that the Tiger International Controlled Group (including Hall's) is the employer responsible for Hall's withdrawal liability.

J.A. at 798.

Tiger did not, however, wait for this response from Central States. Rather, on July 3, 1986, Tiger and its subsidiaries filed a federal class action complaint seeking declaratory and injunctive relief against Central States and the other plans that had asserted or had threatened to assert claims for withdrawal liability against Hall's. In Count I of its complaint, Tiger sought a declaration that it was not liable for any withdrawal liability that might be owed to the plans by Hall's and an order enjoining the plans from asserting claims for such liability against Tiger. In support of this count, Tiger claimed that, as a result of its sale to HAC in January 1985 of 75% of Hall's stock, Hall's was no longer part of the Tiger-controlled group when the withdrawal occurred in March 1986.*fn7 In addition, Tiger argued that MPPAA section 1401 specifically refers to disputes between "employers" and plans,*fn8 and that Tiger's status as an employer therefore should be judicially determined before it is compelled to enter arbitration.

The plans moved to dismiss Tiger's complaint for lack of subject matter jurisdiction, principally on the ground that all disputes concerning MPPAA withdrawal liability must be resolved by plan trustee determinations, trustee review, and MPPAA arbitration before appeal to a federal district court. ON September 12, 1986, the district court denied these motions to dismiss and ruled that "the Court . . . will decide the question of Tiger's status under MPPAA in relation to Hall's alleged withdrawal liability." The Flying Tiger Line, Inc. v. Central States, Southwest & Southeast Areas Pension Fund, No. 86-304, mem. op. at 12-13 (D. Del. Sept. 12, 1986). The district court based its decision to resolve Tiger's employer status on a determination that Tiger had demonstrated a likelihood of irreparable injury sufficient to exempt Tiger from the requirements of the exhaustion doctrine. The court held that Tiger would suffer irreparable harm because it would be required by MPPAA section 1401(d)*fn9 to make interim payments of the assessed withdrawal liability during arbitration. Id. at 14-15.

The multiemployer pension plans thereafter moved for reconsideration. On October 17, 1986, the district court vacated its September 12th order, holding that "any further consideration of Count I is stayed pending arbitration." The Flying Tiger Line, Inc. v. Central States, Southwest & Southeast Areas Pension Fund, No. 86-304, mem. op. at 3 (D. Del. Oct. 17, 1986). The court concluded that, while Tiger faced serious financial hardship, there was no reason to "believe that Tiger would be harmed more if forced to go to arbitration than if Tiger goes to court." Id. The court noted that the pension plans would have to petition the court to enforce the interim payments requirement of MPPAA section 1401(d) and that the possible harm that would result from the threat of withdrawal liability would be the same regardless of the forum in which this dispute was adjudicated. Id. at 4.

The district court also addressed Tiger's claim that arbitration may be bypassed because this case involves a question of pure statutory interpretation. The court found that Tiger's status as an employer can be decided only by addressing the question whether Tiger's January 1985 sale of Hall's to HAC was designed to evade or avoid withdrawal liability as defined in MPPAA section 1392(c).*fn10 The district court identified a need for factual determinations to resolve the legal questions raised by Count I of the complaint, and held that those findings should be made by an arbitrator in the first instance.*fn11

III. APPLYING MPPAA TO THIS DISPUTE

The district court certified the following question for appeal:

May a corporation that legitimately believes its status as a MPPAA "employer" is doubtful have that issue resolved by a federal court in a timely declaratory action, wherein the federal district court will determine the legal and factual issues necessary for a determination that the corporation is subject to MPPAA liability and procedures, or must the issue of MPPAA arbitrator?

The Flying Tiger Line, Inc. v. Central States, Southwest & Southeast Areas Pension Fund, No 86-304, mem. order para. 1 (De. Del. Dec. 4, 1986). We conclude that where the party against which withdrawal liability is being asserted was certainly part of the controlled group of an employer subject to MPPAA at some point in time, and where the issues in dispute fall within the purview of MPPAA provisions that are explicitly designated for arbitration, the Act's dispute resolution procedures must be followed.

