Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
8-29-2007
SUPERVALU Inc v. Bd Trustees SW PA
Precedential or Non-Precedential: Precedential
Docket No. 06-3829
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 06-3829
SUPERVALU, INC.
v.
BOARD OF TRUSTEES OF THE SOUTHWESTERN
PENNSYLVANIA AND WESTERN MARYLAND AREA
TEAMSTERS AND EMPLOYERS PENSION FUND,
a/k/a THE TRUSTEES OF THE SOUTHWESTERN
PENNSYLVANIA AND WESTERN MARYLAND AREA
TEAMSTERS AND EMPLOYERS PENSION FUND
a/k/a SOUTHWESTERN PENNSYLVANIA
AND WESTERN MARYLAND AREA TEAMSTERS
AND EMPLOYERS PENSION FUND
BOARD OF TRUSTEES OF THE SOUTHWESTERN
PENNSYLVANIA AND WESTERN MARYLAND AREA
TEAMSTERS AND EMPLOYERS PENSION FUND,
a/k/a THE TRUSTEES OF THE SOUTHWESTERN
PENNSYLVANIA AND WESTERN MARYLAND AREA
TEAMSTERS AND EMPLOYERS PENSION FUND,
Appellant
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 05-cv-00737)
District Judge: Honorable Joy F. Conti
Argued May 17, 2007
Before: FISHER and ROTH, Circuit Judges,
and RAMBO,* District Judge.
(Filed: August 29, 2007)
Vince P. Szeligo (Argued)
Brendan Delaney
Wick, Streiff, Meyer, O’Boyle & Szeligo
1450 Two Chatham Center
Pittsburgh, PA 15219-3427
Attorneys for Appellant
Thomas M. Christina (Argued)
Ogletree, Deakins, Nash, Smoak & Stewart
300 North Main Street
The Ogletree Building
P.O. Box 2757
*
The Honorable Sylvia H. Rambo, United States District
Judge for the Middle District of Pennsylvania, sitting by
designation.
2
Greenville, SC 29602
Attorneys for Appellee
OPINION OF THE COURT
FISHER, Circuit Judge.
The Board of Trustees of the Southwestern Pennsylvania
and Western Maryland Area Teamsters and Employers Pension
Fund (the “Fund”) appeals the District Court’s grant of summary
judgment in favor of SUPERVALU, Inc. (“SUPERVALU”).
The Fund claims that the District Court improperly concluded
that SUPERVALU did not violate § 4212(c) of the Employee
Retirement Income Security Act (“ERISA”), 29 U.S.C.
§ 1392(c). We agree. For the reasons that follow, we will
reverse the District Court’s judgment and remand the case to the
District Court for enforcement of the Arbitrator’s Award.
I.
The Multiemployer Pension Plan Amendments Act of
1980 (“MPPAA”), 29 U.S.C. § 1381 et seq., amended ERISA.
The MPPAA was enacted “out of a concern that ERISA did not
adequately protect multiemployer pension plans from the adverse
consequences that result when individual employers terminate
their participation or withdraw.” Warner-Lambert Co. v. United
Retail & Wholesale Employee’s Teamster Local No. 115 Pension
Plan, 791 F.2d 283, 284 (3d Cir. 1986) (internal citation
3
omitted). “The . . . amendments to ERISA were designed to
prevent employers from withdrawing from a multiemployer
pension plan without paying their share of unfunded, vested
benefit liability, thereby threatening the solvency of such plans.”
Mfrs. Indus. Relations Ass’n v. E. Akron Casting Co., 58 F.3d
204, 205-06 (6th Cir. 1995) (citing Mason & Dixon Tank-Lines,
Inc. v. Cent. States Pension Fund, 852 F.2d 156, 158-59 (6th Cir.
1988)). At the time the MPPAA was enacted many employers
were withdrawing from multiemployer plans because they could
avoid withdrawal liability if the plan survived for five years after
the date of their withdrawal. Debreceni v. Outlet Co., 784 F.2d
13, 15-16 (1st Cir. 1986).
Congress recognized that multiemployer pension plans
affected millions of Americans and found that “withdrawals of
contributing employers from a multiemployer pension plan
frequently result in substantially increased funding obligations
for employers who continue to contribute to the plan, its
participants and beneficiaries, and labor-management relations.”
