Appeal from the United States District Court for the Northern District of Illinois, Western Division. No. 82 C 20189-Stanley J. Roszkowski, Judge.
BEFORE COFFEY and FLAUM, Circuit Judges, and JAMESON, Senior District Judge.*fn1
COFFEY, Circuit Judge. Keystone Consolidated Industries, Inc. appeals of an arbitrator's award requiring Keystone to make annual contributions to a pension plan pursuant to a collective bargaining agreement, even though the company had obtained a waiver of the minimum funding obligation imposed by Section 302 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1082. We affirm.
The International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (the "Union") and the National Lock Division of Keystone Consolidated Industries, Inc. ("Keystone") have been parties to a series of pension agreements since 1955. Beginning in 1968 and continuing to the present, these pension agreements provided that Keystone shall make annual contributions to the pension's trust fund. The pension agreement between Keystone and the Union provided in relevant part:
The Company agrees to make contributions to the [pension] trust fund on an annual basis during the term of this Agreement in the amount of . . .[sums] determined by the independent actuary employed by the company in the valuation of the pension plan:. . ."
In June 1981, Keystone issued a summary annual report to the pension plan's participants, the members of the Union, as required by ERISA. In this report, Keystone revealed that in December 1980, on the advice of its accountants, it had applied to the Internal Revenue Service ("IRS") for a waiver of its 1979-1980 pension plan contribution. To obtain a temporary waiver of the ERISA annual minimum funding obligation from the IRS, the employer must demonstrate
"(1) The employer is operating at an economic loss,
"(2) There is substantial unemployment or under- employment in the trade or business and in the industry concerned.
"(3) The sales and profits of the industry concerned are depressed or declining and,
"(4) It is reasonable to expect that the plan will be continued only if the waiver is granted."
29 U.S.C. § 1083(b). If the IRS grants the temporary waiver, the company in subsequent years must contribute, "the amount necessary to amortize each waived funding deficiency (within the meaning of section 1083(c) of this title) for each prior plan year in equal annual installments (until fully amortized) over a period of 15 plan years." Id. at 1082(2)(C). The summary annual report to the pension plan participants issued by Keystone revealed that the Internal Revenue Service had granted Keystone's request for a waiver of its annual contribution under ERISA based on evidence presented by Keystone alleging that it had suffered a net loss of almost $3.5 million for the fiscal year beginning on July 1, 1979, and a net loss of over $2.5 million in the industries to which it sold its products. Additionally, the IRS found that Keystone was experiencing great difficulty in maintaining sufficient working capital to prevent a technical default of its prime loan obligations to the Continental Illinois National Bank. However, the IRS concluded that Keystone would in all probability be able to recover from its present financial difficulties as a result of its modernization efforts and its program to reduce costs.
In September 1981, the Union filed grievances with an arbitrator pursuant to the Union's collective bargaining agreement with Keystone, alleging that Keystone had violated the annual funding provision of the pension agreement by failing to make its contribution to the plan for the 1979-1980 plan year. After the arbitrator held an evidentiary hearing and reviewed the parties' briefs, he issued an award in favor of the Union and ordered Keystone to pay $2,147,932 to the pension fund with interest at 8% per year from July 1, 1980, until paid. The parties became involved in a dispute as to when the award was due to be paid, after the issuance of the arbitrator's decision. The Union claimed that the award required the immediate payment of the full amount, while Keystone claimed that the award required full payment in conformity with the fifteen-year equal installment payment schedule, as set forth for in ERISA. As a ...