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Central States Southeast and Southwest Areas Pension Fund v. Bellmont Trucking Co.

April 4, 1986

CENTRAL STATES SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, PLAINTIFF-APPELLEE,
v.
BELLMONT TRUCKING CO., INC., DEFENDANT-APPELLANT



Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 84 C 375 - William C. Lee, Judge.

Author: Cudahy

Before CUMMINGS, Chief Judge, CUDAHY, Circuit Judge, and BARKER, District Judge.*fn*

CUDAHY, Circuit Judge.

Defendant, Bellmont Trucking Co. ("Bellmont") appeals the district court's determination that it owes withdrawal liability to plaintiff, Central States Southeast and Southwest Areas Pension Fund (the "Fund"), as a result of Bellmont's bankruptcy. We affirm.

I.

Bellmont operated a trucking business. Its drivers were members of Teamsters Local No. 414. Bellmont, by virtue of its membership in the Indiana Motor Carriers labor Relations Association, was a signatory to the National Master Freight Agreement, which requires that employers make contributions to the Fund to fund the pension benefits of their employees.

In July 1983 Bellmont filed a petition in bankruptcy under Chapter 11 of the Bankruptcy Code. At this time Bellmont's obligation to make payments to the Fund ceased. The Fund determined, however, that under the Multi-Employer Pension Plan Amendments Act of 1980 (the "MPPAA"), 29 U.S.C. § 1381 et seq., Bellmont had withdrawn from the Fund and thus incurred withdrawal liability. Bellmont admitted that if liability existed, the amount would be $110,122.80. The district court removed the withdrawal liability claim from the bankruptcy court. The parties filed cross-motions for summary judgment and the district court granted the Fund's motion . This appeal followed.

Bellmont argues that it should not be subject to withdrawal liability because the relationship between its former employees and the Fund remains unchanged. Of the eight employees who worked for Bellmont during its last year of operation, five retried. Employers are not obligated to make contributions to the Fund on behalf of retired employees. The other three presently work for other employers in the industry and are still represented by Teamsters Local 414. Their current employers are obligated to make contributions to the Fund on their behalf. Defendant argues:

Thus, all of Bellmont's former employees who still work have contributions made on their behalf to the Fund in the same amount and at the same rate as while they were working for Bellmont. The net effect of Bellmont's bankruptcy is that the Fund receives the contributions it would have (assuming the retirees had retired) -- the only difference is the change in the payor. The payee and the beneficiaries remain precisely the same.

Appellant's Brief at 8-9.

Defendant argues that the MPPAA carves out certain exceptions to the generally applicable rule for imposition of liability on an employer upon its withdrawal from the pension plan. Although Bellmont admittedly cannot take advantage of any of these statutory exceptions, defendant argues that two district court cases stand for the proposition that so long as the relationship between the fund and its workers/beneficiaries remains unchanged, no withdrawal liability should be imposed. See Dorn's Transportation, Inc. v. Teamsters Pension Trust Fund, 596 F. Supp. 350 (D.N.J. 1984); Dyck v. Southern Pacific Milling Co., 4 E.B.C. 1346 (C.D. Cal. 1983). Further, defendant argues that the purpose of the MPPAA is to create a disincentive for employers who deliberately withdraw from pension plans to gain an economic advantage. Because Bellmont did not "voluntarily" withdraw to gain an economic advantage, but rather withdrew because it filed in bankruptcy, defendant argues that no withdrawal liability was intended by Congress. Defendant also argues that the district court's decision unjustly enriches the Fund.

II.

The MPPAA provides that "[i]f an employer withdraws from a multiemployer plan in a complete withdrawal or a partial withdrawal, then the employer is liable to the plan in the amount determined under this part to be the withdrawal liability." 29 U.S.C. § 1381(a). A complete withdrawal occurs "when an employer -- (1) permanently ceases to have an obligation to contribute under the plan, or (2) permanently ceases all covered operations under the plan." 29 U.S.C. § 1383(a). it is not disputed that Bellmont permanently ceased to have an obligation to contribute under the plan when it filed its bankruptcy petition. Subsections (b) and (c) of 29 U.S.C. § 1383 carve out certain exceptions for the construction industry and the entertainment industry. Subsection (d) carves out an exception for employers who contribute to a plan primarily for work in the long and short haul trucking industry, the household goods industry or the public warehousing industry if substantially all of the contributions required under the plan are made by employers primarily engaged in such industries. If subsection (d) applies, a complete withdrawal occurs only if

(A) an employer permanently ceases to have an obligation to contribute under the plan or permanently ceases all covered ...


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