Summary
The Third Circuit held that Crown Cork’s failure to initiate arbitration before or shortly after the enactment of DEFRA did not bar it from asserting DEFRA’s elimination of retroactive withdrawal liability as a defense. However, the court held that the dispute—including questions concerning a binding agreement to withdraw and the date of complete withdrawal—was subject to MPPAA’s mandatory arbitration requirement. The court reversed the district court’s grant of summary judgment to Crown Cork and remanded with instructions to defer the dispute to arbitration.
Topics
Practice areas
Questions Presented
- Whether Crown Cork's failure to initiate arbitration before enactment of DEFRA section 558 barred it from asserting section 558 as a defense to the Fund's withdrawal-liability assessment.
- Whether Crown Cork was required to initiate arbitration within a fixed period after DEFRA section 558 created the defense.
- Whether a dispute involving statutory interpretation and allegedly undisputed facts could bypass the MPPAA arbitration requirement.
- Whether the dispute over Crown Cork's alleged binding agreement to withdraw and date of complete withdrawal was subject to arbitration under 29 U.S.C. § 1401(a)(1).
Holdings
- Crown Cork's failure to initiate arbitration before DEFRA section 558 was enacted did not bar it from asserting the statute's elimination of MPPAA's retroactive reach as a defense to the withdrawal-liability assessment.
- Crown Cork was not barred from raising the section 558 defense by failing to seek arbitration within some fixed period after DEFRA's enactment.
- Pure issues of statutory interpretation involving MPPAA sections 1381 through 1399 are subject to the statute's arbitration requirement and may not bypass arbitration merely because they are characterized as legal questions.
- The dispute over 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 submitted to MPPAA arbitration before judicial resolution.
Key quotations
“under MPPAA there is no per se exhaustion requirement under which the court lacks jurisdiction to hear cases that have not first been before an arbitrator.” (881 F.2d at 16)
“Accordingly, we hold that Crown Cork’s failure to initiate arbitration before DEFRA was passed does not bar it from challenging the Fund’s assessment of withdrawal liability on the ground of DEFRA’s subsequent elimination of MPPAA’s retroactive reach.” (881 F.2d at 17)
“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 18)
“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 20)
Factual background
Crown Cork contributed to the Fund under a collective bargaining agreement covering employees at its St. Louis can-manufacturing plant. It began planning the plant's closure in early 1980, notified the union on July 28, 1980, and ceased new production after September 26, 1980, although cleanup, dismantling, and other closing activities continued. Crown Cork ultimately terminated its remaining production and maintenance employees in November 1981, and the Fund assessed withdrawal liability using November 28, 1981, as the withdrawal date. Crown Cork requested review of the assessment but did not challenge the withdrawal date or seek arbitration before bringing suit.
Procedural history
The Fund assessed Crown Cork approximately $1.3 million in withdrawal liability after Crown Cork closed its St. Louis plant. Crown Cork requested administrative review but did not initiate arbitration, instead filing a declaratory judgment action. The district court rejected the Fund's exhaustion defense and later granted Crown Cork summary judgment, holding that DEFRA section 558 exempted Crown Cork from withdrawal liability. The Third Circuit affirmed the ruling that Crown Cork was not barred from raising the section 558 defense, reversed the merits judgment to the extent it bypassed arbitration, and remanded for arbitration.
Remand instructions
The district court was instructed to conduct further proceedings consistent with the opinion, including entry of an order deferring the dispute to MPPAA arbitration.