Tiger contends that because MPPAA section 1401 specifies that "employers" are required to arbitrate disputes, entities that legitimately question their status as employers are entitled to judicial resolution of this issue before being compelled to arbitrate under MPPAA. Admittedly, section 1401 refers to "employers"; the more fundamental question, however, concerns what needs to be decided to dispose of Count I of Tiger's complaint. Tiger claims that the issue is whether it was an "employer" at the time Hall's withdrew from the plans. The multiemployer pension funds argue, and the district court ultimately determined, that Tiger's status can only be defined by deciding whether the January 1985 sale was a sham transaction designed to relieve Tiger of Hall's withdrawal liability. Because we agree that the central dispute between Tiger and the funds concerns whether the sale must be ignored under MPPAA's "evade or avoid" provision, we are guided by the Act's language that clearly states that "[a] dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under sections 1381 through 1399 of this title shall be resolved through arbitration." 29 U.S.C. § 1401(a)(1) (1982) (emphasis added. We agree with the district court that "characterizing the issue to be decided as whether or not Tiger was an 'employer' is a broad brush description of a specific issue. The case really turns on the determination of the 'evade or avoid' question, a question properly before the arbitrator." The Flying Tiger Line, No. 86-304, mem. op. at 7 (D. Del. Oct. 17, 1986).

A. Relevant Legislative History

The legislative history of MPPAA indicates that Congress specifically contemplated that disputes concerning "evade or avoid" transactions such as Tiger's 1985 sale would be resolved through arbitration. Representative Frank Thompson, Jr., Democrat of New Jersey, the principal House sponsor of the bill, stated that

transactions undertaken to evade or avoid withdrawal liability may not be used as a method of escaping withdrawal liability that would otherwise be imposed. It is intended that the plan sponsor, the arbitrator, and the courts follow the substance rather than the form of such transactions in determining, assessing, and collecting withdrawal liability.

126 Cong. Rec. H23038 (daily ed. Aug. 25, 1980) (emphasis added). This explicit reference to "the plan sponsor, the arbitrator, and the courts" demonstrates that Congress intended "evade or avoid" disputes to be resolved through the MPPAA sequence of procedures, which places arbitration prior to court action.*fn12

B. The Role of Arbitration Under MPPAA

The arbitration requirement is an important component of MPPAA's scheme to secure the financial health of multiemployer pension plans. Arbitration of withdrawal liability disputes substantially reduces the expenses incurred by multiemployer plans while it bears a burden that would otherwise fall on the federal courts. "Arbitration promotes judicial economy and judicial restraint, both because the arbitrator's decision may dispose of the suit, and even if one party appeals the arbitrator's decision, the court will have the benefit of the arbitrator's analysis." Robbins v. Chipman Trucking, Inc., 8 Employee Benefits Cas. (BNA) 1251, 1258 (N.D. Ill. 1986) ("Chipman Trucking").*fn13 Congress clearly designed MPPAA so that court will be the final forum for dispute resolution, and MPPAA's purposes would be undermined by the expense and delay that would be involved if litigation occurred prior to the Act's dispute resolution procedures. Accordingly, we again emphasize the importance of "the legislature's decision that arbitration, and not the courts, is the proper forum for the initial resolution of disputes [under MPPAA]." Republic Indus., Inc. v. Central Pa. Teamsters Pension Fund, 693 F.2d 290, 295 (3d Cir. 1982) ("Republic Industries"); accord Central States, Southeast & Southwest Areas Pension Fund v. MGS Transp., Inc., 661 F. Supp. 54, 56 (N.D. Ill. 1987) ("This congressional preference for arbitration should be respected."); Terson Co., Inc. v. Pension Benefit Guar. Corp., 565 F. Supp. 203, 208 (N.D. Ill. 1982) ("The court must consider the fact that Congress, when it created the statutory scheme encompassing ERISA and the MPPAA, deemed arbitration as the proper forum for the adjudication of claims arising out of this scheme. We cannot blithely ignore the express intent of Congress."); cf. Refined Sugars, Inc. v. Local 807 Labor-Management Pension Fund, 580 F. Supp. 1457, 1461 (S.D.N.Y. 1984) (MPPAA "sections 1381 through 1399 cover the determinations for which Congress has provided an arbitral resolution").

