Galgay v. Beaverbrook Coal Co , 105 F.3d 137 ( 1997 )

Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit
1-29-1997
Galgay v. Beaverbrook Coal Co
Precedential or Non-Precedential:
Docket 95-7532
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THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 95-7532
__________
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)
__________
Argued June 28, 1996
__________
BEFORE: BECKER, NYGAARD AND LEWIS, Circuit Judges
(Opinion Filed January 29, 1997)
__________
A. Richard Caputo (Argued)
Thomas J. Mosca
Shea, Shea and Caputo
387 Wyoming Avenue
P.O. Box 2059
Kingston, Pa. 18704-2059
Counsel for the Appellants
Michael Beltrami (Argued)
1110 South Church Street
Hazleton, Pa. 18201
Counsel for the Appellees
Nygaard, Circuit Judge.
1
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. § 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withdrawn from the Fund on June 15, 1993.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.
§ 1132(g)(2) to recover the delinquent payments, liquidated
2
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
3
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. § 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. §§ 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. § 1399(b)(2)(A). In the event the
dispute is unresolved, either party may request arbitration. 29
U.S.C. § 1401(a)(1). The arbitrator's award, in turn, may be
challenged in federal court. 29 U.S.C. § 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
4
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. § 1399(c)(2). Similarly, § 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. § 1451(b) &
(c). The plan sponsor need show only that it made a demand for
5
interim payments under 29 U.S.C. § 1382 and that the payments
were not made.
Here, Beaverbrook does not dispute that withdrawal liability
payment was demanded, or that it has refused to comply with the
demand. Instead, it argues that a motion for preliminary
injunction is not a proper procedure for either compelling
payment or determining whether the appellees are all considered
employers for purposes of MPPAA. We reject its argument. The
denomination of the procedural vehicle is not important. It is
true that we often consider demands for interim withdrawal
liability payments after summary judgment. E.g., Board of
Trustees of Trucking Employees Pension Fund v. Centra, 983 F.2d
495 (3d Cir. 1992); United Retail & Wholesale Employees Teamsters
Union Local No. 115 Pension Plan v. Yahn & McDonnell, Inc., 787
F.2d 128 (3d Cir. 1986), aff'd, 481 U.S. 735 (1987).
Nonetheless, we have never foreclosed using preliminary
injunctive relief to ensure the payments mandated by Congress are
made.
For instance, in Pantry Pride, we heard an appeal from a
district court order denying a motion to compel withdrawal
liability payments, which we construed as an order denying a
preliminary injunction. 747 F.2d at 170-71. Although we held
that the district court should not have considered the motion
because the moving party in that action had not first made a
claim for interim payments, we indicated that the district court
would be free to consider a request for affirmative relief once
the claim had been made, since the court could then be certain
6
the employer had been afforded an opportunity to respond to the
motion and raise all defenses. Id. at 171-72. In this case, the
Fund acted as we directed in Pantry Pride, first filing a
complaint with a claim for interim payments, then making its
motion for a preliminary injunction.
The district court held that for the Fund to obtain
preliminary injunctive relief it must first meet the traditional
requirements we reiterated in Acierno v. New Castle County: 1) a
reasonable probability of eventual success in the litigation; and
2) irreparable injury if relief is not granted, while taking into
account when relevant; 3) the possibility of harm to other
interested persons from the grant or denial of the injunction
and; 4) the public interest. 40 F.3d 645, 653 (3d Cir. 1994)
(citing Delaware River Port Authority v. Transamerican Trailer
Transport, Inc., 501 F.2d 917, 919-20 (3d Cir. 1974)). The
district court found that any loss to the Fund could be measured
by economic terms; hence, the Fund would suffer no irreparable
injury. In so finding, the district court erred.
The traditional four-prong test for garden-variety
preliminary injunctions is not applicable in this context. In
enacting the interim withdrawal liability provisions of MPPAA, 29
U.S.C. §§ 1399(c)(2), 1401(d), and the judicial mechanism for
their enforcement, 29 U.S.C. § 1451(b) & (c), Congress has
effectively determined that pension funds will be irreparably
harmed unless employers are enjoined to make interim payments
while litigation proceeds. By enacting the withdrawal liability
provisions, Congress has concluded that the uninterrupted flow of
7
payments is important in itself, Pantry Pride, 747 F.2d at 171,
and that the ultimate recovery of payments will not suffice to
make the Fund whole. Congress has likewise determined that
neither party's probability of success in litigation is relevant:
interim payments must be made regardless.
