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DORN'S TRANSP., INC. v. I.A.M. NATL. PENSION FUND

January 19, 1984

DORN'S TRANSPORTATION, INC., Oneida Motor Freight, Inc., Plaintiffs,
v.
I.A.M. NATIONAL PENSION FUND, BENEFIT PLAN A, Defendant



The opinion of the court was delivered by: HOGAN

 THOMAS F. HOGAN, District Judge.

 The case now before the Court on defendant's Motion for Summary Judgment presents another of the proliferate constitutional challenges to the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA" or "the Act"), Pub.L. No. 96-364, 94 Stat. 1208 (1980), codified at 29 U.S.C. § 1001a et seq. (Supp. V 1981).

 By complaint filed April 26, 1982, plaintiffs Dorn's Transportation, Inc. ("Dorn's") and Oneida Motor Freight, Inc. ("Oneida") contest the validity of the MPPAA under the Due Process and Taking clauses of the Fifth Amendment, and the Seventh Amendment. The importance of these issues is manifest not only by the sheer volume of related litigation among a majority of the circuits, *fn1" but also by the recent grant of probable jurisdiction by the Supreme Court to review the Act's constitutionality as retroactively applied. *fn2" In addressing the issues raised by this facial attack, the Court is presented with not only a dispute among the circuits but with differing analyses of the problem. This Court will therefore consider anew the constitutional issues. Based upon the following opinion, summary judgment will be entered for the defendant, finding the statute constitutionally valid, there being no material facts at issue.

 I. Factual and Procedural Background/Issues Presented

 In 1979, Dorn's, an interstate motor freight common carrier, entered into a collective bargaining agreement with District 838 of the International Association of Machinists ("the Union"). Pursuant to this agreement, Dorn's contributed on behalf of its employees until March 1981 to the defendant IAM National Pension Fund, Benefit Plan A ("Fund"), a multiemployer plan. On March 2, 1981, Oneida, also an interstate motor common carrier of freight, contracted with Dorn's to purchase all outstanding Dorn's stock and thus assume ownership and control over the Dorn's corporation, subject to approval by the Interstate Commerce Commission. Temporary authority was granted to Oneida on March 5, 1981 to lease and control Dorn's pending final ICC disposition of the stock acquisition application.

 On March 9, 1981, Dorn's closed its terminal in Albany, New York, releasing from employment its seventeen mechanics. Simultaneously, Oneida proposed hiring the severed Dorn's employees. Although most accepted Oneida's offer, several of these workers sought employment elsewhere. Others chose early retirement. Under the terms of a collective bargaining agreement between Oneida and the International Brotherhood of Teamsters, Local 294, pension contributions for those who joined Oneida were deposited with the Teamsters fund. All contributions by either Dorn's or Oneida to the IAM fund promptly ceased.

 The stock purchase agreement received ICC approval on September 17, 1981 and became final. Pursuant to 29 U.S.C. §§ 1381, 1383, the Fund considered Dorn's to have completely withdrawn from the plan. The Fund's trustees notified Dorn's by letter dated February 24, 1982 of its proportional share of the plan's unfunded vested benefits liability. *fn3" As calculated under the "presumptive method," 29 U.S.C. § 1391(b), the Fund assessed Dorn's liability in the amount of $61,346.

 Plaintiffs did not seek arbitration in this case under 29 U.S.C. § 1401, but instead filed on April 26, 1982 a Complaint for Declaratory and Injunctive Relief, alleging as follows:

 1. Section 4201 of the Act, 29 U.S.C. § 1381, retroactively imposes liability upon Dorn's and Oneida as determined by factors outside their control and unrelated to any actions of either plaintiff, thus depriving plaintiffs of property without due process of law as prohibited by the Fifth Amendment of the United States Constitution.

 2. Section 4219 of the Act, 29 U.S.C. § 1399, requires payment of liability prior to any hearing, thus depriving plaintiffs of property without due process of law, as prohibited by the Fifth Amendment.

 3. Sections 4201 and 4203 of the Act, 29 U.S.C. §§ 1381, 1383, impose and assess withdrawal liability under standards and methods that are so ambiguous and vague as to afford no means of determining accurately when and to what extent liability will be imposed, thus depriving plaintiffs of property without due process as prohibited by the Fifth Amendment.

