Trustees of the Central Pension Fund of the International Union of Operating Engineers & Participating Employers v. Wolf Crane Service, Inc.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED
________________________
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 03-10303 June 25, 2004
________________________ THOMAS K. KAHN
CLERK
D. C. Docket No. 97-06195 CV-JAL

TRUSTEES OF THE CENTRAL PENSION FUND OF THE
INTERNATIONAL UNION OF OPERATING ENGINEERS AND
PARTICIPATING EMPLOYERS,

Plaintiff-Appellee,

versus

WOLF CRANE SERVICE, INCORPORATED,
a Florida Corporation,

Defendant-Counter
Claimant-Appellant.

________________________

Appeal from the United States District Court
for the Southern District of Florida
_________________________

(June 25, 2004)

Before ANDERSON, CARNES and FAY, Circuit Judges.

PER CURIAM:

Wolf Crane Services, Inc. (“Wolf Crane”) appeals the district court’s grant of
summary judgment in favor of the Trustees of the Central Pension Fund of the

International Union of Operating Engineers and Participating Employers (“Pension

Fund”).1 On appeal, we conclude with respect to Count I that the district court

should have reviewed the arbitrator’s legal conclusions de novo, and we conclude

with respect to Count II that the district court erred in granting summary judgment.

BACKGROUND

In 1989, Wolf Crane negotiated with the Pension Fund and became a

contributing employer. At the time of the negotiations, Pension Fund

representatives told Wolf Crane that the fund was solvent and well managed.

Apparently the opposite was true: the federal government took over the Pension

Fund in 1991 and appointed trustees.

The last contract between Wolf Crane and the International Union of

Operating Engineers (“the Union”) expired on July 31, 1996, although the parties

had begun negotiating for a new contract sometime before then. Wolf Crane’s last

proven payment to the Pension Fund was on June 25, 1996, but its employees

continued to work without a contract. On December 31, 1996, Wolf Crane

1
This case was initially filed by the International Union of Operating Engineers Local
No. 675 Pension Fund. However, that fund merged with the Central Pension Fund while the
action was pending below. In this opinion, we use Pension Fund to refer collectively to the
relevant trustee or trustees as well as the relevant pension fund.

2
notified the Pension Fund that it would cease operations on that day. The last

contract negotiations took place on January 15, 1997, and at approximately the

same time, Wolf Crane announced that its facilities were being offered for sale or

lease. As a result of the last unsuccessful negotiations, Wolf Crane declared an

impasse. At that time, the Pension Fund made a formal demand for withdrawal

payments, based on the expiration of the contract and Wolf Crane’s continued

operations. The next week, Wolf Crane served the Pension Fund with a statutory

request for administrative review of the asserted withdrawal liability, which was

ultimately rejected.

In February 1997, the Pension Fund filed the instant suit seeking withdrawal

liability payments (Count I), minimum funding deficiency payments for 1992

through 1995 (Count II), and an injunction preventing Wolf Crane from alienating

its assets. The same day, however, Wolf Crane sold its assets and equipment to

another crane company, thus mooting the claim for an injunction.

In June 1997, Wolf Crane notified the Pension Fund that it was seeking

arbitration on the withdrawal liability (Count I). The district court administratively

closed the case pending the outcome of the arbitration. On February 3, 1999, the

arbitrator decided in favor of the Pension Fund on the withdrawal liability issue,

and Wolf Crane appealed the arbitrator’s award to the district court. The district

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court, in April 1999, denied Wolf Crane’s motion and affirmed the award, thus

resolving Count I involving Wolf Crane’s withdrawal liability.

In October 1999, the Pension Fund filed a motion to reopen the matter

because the issue in Count II of the complaint, the minimum funding deficiency,

had not yet been resolved. On October 16, 2001, the Pension Fund filed a motion

for summary judgment on that issue. On August 19, 2002, and after proceedings

not relevant to the issues on appeal, the district court granted the Pension Fund’s

motion for summary judgment on Count II by default because Wolf Crane had not

responded to the Fund’s motion. After the district court denied reconsideration, it

entered a final judgment.2 Judgment having been entered against Wolf Crane

imposing upon it both withdrawal liability (Count I) and liability for minimum

funding deficiency (Count II), Wolf Crane appealed. With respect to Count I, the

dispositive issue for this appeal is the correct standard of review for a district court

in reviewing an arbitrator’s award under the Multi-Employer Pension Plan

Amendments Act (“MPPAA”). With respect to Count II, the dispositive issue on

appeal is whether a district court can grant summary judgment by default because a

2
Wolf Crane had defended and counterclaimed that it had been fraudulently induced to
enter into the pension fund agreement. The district court’s final judgment implicitly rejected this
defense and counterclaim, which if successful, would have eliminated its liability under both
counts.

