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I.A.M. NATL. PENSION FUND v. FRASER SHIPYARDS

July 28, 1988

I.A.M. NATIONAL PENSION FUND, PLAN A, A BENEFITS, et al., Plaintiffs,
v.
FRASER SHIPYARDS, INC., Defendant


Royce C. Lamberth, United States District Judge.


The opinion of the court was delivered by: LAMBERTH

ROYCE C. LAMBERTH, UNITED STATES DISTRICT JUDGE

 This is an action to enforce an arbitrator's award pursuant to section 4221 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1401 (b)(2) and (3). The Court agrees with both parties that summary judgment is appropriate, and a judgment upholding the arbitrator's award will be entered for plaintiffs.

 Factual and Procedural Background

 Plaintiff I.A.M. National Pension Fund, Plan A, A Benefits (the "Fund"), is a collectively bargained multiemployer employee benefit pension plan, as defined by the Multiemployer Pension Plans Amendment Act of 1980, 29 U.S.C. §§ 1002 (2), (37), 1301 (a)(3). Defendant Fraser Shipyards, Inc. ("Fraser") is a Wisconsin corporation which employs workers represented by several different unions. Up until July 31, 1982, Fraser had two concurrent contracts with the International Association of Machinists and Aerospace Workers, AFL-CIO ("Union" or "I.A.M."). One of these contracts covered union employees at the machine shop of Fraser's shipyard; the other covered union employees at Northern Engineering Works, a separate division of Fraser located about a half mile from the shipyard. Both contracts were collective bargaining agreements requiring the company to make pension contributions to the Fund.

 In response to a notice of delinquency from the Fund, Fraser served notice by letter dated January 26, 1983, that "the Company discontinued its Machinists Bargaining Unit in September of 1982 and has not had any machinists employed since that time. This is the reason they are no longer making contributions to the Fund." The Fund thereafter assessed withdrawal liability in accordance with ERISA section 4203(a), 29 U.S.C. § 1383, assuming that the closing of the shipyard machine shop constituted a complete withdrawal. Following Fraser's request for a review, the Fund reversed its assessment and refunded previous payments. After requesting information from the company and receiving what it considered to be less than satisfactory responses, the Fund assessed partial withdrawal liability in the amount of $ 70,550. See ERISA sec. 4205, 29 U.S.C. § 1385. Upon Fraser's request, the Fund reviewed and confirmed its assessment. Fraser then timely requested arbitration.

 The arbitration hearing was held on September 25, 1986, in front of E. Frank Cornelius, who issued an opinion on November 28, 1986. The arbitrator's opinion dealt extensively with the standard of review of a withdrawal liability determination, see ERISA sec. 4221 (a)(3), 29 U.S.C. § 1401 (a)(3), and the constitutional issues posed by the statutory presumption of correctness of that determination by a plan sponsor. Id. The arbitrator upheld the Fund's liability determination, and in accordance with his constitutional concerns, added de novo findings supporting the Fund's decision.

 This Court's standard of review of the arbitrator's decision is set forth in ERISA section 4221(c), 29 U.S.C. § 1401(c):

 
In any proceeding under subsection (b) of this section, 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.

 Defendant argues that with respect to the arbitrator's conclusions of law, the Court should conduct a de novo review, a contention with which plaintiffs take some issue. The parties diverge as well in their characterizations of the arbitrator's findings as factual, legal, or mixed. After a review of the entire record, it is clear that under any standard, the arbitrator's decision was correct.

 Basis for Partial Withdrawal Liability

 One of the issues before the arbitrator was the basis for the Fund's determination of partial withdrawal liability. In its Notice of Arbitration, Fraser had framed the issue this way:

 
Clearly, the dispute centers around the year in which the partial withdrawal of the Employer occurred and the reason for the partial withdrawal. If the withdrawal was by reason of a 70% contribution decline, it occurred in 1983. If the withdrawal occurred by reason of ERISA Sec. 4205(b)[2], the withdrawal occurred in 1982 and the assessment by the Pension Fund is correct.

 Opinion of the Arbitrator (hereinafter "Op.") at 9.

 It is undisputed, however, that the company had consistently been informed by the Fund that partial withdrawal liability was not being imposed on the basis of ERISA section 4205 (a)(1), 29 U.S.C. § 1385 (a) (1), which mandates partial withdrawal when there is a 70% contribution decline. Rather, the determination of partial withdrawal was based upon sections 4205 (a)(2) and (b)(2)(A), which define a partial cessation of the employer's contribution obligation. Subparagraph (b)(2)(A) reads in full:

 
There is a partial cessation of the employer's contribution obligation for the plan ...

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