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January 12, 1999


The opinion of the court was delivered by: Nordberg, District Judge.


Plaintiffs have filed this action seeking to collect interim withdrawal liability payments under the Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980.*fn1 Before the court are the parties' cross-motions for summary judgment. For the reasons set forth below, this court grants summary judgment in favor of the defendant.


The following facts are undisputed unless otherwise noted. Defendant Hunt Truck Lines, Inc. ("Hunt") is an Iowa corporation with its principal place of business in Minnesota. Plaintiff Central States, Southeast and Southwest Areas Pension Fund ("Central States") is a multiemployer pension plan, and plaintiff Howard McDougall is the trustee of the plan.

Until approximately May 28, 1994, Hunt contributed to Central States on behalf of Hunt's employees covered by various collective bargaining agreements. On or about May 25, 1994, Hunt sold its assets to Wintz Parcel Drivers, Inc. ("Wintz"). However, the sale of assets did not constitute a "withdrawal" from Central States because the transaction satisfied the criteria for such sales under 29 U.S.C. § 1384. Central States approved of the sale of assets, concluding that it met the requirements of § 1384. Under § 1384, Hunt only would he liable to Central States if Wintz made a withdrawal and then failed to make withdrawal liability payments. In other words, Hunt would be secondarily liable to Central States.

Several years later, on May 31, 1996, Central States sent Hunt a Notice and Demand for Payment of Withdrawal Liability. Central States assessed Hunt for $303,372.75 in withdrawal liability. Hunt received the Notice and Demand on June 3, 1996. However, it was not until well over a month later — on or about July 27, 1996 — that Wintz made a complete withdrawal from Central States within the meaning of 29 U.S.C. § 1383. Thus, at the time Central States sent the May 31, 1996 Notice and Demand to Hunt, Wintz had not completely withdrawn from the plan.

As will be discussed below, the timing of the Wintz withdrawal is important for purposes of this ruling, and Central States has raised only a minor challenge to the July 27, 1996 date that will be used by this court. Initially, in its opening memorandum of law to this court, Central States seemed to agree with this basic time frame, stating that Wintz made a complete withdrawal "on or about July 20, 1996." (Opening Mem. at 2; 2/13/97 Keil Affidavit.) Whether the date is July 27th or July 20th is unimportant for this ruling because both dates are after the May 31, 1996 Notice and Demand. However, after Hunt argued in its response brief that the May 31, 1996 Notice and Demand was issued prematurely before Wintz had made a complete withdrawal, Central States then appeared to revise its position as to when the Wintz withdrawal actually occurred. In its reply brief, Central States argued that it occurred on or about May of 1996 when Central States Xpress, into which Wintz was merged, was forced into involuntary bankruptcy and ceased covered operations. (Reply at 3-4; 3/25/97 Kiel Aff.) Central States then explained that its original statement — that the Wintz withdrawal occurred "on or about July 20, 1996" — in fact was consistent with its revised position that the Wintz withdrawal occurred in May of 1996 because the original statement supposedly was not "specific" given that it included "on or about" language. This court simply finds this argument unbelievable. In any event, the parties have now stipulated in the arbitration proceedings that July 27th is the relevant date for the Wintz withdrawal, and thus that is the date this court will use.

On September 5, 1996, Central States filed this lawsuit, seeking a judgment for past due interim withdrawal liability payments, interest, liquidated damages, attorneys' fees, and costs pursuant to 29 U.S.C. § 1132 (g)(2). It is undisputed that Hunt has not made any interim withdrawal liability payments.

On December 20, 1996, Hunt filed a demand for arbitration under 29 U.S.C. § 1401. On June 23, 1998, the arbitrator issued an Interim Award and held, among other things, that the May 31, 1996 Notice and Demand was issued prematurely. The arbitrator ordered Central States to reissue a new Notice and Demand and stated that the earliest date that a demand to Hunt could have been issued seeking secondary withdrawal liability pursuant to § 1384 would have been in mid-August 1996 and that the earliest the first payment by Hunt would have been due on November 1, 1996. On July 1, 1998, Central States issued a revised Notice and Demand containing a schedule of payments revised to reflect an initial payment date of November 1, 1996.*fn2


Both parties have moved for summary judgement on the same basic issue; namely, whether Hunt was required to make interim withdrawal liability payments under the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. § 1381-1461. Summary judgment may be granted when the record contains no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56 (c). A genuine issue for trial will be found only when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). As will be explained below, this court finds that Central States cannot recover interim withdrawal liability payments from Hunt because Central States failed to comply with the statutory prerequisites under the MPPAA.

Before turning to the parties' specific arguments, it is helpful to briefly review the purpose and general structure of the MPPAA. "Congress enacted the MPPAA to protect the financial solvency of multiemployer pension plans." Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., Inc., 522 U.S. 192, 118 S.Ct. 542, 546, 139 L.Ed.2d 553 (1997). When an employer withdraws from a multiemployer plan, the withdrawal can have a domino effect because it increases the burden on the other employers in the plan in turn increasing the chance that those employers will fail. See Artistic Carton Co. v. Paper Industry Union-Management Pension Fund, 971 F.2d 1346, 1348 (7th Cir. 1992) ("a series of withdrawals, much like a bank run, can leave the fund unable to pay off vested obligations"). Therefore, under the MPPAA, if an employer makes a "complete withdrawal," the employer must pay a penalty — called "withdrawal liability" — in the amount of the unfunded, vested pension benefits. Central States, Southeast and Southwest Areas Pension Fund v. Wintz Properties, Inc., 155 F.3d 868, 871 (7th Cir. 1998).

The MPPAA provides that the trustees of the plan initiate the process of imposing withdrawal liability. Id. Under § 1382, when an employer withdraws from a plan, the trustees determine the amount of withdrawal liability and then notify the employer. Although the trustees of the plan make the initial assessment of how much the employer must pay in withdrawal liability, the employer may contest liability by initiating arbitration. 29 U.S.C. § 1401. However, the MPPAA provides that while the arbitration is pending, the employer must make what are known as "interim" withdrawal liability payments until a final determination of liability is made. Central States, Southeast and Southwest Areas Pension Fund v. Lady Baltimore Foods, Inc., 960 F.2d 1339, 1341 (7th Cir. 1992). "If he wins the arbitration he will get back whatever he has paid but the rule is pay first, arbitrate after." Id. The MPPAA thus sets up what has sometimes been described as a "pay now, dispute later" scheme. See Galgay v. Beaverbrook Coal Co., 105 F.3d 137, 139 (3d Cir. 1997) ("Congress foresaw that the purpose of MPPAA would be undermined if employers could postpone paying their debts to pension funds by engaging in protracted litigation over withdrawal liability").

The Seventh Circuit has explained one rationale underlying the MPPAA's "pay now, dispute ...

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