4
party has failed to file an opposition to a motion for summary judgment. We

address each issue in turn.

COUNT I: STANDARD OF REVIEW OF
ARBITRATORS DECISION UNDER MPPAA

The district court, when reviewing the arbitrator’s award on Count I, the

withdrawal liability issue, employed the standard of review found in the Federal

Arbitration Act. The court stated that it would only disturb the arbitrator’s

findings of fact if it was “left with the definite and firm conviction that a mistake

had been committed.” Order at 6 (quoting Anderson v. Bessmer City, 470 U.S.

564, 573, 105 S.Ct. 1504, 1511 (1985)). Conclusions of law, the court held, should

also be given great deference and only reversed if there was manifest disregard for

the law. Id. at 7. We hold that the district court applied an incorrect standard of

review with regard to the legal conclusions of the arbitrator.

For cases brought under the MPPAA, the standard of review by the district

court for factual findings made by the arbitrator is set out at 29 U.S.C. § 1401(c).

This subsection states that “there shall be a presumption, rebuttable only by a clear

preponderance of the evidence, that the findings of fact made by the arbitrator were

correct.” 29 U.S.C. § 1401(c). The Seventh Circuit labeled this standard “unique”

and noted that it conflated “‘clear and convincing evidence’ with ‘preponderance of

5
the evidence’ to yield ‘clear preponderance of the evidence,’” a result which

“would be bad enough if it referred to the finder of fact.” Jos. Schlitz Brewing Co.

v. Milwaukee Brewery Workers’ Pension Plan, 3 F.3d 994, 998 (7th Cir. 1993).

The court then “repaired” the standard, holding that the standard of review for facts

would be that typically used in the arbitration setting: the reviewing court would

inquire as to whether the fact-finding was clearly erroneous. Id. at 999 (citing

Anderson v. Bessmer City, 470 U.S. at 573, 105 S.Ct. at 1511). With regard to the

standard of review of the arbitrator’s findings of fact, we agree with the Seventh

Circuit and hold that the standard is clearly erroneous.

The question of what standard is to be applied to legal conclusions of the

arbitrator is less clear. However, other courts have agreed upon a standard: all of

the circuits that have considered this issue have determined that the review of legal

issues should be de novo. Crown Cork & Seal v. Cent. States S.E. & S.W. Areas

Pension Fund, 982 F.2d 857, 860 (3d Cir. 1992); Trustees of Colo. Pipe Indus.

Pension Trust v. Howard Elec. & Mech., Inc., 909 F.2d 1379, 1386 (10th Cir.

1990); Trustees of Iron Workers Local 473 Pension Trust v. Allied Prod. Corp.,

872 F.2d 208, 211-12 (7th Cir. 1989)3; Union Asphalts and Roadoils, Inc. v.

3
We note that Jos. Schlitz Brewing Co. v. Milwaukee Brewery Workers' Pension Plan, 3
F.3d 994 (7th Cir. 1993), while recognizing that legal conclusions are reviewed de novo, adopts a
somewhat modified standard of review for interpretations of the relevant contract. In the instant

6
Mo-Kan Teamsters Pension Fund, 857 F.2d 1230, 1233-34 (8th Cir. 1988);

Trustees of Amalgamated Ins. Fund v. Geltman Indus., 784 F.2d 926, 928-29 (9th

Cir. 1986); Bd. of Trustees of the W. Conf. v. Thompson Bldg. Mat., 749 F.2d

1390, 1405-06 (9th Cir. 1984); I.A.M. Nat'l Pension Fund Benefit Plan C v.

