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Galgay v. Beaverbrook Coal Co.

January 29, 1997

FRANK J. GALGAY; FRANCIS P. BONNER, TRUSTEES OF THE ANTHRACITE HEALTH AND WELFARE FUND (PENSION TRUST); ANTHRACITE HEALTH AND WELFARE FUND (PENSION TRUST), APPELLANTS

v.

BEAVERBROOK COAL COMPANY; GEORGE HUSS JR.; WILLIAM HUSS; HUSS INDUSTRIES, INC. APPELLEES



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA D.C. Civ. Action No. 95-00433

BEFORE: BECKER, NYGAARD AND LEWIS, Circuit Judges

Nygaard, Circuit Judge.

Argued June 28, 1996

Filed January 29, 1997)

This appeal stems from appellants' action to compel Beaverbrook Coal Company, George Huss, Jr., William Huss and Huss Industries, Inc. to make interim withdrawal liability payments while the parties arbitrate liability. The district court denied appellants' motion for injunctive relief and their motion for reconsideration. We will reverse and remand.

I.

Appellants are trustees of the Anthracite Health and Welfare Fund and the fund itself (collectively, the "Fund"), a multiemployer pension plan under the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. Section(s) 1381 et seq. The Beaverbrook Coal Company, a signatory to the Anthracite Wage Agreement, is a general partnership consisting of George Huss, Jr. and William Huss. Huss Industries, Inc. is a Pennsylvania corporation. Beaverbrook, George and William Huss, and Huss Industries are all appellees.

For over ten years, Beaverbrook made payments to the Anthracite Health and Welfare Fund Pension Plan. In August of 1994, the Fund notified Beaverbrook that it had effectively withdrawn from the Fund on June 15, 1993. The Fund subsequently assessed Beaverbrook withdrawal liability in the amount of $146,242.00, to be paid in monthly installments of $1,966.17. Beaverbrook initiated arbitration proceedings to contest the Fund's claim. Because Beaverbrook refused to make withdrawal liability payments in the interim, the Fund sued under 29 U.S.C. Section(s) 1132(g)(2) to recover the delinquent payments, liquidated damages, attorney's fees and costs. The Fund also sought an order directing appellees to make monthly payments and to provide a bond in the total amount of the withdrawal liability. One month later the Fund requested the same relief by a motion for a mandatory preliminary injunction.

The district court denied both the Fund's motion for a preliminary injunction and its motion for reconsideration. Noting the employer's "compelling obligation to make interim payments" under MPPAA, the court nonetheless held that the Fund had failed to demonstrate that it would suffer irreparable harm if temporary relief were not granted. The district court further indicated that Beaverbrook might not be obligated to make interim payments when the merits of the Fund's claim were considered if Beaverbrook showed that it would suffer irreparable harm as a result. Finally, the court declined to rule on whether all of the defendants were employers for purposes of MPPAA and, consequently, obligated to satisfy Beaverbrook's withdrawal liability, holding that Flying Tiger Line v. Teamsters Pension Trust Fund of Philadelphia, 830 F.2d 1241 (3d Cir. 1987) mandated that the issue be addressed first in arbitration.

On appeal, the Fund argues that it need not satisfy the traditional requirements for a preliminary injunction because, under MPPAA, employers are required to make interim payments, so the Fund need show only that payments were not made when demanded. The Fund also disputes the district court's suggestion that Beaverbrook may avoid making interim payments if it can demonstrate that it would be irreparably harmed as a result. In addition, the Fund contends that under Flying Tiger the court must decide whether all of the appellees are considered employers for purposes of MPPAA, since the answer to that question determines the arbitrator's jurisdiction. The issues appellant raises are legal questions over which we exercise plenary review; we will consider each in turn.

II.

An employer withdraws from a multiemployer pension plan when the employer either permanently ceases to have an obligation to contribute under the plan or permanently ceases all covered operations under the plan. 29 U.S.C. Section(s) 1383(a). The employer is liable for its share of the plan's unfunded vested benefits as calculated at the time of withdrawal. 29 U.S.C. Section(s) 1381, 1383, 1391; Concrete Pipe & Products v. Construction Laborers Pension Trust, 508 U.S. 602, 609, 113 S. Ct. 2264, 2272 (1993). The plan sponsor has the responsibility of determining this withdrawal liability, notifying the employer and collecting payment. 29 U.S.C. 1382. If the employer disputes the amount set, it may ask the plan sponsor to conduct a reasonable review of the computed liability. 29 U.S.C. Section(s) 1399(b)(2)(A). In the event the dispute is unresolved, either party may request arbitration. 29 U.S.C. Section(s) 1401(a)(1). The arbitrator's award, in turn, may be challenged in federal court. 29 U.S.C. Section(s) 1401(b)(2).

Congress enacted MPPAA out of concern that multiemployer pension plans would collapse as employers withdrew if the remaining contributors became too few in number to pay the unfunded vested benefits. See H.R. Rep. No. 869, Pt. II, 96th Cong., 2d Sess. 10-11 (1980), reprinted in 1980 U.S.C.C.A.N. 2918, 3000-01. Congress foresaw that the purpose of MPPAA would be undermined if employers could postpone paying their debts to pension funds by engaging in protracted litigation over withdrawal liability. Pantry Pride, Inc. v. Retail Clerks Tri-State Pension Fund, 747 F.2d 169, 171 (3d Cir. 1984) (citing Senate Comm. on Labor and Human Resources, Summary and Analysis of S. 1076, 96th Cong., 1st Sess. (1980), reprinted in Special Supp. 310, Pens.Rep. (BNA) 81, 84-85 (1980); H.R. Rep. No. 869, reprinted in 1980 U.S.C.C.A.N. at 2952). Therefore, the statute directs employers to begin payments upon notification of withdrawal liability, whether or not they choose to dispute the determination.

Section 4219(c)(2) of MPPAA states:

Withdrawal liability shall be payable in accordance with the schedule set forth by the plan sponsor . . . beginning no later than 60 days after the date of the demand notwithstanding any request for review or appeal of determinations of the amount of such liability or of the schedule. 29 U.S.C. Section(s) 1399(c)(2).

Similarly, Section(s) 4221(d) of MPPAA, 29 U.S.C. 1401(d), specifies that payments are to be made during arbitration. Should the arbitrator decide that the plan sponsor erred in assessing withdrawal liability, the employer is reimbursed for any overpayment. Id.

When an employer fails to make a withdrawal liability payment within the prescribed time, an action may be brought in federal or state court to compel payment. 29 U.S.C. Section(s) 1451(b) & (c). The plan sponsor need show only that it made a demand for interim payments ...


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