29 U.S.C. § 1001a(a). It intended for the MPPAA to uniformly
impose withdrawal liability and 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.’” Debreceni, 784 F.2d at 16
(quoting H.R. Rep. 869, 96th Cong., 2d Sess., 67, reprinted in
1980 U.S. Code Cong. & Ad.News 2918, 2935). To solve this
problem, the MPPAA requires that a withdrawing employer pay
its share of the plan’s unfunded liability. See Warner-Lambert,
791 F.2d at 284. This insures that the financial burden will not
be shifted to the remaining employers. See Cent. States, Se. &
4
Sw. Areas Pension Fund v. Slotky, 956 F.2d 1369, 1371 (7th Cir.
1992).
Section 4201 provides that a withdrawing employer is
liable for its share of the plan’s unfunded vested benefits. 29
U.S.C. § 1381(a).1 It is the duty of the pension plan to determine
whether withdrawal liability has occurred and in what amount.
29 U.S.C. §§ 1382, 1391. Section 4211 provides that the amount
of an employer’s withdrawal liability is the employer’s
proportionate share of the unfunded vested benefits existing at
the end of the plan year preceding the plan year in which the
employer withdraws. 29 U.S.C. § 1391(b)(2)(A). A “complete
withdrawal,” as in this case, occurs when an employer “(1)
permanently ceases to have an obligation to contribute under the
plan, or (2) permanently ceases all covered operations under the
plan.” 29 U.S.C. § 1383(a). “[T]he date of complete withdrawal
is the date of the cessation of the obligation to contribute or the
cessation of covered operations.” 29 U.S.C. § 1383(e). The
“obligation to contribute” arises “(1) under one or more
collective bargaining (or related) agreements, or (2) as a result of
a duty under applicable labor-management relations law.” 29
U.S.C. § 1392(a). Although “all covered operations” is not
defined in the statute, we have held that it means the “substantial
cessation of normal business activity.” Crown Cork & Seal Co.,
1
Although statutory provisions exist that exempt
withdrawing employers from incurring withdrawal liability in
various situations, none of the exemptions are applicable to this
case. See, e.g., 29 U.S.C. § 1384.
5
Inc. v. Cent. States Se. & Sw. Area Pension Fund, 982 F.2d 857,
865-66 (3d Cir. 1992).
SUPERVALU, a wholesale food distributor, was a
contributing employer to the Fund, which is a defined benefit
multiemployer pension plan governed by ERISA, as amended by
the MPPAA. Employers agree to contribute to the Fund based on
collective bargaining agreements (“CBAs”) with various local
Teamsters unions. The Fund, in turn, provides retirement
benefits for the employees of the participating employers.
SUPERVALU and the Teamsters Local 872 (the “Union”) had
CBAs which required SUPERVALU to contribute to the Fund on
behalf of employees at SUPERVALU’s Belle Vernon,
Pennsylvania facility through January 31, 2003, or the cessation
of covered work.
At the beginning of 2002, SUPERVALU decided to close
the Belle Vernon facility for business reasons. On March 14,
2002, SUPERVALU informed its employees of the decision, and
that the closure would occur by late summer 2002. As a result of
the closure, approximately three-hundred employees would lose
their jobs. SUPERVALU and the Union engaged in negotiations
from March until May 2002 regarding the effects of the closing.
The negotiations included discussions regarding
SUPERVALU’s potential withdrawal liability to the Fund. If
SUPERVALU withdrew prior to June 30, 2002, the end of the
Fund’s 2001-2002 plan year, it would incur no withdrawal
liability because the Fund did not have any unfunded vested
benefits at the end of the prior plan year (2000-2001). See 29
U.S.C. § 1391(b)(2)(A). However, if withdrawal occurred after
6
June 30, 2002, during the 2002-2003 plan year, SUPERVALU
would incur significant withdrawal liability based on the
unfunded vested benefits that would exist at the end of the 2001-
2002 plan year. See id.
