Metropolitan Bottling Co., 636 F.Supp. 641 (N.D. Ill. 1986) (Nordberg, J.).
The court agrees with the Fund's position that this case should be dismissed and that plaintiff should exhaust its administrative remedies before the merits of plaintiff's constitutional claim are addressed.
The Fund argues that this constitutional challenge is premature, since plaintiff has not arbitrated its withdrawal liability as required by MPPAA. Although most circuits have treated this as an exhaustion of remedies problem,
the Seventh Circuit has expressly disagreed and has treated it as a matter of judicial restraint. See, e.g., Robbins v. Lady Baltimore, Foods, Inc., 868 F.2d 258 (7th 1989); Transport Motor Exp., Inc. v. Central States, Southeast and Southwest Areas Pension Fund, 724 F.2d 575, (7th Cir. 1983); cf. Peick v. Pension Ben. Guar. Corp., 724 F.2d 1247 (7th 1983), cert. denied, 467 U.S. 1259, 104 S. Ct. 3554, 82 L. Ed. 2d 855 (1984).
In Transport, the Seventh Circuit, stated that "the great gravity and delicacy of constitutional decision-making counsels that federal courts abjure constitutional rulings where a 'dispositive nonconstitutional ground is available.'" 724 F.2d at 577 (citing Ruslan Shipping Corp. v. Coscol Petroleum Corp., 635 F.2d 648, 650 (7th Cir. 1980) (quoting Hagans v. Lavine, 415 U.S. 528, 547, 94 S. Ct. 1372, 1384, 39 L. Ed. 2d 577 (1974))). Transport, like the instant case, was a challenge to a pension fund's assessment of withdrawal liability under provisions of MPPAA. The plaintiffs argued that, as applied retroactively to them, the withdrawal liability provisions of the MPPAA violated the due process and takings clauses of the Fifth Amendment and that the withdrawal liability dispute resolution procedures established by the MPPAA violated certain other constitutional provisions. They also argued that they had not "withdrawn" from the Fund within the meaning of the MPPAA. The fund contended that the court should not reach the merits of plaintiffs' constitutional claims because MPPAA mandated that plaintiffs first arbitrate any dispute regarding the assessment of withdrawal liability. The district court held that arbitration was not required because the plaintiffs were making a "facial challenge," and requiring them to arbitrate "would not promote deference to either Congress or the autonomy of the arbitration process." Id. at 577 (quoting Transport Motor Exp., Inc. v. Central States, Southeast and Southwest Areas Pension Fund, No. 81 C 4535, slip op. at 10 (N.D. Ill. May 18, 1983)).
The Seventh Circuit reversed the district court, holding that the district court (as other courts) had erroneously treated the question as one of exhaustion of remedies:
We think the problem is more precisely viewed as involving the propriety of reaching constitutional issues when potentially dispositive nonconstitutional questions are presented. The Supreme Court has expressed a strong preference for avoidance of constitutional questions in such situations and we do not see how the forum in which the nonconstitutional issues would be resolved is relevant to that preference.
Id. at 578 n.3 (citations omitted). The court concluded that the nonconstitutional issue of whether "withdrawal" -- within the meaning of the statute -- had actually occurred had to be specifically addressed before the plaintiff's constitutional challenges were considered. Id. at 579. The court distinguished its ruling in Peick (issued the same day as Transport, and also presenting the issue of the propriety of addressing the constitutionality of the MPPAA before statutorily mandated arbitration was conducted
) on the ground that the employer-plaintiff in Peick had undisputedly withdrawn from the plan and had raised no statutory defenses to the trustee's assessment; whereas the defendant in Transport did raise statutory defenses. Id. at 577-78. The Seventh Circuit has recently reaffirmed its holding in Transport -- again in the context of a constitutional challenge to MPPAA -- in Robbins v Lady Baltimore Foods, Inc., 868 F.2d 258, 262 (7th Cir. 1989).
Plaintiff argues that these cases do not apply to its cause of action because in Transport and Lady Baltimore the plaintiffs challenged substantive provisions of MPPAA, whereas Sherwin-Williams is challenging "the procedural mechanism provided in MPPAA." Plaintiff's Memorandum In Opposition to Defendant's Motion To Dismiss ("Plaintiff's Opposition") at 9 (emphasis in original). This distinction is beside the point. The question is not the nature of plaintiff's challenge to the assessment. The question is whether that challenge, if successful, would moot the constitutional issue.
A recent case in this district supports this view. See Santa Fe Southern Pacific Corp. v. Central States, Southeast and Southwest Areas Pension Fund, No. 88 C 6999, Order (N.D. Ill. July 17, 1990) (Alesia, J.). The plaintiffs in Santa Fe brought a declaratory action alleging that the same presumptions at issue here violated their due process rights. Judge Alesia refused to reach plaintiff's constitutional argument and dismissed their action without prejudice, citing Transport and Lady Baltimore as dispositive of the issue.
Plaintiff argues that even if the arbitrator decides in its favor, "any appeal by the Fund to this Court will necessarily entail the issue of whether the arbitrator was correct in sustaining Sherwin-Williams' challenge to the trustee's decision in light of the presumption." Plaintiff's Opposition at 7-8. Thus (the argument goes) even if it wins in arbitration, plaintiff will be forced to challenge the constitutionality of § 1401(a)(3)(A) before this court.
This argument overlooks the possibility that plaintiff could win the arbitration by overcoming the presumption and sustain its position on appeal notwithstanding the presumption. Indeed, that possibility is the premise of our conclusion that the case is potentially resolvable on nonconstitutional grounds. Surely there is no basis at this juncture for holding that plaintiff will be unable to show "by a preponderance of the evidence that the determination was unreasonable or clearly erroneous." 29 U.S.C. § 1401(a)(3)(A).
Plaintiff's motion for summary judgment is denied. Defendant's motion to dismiss is granted. The complaint will be dismissed without prejudice to plaintiff's right to file another complaint in this court should it not prevail in the arbitration proceeding.
DATED: February 14, 1992
John T. Grady, United States District Judge