Stockton Tri Indus., 727 F.2d 1204, 1207 n.7 and 1210-12 (D.C. Cir. 1984); see

also Sherwin-Williams Co. v. New York State Teamsters Conf. Pension,158 F.3d

387, 393 (6th Cir. 1998) (focusing primarily on review of the arbitrator’s findings of

fact but also noting that the “arbitrator’s application of the appropriate burden of

evidence is a question of law we review de novo”); Bowers v. Andrew Weir

Shipping, Ltd., 27 F.3d 800, 804 (2d. Cir. 1994) (assuming “as do all the other

circuits that have considered the issue” that de novo is the correct standard of

review, but not deciding the issue); Republic Indus., Inc. v. Teamsters Joint

Council No. 83 of Va. Pension Fund, 718 F.2d 628, 641 (4th Cir. 1983) (without

expressly elaborating on the fullness of judicial review of the arbitrator’s legal

rulings, the court rejected the Federal Arbitration Act’s deferential standard,

holding that 29 U.S.C. § 1401(b)(2) prevails and provides “effective judicial

review of . . . legal rulings”).

case, however, it is clear that there are crucial issues which involve legal conclusions of the
arbitrator, which the district court should review de novo.

7
 In reaching this conclusion, courts have cited 29 U.S.C. § 1401(b)(3), which

states that the MPPAA incorporates the Arbitration Act to the extent that it is

consistent with other parts of this subchapter. These courts have reasoned that “the

limited review of the Arbitration Act (9 U.S.C. § 10) is inconsistent with §

1401(b)(2)’s broad mandate allowing courts to ‘enforce, vacate, or modify the

arbitrator’s award.’” Iron Workers, 872 F.2d at 212 (citing Union Asphalts, 857

F.2d at 1234-35; Republic Industries, 718 F.2d at 641); see also Sanders-Midwest,

857 F.2d at 1234; Amalgamated Ins. Fund, 784 F.2d at 928. Several courts,

including the Seventh Circuit in Iron Workers, have also relied upon the fact that

the MPPAA statutorily mandates arbitration of withdrawal liability,4 in contrast to

the contractually agreed upon arbitration governed by the Federal Arbitration Act,

noting that in the latter, deference was appropriate because it was the parties’

agreed upon method of dispute resolution. 872 F.2d at 212; accord Huber v.

Casablanca Indus., Inc., 916 F.2d 85, 89 n.4 (3d Cir. 1990), overruled in part on

other grounds by Milwaukee Brewery Workers' Pension Plan v. Jos. Schlitz

Brewing Co., 513 U.S. 414, 115 S.Ct. 981 (1995). The parties’ lack of choice was

thought to warrant less deference.

4
29 U.S.C. § 1401(a)(1) provides: “Any dispute between an employer and the plan
sponsor of a multiemployer plan concerning a determination made under sections 1381 through
1399 of this title shall be resolved through arbitration.”

8
 We join our sister circuits and hold that the appropriate standard of review is

clear error for findings of fact and de novo for conclusions of law. Although the

district court may have applied the correct clearly erroneous standard for reviewing

factual findings, it clearly applied an incorrect standard of review of the arbitrator’s

legal conclusions. As noted above, the district court applied the very deferential

standard that would have been appropriate under the Federal Arbitration Act, and

not the de novo standard for legal conclusions which we hold today is the correct

standard in this context. Because crucial issues relevant to Count I are legal

conclusions, and because the district court employed the incorrect standard of

review, we vacate and remand the district court’s judgment with regard to the

Count I withdrawal liability.5

COUNT II: SUMMARY JUDGMENT AS A SANCTION

We now turn to Wolf Crane’s argument with respect to Count II – that the

district court erred in granting summary judgment by default because of the district

court’s perception that Wolf Crane did not respond to the Pension Fund’s motion

for summary judgment. In United States v. One Piece of Property, 5800 S.W. 4th

Ave., Miami, Florida, 363 F.3d 1099 (11th Cir. 2004), this court was confronted

5
Because of the complexity of the issues involved, and because neither party’s brief on
appeal was sufficiently enlightening, we suggest that the district court on remand may wish to
invite amicus curie briefs from the Pension Benefit Guaranty Corporation or other
knowledgeable sources.

