Summary
The Third Circuit held that Crown Cork & Seal was not barred from raising a statutory defense under section 558 of the Deficit Reduction Act of 1984 merely because it had not timely arbitrated the withdrawal-liability dispute before that provision was enacted. However, the court held that the dispute nevertheless had to be submitted to arbitration under the Multiemployer Pension Plan Amendments Act because it concerned withdrawal-liability determinations under 29 U.S.C. §§ 1381–1399. The court reversed the district court's grant of summary judgment to Crown Cork and remanded with instructions to defer the matter to arbitration.
Topics
Practice areas
Questions Presented
- Whether Crown Cork's failure to initiate arbitration before enactment of section 558 barred it from asserting the section 558 defense.
- Whether Crown Cork was required to initiate arbitration within a newly established period after section 558 was enacted.
- Whether the dispute could bypass MPPAA arbitration because it allegedly presented only questions of statutory interpretation or undisputed legal issues.
- Whether the questions concerning a binding agreement to withdraw and the date of complete withdrawal were disputes subject to arbitration under the MPPAA.
Holdings
- Crown Cork's failure to initiate arbitration before enactment of section 558 did not bar it from asserting that section 558 eliminated its retroactive withdrawal liability.
- Crown Cork was not barred by failing to seek arbitration within a fixed period after section 558 was enacted.
- A dispute concerning a determination under MPPAA sections 1381 through 1399 must be submitted to arbitration even when it includes pure questions of statutory interpretation.
- The questions whether Crown Cork had a binding agreement to withdraw by September 26, 1980, and whether it completely withdrew by December 31, 1980, had to be arbitrated before judicial resolution.
Key quotations
“Thus, circuit precedent clearly directs that in view of Congress' plain mandate to "arbitrate first," even pure issues of statutory interpretation are subject to MPPAA's arbitration requirements if they involve sections 1381-1399.” (881 F.2d at 15)
“Accordingly, while we find that Crown Cork's failure to initiate arbitration does not bar it, under the particular facts of this case, from defending against the Fund's assessment of withdrawal liability, we hold that its defense must now be arbitrated.” (881 F.2d at 17)
Factual background
Crown Cork contributed to a multiemployer pension fund under a collective bargaining agreement covering employees at its St. Louis manufacturing plant. The company announced plans to close the plant in July 1980, ceased new production after September 26, 1980, completed finish-up work by October 10, and finally closed the plant in November 1981. The fund assessed $1,319,859.30 in withdrawal liability using November 28, 1981, as the withdrawal date. Crown Cork challenged the assessment and later invoked section 558 of the Deficit Reduction Act, which eliminated certain retroactive withdrawal liability, but did not initiate arbitration.
Procedural history
The fund assessed Crown Cork approximately $1.3 million in withdrawal liability based on the closure of Crown Cork's St. Louis plant. Crown Cork sought administrative review but did not initiate arbitration, instead filing a declaratory-judgment action asserting that section 558 of the Deficit Reduction Act eliminated its liability. The district court granted Crown Cork summary judgment on the statutory defense. The Third Circuit held that Crown Cork was not barred from asserting the defense but that the dispute was required to proceed first to arbitration.
Remand instructions
The district court was instructed to defer the withdrawal-liability dispute to arbitration and conduct further proceedings consistent with the opinion, including entry of an order requiring arbitration. The district court's order was affirmed insofar as it denied the fund's cross-motion and reversed insofar as it granted Crown Cork's motion for summary judgment.