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CONNORS v. ECONOMY BLDG. SYS.

December 18, 1986

Joseph P. Connors, Sr., Donald E. Pierce, Jr., William Miller, William B. Jordan, and Paul R. R. Dean, as Trustees of the United Mine Workers of America 1974 Pension Plan, Plaintiffs,
v.
Economy Building Systems, Inc., Defendant



The opinion of the court was delivered by: SPORKIN

 Stanley Sporkin, United States District Judge

 In this action plaintiffs, as Trustees of the United Mine Workers of America 1974 Pension Plan, are attempting to collect Employee Retirement Income Security Act of 1974 ("ERISA") withdrawal liability payments from defendant Economy Building Systems, Inc. Economy's defense is that it suspended all of its covered operations before the September 26, 1980 effective date of the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1001-1461, as amended, the statute which imposes the obligation of withdrawal liability. The two issues in this case are 1) whether Economy can raise this defense for the first time in this case, having allegedly failed to meet a deadline for bringing the matter to arbitration; and 2) whether Economy did in fact suspend its covered operations before September 26, 1980.

 For the reasons stated more fully below, I find that defendant's failure to bring this issue to arbitration is not a jurisdictional bar to this suit, and thus that the withdrawal issue is properly before me for consideration. On that issue, I find that Economy did cease covered operations before the effective date of withdrawal liability; therefore, no withdrawal liability should be assessed against it. Accordingly, defendant's motion for summary judgment is granted.

 I. BACKGROUND

 The facts in this case are not in dispute. Defendant Economy Building Systems, Inc. ("Economy") is a West Virginia corporation previously engaged in the business of coal mine construction, and a signatory to the National Coal Mine Construction Agreements of 1974 and 1978. These collective bargaining agreements gave rise to an obligation to make contributions to the United Mine Workers of America ("UMWA") 1974 Pension Plan ("Plan"), *fn1" in amounts relating to the number of hours worked by employees covered by the Agreements.

 The last covered project entered into by Economy was a subcontract arrangement with Tri-State Building Sales, Inc., which had a contract to build mine service facilities for the McInnes Coal Mine Company. That project began in 1978 and ended sometime in late 1980. During the prime phase of the contract Economy employed as many as 15 workers at the site; but by August of 1980, only five employees remained. These last five employees were laid off on August 6, 1980.

 Economy did no work on the project in September of 1980, but in October of 1980, Economy reemployed two individuals to do a general clean up and to install door hardware. These employees worked a total of 33 hours each between October 14 and October 17, 1980. Thus Economy performed sixty-six hours of work after September 26, 1980, for which it contributed $ 49.50 to the Plan.

 Defendants did pursue these rights. Economy requested review and represented that as of the date of this request -- June 22, 1983 -- it had not withdrawn from the Plan because it remained signatory to the National Coal Mine Construction Agreement of 1981 and because it continued to seek work covered under the Plan. Plaintiffs reviewed and rejected defendants determination and notified them some two years later, on March 7, 1985, that its initial assessment of withdrawal liability was correct.

 A month after that, on April 1, 1985, Economy wrote to the Plan for another reconsideration, citing for the first time the Tax Reform Act of 1984, Pub. L. No. 98-369, 98 Stat. 494 (1984), which had been passed the previous July. The Tax Reform Act included a provision, § 558, which changed the effective date of the withdrawal liability amendment from April 29, 1980, to September 26, 1980. *fn2" Given this change of law, Economy changed its objections to the imposition of withdrawal liability arguing that it had ceased covered operations, and that in fact, it had done so by the new, September 26, 1980 deadline.

 Plaintiffs never responded to this request for reconsideration and on May 6, 1985, Economy submitted a demand for arbitration. Because this demand did not appear to fall within the prescribed time limits, plaintiffs rejected the arbitration route and brought this action instead.

 II. ARBITRATION

 Plaintiffs argue as a preliminary matter that the issue of whether Economy suspended its operations before September 26, 1980, is not properly before the Court because the defendants failed to go through the statutorily required arbitration route. Specifically, they point to Section 4221 of ERISA, 29 U.S.C. § 1401, which provides that arbitration must be initiated within the earlier of (a) 60 days after the date the Plan notifies the requester of its decision on the matters raised in the request for review, 29 U.S.C. § 1401(a)(1)(A), or (b) 180 days after the ...


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