The opinion of the court was delivered by: ANDERSEN
Plaintiffs bring this action under the Employment Retirement Security Act of 1974, ("ERISA"), 29 U.S.C. § 1001 et seq., as amended by the Multiemployer Pension Plan Amendments Act of 1980 (the "MPPAA"), 29 U.S.C. § 1381, et seq. Plaintiffs, Central States, Southeast and Southwest Areas Pension Fund ("Central States") and Howard McDougall, seek to collect withdrawal liability payments from Defendants, Midwest Motor Express, Inc., MME, Inc., Midnite Express, Inc., and Express Cartage, Inc. (collectively "Midwest"), under the terms of the MPPAA. Midwest contends that the MPPAA, as applied, violates the Due Process Clause of the Fifth Amendment of the United States Constitution.
Currently before the Court are the parties' cross-motions for summary judgment. Plaintiffs assert that the Court should affirm the withdrawal liability assessment in the principal amount of $ 2,546,439.30. Although it is well settled that the MPPAA is constitutional on its face, Defendants claim that the instant case raises a matter of first impression in an "as applied" constitutional challenge because it joined Central States before Congress enacted ERISA. For the reasons set forth below, Plaintiffs' motion for summary judgment is granted and Defendants' motion is denied.
The following facts, primarily taken from the parties' 12(m) and 12(n) statements, are undisputed unless otherwise noted. Central States is a multiemployer pension plan. Howard McDougall is one of Central States' trustees. Midwest Motor Express, Inc. is a North Dakota corporation. MME, Inc., Midnite Express, Inc., and Express Cartage, Inc. are trades or businesses under Midwest's control. Midwest began contributing to Central States in 1958 and continued to contribute to the plan until it withdrew in 1991. Midwest signed various Trust Agreements with Central States governing its participation in the plan.
In a multiemployer pension plan, multiple employers contribute to a single pension fund based on one or more collective bargaining agreements. Central States provides pension benefits to participants employed by the employers that have entered into collective bargaining agreements with the International Brotherhood of Teamsters Union (the "Teamsters").
The parties to a collective bargaining agreement set the level of contributions that employers, such as Midwest, are required to pay to Central States. The employer contributions are pooled in one fund and the individual employee-participants do not have separate benefit accounts. Rather, plan participants are promised certain benefits if they achieve the periods of covered employment defined in the plan documents. Thus, Central States is a defined benefit pension plan.
Eight trustees jointly administer Central States, four appointed by management representatives and four appointed by union representatives pursuant to the Taft-Hartley Act, 29 U.S.C. § 186(c)(5). The Trustees determine the level of benefits paid to participants and beneficiaries. Actuaries advise the Trustees on appropriate benefits levels in light of the plan's assets and income. The actuaries also determine the level of contributions necessary to support the benefits disbursed.
The value of the benefits promised to employees is the principal liability of Central States. Central States' vested benefits were valued at $ 7.206 billion in 1980 and at $ 12.979 billion in 1991. The assets of Central States have grown from $ 2.970 billion in 1980 to $ 11.801 billion in 1991. In 1980 Central States' unfunded vested benefits were $ 3.744 billion, but by 1991, the unfunded vested benefits were reduced to $ 1.764 billion.
During the years of Midwest's participation in Central States, the Trustees agreed several times to increase the amount of benefits paid to employees and the level of employer contributions increased several times pursuant to collective bargaining agreements.
Midwest belonged to Regional Carriers, Inc., a regional association of trucking industry employers that conducted multiemployer bargaining with the Teamsters. Midwest appointed Regional Carriers, Inc. as its agent for collective bargaining. Midwest never appointed its own trustee to the Central States Board of Trustees. Rather, Midwest was represented by management trustees appointed by employer associations.
In late 1990, Midwest withdrew from Regional Carriers, Inc. for the express purpose of negotiating a separate 1991-1994 contract as a single employer. Accordingly, Midwest and the Teamsters commenced negotiations for a contract solely between Midwest and the Teamsters. On August 1, 1991, Midwest presented an initial contract offer to the Teamsters. Although Midwest employees went on strike on August 12, 1991, negotiations continued. In October 1991, Midwest legally hired permanent replacements for some of the strikers. On April 15, 1994, the National Labor Relations Board certified Midwest's employees decertification of the Teamsters and the strike ended. Midwest did not participate in the employees' decertification decision.
Between 1958 and 1991, Midwest made all of its required contributions to Central States. Midwest's contribution obligation permanently ceased on April 15, 1994, the day the strike ended. On April 26, 1994, Central States issued to Midwest a notice of assessment of withdrawal liability and a demand for payment of $ 2,546,439.30. The notice and demand listed Midwest's "pre-1980 pool liability" as $ 1,814,856.36 and its "post-1979 pool liability" as $ 731,582.94.