It is clear from the record that SUPERVALU was aware
of its potential liability under both scenarios. First, at
SUPERVALU’s request, the Fund informed it of the status of the
Fund’s assets as of April 2002: there was a negative return on
the assets during the first three-quarters of the 2001-2002 plan
year. Additionally, SUPERVALU informed the Union of the
potential withdrawal liability if it were to withdraw in the 2002-
2003 plan year. At a bargaining meeting, a SUPERVALU
representative stated that terminating the CBAs after June 30,
2002, would place SUPERVALU in another plan year and make
it liable for a large unfunded liability. SUPERVALU also
explained to the Union that its members would not benefit from
SUPERVALU’s continued participation in the Fund, and that
SUPERVALU would rather the money go directly to its
employees.
Based on this knowledge and its desire to maximize its
employees’ benefits, SUPERVALU proposed that the CBAs,
which were set to expire on January 31, 2003, be terminated and
replaced prior to June 30, 2002. It informed the Union that the
early termination would prevent SUPERVALU from being
assessed withdrawal liability for the 2002-2003 plan year, which
was estimated at the time to be in the range of $1 to $1.5 million.
If the Union agreed to the early termination, SUPERVALU
would make additional payments to its employees as
consideration for the agreement.
7
In May 2002, the Union and SUPERVALU signed a new
agreement (the “Termination Agreement”). Under the
Termination Agreement, the prior CBAs terminated at 11:59 p.m.
on June 29, 2002. The Termination Agreement was identical to
the prior CBAs, except that the provisions regarding
SUPERVALU’s contributions to the Fund were deleted.
Additionally, the new terms provided that employees who were
entitled to severance payments would receive a lump sum of
$2,600 and that employees that continued working after June 30,
2002, would receive a $2.50 per hour salary increase.2 The
Agreement was ratified by the Union’s members on May 31 and
June 1, 2002.
SUPERVALU submitted its final contributions to the
Fund on June 26, 2002. It also informed the Fund that its
obligations to contribute ceased on June 29, when it would
withdraw as a participating employer from the Fund. As
SUPERVALU withdrew during the 2001-2002 plan year, it
believed that it would not incur any withdrawal liability.
However, in February 2003, the Fund sent SUPERVALU
a letter assessing $4,316,996 in withdrawal liability against
SUPERVALU because it withdrew during the 2002-2003 plan
year.3 See 29 U.S.C. § 1382. The letter explained that after
2
Most employees continued working at the facility until
July 27, 2002.
3
The $4,316,996 was SUPERVALU’s pro rata share,
twenty-three percent, of the Fund’s unfunded vested benefits at
8
conducting an investigation, the Fund believed that
SUPERVALU entered the Termination Agreement with a
principal purpose of evading or avoiding withdrawal liability in
violation of ERISA § 4212(c).4 According to the Fund, even
though the facility did not close until July 27, 2002,
SUPERVALU withdrew on June 29, 2002, in order to avoid its
share of the unfunded vested benefits that were expected to exist
at the end of the 2001-2002 plan year. Therefore, for purposes
of calculating SUPERVALU’s withdrawal liability, the Fund
treated SUPERVALU as having withdrawn during the 2002-
2003 plan year and ignored the June 29, 2002 date in the
Termination Agreement in accordance with § 4212(c).
In a letter dated May 1, 2003, SUPERVALU requested a
review of the Fund’s demand letter as allowed under the Fund’s
withdrawal liability procedures and the applicable statutory
provisions, see 29 U.S.C. § 1399. SUPERVALU argued that its
contribution obligations ended on June 29, 2002. Additionally,
SUPERVALU argued that the Termination Agreement was a
the end of the 2001-2002 plan year. See, e.g., 29 U.S.C.
1391(b)(2)(A).
4
The Fund’s letter also asserted an alternative theory of
liability: SUPERVALU’s obligations to employees who were
injured during the 2001-2002 plan year continued into the 2002-
2003 plan year. As the Fund agreed during the proceedings
before the Arbitrator to waive this argument, it is unnecessary
for us to consider whether SUPERVALU could be held liable
under such a theory.
9
bona fide, arm’s length agreement which took it outside of
ERISA’s “evade or avoid” provision. Receiving no response to
its letter, SUPERVALU initiated arbitration on October 23, 2002,
pursuant to ERISA § 4221, 29 U.S.C. § 1401.