Employers may be financially pressed to make sizeable
monthly payments to pension funds, and some courts when deciding
generally whether to order interim payment under 29 U.S.C. §
1381, have created an equitable exception to the requirement in
instances where the employer can show that it would suffer severe
financial hardship, and that the pension fund's claim is
frivolous or not colorable. See Trustees of Plumbers and
Pipefitters National Pension Fund v. Mar-Len, Inc., 30 F.3d 621,
626 (5th Cir. 1994); Trustees of the Chicago Truck Drivers
Pension Fund v. Rentar Industries, Inc., 951 F.2d 152, 155 (7th
Cir. 1991); see also Giroux Brothers Transportation, Inc. v. New
England Teamsters & Trucking Industry Pension Fund, 73 F.3d 1, 5
(1st Cir. 1996) (dictum). Similarly, the district court
indicated that, when considering the merits of the Fund's claim
for interim withdrawal liability payments, it might have the
equitable authority to refuse to order payments if Beaverbrook
showed that irreparable injury would result.
We have never held that there are any equitable exceptions
to the statutory provisions on interim payments, see Centra, 983
F.2d at 507-08,1 and we decline to do so now. Congress has
1
In Flying Tiger, 830 F.3d at 1253, we suggested in dictum
that a court could deny a pension fund's request upon an
employer's demonstration of irreparable injury. However, we went
8
clearly indicated its intent in this matter. The plain language
of the statute declares, "Withdrawal liability shall be payable
in accordance with the schedule set forth by the plan sponsor . .
. ." 29 U.S.C. § 1399(c)(2) (emphasis added). No exceptions are
provided. Our jurisdiction is limited to ordering the employer
to make interim payments once the pension fund has demonstrated
that it complied with the statutory requirements for calculating
liability and notifying the employer. 29 U.S.C. § 1382.
Notably, the two circuits which adopted an irreparable-
injury exception have later held that courts only have discretion
to exercise it once the employer has made an affirmative showing
that the pension fund lacks a colorable or non-frivolous claim.
Mar-Len, 30 F.3d at 626 (5th Cir.); Rentar Industries, 951 F.2d
at 155 (7th Cir.). These circuits have adopted the equitable
exception solely to ensure that the courts are not used by an
unscrupulous pension fund lacking a legitimate withdrawal
liability claim to squeeze money from an employer and propel it
into bankruptcy. Mar-Len, 30 F.3d at 626 (citing Trustees of
Chicago Truck Drivers Pension Fund v. Central Transport, Inc.,
935 F.2d 114, 119 (7th Cir. 1991)).
We do not now have occasion to consider adopting a similar
equitable exception. At no point in the argument of this case
has Beaverbrook contended that the Fund's claim is frivolous or
non-colorable, although supplemental briefs were submitted on the
on to say that any such potential defenses were irrelevant to the
issue in Flying Tiger, namely, whether the dispute in that case
had to be arbitrated.
9
very issue of possible equitable defenses to interim payment
liability. See Rentar Industries, 951 F.2d at 155 (holding that
the employer must make an affirmative showing that the pension
fund lacks a colorable claim). Nor did Beaverbrook submit any
evidence to support its claim of irreparable harm. See id.
(declaring the district court was not obligated to hold a hearing
so the employer could demonstrate irreparable harm when employer
offered no evidence to support its assertion).
We agree with the reasoning employed by the Fifth and
Seventh circuits in concluding that a showing of irreparable harm
to the employer is alone insufficient to warrant equitable relief
from interim payment liability. In both instances, these courts
of appeals have recognized that withdrawing employers are often
financially troubled companies. Mar-Len, 30 F.3d at 626; Central
Transport, 935 F.2d at 118-19. If such companies are allowed to
defer paying their debt to the pension funds, and go out of
business while liability is being litigated, the pension funds
will be saddled with full liability for the unfunded pension
benefits. The interim payment provisions are designed to
diminish this risk. Mar-Len 30 F.3d at 626; Central Transport
935 F.2d at 118.
We believe that it would contort the law if we were to allow
the undercapitalized or financially precarious companies that
pose the very risk to pension funds that MPPAA was designed to
correct to defer payment because they pose that risk. It is
inappropriate to refuse a preliminary injunction ordering interim
withdrawal liability payments on the grounds that the payments
10
might pose a financial risk to the employer.
