On Appeal from the United States District Court for the District of New Jersey. (D.C. Civil Action Nos. 76-01931 & 77-02543).
Before: Stapleton and Scirica, Circuit Judges and Smith, District Judge*fn*
After a four and one-half year hiatus, the Pension Benefit Guaranty Corporation attempted to reopen its case against Pabst Brewing Co. and Anheuser-Busch, Inc. for unfunded benefits in a terminated pension fund. The district court dismissed the case for lack of prosecution under Federal Rule of Civil Procedure 41(b) and denied as untimely the PBGC's motion for reconsideration.
The PBGC appeals contending the district court abused its discretion in dismissing the case. The PBGC also claims its motion for reconsideration was timely, and that due process required notice and a hearing before dismissal.
We hold the district court correctly found the motion for reconsideration was untimely, and that the PBGC received adequate notice. Nonetheless, without considering the evidence the PBGC proffered with its motion for reconsideration,
we find the district court should not have dismissed the case with prejudice. We agree that the PBGC's behavior was negligent and inexcusable, but think dismissal was too harsh a sanction. Therefore we will remand for reinstatement of the case and consideration of lesser sanctions.
In 1956, Pabst, Anheuser-Busch, and other breweries entered into an agreement with the New Jersey Brewers' Association, the Brewery Workers Joint Local Executive Board of New Jersey, and certain of its local unions to establish the "New Jersey Brewery Workers Trust Fund" (the Fund). Each brewery negotiated periodic collective bargaining agreements specifying the amount it would contribute to the Fund, which was to provide brewery workers' retirement pensions.
As employment in the brewing industry declined in the late 1960s, the Fund's unfunded liabilities mounted, exceeding $50 million by 1970. To protect its solvency and reduce the actuarial deficit, the Fund's trustees adopted a Partial Termination Clause, limiting benefits for participants whose employers had withdrawn from the fund.
In 1973, Pabst and Anheuser-Busch (collectively, the Breweries) withdrew from the Fund and set up separate funds for their employees. Other breweries also withdrew throughout the 1970's. In 1978 the Fund was terminated and the PBGC was appointed statutory trustee under Title IV of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1342(b)&(c) (1988).
Coinciding with the termination, 29 employees (the Employees) sued Pabst, Anheuser-Busch, other breweries, the Fund, its trustees, and the PBGC, for benefits under the Labor Management Relations Act of 1947, 29 U.S.C. §§ 185 & 186 (1988 & Supp. IV 1992), and ERISA, 29 U.S.C. §§ 1132, 1302, 1303 (1988 & Supp. IV 1992). In 1979, the PBGC was substituted for the Trustees, and the Employees added a fifth count solely against the PBGC, seeking a declaration that the PBGC was required to guarantee them certain nonforfeitable rights to pension benefits. A class was certified for this count.
The PBGC filed cross-claims against Pabst, Anheuser-Busch, and Rheingold (another brewery), seeking employer indemnification under 29 U.S.C. § 1364 (1988 & Supp. IV 1992) for benefits the PBGC might be required to pay employees under 29 U.S.C. § 1322.*fn1 The PBGC filed a similar claim against Chock-Full O'Nuts Corp., parent company of Rheingold.*fn2 The Breweries filed cross-claims against the PBGC seeking to recover or offset their liability to the PBGC because of payments into both the Fund and the individual corporate plans.
All parties filed summary judgment motions. On September 22, 1980, the district court granted summary judgment to the Employees against the PBGC on the fifth count, holding that the Partial Termination Clause was invalid; and granted summary judgment against the Employees on all their other claims. Michota v. Anheuser-Busch, Inc., 526 F. Supp. 299 (D.N.J. 1980). Thus, all causes of action by the Employees against the Breweries were disposed of, but the Employees' claims against the PBGC continued, as did the cross-claims between the PBGC and the Breweries.