We also note that two other circuits have recently emphasized the clarity of MPPAA's arbitration requirement. The D.C. Circuit has held that

initial recourse to arbitration is a statutory direction, one generally to be followed unless neither party timely presses the plea in abatement[] and the court finds that deferring a court contest while the parties repair to arbitration "will neither lead to the application of superior expertise nor promote judicial economy."

Grand Union Co. v. Food Employers Labor Relations Ass'n, 257 U.S. App. D.C. 171, 808 F.2d 66, 70 (D.C. Cir. 1987) (initial emphasis added) (quoting I.A.M. Nat'l Pension Fund Benefit Plan C v. Stockton TRI Indus., 234 U.S. App. D.C. 105, 727 F.2d 1204, 1210 (D.C. Cir. 1984)) ("Grand Union"). In Marvin Hayes Lines, Inc. v. Central States, Southeast & Southwest Areas Pension Fund, 814 F.2d 297 (6th Cir. 1987), the Sixth Circuit concluded that, "unless an employer is mounting a facial constitutional attack or making a verifiable claim of irreparable injury, the courts have no jurisdiction to entertain the merits of the dispute prior to arbitration." Id. at 300 (emphasis added).

C. Relevant Decisional Law

Tiger relies primarily on this Court's decision in Barker & Williamson for the proposition that an alleged employer may bring a declaratory judgment action to have its status determined before such a corporate entity must engage in arbitration. We there suggested that, in addition to (1) trustee review and arbitration, or (2) complete inaction,

a third course . . . available . . . [to a] corporation [that] legitimately believes its status as a controlled group member is doubtful[ is to] bring a declaratory judgment action to have that question resolved by a federal court. In such a proceeding, the corporation could request that the court enjoin the running of the statutory period for seeking review and arbitration. . . . The corporation [could also] . . . request[] review by the fund and arbitration and mak[e] the interim payments to the fund contingent upon the outcome of the declaratory judgment action.

788 F.2d at 129.

The language of Barker & Williamson cannot be read so broadly as to change the clear meaning of MPPAA section 1401. In Barker & Williamson, this Court was required to interpret MPPAA section 1301 to determine whether Sentinel Electronics, Inc. ("Sentinel"), the putative controlled group member, had become such an employer "at the time" Barker & Williamson, Inc. ("B&W"), the contributing employer, completely withdrew from its multiemployer pension plan. 788 F.2d at 123. The central legal question in Barker & Williamson asked whether Sentinel's interest in certain B&W stock constituted an option that gave Sentinel constructive owner ship over B&W "as of that date." Id. When B&W defaulted on its payments, the fund's trustees alleged that Sentinel was a member of B&W's controlled group, that Sentinel and B&W were a single employer under MPPAA section 1301(b), and, therefore, that Sentinel was liable for the full amount of B&W's withdrawal liability. Sentinel did not challenge the trustees' assessment of withdrawal liability in any fashion; it simply "did nothing[,]. . . gambl[ing] that it would not later be found to be a member of a controlled group with the withdrawn employer." Id. at 129. We affirmed the district court's legal determination that Sentinel was the constructive owner of B&W's stock on the date in question, id. at 122-26, and, accordingly, we held Sentinel liable for the full amount of B&W's withdrawal liability. Id. at 129-30. By "doing nothing," Sentinel "los[t] the possibility of review and arbitration" under MPPAA. Id. at 129.

