October 2015 FBA Labor and Employment Law Third Circuit Update
Stephen E. Trimboli, Esq.
Trimboli & Prusinowski, L.L.C.
When withdrawal liability under an ERISA multi-employer pension plan is paid in annual installments rather than as a lump sum, the “highest contribution” rate for calculating the annual installments is the single highest contribution rate established under the employer’s relevant collective bargaining agreements, but the 10 percent surcharge applicable to plans in “critical status” is not included.
Board of Trustees v. C&S Wholesale Grocers, Inc./Woodbridge Logistics, LLC, _ F.3d _ (3d Cir. 2015), 2015 WL 5438539, C.A. 3, (N.J.), September 16, 2015, available at www2.ca3.uscourts.gov/opinarch/141956p-1.pdf
In the C&S Wholesale Grocers case, the Third Circuit Court of Appeals addressed the amount that an employer withdrawing from a multi-employer pension fund under the federal Employee Retirement Income Security Act of 1974 (ERISA) should pay in withdrawal liability when it elects to make payments on an annual installment basis rather than in a single lump sum.
A multi-employer pension plan is one to which multiple employers contribute, usually pursuant to collective bargaining agreements. As a result of ERISA amendments enacted under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), an employer that withdraws from a multi-employer pension plan must pay to the plan the pro rata share of the plan’s total unfunded vested benefits attributable to the current or former employees of the withdrawing employer. The MPPAA was enacted at a time in which many multi-employer pension plans were experiencing financial difficulty, and was intended to “mitigate the incentives that employers would otherwise have to withdraw” from such financially troubled plans. Withdrawal liability is calculated in accordance with a statutory formula that determines the withdrawing employer’s proportionate share of the plan’s unfunded vested benefits. The withdrawing employer has the option of satisfying its entire withdrawal liability in a single lump sum, or of amortizing the liability amount in equal annual payments.
In 2006, ERISA was amended yet again through the enactment of the Pension Protection Act (PPA), which, among other amendments, mandated that pension plans that are less than 65% funded be declared to be in “critical status.” Being in “critical status” triggers, among other requirements, the payment by the participating employers of an automatic surcharge equal to five percent of the employer’s regular pension contributions in the first year and ten percent of the regular pension contributions in all subsequent years.
The employer in C&S Wholesale Grocers was the largest wholesale grocery distributor by revenue in the United States at the time it elected to withdraw from the IBT Local 863 Pension Fund in 2011. As of September 1, 2011, the actuarial value of that fund’s assets was $202,865,255, while its accrued benefit liabilities totaled nearly $400,000,000. The IBT Local 863 Pension Fund had been declared to be in “critical status” in the plan year beginning September 1, 2008, and the employer had therefore been paying a ten percent surcharge, in addition to its regular contributions, up until the time of its withdrawal.
The parties agreed that the employer’s total withdrawal liability was $189,606,875, and that the employer had properly elected to satisfy this obligation through amortized annual payments. The dispute arose over the statutory calculation of those annual payments. The employer was party to multiple collective bargaining agreements calling for contributions to the IBT Local 863 Pension Fund, and argued that the annual payments should have been based on the weighted average of the various contributions rates contained in those agreements. The employer also argued that the ten percent PPA surcharge should not be included in determining the annual payments. The IBT Local 863 Pension Fund instead computed the annual payments based on the single highest contribution rate from among the employer’s various collective bargaining agreements, and included the ten percent PPA surcharge in the calculation. A neutral arbitrator agreed with the employer on the contribution rate question and with the IBT Local 863 Pension Fund on the inclusion of the surcharge. Both parties filed complaints with the District Court to vacate the arbitrator’s award. The District Court reversed each of the arbitrator’s determinations, holding that the single highest contribution rate should have been used to determine the employer’s annual payments, but that the ten percent PPA surcharge should have been excluded. The IBT Local 863 Pension Fund appealed, and the employer cross-appealed. The Third Circuit affirmed the District Court on both issues as a matter of statutory interpretation.
On the contribution rate issue, 29 U.S.C. Sec. 1399(c)(1)(C)(i)(II) establishes the statutory formula for the calculation of annual withdrawal liability payments that requires the use of “the highest contribution rate at which the employer had an obligation to contribute under the plan during the 10 plan years ending with the plan year in which the withdrawal occurs.” The term, “obligation to contribute,” is elsewhere defined as an obligation arising “(1) under one or more collective bargaining (or related) agreements, or (2) as a result of a duty under applicable labor-management relations law.” 29 U.S.C. Sec. 1392(a). The Third Circuit agreed with the District Court that these provisions clearly and unambiguously anticipated that multiple collective bargaining agreements may exist with respect to a single employer, and that the provisions clearly called for the single highest contribution rate from among all of those agreements to be used. The employer’s argument that these provisions were “ambiguous” was rejected, as was the employer’s reliance on legislative history and an administrative agency opinion letter. “Because we disagree that the statute is ambiguous, we are not at liberty to examine legislative history or the {agency opinion} letter.”
