The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer
MEMORANDUM OPINION AND ORDER
Plaintiff Central States, Southeast and Southwest Areas Pension Fund, a multiemployer pension fund, and one of the fund's trustees, Howard McDougall, (collectively "Central States") brought this action under the Employee Retirement and Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., seeking to collect withdrawal liability from Defendant Georgia-Pacific LLC, a large manufacturer and distributor of tissue, pulp, paper, packaging and building products. After Georgia-Pacific withdrew from the Central States Pension Fund, the fund assessed $5 million in withdrawal liability. An arbitrator vacated that assessment, ruling that the withdrawal occurred "solely because" of Georgia-Pacific's sale of its building division to a new owner who continued to make contributions to the fund. Central States challenges the arbitrator's ruling and moves to vacate or modify it. Georgia-Pacific moves to enforce the ruling. For the reasons that follow, Georgia-Pacific's motion is granted and Central States's motion is denied.
From 1994 to 2004, Georgia-Pacific contributed to Central States on behalf of some employees in its Pulp and Paper Transport Division and its Building Products Distribution Division.
Georgia Pacific LLC v. Central States, Southeast & Southwest Areas Pension Fund, AAA Case No. 51 621 0616 08, at 1 (Mar. 3, 2009) (Glanzer, Arb.). Georgia-Pacific outsourced the Pulp and Paper Transport Division's transportation needs in 1994 and then closed the division entirely in 1995. Id. at 2. As a result, Georgia-Pacific reduced its contributions to Central States. The Multiemployer Pension Plan Amendment Act of 1980 (MPPAA), 29 U.S.C. §§ 1381-1453, a series of amendments to ERISA, governs the consequences of an employer's withdrawing from a multiemployer plan. Generally speaking, the withdrawing employer must pay "the difference between the present value of vested benefits and the current value of the plan's assets," an amount referred to as "withdrawal liability." Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 725 (1984) (citing 29 U.S.C. §§ 1381, 1391). After a qualifying withdrawal, the plan sponsor calculates the amount of withdrawal liability, notifies the employer of the amount owed, and demands payment. 29 U.S.C. § 1399(b)(1); Chicago Truck Drivers v. El Paso CGP Co., 525 F.3d 591, 595 (7th Cir. 2008). Central States determined that Georgia-Pacific's outsourcing of some jobs and the closing of the Pulp and Paper Transport Division did not trigger withdrawal liability. Georgia Pacific, AAA Case No. 51 621 0616 08, at 2. Although the reason for this determination is not addressed in the record, the court presumes that the reduction in fund contributions due to the 1994 outsourcing and 1995 closure was not deemed a withdrawal because Georgia-Pacific continued making contributions for a large number of employees.
From 1994 to 1997, Georgia-Pacific underwent additional restructuring, namely facility closures in the Building Products Distribution Division. Id. This additional restructuring resulted in a further reduction in Georgia-Pacific's contributions to Central States, which Central States determined did require payment of partial-withdrawal liability under ERISA § 4205, 29 U.S.C. § 1385. Georgia-Pacific agreed and paid $81,585.62 in partial-withdrawal liability. Georgia Pacific, AAA Case No. 51 621 0616 08, at 2.
In 2000, Georgia-Pacific announced in a letter to shareholders that it was changing its corporate strategy to focus on higher-margin businesses closer to its customers and core competencies. (Arb. Record, Tab 77 to Tab 7, at 2.) The new strategy involved reducing corporate debt, which Georgia-Pacific accomplished, in part, by selling off some of its operations. Id. The new strategy was not completely successful in reducing Georgia-Pacific's debt, and, in 2003, the company saw its investment rating downgraded. Georgia Pacific, AAA Case No. 51 621 0616 08, at 3. In a 2003 letter to shareholders, Georgia-Pacific stated its goal of improving its investment grade by further reducing debt. (Arb. Record, Tab 81 to Tab 7, at 3.) Its 2004 sale of the Building Products Distribution Division helped in that goal by reducing the company's debt by close to $2 billion. (Arb. Record, Tab 82 to Tab 7, at 3.) As a 2004 SEC filing explains, the sale of the Building Division was also consistent with the corporate strategy adopted in 2000. (Id., at 5.)
After the sale, Georgia-Pacific and the purchaser, a company now known as BlueLinx, informed Central States that Georgia-Pacific had sold the Building Products Distribution Division through a sale governed by ERISA § 4204, 29 U.S.C. § 1384, rendering it exempt from withdrawal liability. Central States initially agreed that the sale complied with § 4204. Id. at 3-4. Under that section, an employer is exempt from withdrawal liability if, among other requirements, the withdrawal is "solely because" of an asset sale and the purchaser promises to continue to contribute to the fund. See Central States, Southeast & Southwest Areas Pension Fund v. Nitehawk Express, Inc., 223 F.3d 483, 487-88 (7th Cir. 2000).