The factual context of Barker & Williamson defines one relatively clear limit on the declaratory judgment course of action. Our reference there to this "third course" of action referred to disputes, such as Sentinel's unsuccessful stock option/controlled group argument, that arise under MPPAA provisions that fall outside of the section 1381 through 1399 range. The reference does not undermine section 1401's clear mandate that disputes within that range of sections be arbitrated.

We emphasize the legal dissimilarity of the two disputes. In Barker & Williamson, the issue was whether Sentinel had become a MPPAA employer in time to incur liability for B&W's withdrawal. Here, the issue is whether Tiger ceased to be a MPPAA employer in time to avoid liability for Hall's withdrawal. The latter unavoidably raises an "evade or avoid" issue under section 1392(c) that cannot be a part of the former. This dispute centers, in other words, upon the trustees' determination under section 1392(c) that a principal purpose of Tiger's sale of Hall's stock was to evade or avoid withdrawal liability; it is not simply a matter of whether Tiger was an "employer" as defined by the statute at the time of Hall's withdrawal.*fn14

While no provision of MPPAA specifically addressed who should resolve questions concerning the status of a one-time employer, the statutory scheme specifically provides that once an entity is an employer, it will be deemed to have withdrawn when it "permanently ceases to have an obligation to contribute under the plan." 29 U.S.C. § 1383(a) (1982). Any such employer will, under MPPAA section 1381, be assessed withdrawal liability unless that employer satisfies a statutory provision relieving it of liability. A district court in Banner Indus., Inc. v. Central States, Southeast & Southwest Areas Pension Fund, 657 F. Supp. 875, issues certified for appeal, 663 F. Supp. 1290, subsequent opinion, 663 F. Supp. 1292 (N.D. Ill. 1987), recently concluded that

whether the requirements of [a statutory] safe-haven have been satisfied necessarily turns on the facts of each case. . . . The issue of whether one remains an employer on the date of withdrawal is not the same issue as whether one ever became an "employer" for the purposes of ERISA generally and MPPAA in particular. The latter is an issue for the court since its resolution determines the arbitrator's authority over the dispute. The former is an issue for the arbitrator since its resolution turns on the applicability of MPPAA provisions relating to employer withdrawals -- provisions Congress specifically placed within the purview of the arbitrator.

657 F. Supp. at 882 (footnote omitted); accord id. at 883" (We disagree with Banner that he factual disputes in this case bear on Banner's 'employer' status. Rather, they bear on Banner's continued employer status, an inherently different question.") (original emphasis); cf. Tri-State Rubber & Equip., Inc. v. Central States Southeast & Southwest Areas Pension Fund, 661 F. Supp. 46, 47 (E.D. Mich. 1987) ("No court has required interim payments form a company that claims it was never 'an employer.'") (emphasis added). We find this distinction to be persuasive.

Courts that have resolved employer status questions prior to arbitration have been concerned with entities that never have been employers subject to MPPAA and that, therefore, legitimately question application of MPPAA's dispute resolution procedures to them. For example, in Central Transp., Inc. v. Central States, Southeast & Southwest Areas Pension Fund, 639 F. Supp. 788 (E.D. Tenn. 1986), aff'd per curiam in an unpublished opinion, 816 F.2d 678 (6th Cir. 1987) (table) (opinion available on LEXIS, Genfed library, USApp file), a corporation, Central Transport, entered into an agreement to purchase Mason & Dixon Lines, Inc., the parent of a subsidiary corporation called Tank Lines. This purchase agreement, however, was contingent upon Interstate Commerce Commission ("ICC") approval. Before such approval was received, Tank Lines ceased contributing to its multiemployer pension plans. While the ICC subsequently did approve Central Transport's purchase agreement, the court held Central Transport was not liable for Tank Line's withdrawal because Central Transport had not exercised control over Tank Lines at the time the withdrawal occurred. The court held as a matter of law that, as of the withdrawal date, Central Trasport had never been an employer. See 639 F. Supp. at 791; cf. United Paperworkers Int'l Union, Local No. 35 Pension Plan v. Arlington Sample Book Co., 5 Employee Benefits Cas. (BNA) 1948 (E.D. Pa. 1984) (issue whether president and sole shareholder of a MPPAA corporate employer was himself an "employer" under MPPAA sections 1002(5) and 1002(9)); Refined Sugars, Inc., 580 F. Supp. 1457 (issue whether corporation was an "employer"); Baldwin v. Shopmen's Ironworkers Pension Trust of S. Calif., 3 Employee Benefits Cas. (BNA) 1713 (C.D. Cal. 1982) (issue whether two sole shareholders were "employers").

