ROBERT F. KELLY, Senior District Judge.
Presently before the Court are two Motions for Summary Judgment. Plaintiffs Roofers Local No. 30 Combined Pension Fund, and its Board of Trustees and fiduciary Michael O'Malley (collectively, the "Fund") move for summary judgment against Defendant D.A. Nolt ("Nolt") and to dismiss all counterclaims in this action. Nolt filed a Cross-Motion for Summary Judgment against the Fund seeking to enforce a March 5, 2009 Opinion and Award ("Arbitration Decision") and a June 20, 2009 Final Award ("Final Award") of Arbitrator Ira F. Jaffe, Esquire (the "Arbitrator") resulting from arbitration conducted pursuant to 29 U.S.C. § 1401(a), and awarding attorneys fees and costs pursuant to 29 U.S.C. § 1451(e).
This is an appeal by a multiemployer pension fund of the determination made at statutory arbitration that an employer owed no withdrawal liability under the Multiemployer Pension Plan Amendments Act of 1980 (the "MPPAA"). This is the last of three related legal disputes involving the Fund which arose out of the former relationship between Nolt and Local Union 30 ("Local 30").
Nolt is a corporation that performs commercial roofing work. Local 30 is a labor union. Nolt was also a member of the Roofing Contractors Association (the "RCA"), a multi-employer association of commercial roofing contractors that exists primarily to conduct negotiations for collective bargaining agreements with the Union on behalf of its members. Since 1993, the RCA has entered into numerous collective bargaining agreements with Local 30. These were made possible because the RCA was authorized by its members to negotiate with Local 30 on their behalf. Nolt joined the RCA in June 1999. At that time, Nolt signed a Bargaining Agent Authorization ("BAA"), which authorized the RCA to serve as Nolt's bargaining agent with Local 30. Under the terms of the 1999 BAA, Nolt could withdraw from the RCA, but had to do so at least ninety days before the expiration of the existing agreement.
In June 2000, ten months before the 1997-2001 Collective Bargaining Agreement ("CBA") was due to expire, Local 30 initiated negotiations with the RCA concerning the terms of a subsequent agreement. In July 2000, the RCA and Local 30 concluded negotiations for a successor CBA for the period May 1, 2001 to April 30, 2009, and the union membership ratified the CBA. On January 30, 2001, Nolt sent a letter to the RCA stating that it was exercising its right to withdraw from the RCA. Because this had been the procedure for withdrawal under the terms of the 1999 BAA, Nolt asserted that this was proper notice of withdrawal. Consequently, Nolt believed that it was not bound by the new 2001-2009 agreement.
On January 23, 2002, a hearing was held before an Administrative Law Judge ("ALJ") on the unfair labor charges that Local 30 had filed before the NLRB. The ALJ found for Nolt and determined that Nolt was not bound by the terms of the 2001-2009 agreement. Local 30 appealed the ALJ's decision to the NLRB. On December 15, 2003, a three-member panel of the NLRB overturned the ALJ's decision and found that Nolt was bound to the terms of the 2001-2009 CBA. Nolt appealed the Board's decision to the Court of Appeals for the Third Circuit. On May 4, 2005, the Third Circuit overturned the Board's decision and issued an opinion in favor of Nolt, finding that Nolt was not bound by the terms of the agreement.
As will be discussed, infra, this was not the Fund's first calculation of its withdrawal liability, but rather, a second revised calculation, and was more than six times greater than the Fund's prior 2002 calculation of $58,226. (Id., Ex. 79.) The Fund recalculated Nolt's withdrawal liability after a retroactive adjustment was made by the Fund's actuary that increased the Plan's 2000 schedule of unfunded vested benefit liabilities ("UVBLs"), or an excess of nonforfeitable benefits beyond the value of current fund assets, that is, benefits beyond the value of current fund assets by more than $10 million.
Nolt issued a demand for arbitration on December 26, 2006, and supplemented on January 7, 2007, challenging the amount of the Fund's withdrawal liability determination. (Id.) The parties agreed to arbitrate under the rules of the American Arbitration Association
The arbitration hearings were held on April 28, 2008 and May 15, 2008, and the Arbitrator issued a 64-page written decision on March 5, 2009 (the "Arbitration Decision"). The Arbitrator rejected each successive change in position that the Fund had taken with respect to Nolt's withdrawal liability. This restored the matter to the Fund's initial determination of Nolt's withdrawal liability of $58,226, which was derived from the calculation of $2.7 million in UVBLs for 2000.
The Arbitrator entered a Final Award on June 20, 2009. The Fund was directed to refund all of Nolt's payments, with statutory interest.
