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Central States, Southeast and Southwest Areas Pension Fund v. Bulk Transport, Corp.

United States District Court, N.D. Illinois, Eastern Division

May 19, 2015



THOMAS M. DURKIN, District Judge.

Defendant/counter-plaintiff Bulk Transport Corporation has filed a counterclaim against plaintiffs/counter-defendants Central States, Southeast and Southwest Areas Pension Fund and Arthur H. Bunte, one of the Fund's trustees (collectively, the "Pension Fund"), seeking declaratory and injunctive relief to prevent the Pension Fund from enforcing its rules governing arbitration of pension withdrawal liability. See R. 8. Bulk Transport has filed a motion for a preliminary injunction, R. 10, which the parties agree should be consolidated with the merits of Bulk Transport's counterclaim. See R. 20 at 11; R. 22 at 1; see also Fed.R.Civ.P. 65(a)(2) ("Consolidating the Hearing with the Trial on the Merits"). For the following reasons, the Court grants the parties' agreed motion to consolidate the preliminary-injunction motion with the merits of Bulk Transport's counterclaim, and denies Bulk Transport's motion for injunctive and declaratory relief.


The Pension Fund is a multiemployer pension plan under the Employee Retirement Income Security Act ("ERISA"), as amended by the Multiemployer Pension Plan Amendment Act ("MPPAA"). See R. 17 ¶ 1; see also 29 U.S.C. §§ 1002(37) and 1301(a)(3). The MPPAA imposes "withdrawal liability" on employers who withdraw, partially or completely, from an underfunded multiemployer pension fund. See 29 U.S.C. §§ 1381-1405.[1] The purpose of the MPPAA's withdrawal liability provisions "is to relieve the funding burden on remaining employers and to eliminate the incentive to pull out of a plan which would result if liability were imposed only on a mass withdrawal by all employers.'" See Central States, Southeast and Southwest Areas Pension Fund v. Midwest Motor Express, Inc., 181 F.3d 799, 806 (7th Cir. 1999) (quoting H.R. Rep. No. 96-869). After receiving notification from the plan sponsor demanding payment of withdrawal liability, an employer has 90 days to ask the plan sponsor to review the decision. See 29 U.S.C. § 1399(b)(2)(A). "After a reasonable review of any matter raised, " the plan sponsor must notify the employer of its decision and the basis for it. See id. at § 1399(b)(2)(B). The employer then has 60 days to initiate mandatory arbitration. See id. at § 1401(a)(1)(A). If the employer fails to initiate arbitration within that time period, the withdrawal liability demanded by the plan sponsor becomes "due and owing." See id. at § 1401(b)(2).

On May 17, 2013, Bulk Transport received from the Pension Fund a demand for: (1) $86, 687.75 for an alleged partial withdrawal during plan year 2011; and (2) $237, 768.18 for an alleged complete withdrawal during plan year 2012. See R. 17 ¶¶ 14-15. On or about August 13, 2013, Bulk Transport submitted a timely request for review to the Pension Fund. See id. at ¶¶ 16-17. On or about December 6, 2013, the Pension Fund rejected Bulk Transport's challenge with respect to both plan years. See id. at ¶¶ 18-19.

On December 20, 2013, the Pension Fund filed this lawsuit seeking a declaratory judgment that Bulk Transport is not entitled to a refund with respect to certain pension contributions. R. 1. Bulk Transport filed its three-count counterclaim in this Court within the 60-day period to initiate arbitration. See R. 8. Bulk Transport's preliminary injunction motion is predicated on Count I of its counterclaim, which seeks declaratory and injunctive relief prohibiting the Pension Fund from enforcing its rules governing arbitration. Id. at ¶¶ 66-70. The relief that Bulk Transport sought in Count II-a stay of the statutory deadline to initiate arbitration, see id. at ¶¶ 71-74-is moot. On January 27, 2014, the parties executed a stipulation tolling the deadline to initiate arbitration under the Pension Fund's rules until ten days after the Court rules on Bulk Transport's preliminary-injunction motion. See R. 13. Count III is the mirror-image of the Pension Fund's own claim for declaratory relief concerning its decision to deny Bulk Transport's administrative claim for a refund. See R. 8 ¶¶ 75-80. The refund issue is the subject of the Pension Fund's pending motion for summary judgment. See R. 25.