Congress has effectively answered all the questions a court
generally asks when considering a motion for a preliminary
injunction. We will not substitute our own views on the wisdom
of ordering interim withdrawal liability payments. The Fund had
sustained its burden of showing that withdrawal liability was
assessed, Beaverbrook was notified and payments were not made.
That is all the statute requires. Therefore, the district court
erred by refusing to grant the Fund's request for a preliminary
injunction.
III.
The district court also did not decide whether all of the
appellees are employers for purposes of MPPAA, finding that our
decision in Flying Tiger directed that the issue first be
resolved in arbitration. Here too it erred, because resolving
this issue determines the arbitrator's authority over the
withdrawal liability dispute.
In both Flying Tiger and our recent decision in Doherty v.
Teamsters Pension Trust Fund of Philadelphia, we have
distinguished between disputes over whether an entity has ceased
to be an employer within the meaning of MPPAA, which must be
resolved in arbitration, and disputes over whether an entity has
ever become an employer, which must be resolved in the courts.
Doherty, 16 F.3d 1386, 1390-91 (3d Cir. 1994); Flying Tiger, 830
F.2d at 1250-51. In the first instance, Congress has directed
that an arbitrator shall initially determine if an entity that
was once an employer took steps to evade or avoid liability as
11
defined under 29 U.S.C. § 1392(c). 29 U.S.C. § 1401(a)(1) ("Any
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."); Flying Tiger, 830 F.2d at 1250.
By contrast, an entity which has never been an employer
within the meaning of MPPAA is not subject to the arbitrator's
jurisdiction, since 29 U.S.C. § 1401(a)(1) only mandates
arbitration for disputes between "an employer and the plan
sponsor." Doherty, 16 F.3d at 1390 (quoting 29 U.S.C. §
1401(a)(1)). Therefore, entity's employer status is a legal
question to be resolved by the court. In particular, we held in
Doherty that the issue of whether persons or entities are "alter
egos" or members of the same controlled group is properly
resolved in the courts. Id. at 1390-91.
Here, some of the appellees have disputed the Fund's
assertion that they are liable as employers under an "alter-ego"
or controlled-group theory. This is a question of law upon which
courts are indeed empowered to act. The district court erred by
holding that the issue should be resolved in arbitration. We
will remand this issue for further proceedings.
IV.
For these reasons, we will reverse and remand to the
district court to determine whether the appellees are employers
under MPPAA, and for it to enter an order requiring Beaverbrook
to make interim payments as scheduled by the Fund.
________________________
12
Circuit JudgeFRANK 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, No. 95-7532
BECKER, J., Dissenting.
The majority's decision is driven by its conclusion that
when the Congress provided that withdrawal liability "shall be
payable . . . no later than 60 days after the date of the demand
notwithstanding any request for review," 29 U.S.C. § 1399(c)(2)
(emphasis added), Congress provided for a mandatory injunction.
Under this approach, a district court must impose such an
injunction even if: (1) the trustees' demand for payment is
frivolous (in terms of either liability or amount demanded); and
(2) the payment would bankrupt or financially cripple the
withdrawing employer and eliminate the possibility of future
payments. I disagree.
I.
First, I doubt that Congress's words here are susceptible to
that construction. It uses the phrase "shall be payable," which
seems much more open-ended than "shall be paid." Thus, the
statute is at least ambiguous. Looking to Congressional intent,
I do not believe that Congress here intended a result so
inflexible and therefore so problematic.