9
with a district court’s grant of summary judgment by default because the motion

was unopposed. We held that “[t]he district court cannot base the entry of

summary judgment on the mere fact that the motion was unopposed but, rather,

must consider the merits of the motion.” Id. at 1101. We also held that in that

context “[i]f a local rule purports to allow summary judgment to be granted by

default, the rule is impermissible” because it would be inconsistent with the Federal

Rules. Id. at 1102. The court noted that Fed.R.Civ.P. 56(e) provides that where

“‘the adverse party does not respond, summary judgment, if appropriate, shall be

entered against the adverse party.’” Id. at 1101 (quoting Fed.R.Civ.P.

56(e))(emphasis in the original). The court then held that summary judgment

would be appropriate “where the ‘pleadings, depositions, answers to interrogatories

and admissions on file, together with any affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is entitled to

judgment as a matter of law.’” Id. (quoting Fed.R.Civ.P. 56(c)). After so holding,

the court in One Piece of Property reviewed the summary judgment record,

concluded that the record did reveal a genuine issue of material fact, and reversed

the district court’s grant of summary judgment.

In reaching this decision, the One Piece of Property court relied upon dicta in

Dunlap v. Transamerica Occidental Life Ins. Co., 858 F.2d 629, 632 (11th Cir.

10
1988), and upon Jaroma v. Massey, 873 F.2d 17 (1st Cir. 1989). 363 F.3d at 1101-

02 (quoting Jaroma, 873 F.2d at 20 (“[T]he district court cannot grant a motion for

summary judgment merely for lack of any response by the opposing party, since the

district court must review the motion and the supporting papers to determine

whether they establish the absence of a genuine issue of material fact.”)); accord

Anchorage Assoc. v. Virgin Islands Bd. of Tax Rev., 922 F.2d 168, 176 (3d Cir.

1990).

In this case, the district court granted the Pension Fund’s motion for

summary judgment on Count II by default, because of the district court’s

perception that Wolf Crane failed to respond to the motion.6 It is apparent that the

district court did not examine the merits of this case, but instead granted summary

judgment by default merely because it believed Wolf Crane had filed no response.7

6
Because of our disposition with respect to this Count II, we need not address Wolf
Crane’s argument that its cross-motion for summary judgment did in fact constitute a response to
the Pension Fund’s motion, and thus that the district court’s perception of no response was
mistaken.
7
In denying Wolf Crane’s motion for reconsideration, the district court used
language suggesting that the court may have been influenced in denying reconsideration by
factors other than, or in addition to, its perception that Wolf Crane did not respond to the Pension
Fund’s motion for summary judgment. Although we do not foreclose consideration on remand
that default may be appropriate for other reasons, we decline for several reasons to affirm the
district court’s judgment on such other grounds (e.g., it is clear that the default was granted on
August 9, 2002 because of the perceived failure to file a response; it does not appear that Wolf
Crane was given notice that default was being considered, see Fed.R.Civ.P. 55; the district
court’s explanation is inadequate and does not indicate that default was a measure of last resort,
see Graves v. Kaiser Aluminum & Chem. Co., 528 F.2d 1360, 1361 (5th Cir. 1976) ("This court

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Because summary judgment cannot be granted as a sanction for merely failing to

file a response to a motion for summary judgment, we vacate the judgment of the

district court with respect to Count II.

For the foregoing reasons, we vacate the judgment of the district court both

with respect to Count I and with respect to Count II, and remand for further

proceedings not inconsistent with this opinion.

VACATED AND REMANDED.

has recognized that a dismissal with prejudice is a serious remedy that may be resorted to only in
extreme situations where there is a clear record of delay or contumacious conduct by the
plaintiff.")).

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FAY, Circuit Judge, concurring:

I enthusiastically join in the opinion of Judge Anderson. Although we find it

unnecessary to discuss, there is no doubt in my mind that a cross motion for a

summary judgment on the same claim serves as a response in opposition to a

motion for summary judgment filed by an adversary. It is easy to understand the

district court’s frustration with counsel for Wolf Crane and some form of sanctions

may have been appropriate. However, as we have held, summary judgment is not

an appropriate sanction and in this case there was a cross motion for summary

judgment on this same claim which I would hold is a response in opposition.

With these observations, I concur.

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