Before the Arbitrator, the parties made cross-motions for
summary judgment and agreed to limit argument to the issue of
whether SUPERVALU engaged in the transaction to evade or
avoid liability under § 4212(c) of ERISA.5 The Arbitrator found
that § 4212(c) was unambiguous and that the plain language
applied to the transaction at issue in this case. According to the
Arbitrator, SUPERVALU was aware of its potential liability and
persuaded the Union to enter the Termination Agreement to
enable SUPERVALU to avoid the liability. The Union was
willing to agree as SUPERVALU offered a bonus to each
employee, as well as a pay increase for the remaining employees.
Such an arrangement, according to the Arbitrator, fit squarely
within the plain language of § 4212(c). Therefore, the Arbitrator
granted summary judgment in favor of the Fund.
SUPERVALU filed a complaint in the District Court
seeking to modify the Arbitrator’s Award pursuant to ERISA
5
Depending on the outcome before the Arbitrator, the
parties reserved questions such as whether SUPERVALU was
required to continue contributing to the Fund on behalf of
employees injured during the 2001-2002 plan year, and the
calculations and methods used to determine the withdrawal
liability. However, the parties later agreed not to make any
additional arguments and the Arbitrator’s Award became final.
10
§§ 4301 and 4221, 29 U.S.C. §§ 1451 and 1401. The case was
initially heard by a magistrate judge, Francis X. Caiazza, and the
parties made cross-motions for summary judgment. After
considering the motions, the Magistrate Judge issued a report and
recommendation, which proposed setting aside the Award.
Additionally, the Magistrate recommended granting summary
judgment in favor of SUPERVALU.
According to the Magistrate Judge, the Termination
Agreement was not entered into to evade or avoid withdrawal
liability. He recognized that SUPERVALU withdrew during the
2001-2002 plan year in order to effect a less costly withdrawal.
However, in the Magistrate’s view, because the Agreement was
bona fide and made at arm’s length, § 4212(c) was not
applicable. The Magistrate rejected the Arbitrator’s
determination that the withdrawal date in the Termination
Agreement should be disregarded. He explained that the date of
withdrawal is determined by the CBA, or in this case the
Termination Agreement, and a fund cannot simply disregard the
CBA and choose the date of an employer’s withdrawal. Such a
rule would enable a fund to choose the date of withdrawal and
prevent an employer and a union from entering an agreement to
minimize withdrawal liability.
The Fund filed objections to the Magistrate’s
recommendations, but the District Court adopted the Magistrate’s
Report and Recommendations. The District Court held that the
language of § 4212(c) was not plain, and had to be considered in
light of the entire statutory scheme. Additionally, it agreed with
the Magistrate’s determination that the date of withdrawal is set
by the Termination Agreement. The date of withdrawal is based
11
on a statutory formula ! when the employer completely
withdraws ! and nothing in the record enabled the Court to find
that a different withdrawal date applied. The District Court
concluded by explaining that where it is not clear that an
employer acted to evade or avoid, but rather acted to minimize,
withdrawal liability, the court would not interfere. In order to
find that SUPERVALU had violated § 4212(c), it would have
had to alter the rules governing withdrawal liability, which was
not within its province. Such an expansion of § 4212(c) would
trump § 4212(a), and only Congress has the power to expand the
provision. Therefore, the District Court granted summary
judgment in favor of SUPERVALU.6
The Fund brought this timely appeal.
II.
We have jurisdiction over this appeal pursuant to 28
U.S.C. § 1291. Our review of a district court’s grant of summary
judgment is plenary, and we employ the same standard used by
the court below. See Kay Berry, Inc. v. Taylor Gifts, Inc., 421
F.3d 199, 203 (3d Cir. 2005). “Summary judgment is appropriate
when ‘there is no genuine issue as to any material fact and . . . the
6
The District Court amended its order on September 1,
2006, granting SUPERVALU’s motion to require the Fund to
refund to SUPERVALU the money that it paid in withdrawal
liability. SUPERVALU had paid $3,948,569 to the Fund. The
District Court ordered the refund (plus interest) within ten days
of the order.
12
moving party is entitled to a judgment as a matter of law.’” Id.