On appeal, we reversed the district court only on the summary judgment for the Employees on the fifth count, holding the Partial Termination Clause was not void. We remanded, however, for determination of whether the Employees received proper notification of the clause. Adams v. New Jersey Brewery Employees' Pension Trust Fund, 670 F.2d 387 (3d Cir. 1982).
After discovery on the notice issue, the PBGC and the Employees renewed their summary judgment motions, and the Breweries filed for summary judgment to dismiss the PBGC cross-claims for statutory employer indemnification. Because ERISA was not enacted until 1975, the Breweries claimed that statutory employer liability was not meant to apply to employers who had withdrawn from the Trust Fund in 1973, and in the alternative, that such liability would violate the Due Process Clause.
On October 7, 1983, after the case was transferred to another Judge, the district court granted the Employees' summary judgment motion on the fifth count, holding they did not receive adequate notice of the Partial Termination Clause. The court denied Pabst and Anheuser-Busch's summary judgment motions, ruling that liability was appropriate under 29 U.S.C. § 1364 and the Due Process Clause. The court certified the issues for interlocutory review.
On a second appeal, we reversed the grant of summary judgment for the Employees, holding they received adequate constructive notice of the Partial Termination Clause as a matter of law. Michota v. Anheuser-Busch, Inc., 755 F.2d 330, 332 (3d Cir. 1985). We declined to address the certified questions, and remanded "for a final determination of the employers' liability on the PBGC's cross-claim for any remaining unfunded portions of the Brewery Pension Fund." Id. at 336.
On October 1, 1986, the district court granted the PBGC's motion to dismiss the Breweries' cross-claims against the PBGC for reduction of their statutory liability based on their payments to the Employees through their corporate pension plans. The court also denied the Breweries' motion for reconsideration of their due process objection to liability under 29 U.S.C. § 1364.
In January, 1987, after the case was transferred to yet another Judge, the Employees again raised their claims for guaranteed benefits from the PBGC. The court held we had ruled with finality that the Partial Termination Clause defeated those claims, and granted summary judgment to the PBGC against the Employees. Michota v. Anheuser-Busch, Inc., C.A. No. 77-2543 (D.N.J.March 17, 1988) (Memorandum Opinion and Order). We affirmed by judgment order, October 4, 1988. Adams v. Trustees of the New Jersey Brewery Employees' Pension Trust Fund, 862 F.2d 306, No. 88-5305 (3d Cir. Oct. 4, 1988) (judgment order).
Following our affirmance, the only claims remaining were the PBGC's cross-claims against the Breweries for employer indemnification. From October, 1988 to March, 1993 there was no contact among the parties and the court, although the PBGC engaged in limited, informal discovery with third parties on these claims. In December, 1992, the PBGC contacted the district court and was informed by the clerk that the case had been administratively closed. On March 19, 1993, the PBGC moved to reopen the case, seeking summary judgment against the Breweries. Without explaining the four and one-half year break in pursuing its claims, the PBGC contended the only remaining issue in the case was the amount of the Breweries' liability and described how that liability should be calculated. In response, Anheuser-Busch argued that the case should be dismissed under Federal Rule of Civil Procedure 41(b), noting that the court could do so sua sponte and discussing the relevant factors for dismissal. Pabst included in its letter response a form for an order denying the PBGC's motion to reopen and dismissing the case with prejudice. Neither party, however, formally moved for dismissal with prejudice.
In reply, the PBGC argued that the court should regard the administrative closure of the case as a clerical mistake and reopen under Rule 60(a). The PBGC responded to some of the Breweries' assertions -- whether the PBGC was inappropriately seeking relief under Civil Procedure Rule 60(b) (relief from a final judgment) and whether the case had in fact already been dismissed -- but did not explain its delay in prosecution, contending that a dismissal under Rule 41(b) would be inappropriate because it had not failed to comply with any procedural rules or court orders, and that the defendants had not moved for dismissal.