"Summary judgment is appropriate when, after considering the evidence in the light most favorable to the nonmoving party, no genuine issue of material fact remains in dispute and `the moving party is entitled to judgment as a matter of law.'" Fed.R.Civ.P. 56(c); Hines v. Consol. Rail Corp., 926 F.2d 262, 267 (3d Cir.1991) (citations omitted). The inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party carries the initial burden of demonstrating the absence of any genuine issues of material fact. Big Apple BMW, Inc. v. BMW of N. Am. Inc., 974 F.2d 1358, 1362 (3d Cir.1992). "A fact is material if it could affect the outcome of the suit after applying the substantive law. Further, a dispute over a material fact must be `genuine,' i.e., the evidence must be such `that a reasonable jury could return a verdict in favor of the non-moving party.'" Compton v. Nat'l League of Prof'l Baseball Clubs, 995 F.Supp. 554, 561 n. 14 (E.D.Pa.1998), aff'd 172 F.3d 40 (3d Cir.1998) (citations omitted).
Once the moving party has produced evidence in support of summary judgment, the non-moving party must go beyond the allegations set forth in its pleadings and
The MPPAA amended ERISA to provide for "withdrawal liability." When an employer makes a "complete withdrawal" from a multiemployer pension plan, and that plan carries UVBLs or an excess of nonforfeitable benefits beyond the value of current fund assets, the employer may be responsible for its pro rata share of that plan's UVBLs. See 29 U.S.C. §§ 1383, 1391(b) and 1393(c). As noted, an employer's obligation to pay its proportional share of UVBLs is referred to as its withdrawal liability.
Before it was enacted, "many employers were withdrawing from multiemployer plans because they could avoid withdrawal liability if the plan survived for five years after the date of their withdrawal," and Congress was concerned "`that ERISA did not adequately protect multiemployer pension plans from the adverse consequences that result when individual employers terminate their participation or withdraw.'" SUPERVALU, Inc. v. Bd. of Trs. of Sw. Pa. & W. Md. Area Teamsters & Employers Pension Fund, 500 F.3d 334, 336 (3d Cir.2007) (quoting Warner-Lambert Co. v. United Retail & Wholesale Employee's Local No. 115 Pension Plan, 791 F.2d 283, 284 (3d Cir.1986)). The MPPAA was therefore enacted and "designed `(1) to protect the interests of participants and beneficiaries in financially distressed multiemployer plans, and (2) to encourage the growth and maintenance of multiemployer plans in order to ensure benefit security to plan participants.'" Bd of Trs. of Trucking Employees of N. Jersey Welfare Fund, Inc.—Pension Fund v. Centra Inc., 983 F.2d 495, 504 (3d Cir. 1992); see also Vornado, Inc. v. Trs. of the Retail Store Employees' Union Local 1262, 829 F.2d 416, 420 (3d Cir.1987) ("[T]he amendments as a whole clearly were meant to facilitate effective plan management and protect the interests of beneficiaries and participants."); Bd of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 168 (3d Cir.2002) (explaining that the MPPAA works to "protect the retirement benefits of covered employees"); IUE AFL-CIO Pension Fund v. Barker & Williamson, Inc., 788 F.2d 118, 127 (3d Cir.1986) ("Courts have indicated that because ERISA (and the MPPAA) are remedial statutes, they should be liberally construed in favor of protecting the participants in employee benefit plans.").
To accomplish these goals, the MPPAA "requires that a withdrawing employer pay its share of the plan's unfunded liability," which "insures that the financial burden will not be shifted to the remaining employers" in the fund. SUPERVALU, 500 F.3d at 337; see also 29 U.S.C. § 1381(a); Foodtown, 296 F.3d at 168 ("[T]he MPPAA requires employers who withdraw from underfunded multiemployer pension plans to pay a withdrawal liability."). The pension fund "determine[s] whether withdrawal liability has occurred and in what amount." SUPERVALU, 500 F.3d at 337 (citing 29 U.S.C. §§ 1382, 1391). Under 29 U.S.C. § 1383(a), a "complete withdrawal ... occurs when an employer(1)
In addition, a multiemployer pension plan is vested with the power under the MPPAA to determine when there is a complete withdrawal, to calculate the amount of withdrawal liability and the schedule of payments, and to demand and collect withdrawal liability in accordance with its determination. See 29 U.S.C. §§ 1382 and 1399(b)(1).