 4. Section 4201(a) of the Act, 29 U.S.C. § 1381(a), deprives plaintiffs of the benefit of their bargain and of the pre-enactment right to withdraw from the Fund without liability, and without compensation to plaintiffs, and thus constitutes an impermissible "taking" under the Fifth Amendment.

 5. Section 4221 of the Act, 29 U.S.C. § 1401, compels arbitration in lieu of factfinding by a jury, thus violating the Seventh Amendment.

 6. Section 4221 of the Act, 29 U.S.C. § 1401, accords the findings of fact by the Fund -- a "self-interested party" -- and the findings of the arbitrator an "irrebuttable" presumption of correctness; and precludes the assertion of constitutional defenses before an arbitrator, in derogation of the plaintiffs' procedural due process rights under the Fifth Amendment.

 By letter dated June 29, 1982, plaintiffs' counsel withdrew their request for a preliminary injunction. Defendants moved on July 23, 1982 for summary judgment, which motion was heard and taken under advisement by this Court on November 18, 1982. Pursuant to the requests of counsel at the summary judgment hearing, this Court issued the following day an Order directing counsel to submit further factual materials and stipulations by January 18, 1983, and supplemental memoranda by February 1, 1983. The Court further denied plaintiffs' request to reopen discovery, finding that the pre-arbitration posture of the case, the lack of actual injury, and the option to submit expert affidavits and a stipulated factual record obviated the immediate need for additional discovery. By Order of January 20, 1983, pursuant to joint motion by the parties, an extension of the time for filing of said materials was granted. Upon motion by the plaintiffs, this Court on March 4, 1983 granted a further extension of the time for filing supplemental materials until March 21, 1983, and for filing supplemental memoranda until March 28, 1983. By the same order, this Court again denied on the same grounds plaintiffs' renewed motion to reopen discovery. Plaintiffs' subsequent motion for expedited reconsideration of the Order of March 4, 1983 was denied on March 16, 1983, and plaintiffs were directed to comply with the prescribed pretrial procedures and dates. Two affidavits were filed on behalf of the plaintiffs on March 21, 1983, and supplemental memoranda and factual statements from each party were submitted to the Court by the March 28, 1983 deadline.

 II. Exhaustion of Administrative Remedies

 A threshold issue must be decided as to whether judicial review of the constitutionality of the MPPAA may be granted the plaintiffs prior to exhaustion of the mandated administrative remedy, i.e., arbitration. 29 U.S.C. § 1401(a)(1). That section provides, in pertinent part, that "any dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under sections 4201 through 4219 [ 29 U.S.C. §§ 1381-1399] shall be resolved through arbitration." For all determinations as to the existence and amount of liability, the Act invokes those policies underlying initial resort to administrative remedies: To streamline the adjudicative process, Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51, 58 S. Ct. 459, 463, 82 L. Ed. 638 (1938); to afford all parties as well as the courts the benefits of the arbitrator's experience and expertise; to compile an adequate record for judicial review; and to prevent premature interference with the administrative process. Weinberger v. Salfi, 422 U.S. 749, 765, 95 S. Ct. 2457, 2466, 45 L. Ed. 2d 522 (1975). See also N.C. P.A.C. v. Federal Election Commission, 200 U.S. App. D.C. 89, 626 F.2d 953, 957 n. 8 (D.C.Cir.1980); Blitz v. Donovan, 538 F. Supp. 1119, 1124 (D.D.C.1982).