Two and a half years later, Central States revised its position and sent Georgia-Pacific a notice and demand for payment of $5,161,930.31 in withdrawal liability. Georgia Pacific, AAA Case No. 51 621 0616 08, at 4. Central States based this assessment on Georgia-Pacific's contribution history for employees in the Pulp and Paper Transport Division and the Building Products Distribution Division; the contribution excluded contribution history for employees whose contribution responsibilities were assumed by BlueLinx in the asset purchase. Id. An employer may challenge a pension fund's assessment of withdrawal liability by asking the fund to review its assessment and then seeking arbitration, 29 U.S.C. §§ 1399(b)(2), 1401(a)(1), and that is what Georgia-Pacific did. Before the arbitrator, Central States argued that the § 4204 exemption did not apply because, based on Georgia-Pacific's reduced contributions before the asset sale, the sale was not the sole reason for the complete withdrawal. Georgia Pacific, AAA Case No. 51 621 0616 08, at 5-6. Georgia-Pacific argued that the prior reductions should not be considered because they were not related to the sale. Id. at 6.
The arbitrator sided with Georgia-Pacific. First, the arbitrator rejected Central States's interpretation of § 4204, reasoning that an employer's withdrawal from a fund can be "solely because" of an asset sale even where prior action by the company resulted in reduced contributions that were not due to an asset sale. Id. at 8-9. The arbitrator ruled that Central States's interpretation would make it too difficult for employers to take advantage of the exemption, thereby frustrating Congress's intent to avoid deterring asset sales. Id. at 8-10. If selling a division imposed a cost that holding the division would not impose, companies would be reluctant to make asset sales. Id.
Next, the arbitrator relied on the analysis adopted by the Pension Benefit Guaranty Corporation to determine whether the asset sale was the sole cause of Georgia-Pacific's withdrawal. Id. at 15-18. That is, the arbitrator examined the facts and circumstances of the case to determine the connection between the asset sale and the earlier events by relying on the following factors: "the length of time between transactions, whether the transactions were related, and whether such transactions would have been subject to Section  if viewed individually." PBGC Opinion Letter 92-1, 1992 WL 425182, at *3 (Mar. 30, 1992). The arbitrator noted that the length of time between the three earlier events, which occurred in 1994, 1995, and 1997, and the 2004 asset sale, supported treating the events as distinct. Georgia Pacific, AAA Case No. 51 621 0616 08, at 16. Next, the court found that there was "no common scheme or pattern among" the different events. Id. at 17-18. The closings in 1994 and 1995, which were motivated by "insurance liability exposure and capital restraints," were in a different division than the 2004 sale. Id. at 17. And the 1997 closures, though in the same division as the later sale, were motivated by "market conditions adversely affecting Georgia-Pacific's share." Id. at 17. In contrast, the 2004 sale was part of an independent "effort to reduce debt and divest the company of non-core assets." Id. at 18. Because the 2004 sale was removed in time from the prior acts and motivated by distinct business considerations, the arbitrator ruled that the withdrawal was solely because of the sale and, therefore, Georgia-Pacific was entitled to the exemption. Id.
Central States brought suit in this court under ERISA § 4221(b)(2), 29 U.S.C. § 1401(b)(2), which, in accordance with ERISA § 4301, 29 U.S.C. § 1451, gives district courts the power to review an arbitrator's award. Georgia-Pacific answered, and now both sides have filed motions: Central States seeks to have the award vacated and modified while Georgia-Pacific seeks to have the award enforced.
When reviewing an arbitrator's ruling on withdrawal liability, the arbitrator's factual determinations are presumed correct and may be overturned only if they are against the "clear preponderance of the evidence," 29 U.S.C. § 1401(c), a standard the Seventh Circuit interprets as a "clearly erroneous" standard. Central States, Southeast & Southwest Areas Pension Fund v. Midwest Motor Express, Inc., 181 F.3d 799, 804-05 (7th Cir. 1999). The arbitrator's legal conclusions are reviewed de novo. Id at 805. And the issue of whether the arbitrator properly exempted Georgia-Pacific from withdrawal liability is a mixed question of law and fact subject to clear-error review. Nitehawk Express, 223 F.3d at 488. Under that standard, a finding is clearly erroneous only "if the reviewing court, after acknowledging that the factfinder below was closer to the relevant evidence, is firmly convinced that ...