It is clear that, in arbitration under the MPPAA, the Arbitrator's factual findings are presumed to be correct and are "rebuttable only by a clear preponderance of the evidence." 29 U.S.C. § 1401(c); Huber v. Casablanca Indus., Inc., 916 F.2d 85, 89-90 (3d Cir.1990); United Retail & Wholesale Employees v. Yahn & McDonnell, Inc., 787 F.2d 128, 135 n. 9 (3d Cir.1986). The "clear preponderance" language of the statute has been used interchangeably with "clear error." See, e.g., Santa Fe Pac. Corp. v. Cent. States, Se. & Sw. Areas Pension Fund, 22 F.3d 725 (7th Cir.1994). "A finding is clearly erroneous if the reviewing court, after duly acknowledging the superior proximity of the factfinder to the witnesses, is firmly convinced that the finding is erroneous." Santa Fe, 22 F.3d at 727 (citing Concrete Pipe & Prods., Inc. v. Constr. Laborers Pension Trust, 508 U.S. 602, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993)).
Moreover, reviewing courts must give great deference to an arbitrator's determination because of the MPPAA's strong policy favoring arbitration of withdrawal liability disputes. Mason & Dixon Tank Lines, Inc. v. Central States Pension Fund, 852 F.2d 156, 163-64 (6th Cir.1988) (stating that arbitration is the "preferred method" for resolving withdrawal liability disputes and that "under the MPPAA `arbitration reigns supreme'"). In Sherwin-Williams Co. v. N.Y. State Teamsters Conference Pension, Ret. Fund, the court stated that:
158 F.3d 387, 392-93 (6th Cir.1998); see also Board of Trs., Mich. United Food & Commercial Workers Unions v. Eberhard Foods, Inc., 831 F.2d 1258, 1260 (6th Cir. 1987). Furthermore, deference to the findings of the arbitrator is proper because the arbitrators chosen to resolve the complicated issue of withdrawal liability often have relevant expertise in the field of pension law which can contribute significantly to the accuracy of a decision. Sherwin-Williams, at 392-93.
The Arbitrator's legal conclusions are reviewed de novo.
As already noted, the parties have both filed Motions for Summary Judgment and have filed extensive briefs in support of their Motions.
As detailed above, for a number of years, Nolt was a member of the RCA, a multiemployer association that bargained for new CBAs with the Roofer Union. Nolt was a signatory to the 1997 to 2001 CBA. In July 2000, a new eight-year CBA was ratified by the Union membership and Nolt accepted the CBA. However, ninety days before the expiration of the 1997-2001 CBA, Nolt advised the RCA that it was withdrawing from the RCA. The Fund brought unfair labor practices against Nolt with the NLRB. An ALJ found no violation of the MPPAA by Nolt's behavior. A split Board panel reversed and the Third Circuit eventually reversed the Board finding that Nolt's withdrawal from the RCA was proper and that Nolt was not bound by the 2001-2009 CBA.
Also, as noted earlier, on May 1, 2006, the Fund issued a notification to Nolt that it owed withdrawal liability based on Nolt making a complete withdrawal from the Roofers Local 30 Combined Pension Plan (the "Plan") during the 2001 Plan year. The Fund calculated the withdrawal liability to be $370,327 (Pls.' Mot. Summ. J., Ex. 49.) This, however, was not the Fund's first calculation of Nolt's liability. Rather, it was the Fund's second "revised" calculation because in 2002 the Fund had previously calculated the withdrawal liability to be $58,226. (Id., Ex. 76.) Thereafter, Nolt issued a timely "Request for Review" of the Fund's Withdrawal Liability Demand,
Subsequent to the arbitration, the Fund presented for the first time in its post-hearing brief, a fourth and fifth position on the amount of withdrawal liability owed by Nolt. The Fund's new theory claimed that Nolt should be found to have withdrawn from the Fund in 2005 and that Nolt owed either $706,816 or $831,248 in withdrawal liability.
The Arbitrator determined that there are both procedural and substantive reasons why Nolt must be deemed to have withdrawn in 2001 and why the allocation of UVBLs must take place as of December 31, 2000. The Arbitrator rejected the assertion of the Fund that the withdrawal should have taken place in 2005. We agree and find that the presumption of correctness of the Arbitrator's factual determinations with regard to this issue has not been overcome by "a clear preponderance of the evidence." In addition, our de novo review of the legal findings of the Arbitrator find no error.
In his decision, the Arbitrator determined that the Fund was estopped from changing its position during the course of the arbitration that Nolt's withdrawal date should be 2005 and not 2001, as it had asserted up to the arbitration. The Arbitrator noted that the Fund assessed withdrawal liability based upon a 2001 withdrawal date both in its May 2006 Demand for Withdrawal Liability, and thereafter, in its March 2008 recalculated demand. The Arbitrator emphasized that all of the facts that the Fund relied upon in favor of a 2005 withdrawal date existed and were known to the Trustees of the Fund in May 2006 when the original Demand for Withdrawal Liability was issued. (Arbitration Decision at 12.) The Arbitrator further based his decision on the fact that:
(Id. at 12-13.)
