Penske Logistics LLC v. Freight Drivers and Helpers
16-2115
| 4th Cir. | Jan 10, 2018Background
- Leaseway, a long-time contributing employer to the Freight Drivers and Helpers Local Union No. 557 pension Fund, was acquired by Penske in 1995 and sold (100% stock) to Performance Logistics Group (PLG) on March 26, 2004.
- The Fund’s trustees assessed withdrawal liability against Penske, concluding a principal purpose of the 2004 sale was to evade or avoid withdrawal liability; Penske disputed the assessment and paid the amounts pending arbitration.
- Penske initiated arbitration contesting three assessments (partial withdrawals for 2004 and 2005 and a complete withdrawal in 2006); the Arbitrator held Penske not liable and ordered refund of payments plus attorneys’ fees for Fund discovery abuses.
- The Fund petitioned the district court to vacate the award, arguing the Arbitrator applied the wrong burden of proof; the district court affirmed the award and denied a stay pending the Arbitrator’s motion to modify.
- The Fourth Circuit vacated and remanded, holding the Arbitrator clearly erred by applying the burden of proof improperly (treating the Fund as having to prove evasion rather than requiring Penske to disprove it), and declined to resolve fee reasonableness because of the remand.
Issues
| Issue | Plaintiff's Argument (Fund) | Defendant's Argument (Penske) | Held |
|---|---|---|---|
| Whether district court abused discretion by denying a stay pending arbitrator decision on modification motion | District court should have stayed to allow arbitrator to rule within regulatory timeframes | Court may enforce/vacate award after regulatory time limit passed; stay not required | No abuse; district court properly denied stay |
| Whether arbitrator applied correct burden of proof regarding whether sale’s principal purpose was to evade/avoid withdrawal liability | Arbitrator placed burden on Fund to prove evasion; should have required Penske to disprove presumption of sponsor’s factual determination by preponderance | Penske contends arbitrator applied burden correctly and relied on Penske’s affirmative evidence | Vacated: Arbitrator clearly erred by requiring Fund to prove evasion rather than requiring Penske to rebut presumption; remanded for further proceedings |
| Whether the arbitrator’s factual findings should be reviewed or remanded for reexamination of entire record | Fund argues misapplied burden infected findings and requires remand | Penske argues findings are supported by evidence and should be affirmed under clear-error review | Majority remands for reconsideration under correct burden; dissent would affirm |
| Reasonableness of attorneys’ fees award | Fund argues award not reasonable and arbitrator should have followed local rules | Penske defends award as sanction-based and reasonable | Court declined to decide due to vacatur/remand |
Key Cases Cited
- Concrete Pipe & Products of Cal., Inc. v. Construction Laborers Pension Trust for Southern California, 508 U.S. 602 (presumption of correctness for plan sponsor factual determinations; employer bears burden to rebut)
- Bd. of Trs., Sheet Metal Workers’ Nat’l Pension Fund v. BES Servs., Inc., 469 F.3d 369 (4th Cir. 2006) (MPPAA’s purpose to stabilize multiemployer plans and favor arbitration)
- Borden, Inc. v. Bakery & Confectionery Union & Indus. Int’l Pension, 974 F.2d 528 (4th Cir. 1992) (withdrawal liability allocation among controlled group members)
- Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717 (statutory background for withdrawal liability under MPPAA)
- Trustees of the Plumbers & Pipefitters National Pension Fund v. Plumbing Services, Inc., 791 F.3d 436 (4th Cir. 2015) (definition of complete withdrawal)
- Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115 (4th Cir. 1991) (partial withdrawal definition/analysis)
- Sherwin-Williams Co. v. New York State Teamsters Conference Pension & Retirement Fund, 158 F.3d 387 (6th Cir. 1998) (transaction can have multiple principal purposes)
- Republic Industries, Inc. v. Teamsters Joint Council No. 83 of Virginia Pension Fund, 718 F.2d 628 (4th Cir. 1983) (MPPAA arbitration is streamlined and awards presumptively correct)