 Despite the inherent virtues of these policies favoring prior arbitration, the exhaustion requirement must be evaluated in light of the circumstances presented by each case. McKart v. United States, 395 U.S. 185, 193, 89 S. Ct. 1657, 1662, 23 L. Ed. 2d 194 (1969); Ass'n of Nat'l Advertisers, Inc. v. Federal Trade Comm'n, 201 U.S. App. D.C. 165, 627 F.2d 1151, 1156 (D.C.Cir.1979), cert. denied, 447 U.S. 921, 100 S. Ct. 3011, 65 L. Ed. 2d 1113 (1980). If, for example, a challenge were founded upon a particular question of law and fact, e.g., whether a "withdrawal" has occurred, or whether a party was an "employer" within the meaning of the Act, prior adjudication by an arbitrator would be an appropriate prerequisite to judicial "as applied" constitutional review. But where, as here, the complaint poses a facial challenge *fn4" to the constitutionality of the Act, the purposes of the exhaustion doctrine would not be served by its application. The questions of law presented are triable upon a stipulated factual record sufficient to determine the justiciability of the claims at bar. No factual issues essential to this determination are in dispute, thus obviating the need or desirability for a complete factual record, and for the expertise of an arbitrator. Moreover, consideration of the issues presented will not promote future piecemeal attacks on the administrative process, since purely constitutional questions generally are thought beyond the ambit of administrative proceedings. See Blitz v. Donovan, 538 F. Supp. at 1124, citing Oestereich v. Selective Service Local Board, 393 U.S. 233, 242, 89 S. Ct. 414, 419, 21 L. Ed. 2d 402 (1968) (Harlan, J., concurring). A decision rendered by this Court will not usurp the arbitrator's discretion, nor weaken the effectiveness of arbitration, nor disturb the efficiency of the adjudicative process. McKart v. United States, 395 U.S. at 193-95, 89 S. Ct. at 1662-63; Association of Nat'l Advertisers, 627 F.2d at 1156-57. Upon the circumstances presented by the parties in this case, the Court finds the purposes of the exhaustion doctrine will not be served by referring purely legal questions to arbitration at this time.

 III. Analysis

 A. Substantive Due Process Claims Under the Fifth Amendment.

 Due process analysis of the constitutionality of economic regulation begins with the principle that "legislative Acts adjusting the burdens and benefits of economic life come . . . with a presumption of constitutionality, and that the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way. See, e.g., Ferguson v. Skrupa, 372 U.S. 726, 83 S. Ct. 1028, 10 L. Ed. 2d 93 (1963); Williamson v. Lee Optical Co., 348 U.S. 483, 487-488, 75 S. Ct. 461, 464, 99 L. Ed. 563 (1955)." Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15, 96 S. Ct. 2882, 2892, 49 L. Ed. 2d 752 (1976), cited in Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 83, 98 S. Ct. 2620, 2635, 57 L. Ed. 2d 595 (1978). Where the ends of the statutory scheme are legitimate, and the means to accomplish those ends are rational, the challenged economic regulation will pass muster under the due process clause of the Fifth Amendment.

 For legislation of express retroactive as well as prospective effect, the same standard will be applied; but separate rationales must justify each. Usery v. Turner Elkhorn Mining Co., 428 U.S. at 17-18, 96 S. Ct. at 2893. Because the MPPAA was signed into law by President Carter on September 26, 1980 with an effective date of April 29, 1980, any retrospective liability imposed by the Act upon these plaintiffs must satisfy due process on independent grounds. Although plaintiffs in this case withdrew from the Fund in March 1981, or more than five months after the Act was signed into law, the MPPAA attaches automatic withdrawal liability that was contingent at the time Dorn's and the Union entered into their collective bargaining agreement. In this respect only, the MPPAA may be said to retroactively affect the plaintiffs at bar. The Washington Star v. International Typographical Union Negotiated Pension Plan, 4 E.B.C. 1145, slip op. at 13, 582 F. Supp. 301 at (D.D.C. 1983) (June Green, J.).

 1. The Legitimacy of the Legislated Ends

 A number of prior cases, most notably Peick v. Pension Benefits Guaranty Corp., 539 F. Supp. 1025 (N.D.Ill.1982), aff'd, 724 F.2d 1247 (7th Cir.1983), have amply reviewed the legislative history of the Employee Retirement Income Security Act ("ERISA") and the MPPAA. In brief, Congress designed the Act

 
to promote benefit security for multiemployer plan participants through the melioration of the financial condition of multiemployer plans, the elimination of incentives for plan termination, the provision of assistance to insolvent plans, and the establishment of the guarantee program on a fiscally sound basis at a reasonable cost to the premium payers.

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