Thus, the Arbitrator ruled that the date of Nolt's withdrawal was not a determination appealable to him for resolution under the MPPAA because the Fund had determined that Nolt made a complete withdrawal in 2001 in its May 1, 2006 demand.
We agree with the Arbitrator's findings of fact that the Fund's prior actions were inconsistent with its newly announced position of a 2005 withdrawal because the Fund had not rescinded its Demand based on a 2001 withdrawal. Moreover, the Fund did not refund Nolt's withdrawal liability payments based on a purported 2005 withdrawal date. We also agree that the Fund had been aware of all of the facts relied upon in arguing for a 2005 withdrawal date for more than three years since the Third Circuit decision, yet as late as the eve of the arbitration hearing, when the Fund changed its position and adopted the position in the March 18, 2008 McKeough Report, the Fund still utilized a 2001 withdrawal date.
As noted earlier, the MPPAA gives a plan statutory power to unilaterally determine by issuance of written notice that a complete withdrawal has occurred, when such had occurred, the amount of withdrawal liability and the schedule of payments. See 29 U.S.C. § 1399(b)(1). Such a determination binds an employer to commence payments, strictly according to the plan's determination, under the MPPAA. The "pay now, dispute later" principle of the MPPAA is well established. 29 U.S.C. § 1399(c)(2)
An employer has limited rights under the MPPAA to challenge a plan's statutory power. An employer may request the plan's review of any aspect of its withdrawal liability which the Fund may handle as it sees fit and it is only obligated to inform the employer of its decision and explain any change it may choose to make. See 29 U.S.C. § 1399(b)(2). In addition, an employer may appeal through arbitration any determination made by a plan under 29 U.S.C. §§ 1381 to 1399. See 29 U.S.C. § 1401(a)(1).
Here, the Fund determined that Nolt made a complete withdrawal in 2001 and owed withdrawal liability in the amount of $370,327. Nolt was legally obligated to make payments according to the payment schedule, and if it disagreed with the amount and/or any other decision the Fund had made in coming to its determinations, including the withdrawal date, its only avenue was to appeal through arbitration. Nolt did seek arbitration and challenged the amount of the withdrawal liability and payment schedule, however, it did not challenge the Fund's determination that it made a complete withdrawal in 2001. Thus, Nolt proceeded through the arbitration process, as it was required to do so under the MPPAA, to challenge decisions made by the Fund and all decisions made by the Arbitrator at that time were made with the assumption that there
The Arbitrator also determined that "even if the matter were properly subject to redetermination based solely upon the assertion of Counsel, the record is clear that the Employer withdrew in May 2001." (Arbitrator Decision at 13). We agree. Contributions were last made when the 1997-2001 agreement expired and contributions thereafter were not made due to an ongoing labor dispute. There is no record evidence that Nolt was ever required to continue to contribute to the Fund after the expiration of the 1997-2001 CBA. There was also never a claim made by the Fund that even if Nolt properly withdrew from the RCA and was not bound by the 2001-2009 Agreement, "it still was required to make contributions to the Fund as a result of the obligation under federal labor law to continue the status quo until changed as a result of impasse following good faith bargaining." (Id.) In addition, the Fund has provided no evidence of a successor CBA providing for the making of contributions to the Fund. Moreover, as pointed out by the Arbitrator:
(Id. at 13-14.) Thus, we agree with the Arbitrator that the Fund's own actions substantiate a withdrawal date of 2001 and that the record contains no convincing evidence of a 2005 withdrawal date.
The next issue for review involves the Arbitrator's determination that the Fund improperly treated a number of benefits as "nonforfeitable," and therefore, improperly included them in the valuation of the Fund's UVBLs. We include the following background before specifically addressing this issue.
Nolt asserts that it bears no obligation under the MPPAA to pay withdrawal liability unless the Fund had UVBLs in the relevant plan years that Nolt participated in the Fund. Nolt states that the Fund's initial calculation in 2002 of Nolt's withdrawal liability of $58,226 was based upon the Fund's actuarial reports reflecting the existence of $2.7 million in UVBLs in 2000, the only relevant Fund year where there were UVBLs. Nolt asserts that there were no UVBLs in 2000 because the Plan actuary improperly included more than $8.5 million in benefits in the schedule of UVBLs, and as such, there was never any basis to assess any withdrawal liability under the MPPAA. (Def.'s Mot. Summ. J. at 22.)
