States" or "Fund") brought this action to vacate an arbitration award in favor of defendant Robinson Cartage Company ("Robinson") pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1401(b)(2). This matter is before the court on the parties' cross-motions for summary judgment. For the reasons explained below, plaintiffs' motion for summary judgment is granted, and defendant's motion for summary judgment is denied.
It is undisputed that from 1965-1975, Robinson was a construction industry employer. However, in 1976, defendant began working in the steel hauling business, which is a non-construction industry, while continuing in the construction industry. The non-construction business proved unsuccessful, and in 1983, Robinson closed its steel hauling operation and returned its focus to the construction industry. However, closing the steel hauling business resulted in a 70 percent decline of defendant's contributions to plaintiff Fund over a three year period. Since ERISA provides that an employer is liable for partially withdrawing from a pension plan if the employer's contributions in a plan year decline by 70 percent,
Central States assessed partial withdrawal liability of $ 631,722.51 against Robinson.
Robinson objected, arguing that partial withdrawal liability should not have been assessed against it because it was exempt from liability as a construction industry employer under 29 U.S.C. § 1388(d).
To qualify for this exemption, Robinson had to show that "substantially all" (at least 85 percent)
of the employees for whom it contributed to the Fund performed work in the building and construction industry.
Also, the parties agreed that the best way to make this determination was to assess Robinson's contribution base units ("CBUs"), the measure of work upon which contributions to the plan are based.
After some preliminary hearings, the parties stipulated to the amount of Robinson's CBUs over the 1975 through 1985 period, and the number of these CBUs that were construction and non-construction related. A summary of this stipulation is shown below:
CONSTRUCTION OTHER CONSTRUCTION
YEAR INDUSTRY CBUs CBUs TOTAL INDUSTRY CBUs
1975 965 100 1064 90.6%
1976 1093 803 1896 57.6%
1977 1414 1596 3010 47%
1978 2085 2934 5019 41.5%
1979 2000 3948 5948 33.6%
1980 2090 3327 5417 38.6%
1981 2272 1305 3577 63.5%
1982 1935 187 2122 91.2%
1983 985 161 1149 86%
1984 1065 73 1138 93.6%
1985 1329 50 1379 96.4%
After stipulating to these facts, the parties agreed that the key issue was which time period the "85 percent substantially all" test should be applied to in determining whether Robinson qualifies as a construction industry employer. The parties then submitted the matter to arbitration pursuant to 29 U.S.C. § 1401(a)(1). Without addressing the questions presented, the arbitrator, Steven E. Schanes, held that Robinson was exempt from withdrawal liability pursuant to 29 U.S.C. § 1383(b)(1).
Central States appeals. It argues that Robinson cannot escape partial withdrawal liability because it was not a construction industry employer at the relevant time.
Standard of Review
This court has the authority to "enforce, vacate, or modify the arbitrator's award." 29 U.S.C. § 1401(b)(2). Section 4221(c) provides that findings of fact made by the arbitrator are presumed correct, and are rebuttable only by a clear preponderance of the evidence. 29 U.S.C. § 1401(c). However, an arbitrator's conclusions of law are subject to de novo review. Schlitz Brewing Co. v. Milwaukee Brewery Workers' Pension Plan, 3 F.3d 994, 999 (7th Cir. 1993); Trustees of Iron Workers Local 473 Pension Trust v. Allied Products Corp., 872 F.2d 208, 211 (7th Cir. 1989).
An arbitrator's interpretation of a statute is a legal determination subject to the full scrutiny of the reviewing court. Central States, S.E. and S.W. Areas Health and Welfare Fund v. Cullum Cos., 973 F.2d 1333 (7th Cir. 1992). Therefore, this court will review the arbitrator's interpretation of § 4203 (the building and construction industry exemption) and other statutory provisions under the de novo review standard.
In addition, the court notes that both parties have moved for summary judgment. Summary judgment is appropriate if the record shows that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In deciding a summary judgment motion, the court must review all evidence, draw all reasonable inferences, and resolve all doubts in favor of the nonmoving party. Wolf v. City of Fitchburg, 870 F.2d 1327, 1330 (7th Cir. 1989).
The Arbitrator's Decision
In analyzing the issues presented by this case, Arbitrator Schanes first outlined a history of the case and the relevant law. (Arbitration Award, Pl.'s Mem., Ex. A at 1-4). He then noted the parties' stipulated chart, the question presented,
and the arguments made by both sides. (Id. at 4-5). However, instead of interpreting the language of § 4203(b)(1) according to the stipulated facts and arguments of the parties, the arbitrator considered the "threshold question of: Congressional reasoning and purpose underlying the construction industry full and partial withdrawal liability exemption provisions of the MPPAA." (Id. at 5). After quoting portions of the Senate and House reports, the arbitrator concluded:
Congress was concerned about the adverse effect on a multiemployer plan of: (1) a long-term reduction in an employer's contribution base and (2) the possibility that an employer would seek to avoid withdrawal liability by maintaining a token number of employees covered under that plan, while continuing in non-covered business, with a substantial majority of its employees, within the geographical area covered by the plan.