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.
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.
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  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.
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 ...