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Robbins v. McNicholas Transportation Co.

decided: April 21, 1987.

LORAN W. ROBBINS, ET AL., PLAINTIFFS-APPELLEES, CROSS-APPELLANTS
v.
MCNICHOLAS TRANSPORTATION COMPANY, DEFENDANT-APPELLANT, CROSS-APPELLEE



Appeals from the United States District Court for the Eastern Division of Illinois, No. 84 C 6821, Paul E. Plunkett, Judge.

Wood and Posner, Circuit Judges, and Fairchild, Senior Circuit Judge.

Author: Fairchild

FAIRCHILD, Senior Circuit Judge.

Trustees of the Central States, Southeast and Southwest Areas Pension Fund (Trustees) filed a complaint on August 8, 1984 against McNicholas Transportation Company (McNicholas) seeking an order compelling McNicholas to make withdrawal liability payments pursuant to the Multiemployer Pension Plan Amendment Act of 1980 (MPPAA),*fn1 29 U.S.C. § 1381 et seq. McNicholas, an Ohio corporation, is a motor carrier, and was a contributor to the Central States Fund.

On May 31 and June 6, 1985, the district court ordered McNicholas "to pay 55.73 monthly interim installments of $71,221.83 to the Trustees beginning July 1, 1985." McNicholas appealed from the order compelling payments and the Trustees appealed from the denial of its request that McNicholas be compelled immediately to pay past due installments, with interest. On June 6, 1986, after oral argument, this court stayed the June 6, 1985 order during the pendency of this appeal.

The Trustees' side of the matter is as follows: McNicholas stopped making contributions to the Fund in September 1982. The Trustees determined in late 1982 that McNicholas had permanently ceased its obligation to make contributions and thus had completely withdrawn. 29 U.S.C. § 1383. The Trustees determined McNicholas' withdrawal liability, 29 U.S.C. § 1382, at $3,287,614.68 in total, or $71,270.83 in monthly installments, beginning March 1, 1984. On December 22, 1983, they gave notice pursuant to 29 U.S.C. § 1399(b)(1). Although McNicholas disputes the claim that it has withdrawn, and that it is liable, and has sought arbitration under 29 U.S.C. § 1401(a), § 1401(d) requires McNicholas to make the monthly payments while the arbitration remains pending, and the Trustees are entitled to bring this action to compel the payments. 29 U.S.C. § 1451.

McNicholas' side is as follows: McNicholas' operations in the Pittsburgh area were shut down by a strike September 7, 1982, and its entire operation was shut down as a result on September 28, 1982. (Apparently the workers who struck were not beneficiaries of the Fund, although other McNicholas employees are.) The Company desires to reopen its operations, but cannot do so until it reaches agreement with the striking union. Negotiations have continued, but have not been successful. The Trustees' determination that McNicholas had withdrawn was erroneous because 29 U.S.C. § 1398 provides

Notwithstanding any other provision of this part, an employer shall not be considered to have withdrawn from a plan solely because --

(2) an employer suspends contributions under the plan during a labor dispute involving its employees. . . .

McNicholas timely sought review by the Trustees (29 U.S.C. § 1399(b)(2)(A)) and then initiated arbitration under § 1401(a).

The Trustees brought this action for an order compelling McNicholas to make its 56 withdrawal liability monthly payments.

29 U.S.C. § 1451(a)(1) authorizes fiduciaries, employers, and others adversely affected to bring an action for legal or equitable relief, and § 1451(c) confers jurisdiction. (See also § 1132(a) and (e).) 29 U.S.C. § 1401(a)(1) provides that "Any dispute between an employer and the plan sponsor of a multi-employer plan concerning a determination made under sections 1381 through 1399 of this title shall be resolved through arbitration."

Notwithstanding the mandatory language prescribing arbitration for a dispute like the present one, employers, faced with a demand for interim payments to which they claim a defense, have brought actions, or interposed counterclaims in actions brought to compel payments, seeking to enjoin fiduciaries from asserting or collecting withdrawal liability.

Many courts have viewed the arbitration provision as an administrative remedy and have acknowledged the rule that the administrative remedy must be exhausted before judicial relief can be sought. They usually have cited Myers v. Bethlehem Corp., 303 U.S. 41, 82 L. Ed. 638, 58 S. Ct. 459 (1938). Courts have often found, however, an exception permitting them to resolve some or all the issues on the merits. Republic Industries v. Central Pa. Teamsters, Etc., 534 F. Supp. 1340 (E.D. Pa. 1982), reversed, 693 F.2d 290 (3rd Cir. 1982) (exhaustion excused in order to decide facial constitutional challenge, p. 296); T.I.M.E.-D.C., Inc. v. Truck Emp. of N.J. Wel. Fund, 560 F. Supp. 294 (E.D.N.Y. 1983) (exhaustion excused in order to decide statutory interpretation, p. 303); T.I.M.E.-D.C. v. N.Y. St. Teamsters Conf. Pen. & Ret., 580 F. Supp. 621 (N.D.N.Y. 1984), aff'd 735 F.2d 60 (2d Cir. 1984) (exhaustion excused in order to decide statutory interpretation and because employer established irreparable injury, p. 633); T.I.M.E.-D.C. v. Management-Labor W&P Funds, Etc., 756 F.2d 939 (2d Cir. 1985) (exhaustion excused in order to decide statutory interpretation, p. 945); I.A.M. Nat. Pen. Fund v. Schulze Tool & Die, 564 F. Supp. 1285 (N.D. Cal. 1983) (exhaustion excused in order to decide statutory interpretation, p. 1294); Central States, etc., Pension Fund v. T.I.M.E.-D.C., 639 F. Supp. 1468 (N.D. Tex. 1986), appeal pending, (exhaustion excused in order to avoid irreparable injury, p. 1478); I.A.M. Nat. Pension Fund Ben. v. Stockton Tri. Ind., 234 U.S. App. D.C. 105, 727 F.2d 1204 ...


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