(quoting Fed. R. Civ. P. 56(c)). All reasonable inferences must
be drawn in favor of the non-moving party. Id. An arbitrator’s
findings of fact are subject to clear error review, but his or her
legal conclusions are subject to de novo review. See Crown Cork
& Seal, 982 F.2d at 860-61. The parties stipulated to the facts
before the Arbitrator and District Court, so only a question of law
remains.
III.
The main issue in this appeal is whether SUPERVALU
violated ERISA § 4212(c) by entering the Termination
Agreement with the Union. Section 4212(c) provides that “[i]f
a principal purpose of any transaction is to evade or avoid
liability under this part, this part shall be applied (and liability
shall be determined and collected) without regard to such
transaction.” 29 U.S.C. § 1392(c). The terms transaction, evade,
and avoid are not defined in the statute, and therefore we must
construe them in accordance with their ordinary and natural
meaning, United States v. E.I. DuPont De Nemours & Co., Inc.,
432 F.3d 161, 171 (3d Cir. 2005), and “the overall policies and
objectives of the statute,” United States v. Lowe, 118 F.3d 399,
402 (5th Cir. 1997) (citing Brown v. Gardner, 513 U.S. 115, 117-
19 (1994)).
The noun “transaction” means “[t]he act of transacting or
the fact of being transacted,” and the verb “transact” means “[t]o
do, carry on, or conduct” or “[t]o conduct business.” Am.
Heritage Dictionary 1899-1900 (3d ed. 1992). The verb “avoid”
means “[t]o stay clear of” or “[t]o keep from happening” and is
13
synonymous with escape. Id. at 128. The verb “evade” means
“[t]o escape or avoid by cleverness or deceit” or “[t]o fail to
make a payment of.” Id. at 634. Under a plain language
statutory reading the provision applies when a contributing
employer enters a transaction with a principal purpose of
escaping its duty to pay withdrawal liability to the plan or fund.
In Dorn’s Transportation, Inc. v. Teamsters Pension Trust
Fund of Philadelphia & Vicinity, 787 F.2d 897 (3d Cir. 1986), we
called § 4212(c) a “good faith requirement.” Id. at 902. The use
of the term “good faith requirement” has led to confusion in this
case. The good faith requirement was simply shorthand for the
language of the statute: an employer cannot act in bad faith, i.e.,
with a principal purpose, of evading or avoiding withdrawal
liability. By using such shorthand, we did not create an
additional requirement that must be considered in determining
whether the statute was violated. Rather, a principal purpose to
evade or avoid connotes bad faith.
The facts of Dorn’s are too dissimilar to the facts of this
case for the opinion to provide much guidance. However, the
case is important because we explained that § 4212(c) “was
designed to guard against the intentional evasion of liability.” Id.
at 902. There was no violation in Dorn’s because a “‘principal
purpose of the transaction’ as a whole [was not] to escape
liability.” Id. In other words, § 4212(c) is violated when one of
14
the main reasons for entering a transaction is to effectuate that
goal.7
There is no doubt that SUPERVALU had the intent
required by the statute. SUPERVALU was aware of the
significant withdrawal liability that it would incur by
withdrawing during the 2002-2003 plan year when the facility
closed and all covered operations ceased. Based on its desire to
avoid such liability, SUPERVALU offered enhanced severance
benefits and wages to the Union’s members as consideration for
the Union’s agreement to enter the Termination Agreement. By
entering the Termination Agreement, SUPERVALU withdrew
7
SUPERVALU cites our decision in Board of Trustees of
the Trucking Employees of Northern Jersey Welfare Fund, Inc. -
Pension Fund v. Centra, 983 F.2d 495 (3d Cir. 1992), for the
proposition that § 4212(c) should not be read literally. Centra
dealt with a settlement between the fund and a withdrawing
employer regarding withdrawal liability. Id. at 506-07. We held
that the employer did not violate § 4212(c), despite the fact that
it entered into the transaction to limit its liability, because the
agreement was voluntarily entered into by both the fund and the
employer. Centra cannot be construed as rejecting a literal
interpretation of § 4212(c), but rather demonstrates that a
principal purpose of the transaction must be to evade or avoid
withdrawal liability. The employer did not agree to the
settlement with a principal purpose of evading or avoiding
liability, rather the principal purpose was to settle the claim and
avoid liability within the larger context of “avoid[ing] the
possibility of a larger adverse verdict at trial.” Id.