The MPPAA provides that an employer is liable for its pro rata share of the unamortized amount of the change in the
The calculation of a plan's UVBLs is based, in relevant part, upon the value of the plan's "nonforfeitable benefits." See 29 U.S.C. § 1393(c). The MPPAA defines a nonforfeitable benefit as:
29 U.S.C. § 1301(a)(8).
"Vested benefits" carried by a plan are not the same as its "nonforfeitable benefits." In his decision, the Arbitrator cited PBGC Opinion Letter 91-2, explaining the difference between the two:
(Arbitration Decision at 35.) Nolt asserts that "in sum, the existence and amount of a plan's UVBLs depends upon the value of its nonforfeitable benefits." (Def.'s Mot. Summ. J. at 23-24.) We now turn to the issue of whether the Fund properly included certain forfeitable benefits in the calculation of the UVBLs.
The Arbitrator determined that the Fund included $8.5 million in benefits that were "nonforfeitable" in its schedule of Plan year 2000 UVBLs.
In coming to these determinations, the Arbitrator applied the plain language of the MPPAA which provides that a benefit is nonforfeitable only when a participant has "satisfied the conditions for entitlement under the plan." See 29 U.S.C. § 1301(a)(8). In support of its position, the Fund relies largely upon a decision out of the Northern District of California, United Foods, Inc. v. Western Conference of Teamsters Pension Trust Fund, 816 F.Supp. 602 (N.D.Cal.1993), aff'd 41 F.3d 1338 (9th Cir.1994). Nolt relies primarily upon a series of Pension Benefit Guarantee Corporation ("PBGC")
Id. at 104-05.
The court in United Foods came to the opposite conclusion of Huber. There, the court found that survivor/death benefits were nonforfeitable, not withstanding the facts that the participant had not died as of the valuation date. The court reasoned that "the employee's death is [not] a condition for entitlement to death benefits because the participant does not have to die to be entitled to the type of death benefits in this case . . . death is simply the time at which vested benefits are paid out to the beneficiaries of plan participants." 816 F.Supp. at 608. The Arbitrator carefully considered the United Foods decision when he set forth his reasoning for rejecting its holding:
(Arbitration Decision at 39-40.)
Likewise, in a de novo review of this issue, we come to the same legal conclusions as the Arbitrator and find no need to reiterate the above sound reasoning of the Arbitrator. We, too, find that the Third Circuit's decision in Huber supports a determination that the Fund improperly treated the benefits at issue as "nonforfeitable" and, therefore, improperly included them in the valuation of the Fund's UVBLs.
Moreover, arbitration testimony from the Fund's own actuary and expert at the arbitration is perhaps most damaging to the Fund's position that the findings of the Arbitrator were in error with regard to the instant issue. The Fund's actuary, McKeough, candidly admitted the difficulty in this area in determining which types of benefits are "nonforfeitable," which ones are "vested" and which get included in withdrawal liability calculations.
McKeough testified at the arbitration hearing:
(Pls.' Mot. Summ. J., Ex. 111 at 236 (emphasis added).) It is apparent that in light of such an acknowledgment that it would be difficult for the Fund to make any kind of convincing argument that the Arbitrator somehow erred in finding that the Fund included $8.5 million in benefits that were "nonforfeitable" in its schedule of 2000 UVBLs. Accordingly, in light of our circuit's decision in Huber and McKeough's testimony, we find no error in the Arbitrator's factual and legal conclusions.
In the course of his preparation of the Plan's 2002 actuarial report during 2003, the Plan actuary, McKeough, discovered a "programming error" which he claimed had understated the Plan's UVBLs by more than $10 million dollars. (Pls.' Mot. Summ. J., Ex. 79.) McKeough
McKeough stated in a letter to the Fund dated October 3, 2003:
(Pls.' Mot. Summ. J., Ex. 79.) As a result, McKeough claimed that the UVBLs were understated by about $3.3 million for the 1999 Plan year and $7.0 million in the 2000 Plan year. (Id., Ex. 81.)
The Arbitrator determined that the Fund's attempt to retroactively increase the schedule of 1999 and 2000 UVBLs was not permitted under the MPPAA. The Arbitrator based his decision on the PBGC's interpretation of the MPPAA and the facts of this case.
The Arbitrator opined:
(Arbitration Decision at 28-29.)
The Fund argues that the Arbitrator's conclusions ignore the Supreme Court's holding in Concrete Pipe "that IRS rules on minimum funding methods under 26 U.S.C. § 412 are expressly authorized as the default rules on withdrawal liability under 29 U.S.C. § 1393(b)(1)." (Pls.' Mot. Summ. J. at 56-57.) The Fund asserts that:
(Id. at 52.)
