Summary
The Ninth Circuit considered whether the retroactive application of the Multiemployer Pension Plan Amendments Act violated employers’ due process rights. It held that imposing withdrawal liability on employers that withdrew from multiemployer pension plans before the Act’s enactment was unconstitutional. The court also addressed intervention by the Pension Benefit Guaranty Corporation and whether arbitration had to be exhausted before litigating the constitutional claims.
Topics
Practice areas
Questions Presented
- Whether the district court abused its discretion by denying the Pension Benefit Guaranty Corporation's untimely motion to intervene.
- Whether arbitration of withdrawal-liability disputes was required before the district court could adjudicate the employers' constitutional challenge.
- Whether retroactive application of the Multiemployer Pension Plan Amendments Act to employers that withdrew after the Act's effective date but before its enactment violated the Fifth Amendment's Due Process Clause.
- Whether the employers were entitled to attorney's fees under 29 U.S.C. § 1451(e).
Holdings
- The district court did not abuse its discretion in denying PBGC's motion to intervene because the motion was untimely and the existing parties would be prejudiced by late intervention.
- ERISA did not require arbitration before adjudication of a constitutional challenge to the withdrawal-liability provisions, and exhaustion was not required because arbitration would have been futile and would not have aided resolution of the constitutional issue.
- Retroactive application of the Amendments Act's withdrawal-liability provisions violated the Fifth Amendment Due Process rights of employers that withdrew from multiemployer plans after April 29, 1980, but before September 26, 1980.
- The district court properly awarded attorney's fees to Shelter Framing and G & R Roofing, and the Ninth Circuit awarded fees on appeal.
Key quotations
“We hold that retroactive application of the withdrawal liability provision of the Amendments Act violates the due process rights of employers who withdrew from multiemployer pension plans before the Act became law.” (705 F.2d at 1505)
“The district court correctly found no mandatory arbitration requirement for determination of constitutional issuejs.” (705 F.2d at 1509)
“We hold that retroactive application of the Amendments Act violated the employers’ rights to due process as guaranteed by the fifth amendment.” (705 F.2d at 1515)
“The judgments in appeal numbers 82-5271, 82-5272, 82-5460 and 82-5461 are AFFIRMED.” (705 F.2d at 1515)
“The judgment in appeal number 82-3506 is REVERSED.” (705 F.2d at 1515)
Factual background
Shelter Framing, G & R Roofing, and R.A. Gray were employers participating in multiemployer pension plans under collective bargaining agreements that expired or were not renewed in 1980. Each employer ceased contributing after negotiations for new agreements failed and withdrew before September 26, 1980, the enactment date of the Multiemployer Pension Plan Amendments Act, but after its April 29, 1980 effective date. The pension trustees assessed substantial withdrawal liability against the employers, in amounts that materially threatened their financial condition. The employers challenged the retroactive liability as unconstitutional.
Procedural history
Shelter Framing and G & R Roofing sued their pension trust seeking to enjoin collection of withdrawal liability and challenging the constitutionality of the Amendments Act. The Central District of California granted plaintiffs preliminary injunctions and summary judgment, awarded attorney's fees, denied PBGC's motion to intervene as untimely, and declined to require arbitration before adjudicating the constitutional claims. In a related action, the District of Oregon granted summary judgment for R.A. Gray's defendants. The Ninth Circuit affirmed the judgments in the Shelter Framing and G & R appeals, affirmed the attorney-fee awards, and reversed the judgment in the R.A. Gray appeal.