In its response to Bulk Transport's preliminary-injunction motion, the Pension Fund moved to consolidate the preliminary-injunction hearing with a trial on the merits. See R. 20 at 11; see also Fed.R.Civ.P. 65(a)(2) (authorizing district courts to "advance the trial on the merits and consolidate it with the [preliminary injunction] hearing"). In that connection, the Pension Fund asks the Court to grant summary judgment in its favor pursuant to Rule 56(f). See R. 20 at 11; see also Fed.R.Civ.P. 56(f)(1) ("After giving notice and a reasonable time to respond, the court may... grant summary judgment for a nonmovant."). Bulk Transport agrees that its preliminary injunction motion should be consolidated with a trial on the merits, see R. 22 at 1, n.1, and asks the Court to enter a permanent injunction and/or a declaratory judgment barring the Pension Fund from imposing its arbitration rules. Id. at 16-18. The Court grants the parties' agreed motion to consolidate the preliminary-injunction proceedings with the ultimate merits of Bulk Transport's counterclaim. The relevant facts, drawn from the Pension Plan's answer to Bulk Transport's counterclaim ( see R. 17), are undisputed. What remains are purely legal questions regarding the procedures governing the initiation and conduct of withdrawal-liability arbitration.

I. PBGC Regulations and Alternative Arbitration Procedures

Congress created the Pension Benefit Guaranty Corporation ("PBGC") to carry out ERISA provisions governing plan termination insurance. See 29 U.S.C. § 1302. The statute requires parties to arbitrate withdrawal liability disputes "in accordance with fair and equitable procedures to be promulgated by the [PBGC]." Id. at § 1401(a)(1), (2). In 1983, the PBGC proposed rules governing the arbitration of withdrawal liability disputes, see 48 Fed. Reg. 31251-01, and later issued final rules effective September 26, 1985. See 50 Fed. Reg. 34679-01. The only requirement for initiating arbitration under the PBGC's regulations-in their original and current forms-is the receipt of notice by the non-initiating party. See id. at 34680; see also 29 C.F.R. § 4221.3 (current version imposing substantially the same requirement). The regulations further provide, however, that parties may use "an alternative arbitration procedure approved by the PBGC... [i]n lieu of the procedures prescribed by this part." 50 Fed. Reg. at 34686; see also 29 C.F.R. § 4221.14 (current version containing substantially the same language). Shortly before the PBGC's regulations became effective, the PBGC, "on its own initiative, determined that the Multiemployer Pension Plan Arbitration Rules effective June 1, 1981, sponsored by the International Foundation of Employee Benefit Plans ["IFEBP"] and administered by the American Arbitration Association ["AAA"] will be substantially fair to all parties involved in the arbitration of a withdrawal liability dispute and that the [AAA] is neutral and able to carry out its role under the procedures." See 50 Fed. Reg. 38046-03. The PBGC approved those rules, effective September 26, 1985, and stated that its approval would "remain effective until revoked by the PBGC through a Federal Register notice." Id. Section 7 of the 1981 version of the AAA's Multiemployer Pension Plan Arbitration Rules ("MPPAR") imposed the following requirements for initiating arbitration:

Section 7. INITIATION OF ARBITRATION - Arbitration may be initiated in the following manner:
(a) Under an arbitration provision in a plan document calling for arbitration under these Rules or by the AAA, the initiating party shall give notice to the other party of its intention to arbitration (Demand), which notice shall contain a statement setting forth a brief description of the dispute, the amount involved, if any, the remedy sought, and
(b) By filing at any Regional Office of the AAA two (2) copies of said notice, together with the appropriate administrative fee as provided in the Administrative Fee Schedule.

See R. 22-1 at 4-5. The "Administrative Fee Schedule, " in turn, imposed fees for initiating arbitration tied to the amount in dispute: (1) $500 (for disputes up to $1 million); (2) $850 (for disputes between $1 million and $3 million); and (3) $1, 300 (for disputes between $3 ...

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