D. Identifying Arbitral Jurisdiction

Tiger also claims that, because its complaint challenges the applicability of MPPAA's entire administrative scheme to this dispute, it cannot be compelled to arbitrate a question of arbitral jurisdiction. Tiger relies on the Supreme Court's unanimous decision in At & T Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 89 L. Ed. 2d 648, 106 S. Ct. 1415 (1986) ("AT & Technologies"). Tiger argues that arbitrators derive their authority form MPPAA; if there is ambiguity concerning the applicability of its arbitration provisions, "it is for the court, not the arbitrator, to decide in the first instance whether the dispute is to be resolved through arbitration." Id. at , 106 S. Ct. at 1420.

Tiger's argument fails for two reasons. First, we note that AT & T Technologies concerned a federal court's duty to interpret the arbitration clause of a collective bargaining agreement, and was not a case of a court addressing the arbitration provisions of a federal statute such a MPPAA.*fn15 In addition, we note that the district court did not compel Tiger to arbitrate a legal question of the arbitrator's jurisdiction. Rather, the district court considered the statutory issue and decided that the dispute here must be arbitrated under MPPAA section 1401. This decision was consistent with AT & T Technologies, where the Supreme Court emphasized that, in deciding whether a dispute is subject to arbitration, "a court is not to rule on the potential merits of the underlying claims." 475 U.S. at , 106 S. Ct. at 1419. For this reason, Tiger's argument on the merits -- that the plans have not demonstrated that Tiger's conduct fails to satisfy the good faith requirement of MPPAA section 1392(c), see generally Dorn's Transp., Inc. v. Teamsters Pension Trust Fund of Philadelphia & Vicinity, 787 F.2d 897, 902-03 (3d Cir. 1986) ("Dorn's"),*fn16 -- has no bearing on our decision that the arbitrator must decide the merits initially.

IV. EXHAUSTION DOCTRINE

It is a settled principle of law that "no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted." Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51, 82 L. Ed. 638, 58 S. Ct. 459 (1938). The primary purpose of this exhaustion doctrine is to allow an administrative agency or an arbitrator to perform functions within its special competence: to create a factual record, to apply its expertise, and to correct its own errors so as to eliminate potential controversies that would otherwise end up in federal court.*fn17 This Court has held that the policies underlying the exhaustion doctrine are generally applicable to the arbitration proceedings established by MPPAA. Republic Industries, 693 F.2d at 294-95.

Tiger argues that it should not be required to exhaust any administrative procedures, such as arbitration, that may be prescribed by MPPAA because Tiger falls within recognized exceptions to the doctrine. Initially, we note that "exceptions to the doctrine. Initially, we note that "exceptions to [MPPAA's] 'arbitrate first' rule are narrowly cabined," Grand Union, 808 F.2d at 68, and "apply only in 'extraordinary circumstances.'" Republic Industries, 693 F.2d at 294 (quoting First Jersey Securities, Inc. v. Bergen, 605 F.2d 690, 696 (3d Cir. 1979)). Nevertheless, there may be such circumstances where the arbitral process would be either inappropriate or futile. We conclude, however, that Tiger's dispute does not fall within one of these narrow exceptions.