As to the ten percent PPA surcharge, the Third Circuit agreed with the District Court that the surcharge did not fall within the statutory definition of an “obligation to contribute” under 29 U.S.C. Sec. 1392(a). The obligation to pay the surcharge did not arise under a collective bargaining agreement. As to the question whether the surcharge constituted an obligation arising under “applicable labor-management relations law,” the Third Circuit read the applicable statutory provisions to distinguish between “contributions” and “contribution rates.” “Contribution rates” are used to determine the employer’s total contributions. 29 U.S.C. Sec. 1399(c)(1)(C)(i)(II) requires annual withdrawal liability payments to be based on the highest “contribution rate,” not the employer’s total contributions. “{T}he correct question is whether surcharges are part of the contribution rates (not whether they constitute contributions) and we conclude that they are not.” In addition, while contribution rates are set by collective bargaining agreements, the surcharge is established by statute, and “{n}othing in the statutory scheme suggests that surcharges, when applicable, amend the underlying terms of the employers’ {collective bargaining agreements}.” The Court concluded:
We appreciate that ERISA is not a model of clarity. It is, in fact, a bewilderingly complex statute. However, despite its many obfuscations, it is clear that Congress intended to distinguish between contribution rates and contributions, and we are not convinced by the {IBT Local 863 Pension Fund}’s arguments to the contrary.
On December 16, 2014, subsequent to the operative events in this case, Congress enacted the Multiemployer Pension Reform Act of 2014 (MPRA), which made explicitly clear that surcharges such as those paid by the employer in C&S Wholesale Grocers should be excluded from annual withdrawal liability payments. IBT Local 863 Pension Fund argued that the passage of the MPRA implied that prior to its enactment, surcharges were to be included in annual withdrawal liability payments. The Third Circuit rejected this argument:
{A}s the Supreme Court has cautioned: “we [must] begin with the oft-repeated warning that the views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one.” {citation omitted} Indeed, the weight given subsequent legislation and whether it constitutes a clarification or a repeal is a context- and fact-dependent inquiry…Here, because of the dearth of legislative history for the MPRA and lack of clear statutory language, it would be a hazardous venture for us to draw any conclusions from the enactment of the MPRA.
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A complaint about interdepartmental romantic favoritism, without more, is a personal grievance not giving rise to a viable First Amendment retaliation claim on behalf of a municipal police officer.
Young v. Township of Irvington, et al., _ Fed. Appx. _ (3d Cir. 2015), 2015 WL 6123228, C.A. 3, (N.J.), October 19, 2015, available at www2.ca3.uscourts.gov/opinarch/134353np-1.pdf
In a non-precedential opinion, a Third Circuit panel held that a police officer who allegedly complained to his Internal Affairs department about the Police Chief allegedly showing favoritism toward those employees with whom he was romantically involved and toward their relatives was found not to have alleged a viable First Amendment retaliation claim.
Walter Young was a lieutenant in the Irvington Township Police Department who was terminated on October 19, 2010, for his failure to respond properly to a police officer under Young’s supervision who had twice been found asleep on duty. Young alleged that his termination constituted “the culmination of a three-year campaign of unfair treatment and retaliation” that had allegedly begun after Young had submitted a written complaint to the Irvington Township Police Department Internal Affairs Office alleging that the Chief of the Department was engaged in “improper sexual relationships with subordinates.” Notably, Young did not allege that the Chief was engaging in unlawful sexual harassment. Rather, he alleged that the subordinates who engaged in these apparently-welcome and consensual “sexual” relationships with the Chief received favored treatment from him. In one case, Young alleged that he had been subjected to disciplinary action based on “false” allegations made against him by a fellow officer because that officer’s sister was romantically involved with the Chief.
Young ultimately filed a pro se complaint in New Jersey state court that was 300 pages in length, including 614 paragraphs and sixty “counts” against no fewer than 33 named defendants. Of particular note, Young alleged violations of 42 U.S.C. Sec. 1983 and of the First, Fifth, Sixth and Fourteenth Amendments to the United States Constitution. The case was removed to the United States District Court for the District of New Jersey, which ultimately dismissed all claims as to all defendants on the pleadings. Young thereupon retained counsel, who appealed the District Court’s determination only with regard to the Township, the Police Department, the Chief, the Township’s Police Director, and a single Lieutenant. The Third Circuit affirmed.
