Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

TERSON CO., INC. v. PENSION BENEFIT GUAR. CORP.

April 22, 1982

THE TERSON COMPANY, INC., PLAINTIFF,
v.
PENSION BENEFIT GUARANTY CORPORATION, HAROLD J. O'BRIEN, ROBERT N. MEIDEL, JOSEPH SLAZAS, JAMES MURPHY, WILLIAM B. HANLEY, WILLIAM H. SMITH, D.D. LOCKE, JR., RANDY SHENK, AS TRUSTEES OF THE BAKERY, CRACKER, PIE, YEAST DRIVERS AND MISCELLANEOUS WORKERS UNION LOCAL 734 — INTERNATIONAL CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA PENSION FUND, DEFENDANTS.



The opinion of the court was delivered by: McGARR, Chief Judge.

  This is an action for a preliminary injunction in which the plaintiff The Terson Company ("Terson") seeks to enjoin the defendants, the Trustees of Local 734 of the International Brotherhood of Teamsters (the "Trustees") from collecting, declaring a default or commencing arbitration on any dispute with the plaintiff concerning payment of "withdrawal liability" demanded from Terson by the Trustees as authorized by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001-1380, as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA") 29 U.S.C. § 1381-1461 (Supp. 1981).

Terson is engaged in the baking and food processing business. In December, 1980, it sold its Chicago bakery operations ("Buttermaid Bakeries") to Interstate Brands Corporation ("IBC") for $1,500,000. IBC hired all of Terson's employees and assumed Terson's obligations to contribute to the two pension funds at issue. In May, 1981, the Trustee requested that Terson pay approximately $3,500,000 in withdrawal liability pursuant to the MPPAA.

According to the complaint, IBC is currently making contributions to the pension fund. Neither of the pension funds are in danger of insolvency; one plan is fully funded to provide presently vested benefits and the other fund is adequately funded. Until Buttermaid Bakeries was sold, that division made all the pension fund contributions that were required under the collective bargaining agreements. See Plaintiff's Memorandum in Support of its Motion for Preliminary Injunction ("Pl's. Mem.") at 5-7. The plaintiff asserts further that payment of the withdrawal liability will result in a windfall gain and unjust enrichment to the pension fund, remaining contributing employers and beneficiaries of the funds.

According to the MPPAA, an employer who effects a "complete withdrawal" from a multiemployer pension fund is subject to withdrawal liability, 29 U.S.C. § 1383 which is an allocable share of the unfunded vested benefits liability of the fund. Id. § 1381(a). Generally, a complete withdrawal occurs when an employer permanently ceases to have an obligation to contribute to the fund because it has discontinued business.

The statute allows the Trustees to choose any one of four ways to calculate an employer's withdrawal liability. Id. at § 1391. Once the employer's withdrawal liability is calculated, the Trustees must notify the employer of the amount of the liability, establish a schedule for its payment and demand payment in accordance with the schedule. Id. § 1382. If the withdrawing employer fails to make a payment as scheduled, interest at the prevailing market rate accrues on the payment from its due date until it is paid. Id. at § 1399(c)(3). If the default is not cured within sixty days, the Trustees may declare the full amount of the liability due immediately and assess an interest penalty. Id. at § 1399(c)(5).

If the employer disputes the fact or amount of the withdrawal liability, the statute requires that the dispute be submitted to compulsory arbitration. Id. at § 1401. In the arbitration proceeding, any determination made by the Trustees is presumed correct unless the party contesting the determination establishes, by a preponderance of the evidence, that the determination was unreasonable or clearly erroneous. Id. § 1401(a)(3). The "presumably correct" determinations include whether a complete withdrawal has occurred, id. at § 1383, and whether the Trustee's determination of the amount of liability due was correct. Id. § 1391. If there is no arbitration, these determinations are given conclusive effect by statute, the amount claimed is converted into a debt, and the Trustees may bring a collection action in which the defaulting employer is subject to penalties, costs and attorneys' fees. Id. §§ 1132(g)(2), 1145, 1451(b) and 1451(e).

The Trustees have a certain amount of leeway in computing the fund's own unfunded vested benefits and allocating the employer's share. The guidelines are relatively vague. The computations may be based on actuarial assumptions and methods as long as they are not "in the aggregate, unreasonable." Id. § 1401(a)(3)(B). Moreover, the Trustees may determine whether "a principal purpose of any transaction is to evade or avoid liability," and whether there has been a bona fide sale of all or substantially all of the employer's assets in an arm's length transaction. Id. § 1392(c) and 1405(a)(1).

The MPPAA provides further that an action may be brought in a district court "to enforce, vacate or modify the arbitrator's award." Id. § 1401(b)(2). However, in such a proceeding, there shall be a presumption, rebuttable only by a clear preponderance of the evidence, that the findings of fact made by the arbitrator were correct. Id. § 1401(c).

A preliminary injunction is an extraordinary remedy. It is unavailable unless the plaintiff can meet all the prerequisites. Fox Valley Harvestore, Inc. v. A.O. Smith Harvestore Prods., Inc., 545 F.2d 1096 (7th Cir. 1976). The elements of a preliminary injunction are as follows: 1) The plaintiff has no adequate remedy at law and will be irreparably harmed if the injunction does not issue; 2) The threatened injury to the plaintiff outweighs the threatened harm the injunction may inflict on the defendant; 3) the plaintiff has at least a reasonable likelihood of success on the merits; and 4) The granting of a preliminary injunction will not disserve the public interest. Id. at 1087; In re Uranium Antitrust Litigation, 617 F.2d 1248, 1261 (7th Cir. 1980).

Terson offers several reasons to support its claim that it lacks an adequate remedy at law and that it will suffer irreparable injury if the preliminary injunction does not issue. It contends that if Terson failed to make periodic payments of its withdrawal liability, the Trustees could declare a default and require immediate payment of the entire amount plus interest. 29 U.S.C. § 1451. It maintains further that the Trustees would be entitled to the delinquent amount, interest on that amount, liquidated damages, attorneys' fees and costs. Id. § 1132.

Terson asserts that its only alternative is to commence arbitration over the amount and basis for the withdrawal liability. Terson objects to pursuing that course of action on several grounds. In that situation there would be a presumptive conclusion that the determinations of the Trustees were correct. Id. §§ 1401(a) and (c). Thus, Terson contends, it could only obtain a limited review of these actions in the district court. It also maintains that during the pendency of the arbitration and subsequent appeal, it still would be required to make withdrawal liability payments.

The court concurs in this interpretation. Since the PBGC was statutorily created to administer the MPPAA, private parties are protected should they rely on PBGC's interpretation of the statute. Cf. United States v. National Ass'n. of Securities Dealers, 422 U.S. 694, 717-18, 95 S.Ct. 2427, 2441-42, 45 L.Ed.2d 486 (1975). Moreover, inasmuch as neither the Trustees nor Terson have initiated arbitration proceedings within the time specified, the fact that Terson did bring this suit in order to prevent a default should toll the limitation's period. See Memorandum of Defendant Trustees in Opposition to the Plaintiff's Motion for a Preliminary Injunction at 2.

Next, the PBGC contends that even if Terson does not seek arbitration, it has an adequate remedy at law for any harm it may suffer as a consequence of making monthly payments. The PBGC maintains that Terson can always seek a court order ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.