A. Irreparable Injury

If forcing a plaintiff to follow a designated administrative procedure would cause the plaintiff irreparable harm, then that plaintiff may bypass those procedures and seek judicial relief directly. Republic Industries, 693 F.2d at 293. The district court originally ruled that Tiger had satisfied the irreparable injury exception to the exhaustion doctrine. On reconsideration, however, the district court reversed itself, holding that Tiger would be no more harmed by arbitration than by judicial review. Flying Tiger Line. Inc., No. 86-304, mem. op. at 2(D. Del. Oct. 17, 1986). We will affirm the district court's reconsidered conclusion.

Tiger claims that its precarious financial position will be jeopardized by the plans' assertion of withdrawal liability. Tiger's creditors are presumably aware, however, of these liability assertions by the plans. Any impact on creditors' perceptions of Tiger's fiscal health should therefore not vary with the actor who resolves this dispute. Tiger also argues that, if it is forced to arbitrate its claim, the plans will demand interim payments pursuant to MPPAA section 1401(d). As the district court noted, however, section 1401(d) is not self-enforcing. Even if the plans succeed in winning an arbitrator's judgment, they would still have to obtain a court order to compel payments form Tiger. See United Retail & Wholesale Employees Teamsters Union Local No. 115 v. Yahn & McDonnell, Inc., 787 F.2d 128, 134 (3d Cir. 1986), aff'd per curiam by an equally divided court sub nom. Pension Benefit Guar. Corp. v. United Retail & Wholesale Employees Teamsters Union Local No. 115 Pension Plan, 481 U.S. 735, 107 S. Ct. 2171, 95 L. Ed. 2d 692 (1987). At that point in time, Tiger could present evidence that it faced irreparable injury. Further, the mere possibility of such a court decision concerning interim payments has no independent legal effect of the question whether Tiger's dispute is to be arbitrated; the possibility that a court may in the future deny a fund's request to compel payments, based upon an employer's demonstration of irreparable injury and the court's preliminary review of the merits, does not determine whether the underlying dispute must, by law, be arbitrated.*fn18

B. Questions of Statutory Interpretation

The Supreme Court has held that the requirements of the exhaustion doctrine are also not applicable where the question is "solely one of statutory interpretation . . . [and the resolution of the] issue does not require any particular expertise on the part of the [arbitrator] . . . ." McKart v. United States, 395 U.S. 185, 197-98, 23 L. Ed. 2d 194, 89 S. Ct. 1657 (1969); accord Dorn's, 787 F.2d at 903 ("arbitration may be bypassed when the district court faces only questions of statutory interpretation").*fn19 Under this second exception to exhaustion doctrine, Tiger argues that Count I of its complaint should be decided by a court because it raised questions of statutory interpretation.

The factors that led this Court in Dorn's to bypass arbitration are not present in the case at bar. The dispute there focused on whether a withdrawal occurred when a contributing employer and principal stockholder sold all of his stock to a corporation that continued to make contributions to the same multiemployer pension plans pursuant to an identical collective bargaining agreement. 787 F.2d at 901. The Dorn's issue arose under MPPAA section 1398, which states that,

notwithstanding any other provision of this part, any employer shall not be considered to have withdrawn form a plan solely because

(1) an employer ceases to exist by reason of

(a)

a change in corporate structure described in Section 1362(d) of this title

29 U.S.C. § 1398 (1982). Accordingly, one of the issues decided in 'Dorn's was whether the requirements of MPPAA section 1362(d)*fn20 had been satisfied. Our analysis of that provision did not, however, contravene the clear mandate of MPPAA section 1401 to arbitrate disputes that arise under sections 1381 through 1399. In addition, while the funds in Dorn's alleged that discovery was necessary to prove whether the transaction violated the good faith requirement of § 1392(c), it was undisputed that the stock purchaser was unaware that the seller was attempting to escape withdrawal liability. See supra note 16. We concluded that, "since the . . . transaction did not involve the kind of bad faith addressed by § 1392[(c)], there was no disputed issue of material fact." Dorn's, 787 F.2d at 902. In reaching the merits of the dispute, we therefore emphasized that it "was a rare case in which there was no need for the development of a factual record . . . . " Id. at 903 (emphasis added).