Like the majority, I read Congress to be concerned that an
13
employer could stymie a pension fund's collection attempts by
pursuing litigation over withdrawal liability. However, by
disallowing consideration of the employer's inability to pay in
the face of a frivolous withdrawal liability claim, the majority
actually undermines Congress's goals. If an employer becomes
financially insolvent as a result of its withdrawal payment
obligations, the pension fund will not only be unable to receive
"an uninterrupted flow of payments," but also will be the but
for cause of its own inability to secure "ultimate recovery."
Furthermore, the proposal that I will advance -- giving courts
the discretion to deny a preliminary injunction only when the
pension's claim is not colorable and when requiring interim
payments would push a financially distressed employer over the
cliffs -- preserves Congress's "pay now, dispute later" scheme.
II.
There is an even more fundamental problem with the
majority's analysis, one which does not depend on finding an
ambiguity in the Congressional language. The majority
uncritically assumes that the Congressional locution "shall be
payable" translates into a proscription against a federal court's
using its historic equity powers to withhold or condition relief.
It is incorrect.
A.
As I see it, the seminal cases in this area are Hecht Co. v.
Bowles, 321 U.S. 321 (1944), and Porter v. Warner Holding Co.,
328 U.S. 395 (1946). These cases arose under the World War II
Emergency Price Control Act and Regulations, and involved actions
14
by the Price Administrator to enforce compliance therewith.
Section 205(a) of the Act provided that
[w]henever in the judgment of the Administrator any person has
engaged or is about to engage in any acts or practices which
constitute or will constitute a violation of any provision
of section 4 of this Act, *** he may make application to the
appropriate court for an order enjoining such acts or
practices, or for an order enforcing compliance with such
provisions, and upon a showing by the Administrator that
such person has engaged or is about to engage in any such
acts or practices a permanent or temporary injunction,
restraining order, or other order shall be granted without
bond.
Emergency Price Control Act of 1942, 50 U.S.C. App. Supp. II
§§ 901 et seq., 925. (emphasis added).
The question presented in Hecht was whether the
Administrator, having established that a defendant has engaged in
acts or practices violative of § 4 of the Act, is entitled as of
right to an injunction restraining the defendant from engaging in
such acts or practices, or whether the court has some discretion
to grant or withhold such relief. Although the Court determined
that the mandatory character of § 205(a) is clear from its
language, history and purpose (in our case the language is less
clear), it held that the phrase "shall be granted" does not
require issuance of an injunction against violation of a price
regulation merely because the Administrator asks for it.
Instead, the district court may, in accordance with equity
practice, exercise discretion in determining what order shall be
made. Hecht, 321 U.S. at 328-29. The court explained that
[a] grant of jurisdiction to issue compliance orders hardly
suggests an absolute duty to do so under any and all
circumstances. We cannot but think that if Congress had
intended to make such a drastic departure from the
traditions of equity practice, an unequivocal statement of
its purpose would have been made.
15
Id. at 329.
In Porter, the Court dealt with the power of a federal
court, in an enforcement proceeding under § 205(a), to order
restitution of rents collected by a landlord in excess of the
permissible maximums. In rejecting the position of the Price
Administrator that there was no jurisdiction under the statute to
give the equitable remedy of restitution, the Court, following
Hecht, held that
the comprehensiveness of this equitable jurisdiction is not to
be denied or limited in the absence of a clear and valid
legislative command. Unless a statute in so many words, or
by a necessary and inescapable inference, restricts the
court's jurisdiction in equity, the full scope of that
jurisdiction is to be recognized and applied. 'The great
principles of equity, securing complete justice, should not
be yielded to light inferences, or doubtful construction.'
Brown v. Swann, 10 Pet. 497, 503. See also Hecht Co. v.
Bowles, supra.
Porter, 328 U.S. at 398.
Another helpful case is Weinberger v. Romero-Barcelo, 456
U.S. 305 (1982). In Weinberger, the Court faced the question
whether the mandatory language of the Federal Water Pollution
Control Act requires a district court to enjoin immediately all
discharges of pollutants that do not comply with the Act's permit
requirements, or whether the district court retains discretion to
order other relief to achieve compliance. Reviewing the
structure of the statutory scheme and the legislative history,
the Court held that the statute contemplated the exercise of
discretion. Importantly, however, the Court also relied on Hecht
Co. v. Bowles, supra, pointing out that, while Congress may
intervene and guide or control the exercise of the courts'
16
historic equity discretion, which reflects a "practice with a
background of several hundred years of history," Hecht, 321 U.S.
at 329, we "should not lightly assume that Congress has intended
to depart from established principles." Weinberger, 456 U.S. at
313 (emphasis added). Nor should we.
