Summary
The Second Circuit held that an employer disputing withdrawal liability under ERISA's Multiemployer Pension Plan Amendments Act must generally submit its defenses, including whether it was obligated to contribute to the pension plan, to arbitration before seeking judicial review. The court rejected the argument that the arbitration requirement depended on the employer's consent or definitive status as an employer subject to withdrawal liability. It reversed the district court's judgment and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether MPPAA requires an employer to arbitrate a defense that it was not bound by a collective bargaining or related agreement and therefore had no obligation to contribute to a multiemployer pension plan.
- Whether failure to arbitrate first absolutely bars federal jurisdiction or instead constitutes failure to exhaust an administrative remedy, subject to narrow exceptions.
- Whether the Fund's delay of approximately one year in sending the initial withdrawal-liability notice necessarily barred its collection action under 29 U.S.C. § 1399(b)(1).
- Whether the case should be remanded to determine whether the statutory conditions precedent to a collection action had been satisfied.
Holdings
- MPPAA requires arbitration of a dispute between an employer and a plan sponsor concerning a withdrawal-liability determination, including the employer's defense that it was not bound by a collective bargaining or related agreement and therefore had no obligation to contribute.
- MPPAA's arbitration provisions generally operate as an exhaustion-of-administrative-remedies requirement rather than an absolute jurisdictional bar, but exceptions to the arbitrate-first rule are narrow.
- The requirement that notice be sent '[a]s soon as practicable' after withdrawal does not impose a strict deadline, and the Fund's approximately one-year delay did not automatically bar collection or establish laches.
- The case had to be remanded for the district court to determine whether the statutory conditions precedent to the Fund's collection action had been satisfied.
Key quotations
“The Corporation's duty to arbitrate its dispute with the Fund arises under MPPAA and is based upon Congress' express desire to have disputes concerning withdrawal liability resolved through arbitration.” (846 F.2d at 884)
“We agree that the arbitration provisions of MPPAA do not constitute an absolute bar to federal jurisdiction, but instead constitute an exhaustion of administrative remedies requirement.” (846 F.2d at 886)
“We do not read the notice requirement of 29 U.S.C. Sec. 1399(b)(1), which provides that notice must be sent to employers '[a]s soon as practicable' after withdrawal, to impose 'a strict deadline for notifying employers of their withdrawal liability.'” (846 F.2d at 887)
Factual background
Levy Bros. operated first as a partnership and later, beginning in 1967, as a corporation. The partnership had executed authorizations for collective bargaining agreements and contributed to the Fund; after incorporation, the corporation refused to execute later authorizations but continued paying union-scale wages, making fringe-benefit payments, permitting audits, and dealing with the union until it ceased operations in 1982. The Fund later assessed approximately $277,881 in withdrawal liability, but the corporation did not initiate arbitration and instead challenged its obligation to contribute and the Fund's compliance with MPPAA.
Procedural history
The Fund sought $277,881 in withdrawal liability, interest, liquidated damages, costs, and attorney fees after Levy Bros. ceased operations and failed to make payments. Levy Bros. did not initiate arbitration and asserted that it was not bound by a collective bargaining or related agreement during the relevant period. After a three-day bench trial, the district court dismissed the Fund's complaint and the corporation's counterclaims. The Second Circuit reversed and remanded for determination of whether the statutory conditions precedent to collection had been satisfied.
Remand instructions
The district court must determine whether the statutory conditions precedent to the Fund's collection action have been satisfied. If they have, the court should enter judgment for the appellants on the relief sought in the complaint. If they have not, the court should dismiss the suit and direct the parties to pursue their administrative remedies.