15
from the Fund during the 2001-2002 plan year, which enabled it
to avoid incurring the significant liability that existed for
withdrawal during the 2002-2003 plan year. The record indicates
that the only reason that SUPERVALU chose to renegotiate the
CBAs less than a month before the facility closed was to bring its
withdrawal date within the 2001-2002 plan year in order to avoid
withdrawal liability for the 2002-2003 plan year.8 As there was
no other reason for SUPERVALU to enter the Termination
Agreement, its intention to evade or avoid withdrawal liability
was a principal purpose, if not its only purpose. Therefore,
SUPERVALU acted with a principal purpose of escaping
withdrawal liability in violation of § 4212(c).9
As noted above, when interpreting undefined terms in a
statute, we may also consider the statute’s policies and
8
We note that this case does not present the question of
whether SUPERVALU could have withdrawn without liability
had it simply closed the facility before the end of the 2001-2002
plan year. As that question is not before us, it is unnecessary for
us to determine whether such a situation would violate
§ 4212(c).
9
We note that although the timing of SUPERVALU’s
withdrawal under the Termination Agreement was suspicious,
our determination is not based on the fact that it withdrew on the
last day of the 2001-2002 plan year. Rather, it is the transaction
itself that violates the statute, regardless of what day
SUPERVALU and the Union agreed to terminate the obligation
to contribute to the Fund.
16
objectives. SUPERVALU’s entering of the Termination
Agreement was also contrary to the purpose of the MPPAA. As
discussed above, Congress enacted the MPPAA to “protect
multiemployer pension plans from the adverse consequences that
result when individual employers terminate their participation or
withdraw.” Warner-Lambert, 791 F.2d at 284. By amending
ERISA, Congress intended to prevent withdrawing employers
from threatening the financial stability of a plan by requiring the
employers to pay their share of unfunded vested benefit liability.
See Akron Casting, 58 F.3d at 205-06. By renegotiating the
CBAs in order to withdraw from the Fund, SUPERVALU
engaged in exactly the type of conduct Congress was trying to
prevent. That is, SUPERVALU’s withdrawal threatened the
financial stability of the Fund as SUPERVALU withdrew in
order to avoid paying its share of the existing unfunded vested
benefit liability. Therefore, SUPERVALU’s conduct violated
not only the plain language of the statute, but also its purpose.10
10
The parties and the lower courts relied heavily on
Cuyamaca Meats, Inc. v. San Diego & Imperial Counties
Butchers’ & Food Employers’ Pension Trust Fund, 827 F.2d
491 (9th Cir. 1987). Cuyamaca Meats dealt with a transaction
in which the employers violated the plain meaning of the statute,
but did not frustrate the purpose of the statute. Id. at 499.
Because the purpose of the statute was not frustrated, the court
of appeals held that the employers did not violate the statute. Id.
As it is clear that the transaction in this case also violated the
purpose of the statute, it is unnecessary for us to decide whether
we agree that such a situation does not violate the statute.
17
The arguments raised by SUPERVALU do not persuade
us that it did not violate § 4212(c).11 First, it argues that as a
matter of law it withdrew on June 29, 2002, when its obligation
to contribute ceased. SUPERVALU misunderstands the
language of § 4212(c), which provides that any transaction that
violates the provision must be disregarded. As we have
determined that the Termination Agreement violated § 4212(c),
the Agreement must be disregarded. Therefore, we return to the
statute to determine when SUPERVALU actually withdrew.12
The date of complete withdrawal is the day on which the
employer’s obligation to contribute to the plan ceases or when all
covered operations cease. 29 U.S.C. §§ 1383(a), (e). Because
11
It is unnecessary for us to reach the additional
arguments made by the Fund as we hold that SUPERVALU
violated the statute based on its plain and unambiguous
meaning.