B.
Nothing cited to us suggests that Congress has been so
direct and explicit in the MPPAA that we can conclude, much less
“lightly assume,” that all equitable discretion has been removed.
I, therefore, would follow the lead of the Fifth Circuit in
Trustees of Plumbers and Pipefitters N.H. Pension Fund v. Mar-
Len, Inc., 30 F.3d 621, 626 (5th Cir. 1994), and the Seventh
Circuit in Robbins v. McNicholas Transport Co., 819 F.2d 682,
685-86 (7th Cir. 1987). As the majority acknowledges, these
courts have adopted an “equitable exception” to the MPPAA’s “pay
now, dispute later” scheme. The equitable exception was first
articulated by the Seventh Circuit, which observed in McNicholas:
where the trustees bring an action to compel payments, pending
arbitration, the court should consider the probability of
the employer's success in defeating liability before the
arbitrator and the impact of the demanded interim payments
on the employer and his business.
McNicholas Transport Co., 819 F.2d at 685. The McNicholas
standard has evolved into a test whereby “a reviewing court
merely determines whether the pension plan’s claim [for
withdrawal liability] is nonfrivolous and colorable.” If the
claim is colorable, then the employer “must make interim payments
while it contests the underlying liability.” Mar-Len, 30 F.3d at
626. If the claim is frivolous or not colorable, the district
17
court has a narrow measure of discretion to excuse interim
payments which to do otherwise would cause irreparable economic
injury to the employer. Id.; Trustees of Chicago Truck Drivers
Union Pension Fund v. Central Transport, Inc. 935 F.2d 114, 119
(7th Cir. 1991).
In suggesting that we follow the Fifth and Seventh Circuit
test, I underscore that the "equitable exception" would take hold
only in the rare case. The district court can exercise
discretion solely to ensure that the courts are not used by an
unscrupulous pension fund lacking a legitimate withdrawal
liability claim to squeeze money from an employer and propel it
into bankruptcy. See Central Transport, 935 F.2d at 119. It
also bears emphasizing that federal judicial involvement need not
be extensive nor burdensome -- federal judges are comfortable
with making threshold colorability assessments, which is what I
would require as to the viability of the withdrawal liability
claim. The same is true for the inquiry as to whether the
withdrawal liability will be so burdensome as to permanently
cripple the employer (and deprive the Fund of future payouts). I
also stress that, contrary to the majority's intimation, our
decision in Board of Trustees of Trucking Employees Pension Fund
v. Centra, 983 F.2d 495 (3rd Cir. 1992), did not decide the
question before us here. Indeed, after noting the Seventh
Circuit position, the Centra panel was careful to explain that
the equitable exception could not possibly apply in the case
before it because the withdrawing employer was "well heeled."
C.
18
It is not clear from the present record whether the
Trustees' withdrawal liability claim here is in fact colorable or
whether the financial impact of withdrawal liability payouts on
Beaverbrook will in fact be devastating. I note that Beaverbrook
has represented that it will experience serious financial
difficulty if required to make interim withdrawal payments prior
to the resolution of its challenge to the assessment of
liability. And while it did not make a formal proffer on the
point, Beaverbrook’s litigation position suggests its belief that
the withdrawal liability claim is wholly without merit. I would
remand for consideration of such matters under the Seventh
Circuit test, which I read to be conjunctive: if the district
court finds that the claim for withdrawal liability is not
colorable, and if payment of withdrawal liability would push
Beaverbrook over the cliff, as it were, it can utilize its
equitable discretion to fashion a decree that might relieve
Beaverbrook of the obligation to make interim payments (or some
portion thereof).
A good argument can be made that this test should be made in
the disjunctive, so as to protect every employer from frivolous
claims and from bankruptcy. But I would be reluctant to extend
our equitable discretion in the absence of more persuasive
authority and a more compelling factual scenario.
For the foregoing reasons, I respectfully dissent.
19