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I.A.M. NATL. PENSION FUND v. WAKEFIELD INDUS.

June 13, 1985

I.A.M. NATIONAL PENSION FUND, et al., Plaintiffs,
v.
WAKEFIELD INDUSTRIES, INC., et al., Defendants



The opinion of the court was delivered by: HOGAN

 The matter before the Court involves the interplay of a recent federal statute, the Deficit Reduction Act of 1984, with a well settled principle of constitutional law, the separation of powers between the legislative and judicial branches of government. To place the matter in context, the Court will first trace the history of this litigation and the corresponding history of the statute involved.

 The I.A.M. National Pension Fund (the Fund) brought the present lawsuit in August, 1982 to collect from the defendants *fn1" the "withdrawal liability" imposed by the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001, et seq., as amended by the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), 29 U.S.C. § 1381, et seq. Under the MPPAA, Congress established this new statutory liability, known as "withdrawal liability," for any employer who withdraws from a multiemployer pension fund. Even though the MPPAA did not become effective until September 26, 1980, liability was imposed retroactively to include any withdrawal occurring after April 28, 1980. This retroactive liability in the so-called "window period" (from April 28 to September 26, 1980) was upheld as constitutional in Pension Benefit Guarantee Corp. v. R. A. Gray, 467 U.S. 717, 104 S. Ct. 2709, 81 L. Ed. 2d 601 (1984).

 On November 23, 1983, this Court entered summary judgment for the plaintiffs against all corporate defendants for withdrawal liability occurring in the window period. The Court denied plaintiffs' motion for summary judgment against defendant Margolis on the grounds that the factual record was insufficient to impose personal liability. On December 12, 1983, a final judgment was docketed jointly and severally against all corporate defendants. No appeal was ever noticed.

 The parties then continued discovery concerning Margolis' personal liability under the corporate veil doctrine. Before the close of discovery, however, Congress enacted the Tax Reform Act of 1984 (the Act), Pub. L. No. 98-369, 98 Stat. 494 (1984). Section 558 of that Act purports to extinguish all withdrawal liability for withdrawals occurring during the window period established by the MPPAA.

 According to defendant Margolis, the enactment of Section 558 eliminates any potential liability in this case and justifies the immediate dismissal of this action. Plaintiffs argue that Section 558 cannot be applied in a fashion that would "effectively nullify" the final judgment of this Court. The Court will now turn to these arguments.

 Congressional Authority to Modify Federal Court Jurisdiction

 The debate over congressional authority vis-a-vis the federal courts has raised some difficult and controversial questions in recent times. See e.g., Sager, Foreword: Constitutional Limitations on Congress' Authority to Regulate the Jurisdiction of Federal Courts, 95 Harv. L. Rev. 17 (1981); Redish, Constitutional Limitations on Congressional Power to Control Federal Jurisdiction: A Reaction to Professor Sager, 77 Nev. U. L. Rev. 143 (1982). Fortunately, the issues posed by this case follow a better-worn path of precedent.

 It has been established, at least since United States v. Klein, 80 U.S. (13 Wall.) 128, 20 L. Ed. 519 (1871), that Article III of the Constitution places some limits on congressional authority to intrude on the decisional independence of the judiciary. In particular, Klein holds that Congress may not enact jurisdictional limitations in order to control or reverse the results in a particular case.

 This principle of separation was clearly enunciated by this Circuit in Daylo v. Administrator of Veterans Affairs, 163 U.S. App. D.C. 251, 501 F.2d 811 (D.C. Cir. 1974). In Daylo, the plaintiff, a veteran's widow had her statutory benefits cancelled because of a Veterans Administration (V.A.) finding that she had not met her administrative burden of proving that she had "not remarried."

 Under the law in effect prior to 1962 the term widow was defined by statute as a "woman who was the wife of a veteran . . . and who has not remarried. . . ." 38 U.S.C. § 101(3). The V.A. followed an administrative practice of shifting the burden of proof on the issue of remarriage to any "widow" who was living with another man. This practice was not approved by this Court. See Daylo at 813.

 In 1962 Congress amended the V.A. statute to provide that a "widow" would be ineligible for benefits if she "lived with another man and held herself out openly to the public to be the wife of such other man." Act of Sept. 19, 1962, Pub. L. 87-674, 76 Stat. 558 (amending 38 U.S.C. § 101(3)). This bright-line rule went beyond the V.A. practice of merely shifting the burden on the "remarriage" issue to widows who lived with other men. However, the statute was given only prospective application.

 In 1969, Mrs. Daylo filed her suit in this Court, seeking to compel payment of the benefits that had been denied her since 1951. In 1970, the District Court entered judgment for Mrs. Daylo for all benefits payable prior to September 19, 1962, the effective date of the amendment discussed above.

 This partial summary judgment had become final and unappealable by the time the V.A. statute was amended again by the Act of August 12, 1970, Pub. L. 91-376, 84 Stat. 787. The 1970 amendments made two crucial changes in the existing law. First, it provided that there would be no payment of benefits "because of a widow's relationship with another man before enactment of [the 1962 amendments]" that would not have been payable by the V.A. under the "standard for determining remarriage applied by that agency before said enactment." 38 U.S.C. § 3111. This language ratified the V.A.'s burden shifting rule and, in effect, reversed the judicial rule of decision in Mrs. Daylo's case. Second, the 1970 amendments retroactively reversed the ...


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