12
We also reject SUPERVALU’s argument that ignoring
the Termination Agreement enables the Fund to just pick a
withdrawal date, which it is not authorized to do under the
MPPAA. As evidenced by the discussion below, ignoring the
Termination Agreement does not enable the Fund to pick
SUPERVALU’s withdrawal date on a whim. Rather, once the
Termination Agreement is out of the picture, we return to the
statute, which provides that a withdrawal occurs when the
obligation to contribute ceases, as dictated by a CBA, or when
all covered operations cease. See 29 U.S.C. §§ 1383(a),
1392(a).
18
we must ignore the Termination Agreement, the prior CBAs
govern SUPERVALU’s obligation to contribute. The prior
CBAs required SUPERVALU to continue contributing until
January 2003. However, the definition of a complete withdrawal
is disjunctive; it is either when the obligation to contribute ceases
or the cessation of all covered operations. SUPERVALU’s
cessation of all covered operations occurred before its obligation
to contribute ceased. In other words, SUPERVALU actually
withdrew when it ceased all covered operations. As noted above,
we have defined “all covered operations” as “the substantial
cessation of normal business activity.” Crown Cork & Seal, 982
F.2d at 865-66. The facts indicate that normal business activity
at the Belle Vernon facility substantially ceased on July 27, 2002,
when most of SUPERVALU’s employees were laid off and the
facility was closed. Therefore, SUPERVALU completely
withdrew from the Fund on July 27, 2002, when it ceased all
covered operations.13
13
Similarly, we reject SUPERVALU’s argument that the
Arbitrator misunderstood how to calculate withdrawal liability.
It is clear from his decision that he understood that a statutory
formula was used which based the amount of liability on the
unfunded vested benefits existing in the plan year prior to the
year in which the employer withdrew. To the extent that
SUPERVALU appears to argue that the calculation of
withdrawal liability was improper in this case, SUPERVALU
has waived any such argument as it agreed to not make such an
argument before the Arbitrator.
19
SUPERVALU’s main argument is that § 4212(c) does not
apply to bona fide collective bargaining agreements or other
transactions that are negotiated at arm’s length. Essentially
SUPERVALU is suggesting, and the District Court agreed, that
bona fide, arm’s length transactions are exempt. We disagree.
As discussed above, § 4212(c) is unambiguous. The text
in no way suggests that it only applies to sham or fraudulent
transactions. The
statutory criterion is not whether the transaction is
a sham, having no purpose other than to defeat the
goals of the [MPPAA] by leaving the other
employers in the multiemployer pension plan
holding the bag. It is whether the avoidance of
withdrawal liability . . . is one of the principal
purposes of the transaction.
Sante Fe Pac. Corp. v. Cent. States, Se. & Sw. Areas Pension
Fund, 22 F.3d 725, 729-30 (7th Cir. 1994).
Additionally, SUPERVALU claims that there is some
support for its proposition in the legislative history.14 We will
14
The lower courts engaged in extensive discussions of
International Typographical Union Negotiated Pension Plan &
Ft. Worth Star Telegram, 5 E.B.C. (BNA) 1193 (1984)
(Mittelman, Arb.) (hereinafter “ITU”). According to the
arbitrator, “evade or avoid” refers to fraudulent transactions,
therefore, a bona fide transaction does not violate the provision.
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not allow an examination of the legislative history to create an
ambiguity where none exists in the statute. Exxon Mobil Corp.
v. Allapattah Servs., Inc., 545 U.S. 546, 567-68 (2005). “[T]he
authoritative statement is the statutory text, not the legislative
history or any other extrinsic material.” Id. at 568. Therefore,
we reject SUPERVALU’s claim that a bona fide arm’s length
transaction is not within the purview of § 4212(c).15
IV.
For the reasons stated above, we will reverse the District
Court’s grant of summary judgment in favor of SUPERVALU
and remand the proceeding with directions that the District Court
enforce the Arbitrator’s Award.
Id. at 1197. In part, the arbitrator reached this decision based on
legislative history. As explained above, we believe that the
statute is clear and therefore we need not consider the legislative
history. Additionally, we find no basis for the arbitrator’s
interpretation of the provision as only applying to fraudulent or
sham transactions. Therefore, we are unpersuaded by ITU.
15
We have fully considered the remaining arguments
raised by SUPERVALU and we find them also to be without
merit.
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