The opinion of the court was delivered by: GREEN
Plaintiffs brought this action to collect withdrawal liability payments from defendant pursuant to the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1381-1405, 1451 (1982). Defendant counterclaimed asserting that plaintiffs' assessment of liability rests on an invalid interpretation of the governing statute, section 4204 of the MPPAA, 29 U.S.C. § 1384 ("section 1384"). Both parties have moved for summary judgment.
Pursuant to the Court's order of June 28, 1985, ruling that the legal claims asserted by defendant could be addressed by this Court, the parties submitted additional memoranda addressing the interpretation of section 1384. For the reasons set forth below, the Court grants defendant's motion for summary judgment and denies plaintiffs' motion.
Plaintiff I.A.M. National Pension Fund ("the Fund"), Benefit Plan A ("the Plan") is a multiemployer pension plan within the meaning of 29 U.S.C. § 1002(37). Plaintiffs Eugene Glover and Lester F. Gettle, Jr. are co-chairmen of the Board of Trustees of the Plan and are fiduciaries within the meaning of 29 U.S.C. § 1132(a)(3). Plaintiff Board of Trustees of the Fund is the administrator of the Plan within the meaning of 29 U.S.C. § 1002(16).
Defendant Cooper Industries, Inc. ("Cooper") is an "employer" within the meaning of 29 U.S.C. § 1002(5). Cooper, through one or more of its subdivisions contributed, under the terms of various collective bargaining agreements, to the Plan from 1967 until May 25, 1984.
Effective December 10, 1981, Cooper sold the assets of one of its divisions, Cooper Airmotive, to Aviall, Inc. ("Aviall"). Cooper and Aviall structured the transaction and obtained the necessary bonding to comply with the MPPAA sale of assets provision, section 1384. That section provides an exception to the rule that an employer incurs withdrawal liability when it sells covered operations. At all times material, Aviall has continued to operate the former Cooper division and has continued to make contributions to the Plan in accordance with the collective bargaining agreement.
In May 1984, Cooper closed another division, Crescent Tool. Contributions were being made to the Plan on behalf of Crescent employees; therefore, the closing of this division constituted a withdrawal within the meaning of 29 U.S.C. § 1383(a)(2).
Thereafter, the Plan notified Cooper pursuant to 29 U.S.C. § 1399 that it owed plaintiffs $624,343 in withdrawal payments, to be paid in three installments. The first payment of $262,188 was due by September 25, 1984.
When Cooper failed to make the initial payment, plaintiffs filed suit demanding judgment against Cooper in the amount of the first installment, plus interest from the September 25 payment date. In its answer, Cooper claimed that the requested payment was unlawful under section 1384 because it sought to impose liability for the division sold to Aviall over two years prior to Cooper's complete withdrawal from the Plan. Cooper also counterclaimed for an injunction against the enforcement of plaintiffs' withdrawal liability demand.
On June 25, 1985, the Court entered an order requiring Cooper to pay the overdue first installment of withdrawal liability to the Fund, with interest, pending resolution of its counterclaim. The issue now ready for decision is the meaning of section 1384 raised by Cooper.
Section 1384 provides an exception to the rule that an employer incurs withdrawal liability when it sells operations covered by MPPAA funding requirements. No withdrawal occurs "as a result of a bona-fide, arm's-length sale of assets to an unrelated party" if (1) the purchaser assumes "an obligation to contribute to the plan . . . for substantially the same number of contribution base units"
as the seller contributed for the operations; (2) the purchaser posts the required bond or places the required amount in escrow for five plan ...