To establish a retaliation claim under the First Amendment, a public employee must show that, among other things, his or her speech is constitutionally protected. A statement is protected by the First Amendment if: (1) in making it, the employee spoke as a citizen, (2) the statement involved a matter of public concern, and (3) the government employer did not have an adequate justification for treating the employee differently from any other member of the general public as a result of the statement he made. In this case, Young did not speak as a private citizen. “{I}t was part of Young’s ordinary job duties as a lieutenant in the Irvington Police Department to file an Internal Affairs complaint stating that, inter alia, Chief of Police Chase showed favoritism to another police officer (who evidently had accused Young himself of misconduct and was one of Young’s own subordinates) because of a sexual relationship between the Chief of Police and the officer’s sister.”
Further, the Court found that Young’s allegations did not rise to the level of a public concern. “{W}ithout more, a complaint about intradepartmental favoritism falls squarely within the realm of personal grievances—as opposed to speech implicating a matter of public concern. In fact, it appears that Young complained about Chase’s relationships as part of his own defense to a disciplinary action brought against Young himself.”
The Court also found that the Young had failed to plead cognizable claims under New Jersey’s Conscientious Employee Protection Act, i.e., New Jersey’s employment “whistleblower” statute, or under the New Jersey Law Against Discrimination.
Finally, the Court found that allowing Young an opportunity to amend his complaint would be futile. The complaint contained fatal deficiencies, and Young did not reference any allegations that could be added to remedy these deficiencies. “After all, Young filed a 300-page pleading, but he was unable to allege sufficient factual matter to state a facially plausible claim.”
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A frostbite condition that affected a truck driver only in extreme cold, and that the driver admitted did not affect his ability to work or otherwise limit a major life activity, does not constitute a disability under the Americans with Disabilities Act.
Wilson v. Iron Tiger Logistics, Inc., _ Fed. Appx. _ (3d Cir. 2015), 2015 WL 6504286, C.A. 3, (Penna.), October 28, 2015, available at www2.ca3.uscourts.gov/opinarch/144470np-1.pdf
Robert Wilson was a truck driver employed by Iron Tiger Logistics, Inc. As the Court explained:
His duties included receiving a load of trucks, delivering them to customers’ facilities, and “undecking” and reassembling the trucks at the delivery location. Undecking takes approximately one hour to complete and involves conducting safety checks, hooking straps to the axles of the trucks, using wrenches to loosen and tighten bolts, and reinstalling axles and exhaust stacks. Drivers may take extra time to complete the undecking process in order to warm up, rest, or eat.
Wilson incurred frostbite on several fingers in January 2010 while delivering a load of trucks to a location in Canada. Again, as the Court explained:
The only documented work restrictions caused by the frostbite were that Wilson needed to “avoid any prolonged exposure to cold” and “must be able to warm up his fingers immediately if he feels any pain in the fingertip.” … Wilson admitted that his frostbite did not affect his ability to see, hear, eat, sleep, walk, stand, sit, reach, lift, bend, speak, breathe, learn, read, concentrate, think, communicate, or interact with others. … It only affected his ability to work by causing him pain when working outside in extreme cold. To allow him to fulfill his duties as a driver and comply with his doctor’s restrictions, Iron Tiger allowed (and instructed) Wilson to wear gloves when delivering and undecking loads, to take longer when delivering loads, and to warm up his hands in the cab of the truck or in the customers’ facilities when delivering loads.
Indeed, Wilson himself testified that when he returned to work, he resumed all of his regular duties as if he, in his own words, “hadn’t skipped a beat.”
On December 18, 2010, Wilson was directed to accept a load of trucks for dispatch to Canada. He refused. Iron Tiger assured him that accommodation would be made for him to keep his hands warm during undecking and to allow him extra time if needed to complete the delivery process. He was also warned that refusal to accept the assignment would result in termination. Wilson refused to go to Canada under any circumstance and was thereupon fired. Wilson then sued Iron Tiger under the federal Americans with Disabilities Act (ADA) and Pennsylvania’s Human Relations Act. The District Court granted Iron Tiger summary judgment, and the Third Circuit affirmed.
To qualify as disabled under the ADA, Wilson was required to demonstrate (1) that he had a physical or mental impairment that substantially limits one or more major life activities, (2) that he had a record of such an impairment, or (3) that Iron Tiger regarded him as having such an impairment. 42 U.S.C. § 12102(1). “Major life activities” include caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working. 42 U.S.C. § 12102(1) and (2)(a).
In this case, Wilson failed to show that he was substantially limited in performing one or more major life activities, or that he had a “record” of being so substantially limited. He admitted that he was not affected in his ability to perform any major life activity other than working, and cited to nothing in the record that would allow a jury to conclude that he was substantially limited in his ability to work.
Nor did Iron Tiger “regard” Wilson as having such an impairment. Wilson’s mere receipt of workers compensation benefits and leave from Iron Tiger was insufficient standing alone to establish either that Wilson had a “disability” under the ADA or that Iron Tiger regarded him as having such a “disability.”
The dismissal of Wilson’s claim under Pennsylvania law was affirmed on the same ground as was the dismissal of his ADA claim.
