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Cork v. Central States Southeast and Southwest Areas Pension Fund

argued: November 16, 1992.

CROWN CORK & SEAL COMPANY, INC.
v.
CENTRAL STATES SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, A FEDERAL MULTIEMPLOYER EMPLOYEE PENSION BENEFIT PLAN; LORAN W. ROBBINS; MARION M. WINSTEAD; ROBERT C. SANSONE, ROBERT J. BAKER; HOWARD MCDOUGALL; ARTHUR H. BUNTE; R. JERRY COOK AND R. V. PULLIAM, ITS PRESENT TRUSTEES IN THEIR FIDUCIARY CAPACITY(IES) CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, A PENSION TRUST; MARION M. WINSTEAD; ROBERT C. SANSONE; ROBERT J. BAKER; HOWARD MCDOUGALL; ARTHUR H. BUNTE, JR.; R. JERRY COOK; R. V. PULLIAM, SR.; HAROLD D. LEU, ITS PRESENT TRUSTEES V. CROWN CORK & SEAL COMPANY, INC. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, A PENSION TRUST, AND ITS TRUSTEES, INCLUDING MARION M. WINSTEAD, ROBERT C. SANSONE, ROBERT J. BAKER, HOWARD MCDOUGALL, ARTHUR H. BUNTE, JR. R. JERRY COOK, R. V. PULLIAM, SR. AND HAROLD D. LEU, APPELLANTS



Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. Civil No. 84-05737). (D.C. Civil No. 91-04423).

Before: Mansmann, Hutchinson and Garth, Circuit Judges.

Author: Mansmann

Opinion OF THE COURT

MANSMANN, Circuit Judge.

Crown Cork & Seal Company, Inc., sought to obviate, under the Deficit Reduction Act of 1984 ("DEFRA"), its withdrawal liability to its multiemployer pension plan when it ceased production at its St. Louis Plant in 1980. In order to seek the benefits of DEFRA, the company must show that (1) it had a binding agreement to withdraw from a multiemployer plan as of September 26, 1980 and (2) that it effectuated a complete withdrawal from the plan by December 31, 1980.

In this appeal we must interpret the term, a "binding agreement to withdraw," within the meaning of Section 558(d) of DEFRA and must determine whether a cessation of virtually all covered operations satisfies the complete withdrawal requirement of § 1383(a)(2) of the Multiemployer Pension Plan Amendments Act ("MPPAA") to ERISA.

We hold that an employer's actions committing it to withdraw from a multiemployer pension plan by announcing its plant closing, bargaining with its unions over the effects of that closing and signing a listing agreement placing its plant for sale satisfy the language and statutory purpose of DEFRA's requirement of a "binding agreement to withdraw." We further hold that an employer has completely withdrawn when it ceases its normal business operations in preparation for a shutdown. Accordingly, we will affirm the judgment of the district court exempting Crown Cork from withdrawal liability in closing its St. Louis Plant.

I.

In 1980, economic conditions and decreased demand for three piece cans convinced Crown Cork to close its St. Louis can manufacturing plant. On July 28, 1980, Harold Abrams, Crown Cork's Director of Industrial Relations, sent a letter to each of the four unions that represented employees at the St. Louis plant, informing them that the company had made a final decision to close the plant. In those letters Abrams stated that Crown Cork "expected that the closing [would] occur by the end of September, 1980."

Production and maintenance employees, as well as some clerical employees, were represented by Local 688 of the International Brotherhood of Teamsters (Local 688).*fn1 On July 31, 1980, Local 688's business representative, Ken DeGrande, sent a letter acknowledging receipt of Abrams' letter "regarding the closing of the St. Louis plant" and requesting that Abrams meet with him "as rapidly as possible to negotiate the effects of the closing." On August 13, 1980 and several occasions thereafter, Abrams met with DeGrande to negotiate the effects of the closing, including severance pay, vacation pay and related matters. Local 688 did not, however, challenge the company's decision to close the plant.

Crown Cork proceeded to implement its decision by a massive reduction in its work force. As a result of layoffs, terminations and transfers, only 9 of Crown Cork's 29 management employees remained at the St. Louis Plant after September 26th; 44 of the 148 production and maintenance workers remained; of 12 clerical workers, only 4 remained.

On September 16, 1980, Crown Cork's Director of Production Control, Donald Kirkpatrick, issued an internal mailgram to managers notifying them that the St. Louis plant would close at the end of business on September 26, 1980, and that all orders placed at the St. Louis plant should be switched to another point of manufacturing before then. After this date, there was no new can production at the St. Louis plant. Finish-up work consisting of assembling remaining materials into cans amounting to a total of 265 production line-hours was performed in October. This "finish up" work was completed by October 10, 1980; thereafter, the only work performed at the St. Louis plant consisted of tasks incidental to the final closing of the plant: dismantling, maintenance, clean-up and disposal of equipment and property.

On September 23, 1980, Crown Cork entered into a listing agreement with Turley Martin, a real estate broker, to sell the plant. The St. Louis plant was ultimately sold on June 3, 1982.

Additional layoffs and terminations followed and by December 31, 1980, only three members of Local 688's production and maintenance unit and only one member of Local 688's clerical unit were still employed at the St. Louis Plant, performing shut down work. Crown Cork's last production and maintenance employee was placed on layoff on November 6, 1981. From October, 1980 through November, 1981 Crown Cork continued to submit employee work history reports for these few remaining employees and continued to contribute to the Pension Fund on their behalf.

In a letter dated October 26, 1983, pursuant to 29 U.S.C. § 1399(b)(1), the Pension Fund sent Crown Cork a notice and demand for the payment of withdrawal liability in the amount of $31,802.75 monthly, beginning January 1, 1984 or alternatively as a lump sum amount of $1,319,859.30 (based upon a withdrawal date of November 28, 1981). On December 20, 1983 the Pension Fund sent Crown Cork a "past due" notice. Subsequently, on December 30, 1983, Crown Cork requested that the Pension Fund review its withdrawal liability determination in accordance with 29 U.S.C. § 1399(b)(2)(A). On March 23, 1984, pursuant to 29 U.S.C. § 1399(b)(2)(B), the Pension Fund responded to Crown Cork's review request.

In November, 1984, after exhausting review with the Pension Fund, Crown Cork filed suit in the United States District Court for the Eastern District of Pennsylvania, seeking a declaration that it did not owe the Pension Fund withdrawal liability because it was exempt from such liability under DEFRA. On December 30, 1988, the district court granted summary judgment in Crown Cork's favor based upon its DEFRA defense. The district court found that Crown Cork had a "binding agreement to withdraw" ...


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