However, Nolt argues that the Arbitrator did not ignore any ruling in Concrete Pipe which would have a legal effect upon the instant issue. Nolt asserts that Concrete Pipe makes no mention of this IRS provision as cited by the Fund anywhere in the Court's opinion, and specifically, does not address the issue of retroactively increasing UVBLs. (Def.'s Mot. Summ. J. at 40.) We agree. We find nothing in Concrete Pipe that supports a finding that the Arbitrator erred in finding that the Fund's attempt to retroactively increase the schedule of 1999 and 2000 UVBLs was not permitted under the MPPAA. Instead, we read Concrete Pipe as primarily addressing an employer's constitutional challenge to the MPPAA and not addressing the issue of retroactive increase to a schedule of UVBLs.
The Fund next claims that the Arbitrator erred in relying on PBGC Letters to support his decision and ignored inapposite IRS memoranda and directives. (Pls.' Mot. Summ. J. at 56-57.) The Fund specifically cites an IRS Technical Advice Memorandum ("TAM") in support of its position that the Arbitrator erred in determining that the Fund's attempt to retroactively increase the schedule of 1999 and 2000 UVBLs was not permitted under the MPPAA. However, the cited authority is unpersuasive. The Fund asserts that TAM 8831003, 1988 WL 572309 (April 25, 1988) explains the different rules on retroactivity for changes of assumptions and corrections of mistaken facts. This TAM determined that because a plan's deductable limit depends upon the methods, factors
(Id.) However, it is apparent that this TAM has no relevance to this case. As the Arbitrator recognized, the Plan never amended any Form 5500 to reflect the $10 million retroactive increase to the Fund's schedule of UVBLs. (Arbitration Decision at 28-29). The Arbitrator specifically stated that:
(Id. at 29-30.) In addition, the Fund has failed to explain in its Motion the significance of this TAM because the Fund never made any changes to any Form 5500 to correct McKeough's programming error. Furthermore, the Fund has failed to include any case as support for the legal significance that a federal court is to accord a TAM.
On the other hand, PBGC Letters are to be given "considerable weight." As noted earlier, the Supreme Court in Chevron stated that "[w]e have long recognized that considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer, and the principle of deference to administrative interpretations." 467 U.S. at 844, 104 S.Ct. 2778. Thus, the Arbitrator correctly gave considerable weight to PBGC's Opinion Letters 90-2 and 94-5 in supporting his legal conclusions.
In Opinion Letter 90-2, a plan reported that its actuary had reallocated, for the 1988 plan year, unfunded vested benefit liability for the 1980 through 1987 plan years based upon corrections to certain contribution and control group data. The plan inquired to the PBGC whether the unfunded vested benefit reallocation for those prior years could be applied to employers that had withdrawn or were currently paying or contesting withdrawal liability. The PBGC determined that no retroactive adjustments of UVBLs were permissible. (Pls.' Mot. Summ. J., Ex. 85.) PBGC Letter 90-2 states in relevant part:
(Id.)
In PBGC Opinion Letter 94-5, a plan asked for a clarification of "PBGC Opinion Letter 90-2 to the extent it addresses calculation of unfunded vested benefits for purposes of section 4211 of the Employee Retirement Income Security Act of 1974." (Id., Ex. 86.) The PBGC stated:
(Id.)
The PBGC then stated:
(Id.)
PBGC responded to the inquiry and clarified that Opinion Letter 90-2 was distinguishable because it precluded any retroactive increases to withdrawal liability and not the permissibility of refunds. It stated:
(Id.)
Thus, the Arbitrator's legal conclusions are supported by these Opinion Letters which he correctly gave "considerable weight." Chevron, 467 U.S. at 844, 104 S.Ct. 2778. Likewise, we give the Opinion Letters "considerable weight." Because our research also has found no convincing
At the Arbitration, for the first time, the Fund sought almost $175,000 in "pre-demand" interest for the period December 31, 2001 to July 1, 2007. The Fund sought this interest on the basis of the McKeough Report. The Arbitrator rejected this claim and the Fund challenges that decision here.
The Arbitrator's decision explains the background of this issue:
(Arbitration Decision at 54.) This claim, however, has no legal basis and is rejected.
In Huber, the Third Circuit addressed the issues of a fund's claim for both gap year interest
In support of its position that pre-demand interest is proper in this action, the Fund has cited a number of cases which it argues distinguishes Huber. We, however, disagree and find that none of the cases cited overturn and/or distinguish Huber's holding that the MPPAA does not provide for pre-demand interest. We will address several of these cases below.
The Fund first asserts that:
(Pls.' Mot. Summ. J. at 75.)