Our case differs form Dorn's in two significant respects. First, as we have noted throughout this opinion, the statutory interpretation in this case involves only a MPPAA section that Congress explicitly reserved for arbitration. Second, the district court here concluded that "the present factual submissions and allegations before the Court indicate that there is a genuine factual dispute surrounding the [bona fides of the] 1985 transaction."*fn21 Flying Tiger Line, Inc., No. 86-304, mem. op. at 8 (D. Del. Oct. 17, 1986). By contrast, Dorn's -- and the other decisions Tiger has cited as supporting its position that the district court, and not an arbitrator, should address this dispute in the first instance -- concerned a set of undisputed facts that allowed the court to identify the MPPAA employer therein as a matter of law.*fn22

This Court has recently reaffirmed that, under MPPAA, "determinations of fact . . . are well within the province of an arbitrator." Warner-Lambert Co., Inc. v. United Retail & Wholesale Employee's Teamster Local No. 115 Pension Plan, 791 F.2d 283, 288 (3d Cir. 1986). In addition, even when a dispute raises a mixed question of law and fact, the Act's statutory framework dictates that arbitration should be the initial forum for dispute resolution. "The fact that the arbitrator will ultimately have to apply the statute to the facts it finds does not render these issues inappropriate for arbitration in the first instance." Id. Distinctions between questions of fact and law are, after all, often rather tenuous,*fn23 and MPPAA's language and purposes convince us that any doubt concerning fact/law differentiation as a means of determining whether arbitration is appropriate should be resolved in favor of arbitration. MPPAA section 1401, for instance, does not differentiate between legal and factual questions; it simply dictates that "any dispute between and employer and the plan sponsor. . . shall be resolved through arbitration." 29 U.S.C. § 1401 (1982) (emphasis added). In accordance with such a clear statutory directive, we conclude that "whether an employer's defense is a question of fact, or of law, or a mixed question of fact and law, is often difficult to discern, and should not be left for the employer itself to decide in the first instance." Chipman Trucking, 8 Employee Benefits Cas. (BNA) at 1261.

The District of Columbia Circuit recently held that when MPPAA provisions earmarked for arbitration are involved in a dispute, questions of statutory interpretation should not alter the forum for dispute resolution. "From the unambiguous language by which Congress established the primacy of arbitration in withdrawal liability disputes and in light of our decisions interpreting those terms, it should be beyond cavil that the existence of an issue of statutory interpretation, standing alone, does not justify bypassing arbitration." I.A.M. Nat'l Pension Fund, Plan A, A Benefits v. Clinton Engines Corp., 263 U.S. App. D.C. 278, 825 F.2d 415, (D.C. Cir. 1987) ("Clinton Engines"); accord Republic Indus., Inc. v. Teamsters Joint Council No. 83 of Va. Pension Fund, 718 F.2d 628, 635 (4th Cir. 1983) (MPAA requires that "a nice [mixed] question of fact and law" must be decided by an arbitrator), cert. denied, 467 U.S. 1259, 82 L. Ed. 2d 855, 104 S. Ct. 3553 (1984); Chipman Trucking, 8 Employee Benefits Cas. (BNA) at 1262 ("The purposes of the arbitration requirement are best served by the parties resorting first to arbitration, even where one of the parties believes the issues are limited to statutory interpretation."); Combs v. Pelbro Fuel, Inc., No. 83-1524, mem. op. at 14 (D.D.C. Nov. 15, 1984) (". . . . Congress has devised an elaborate statutory scheme for resolving disputes that may arise over the determinations and amounts of withdrawal liability. To permit an employer to stylize his [or her] claim into a 'question of law' and thereby bypass this framework would surely frustrate the intent of Congress and should not be sanctioned by the courts.").*fn24

V. CONCLUSION

For the foregoing reasons, we will affirm the district court's order staying Count I of Tiger's complaint pending MPPAA arbitration.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.