On June 7, 1993, the district court dismissed the PBGC's claims under Rule 41(b). Noting that the PBGC had given no explanation for its dilatory conduct, the court said that for equitable reasons it would sua sponte treat the defendants' motions and responses as a 41(b) motion to dismiss for lack of prosecution. Acknowledging that a dismissal for lack of prosecution was a harsh sanction because it operates as an adjudication on the merits, the court evaluated the case in light of the six factors set forth in Poulis v. State Farm Fire & Casualty Co., 747 F.2d 863 (3d Cir. 1984), and found all factors pointed toward dismissal except the factor evaluating the merits of the PBGC's case.
On June 24, 1993, the PBGC filed a motion under Federal Rule of Civil Procedure 59(e) for alteration or amendment of the dismissal order. The PBGC submitted an explanation of the delay in prosecution, describing how the case was shifted from one overloaded attorney to another, and documented a small amount of "informal discovery" during the hiatus, consisting of a few letters between the PBGC and consultants or fund managers. The court denied the motion as untimely, noting that Rule 59(e)'s ten-day time limit was jurisdictional. The court also stated that had the motion been timely, it would have affirmed its prior holding, having found nothing in the proffered arguments and documents giving cause for reconsideration.
The PBGC filed a timely notice of appeal.
The district court had jurisdiction of the PBGC's ERISA employer liability claim against the Breweries under 29 U.S.C. § 1303(e)(3). The court's dismissal of that claim and its denial of the motion for reconsideration are final orders. We have jurisdiction under 28 U.S.C. § 1291.
The motion for reconsideration was denied because a jurisdictional time limit had expired. We exercise "plenary review of the district court's choice and interpretation of applicable tolling principles," Sheet Metal Workers Local 19 v. 2300 Group, Inc., 949 F.2d 1274, 1278 (3d Cir. 1991), and of jurisdictional decisions by the district court, Anthuis v. Colt Indus. Operating Corp., 971 F.2d 999, 1002 (3d Cir. 1992). The question of whether due process required formal notice and a hearing before dismissal is also subject to plenary review. Gregoire v. Centennial Sch. Dist., 907 F.2d 1366, 1370 (3d Cir.), cert. denied, 498 U.S. 849 (1990).
We review the dismissal for failure to prosecute under Rule 41(b) for abuse of discretion. "The question, of course, is not whether [the Supreme] Court, or whether the Court of Appeals, would as an original matter have dismissed the action; it is whether the District Court abused its discretion in so doing." National Hockey League v. Metropolitan Hockey Club, 427 U.S. 639, 642, 49 L. Ed. 2d 747, 96 S. Ct. 2778 (1976) (per curiam). While we defer to the discretion of the district court, we are mindful that dismissal with prejudice is only appropriate in limited circumstances: "Because [an order of dismissal] deprives a party of its day in court, our precedent requires that we carefully review each such case to ascertain whether the district court abused its discretion in applying such an extreme sanction," Scarborough v. Eubanks, 747 F.2d 871, 875 (3d Cir. 1984), and in this review "doubts should be resolved in favor of reaching a decision on the merits," id. at 878.
Rule 59(e) requires a motion for reconsideration to "be served not later than 10 days after entry of the judgment." Fed. R. Civ. P. 59(e). Rule 6(a) provides that in computing any time period under the Rules of Civil Procedure, the day of the event from which the designated period of time begins to run shall not be included, nor shall intermediate Saturdays, Sundays, or legal holidays, if the period is less than eleven days. Rule 6(b) provides that the time limit of Rule 59(e) may not be judicially extended; as we have explained, the ten-day period "is jurisdictional, and cannot be extended in the discretion of the district court." Welch v. Folsom, 925 F.2d 666, 669 (3d Cir. 1991) (internal quotations omitted).
The district court's order denying the PBGC's motion to reopen the case and dismissing it with prejudice was dated May 25, 1993, and docketed June 7. The PBGC served a "Motion to Alter or Amend the Judgment" under Rule 59(e), with accompanying affidavits and documents, on June 24. Not counting weekend days, ten days after June 7 would be June 21. Therefore, the June 24 service by PBGC was not timely.*fn3
The PBGC argues that Rule 6(e) extended the deadline by three days, rendering its motion ...