The Arbitrator noted in his opinion that the Fund relies upon language in Milwaukee Brewery that "discussed interest as part of the payment schedule and further discusses interest becoming payable after
Likewise, the other cases cited by the Fund to support its contention that pre-demand interest is allowable under MPPAA are misplaced. For example, the Fund cites Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corporation of California, Inc., The Court addressed the MPPAA's statute of limitations in connection with an action to collect withdrawal liability payments from the employer. 522 U.S. 192, 118 S.Ct. 542, 139 L.Ed.2d 553 (1997). The Fund asserts that this case reconfirmed the point that "[i]nterest accrues from the day of the plan year following withdrawal." 522 U.S. at 197, 118 S.Ct. 542. This quote, however, is misleading because a reading of this case indicates that the Court was only citing to Milwaukee Brewery in arriving at the proposition that "first year" interest is prohibited and referring to calculation of the payment schedule under 29 U.S.C. § 1399(c)(1)(A)(I). There is nothing in Bay Area Laundry that suggests that the MPPAA allows pre-demand interest.
The Fund also cites to Pension Benefit Guaranty Corporation v. Furlong Manufacturing Company, 590 F.Supp. 740 (E.D.Pa.1984), and Pension Benefit Guaranty Corporation v. Quimet Corporation, 711 F.2d 1085 (1st Cir.1983) in support of its position. However, the Fund has failed to assert any satisfactory explanation of how these decisions have any bearing upon "pre-demand" interest in connection with withdrawal liability and our reading of these decisions does not reveal one.
Presently before the Court is Plaintiffs Roofers Local No. 30 Combined Pension Fund, and its Board of Trustees and fiduciary Michael O'Malley's (collectively, the "Fund") Motion for Reconsideration of our decision granting Defendant D.A. Nolt Inc.'s ("Nolt") Motion for Summary Judgment and denying their own Motion for Summary Judgment for the reasons set forth below.
Nolt is a corporation that performs commercial roofing work. Local 30 is a labor union. Nolt was also a member of the Roofing Contractors Association, a multi-employer association of commercial roofing contractors that exists primarily to conduct, negotiations for collective bargaining agreements with the Union on behalf of its members. We will not recite the facts here, but rather, refer to the facts as outlined in our June 18, 2010 decision. See Roofers Local No. 30 Combined Pension Fund v. D.A. Nolt, Inc., No. 09-1445, 2010 WL 2527885, at *1-3 (E.D.Pa. June 18, 2010).
"The United States Court of Appeals for the Third Circuit has held that the purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence." Cohen v. Austin, 869 F.Supp. 320, 321 (E.D.Pa.1994). Accordingly, a district court will grant a party's motion for reconsideration in any of three situations: (1) the availability of new evidence not previously available, (2) an intervening change in controlling law, or (3) the need to correct a clear error of law or to prevent
The Fund asserts that the "Court takes a horrendous misstep in its ruling on the nonforfeitability of early retirement benefits, without apparent apprehension of the impact of its decision on the Pension Benefit Guaranty Corporation (PBGC) guaranty program and thousands of people whose pension benefits will only be provided by that program." (Pls.' Mot. Recons. at 4.) The Fund further claims that:
(Id.)
As noted above, we will grant a motion for reconsideration only for the (1) availability of new evidence not previously available, (2) an intervening change in controlling law, or (3) the need to correct a clear error of law or to prevent manifest injustice. Here, the Fund has offered no new evidence that was previously unavailable or alleged that there was an intervening change in the controlling law. Thus, the Fund has to establish that we need to correct a clear error of law or prevent manifest injustice. The Fund, despite its "doomsday" predictions concerning the results of our decision, has failed to establish either.
It must first be noted that our decision simply affirms the decision of the Arbitrator in this case. Here, we only determined that the Fund in this factual scenario improperly treated the benefits at issue as "nonforfeitable" and, therefore, improperly included them in the valuation of the Fund's unfunded vested benefit liabilities ("UVBLs").
In Huber, the Third Circuit upheld the arbitrator's determination that a lump sum benefit was not nonforfeitable under the MPPAA because death was a condition to entitlement, and had not been met in the facts of that case. The court specifically overturned the district court's reversal of the arbitrator on the basis that death was not a condition for entitlement to such benefits. Huber, 916 F.2d at 85. The Third Circuit held that its position was consistent with the position taken by the PBGC since 1975, as specifically codified by Congress in 1980 when it enacted the MPPAA. Id. at 104.
In its Motion for Reconsideration, the Fund has failed to cite any law that convinces this Court that we erred in relying on Huber and the PBGC Opinion Letters cited by the Arbitrator in determining that the Fund improperly treated the benefits at issue as "nonforfeitable" and, therefore, improperly included them in the valuation of the Fund's UVBLs.
