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Long Island Oil Products Co. v. Local 553 Pension Fund and Bernard Pellegrino

September 27, 1985

LONG ISLAND OIL PRODUCTS CO., INC., PLAINTIFF-APPELLEE,
v.
LOCAL 553 PENSION FUND AND BERNARD PELLEGRINO, JOSEPH RUDIN, WILLIAM KENNY, ROBERT GREENES AND THOMAS HANNEY, AS TRUSTEES OF THE LOCAL 553 PENSION FUND, DEFENDANTS-APPELLANTS



Appeal by Local 553 Pension Fund and its trustees, a multiemployer pension benefit plan, from a judgment of the United States District Court for the Southern District of New York (Knapp, J.) which dismissed its counterclaim seeking withdrawal liability in the amount of $270,655 from Long Island Oil Products, Inc., a withdrawing employer, appellee, upon the grounds that § 558 of the Benefit Reduction Act of 1984 eliminated the retroactive liability provisions of the Multiemployer Pension Plan Amendments Act of 1980. Affirmed.

Author: Cardamone

Before: KEARSE and CARDAMONE, Circuit Judges and WYATT, District Judge*fn*

CARDAMONE, Circuit Judge:

The question on this appeal is whether Congress violates due process when it first enacts a law having retroactive application and then - after having second-thoughts - rescinds it. This case, one of the many disputes engendered by the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA or Act), pits a multiemployer pension benefit fund against an employer that has withdrawn from the fund. When Congress enacted the MPPAA - which became law on September 26, 1980 - it provided that the Act's effective date was to be five months earlier - on April 29, 1980. Since the date of its enactment, the withdrawal liability provisions of the Act, and more particularly the retroactive application of those provisions, have been the target of repeated legal challenges. Time and again employers have attacked the Act's constitutionality in an effort to escape its liabilities.

The air was cleared for a brief time on June 18, 1984 when the Supreme Court unanimously ruled that the Act's retroactive application was consistent with the Due Process Clause of the Fifth Amendment. Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 104 S. Ct. 2709, 81 L. Ed. 2d 601 (1984). That settled state of affairs lasted only one month until July 18, 1984 when Congress amended the effective date of the Act thereby eliminating its retroactive application and precipitating another spate of litigation, of which this case is one. In this new round of litigation multiemployer plans that had anticipated collecting from employers withdrawing prior to September 26, 1980 challenged the constitutionality of Congress' decision to alter the Act's effective date. The issue raised is whether Congress' repeal of the Act's retroactive effective date deprives multiemployer pension funds of their property without due process of law in violation of the Fifth Amendment. We hold that it does not.

I BACKGROUND

A. Facts and Proceedings Below

Plaintiff-appellee Long Island Oil Products (Long Island Oil or employer) was a participating employer in defendant-appellant Local 553 Pension Fund (Fund), a multiemployer pension benefit plan within the meaning of 29 U.S.C. §§ 1002(37)(A) (1982) and 1301(a)(3) (1982). The employer contributed to the Fund on behalf of its employees pursuant to a collective bargaining agreement with Local 553. On May 15, 1980 Long Island Oil sold its business and withdrew from the Fund.

The MPPAA, 29 U.S.C. §§ 1381-1461 (1982), became law on September 26, 1980. Detailed explanations of the mechanics of the MPPAA and accounts of its extensive legislative history are reported elsewhere. See, e.g., TIME-DC, Inc. v. Management-Labor Welfare & Pension Funds, 756 F.2d 939, 944, 946-47 (2d Cir. 1985); Textile Workers Pension Fund v. Standard Dye & Finishing Co., 725 F.2d 843, 847-49 (2d Cir.), cert. denied, 467 U.S. 1259, 104 S. Ct. 3554, 82 L. Ed. 2d 855 (1984); Peick v. Pension Benefit Guaranty Corp., 539 F. Supp. 1025 (N.D. Ill 1982), aff'd, 724 F.2d 1247, 1251-56 (7th Cir. 1983), cert. denied, 467 U.S. 1259, 104 S. Ct. 3554, 82 L. Ed. 2d 855 (1984). The Act's most significant parts are the withdrawal liability provisions that require a withdrawing employer to pay its shares of the unfunded vested employee benefits for which the plan is liable. The MPPAA applied to any employer that withdrew after April 29, 1980 - five months prior to the date when the Act became law. See 29 U.S.C. § 1461(e)(2)(A) (1982) (amended 1984).

As a result of the retroactive application of the MPPAA, Long Island Oil, which withdrew from the Fund three weeks after the law's effective date, owed the Fund a claimed withdrawal liability totalling $270,655. The Fund notified the employer of this liability, but received no payment. On December 29, 1982 Long Island Oil filed the present action in the United States District Court for the Southern District of New York (Knapp, J.), seeking an injunction preventing the Fund from collecting any withdrawal liability and a judgment declaring the MPPAA to be unconstitutional. The Fund counterclaimed. for the full amount of the withdrawal liability. Shortly thereafter the Supreme Court granted certiorari in a case raising the same constitutional challenge. Judge Knapp therefore stayed the present action pending the Supreme Court's decision. On June 18, 1984 the Court unanimously upheld the constitutionality of the retroactive application of the withdrawal liability provisions. R.A. Gray & Co., 104 S. Ct. at 2709. As a consequence, the district court granted on June 29, 1984 the Fund's motion for summary judgment, but the decision was never reduced to a judgment.

B. Congressional Action

While the present action was pending, Congress considered amendments to the MPPAA that would repeal the retroactive effective date of the Act by moving the effective date to September 26, 1980 - the date of enactment. In 1984 the Senate Finance Committee included as part of the Deficit Reduction Act of 1984 a provision amending the Act's effective date. The MPPAA amendment passed the Senate and was accepted by the Conference Committee. The full provision, Pub. L. No. 98-369, § 558(a)(1), 98 Stat. 494, 899 (1984), is as follows:

(1) Liability. - Any withdrawal liability incurred by an employer pursuant to part 1 of subtitle E of title IV of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1381 et seq.) as a result of complete or partial withdrawal of such employer from a multiemployer plan before September 26, 1980, shall be void.

Section 558(a)(2) provides that a plan sponsor shall refund with interest any amounts paid by an employer for such withdrawal liability, less a reasonable amount for administrative expenses ...


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