On April 26, 1994, Central States filed suit against Midwest to collect the withdrawal liability in the United States District Court for the Northern District of Illinois. Midwest received Central States' notice and demand on April 27, 1994.
Midwest requested arbitration on October 4, 1994. On September 24, 1996, the parties agreed that Midwest would make interim payments of $ 31,000 per month. Midwest has made all required monthly payments.
Arbitrator Malcolm Pritzker held hearings on January 14-15, 1997. The parties agreed that Arbitrator Pritzker would answer certain stipulated factual questions. Midwest never disputed the actuarial soundness of the withdrawal liability assessment. Instead, Midwest claimed that the withdrawal liability is unconstitutional as applied and, therefore, it owes nothing. Accordingly, at the hearing Midwest offered no testimony to dispute the amount of the withdrawal liability claimed by Central States. In addition, Midwest offered no evidence to quantify the amount of any withdrawal liability attributable to Midwest's pre-ERISA, ie., pre-1974, participation in Central States. Midwest also proffered no evidence to quantify any alleged impact that the benefits increases had on Midwest's withdrawal liability or Central States' unfunded vested benefits level generally.
Arbitrator Pritzker issued his Decision and Award on May 20, 1997 finding that:
1. Midwest is a pre-ERISA employer in that it started to participate in the Central States Pension Fund in 1958 well prior to the passage of ERISA in 1974. Midwest continued to participate in the fund after the passage of ERISA until it withdrew from the fund.
2. Midwest's withdrawal from Central States was involuntary.
3, 5, 5A, 5B. Central States is not a hybrid Taft-Hartley pension plan within the meaning of ERISA or a defined contribution plan. Central States is a defined benefit pension plan and is therefore covered by Title IV of ERISA. Central States is a hybrid plan as that phrase is used by Justice O'Connor in Connolly [v. Pension Benefit Guaranty Corp., 475 U.S. 211, 232-236, 89 L. Ed. 2d 166, 106 S. Ct. 1018 (1986) (O'Connor, J., concurring].
4. Midwest had little but some control over the level of contributions, the degree of benefits or other factors that produced unfunded vested benefits for Central States from the period of 1973 to the time [sic] Midwest's withdrawal from Central States.
6. On the basis of the Record before me, it is impossible to conclude that benefit increases by Central States unduly added to Midwest's withdrawal liability.
Central States and Midwest now move for summary judgment. Midwest contends that the imposition of withdrawal liability under the MPPAA is unconstitutional as applied to its particular circumstances. Central States disagrees and asserts that Midwest must pay the withdrawal liability in accordance with the MPPAA.
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show 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); Salima v. Scherwood South, Inc., 38 F.3d 929, 932 (7th Cir. 1994). The moving party bears the burden of demonstrating an absence of evidence to support the position of the nonmoving party, Doe v. R.R. Donnelley & Sons Co., 42 F.3d 439, 442-43 (7th Cir. 1994), and all reasonable inferences are drawn in favor of the party opposing the motion. Associated Milk Producers, Inc. v. Meadow Gold Dairies, Inc., 27 F.3d 268, 270 (7th Cir. 1994). The Court, however, is "not required to draw every conceivable inference from the record [in favor of the non-movant]--only those inferences that are reasonable." Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir. 1991). To avert summary judgment the plaintiff must "do more than simply show there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). The non-movant cannot rely solely on its pleadings and must come forth with evidence showing that a genuine issue of material fact exists for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).
In making its determination, the court's sole function is to determine "whether there is any material dispute of fact that requires a trial." Waldridge v. American Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994). Credibility determinations and weighing evidence are jury functions, not those of a judge when deciding a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).
Even though the parties have filed cross motions for summary judgement, the court need not grant summary judgment for one side. Lac Courte Oreilles Band of Lake Superior Chippewa Indians v. Voigt, 700 F.2d 341, 349 (7th Cir. 1983), cert. denied, 464 U.S. 805, 78 L. Ed. 2d 72, 104 S. Ct. 53 (1983); Intermatic Inc. v. Toeppen, 947 F. Supp. 1227, 1232 (N.D. Ill. 1996). The court must still assess whether a material fact question exists. Id.
The arbitrator's factual findings are presumed correct and are rebuttable only by a clear preponderance of the evidence. His resolution of "mixed questions of fact and law" are also entitled to deference. 29 U.S.C. § 1401(c); Central States, Southeast and Southwest Areas Pension Fund v. Cullum Co., 973 F.2d 1333, 1337 (7th Cir. 1992). We review the arbitrator's legal determinations de novo. Id.
1. This Court Has Jurisdiction Over Central ...