The Fund next challenges our determination that the Fund's retroactive increase to the schedule of 2000 UVBLs was impermissible under the MPPAA. In a section of the Fund's brief headed "The Court Mistakenly Allows the Arbitrator to Overrule the Third Circuit and IRS," the Fund appears to argue that we: (1) erroneously bound the Fund to its first estimate of withdrawal liability; (2) denied it the opportunity of presenting alternative and inconsistent claims; and (3) failed to defer to IRS authority and misunderstood the nature of the Fund's tax filings. (Pls.' Mot. Recons. at 9.)
We first note that neither the Arbitrator nor this Court in our decision "bound" the Fund to its initial estimate of Nolt's withdrawal liability. In this litigation and before the Arbitrator, the Fund attempted to set forth four different withdrawal liability positions. It is apparent in our decision that we did not bind the Fund to any withdrawal date, but rather, rejected under the MPPAA the Fund's several withdrawal liability positions to retroactively increase the schedule for 1999 and 2000 UVBLs. The rationale for rejecting those positions was set forth in our decision, and we will not reiterate it here. Roofers Local No. 30 Combined Pension Fund, 719 F.Supp.2d 530, 546-51, 2010 WL 2527885, at *13-17. Moreover, the Fund has failed to provide any new evidence in order for this Court to correct a clear error of law or to prevent manifest injustice to warrant granting its Motion for Reconsideration on this issue. See Cont'l Cas. Co., 884 F.Supp. at 943.
Next, the Fund asserts that we denied it the opportunity of presenting alternative and inconsistent claims. The Fund argues that the "Court adopts the Arbitrator's conclusion that arbitration is `Heads I Win, Tails You Lose' game in which the Plan is unable to respond to employer claims by presenting evidence of alternative or inconsistent bases for liability." (Pls.' Mot. Recons. at 10.) This confusing and vague claim is baseless. As is evident in our decision, we painstakingly addressed all of the Fund's claims. The Arbitrator and this Court considered the Fund's several withdrawal liability positions and rejected them. Curiously in arguing this claim, the Fund asserts that the "Arbitrator's analysis was laid to rest, after his opinion, by Judge Stengel's decision" in Penske Logistics LLC v. Freight Drivers and Helpers
Likewise, we dismiss the Fund's other vague assertions that our decision failed to defer to IRS authority. In our decision, we considered and addressed the IRS Technical Advise Memoranda ("TAM") materials submitted by the Fund and found that they had no relevance to this case. Roofers Local No. 30 Combined Pension Fund, 719 F.Supp.2d at 548-49,-2010 WL 2527885, at *14-15. We rejected the TAMs and affirmed the Arbitrator for the reasons stated in our decision, including the fact that "PBCG Opinion Letters Nos. 90-2 and 94-5, read together, prohibit an after-the-fact change to unfunded vested benefit liabilities that will increase the withdrawal liability of a withdrawn employer." Id.
Lastly, the Fund asserts that our discussion of interest omits reference to "Ludlow Industries v. Pension Benefit Guaranty Corporation, 524 F.Supp. 155 (N.D.Ill. 1981), which found a right to interest on indistinguishable statutory language." (Pls.' Mot. Recons. at 18.) In our decision, we relied on Huber. In Huber, the Third Circuit addressed the issues of a fund's claim for both gap year interest
Ludlow clearly has no bearing upon the Huber decision. Ludlow involved completely different ERISA interest provisions that apply only in circumstances of a plan termination under 29 U.S.C. §§ 1362 and 1368. 524 F.Supp. 155. The Fund also again attempts to assert that the Supreme Court's ruling in Milwaukee Brewery Workers' Pension Plan v. Jos. Schlitz Brewing Co., 513 U.S. 414, 115 S.Ct. 981, 130 L.Ed.2d 932 (1995) somehow negates the rationale of Huber. However, as we discussed in our decision, Schlitz addressed only gap year interest, and thus, has no bearing on the issue of pre-demand interest.
We finally note again that the Fund's own actions indicate that it understood
(Arbitration Decision at 59.)
An appropriate Order follows.
Operating under this framework, the Third Circuit found that the actions of the RCA and Local 30, in conducting the negotiations in secret, constituted "collusion or conspiracy" under Chel LaCort. NLRB, 406 F.3d at 204. As such, the Third Circuit determined that these "unusual circumstances" justified Nolt's withdrawal from the RCA after it began negotiating with the Union. Id.
29 U.S.C. § 1399(b)(1).
(Arbitration Decision at 2-5.)
(Arbitration Decision at 63-64.)
(Arbitration Decision at 64.)
Id.
29 U.S.C. § 1399(c)(2).
(Arbitration Decision at 59.)
29 C.F.R. § 4219.31(d).