OPINION OF THE COURT
Thе Board of Trustees of the Southwestern Pennsylvania and Western Maryland Area Teamsters and Employers Pension Fund (the “Fund”) appeals the District Court’s grant of summary judgment in favor of SUPERVALU, Inc. (“SUPERVA-LU”). The Fund claims that the District Court improperly concluded that SUPER-VALU did not violate § 4212(c) of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1392(c). We agree. For the reasons that follow, we will reverse the District Court’s judgment and remand the case to the District Court for enforcement of the Arbitrator’s Award.
I.
The Multiemployеr Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C. § 1381
et seq.,
amended ERISA. The MPPAA was enacted “out of a concern that ERISA did not adequately protect multiemployer pension plans from the adverse consequences that result when individual employers terminate their participation or withdraw.”
Warner-Lambert Co. v. United Retail & Wholesale Employee’s Teamster Local No. 115 Pension Plan,
Congress recognized that multiem-ployer pension plans affected millions of Americans and found that “withdrawals of contributing employers from a multiem-ployer pension plan frequently result in substantially increased funding obligations for employers who continue to cоntribute to the plan, its participants and beneficiaries, and labor-management relations.” 29 U.S.C. § 1001a(a). It intended for the MPPAA to uniformly impose withdrawal liability and to “ ‘relieve the funding burden on remaining employers and to eliminate the incentive to pull out of a plan which would result if liability were imposed only on a mass withdrawal by all
Section 4201 provides that a withdrawing employer is liable for its share of the plan’s unfunded vested benefits. 29 U.S.C. § 1381(a).
1
It is the duty of the pension plan to determine whether withdrawal liability has occurred and in what amount. 29 U.S.C. §§ 1382, 1391. Section 4211 provides that the amount of an employer’s withdrawal liability is the employer’s proportionate share of the unfunded vested benefits existing at the end of the plan year preceding the plan year in which the employer withdraws. 29 U.S.C. § 1391(b)(2)(A). A “complete withdrawal,” as in this case, occurs when an employer “(1) permanently ceases to have an obligation to contribute under the plan, or (2) permanently ceases all covered operations under the plan.” 29 U.S.C. § 1383(a). “[T]he date of complete withdrawal is the date of the cessation of the obligation to contribute or the cessation of covered operations.” 29 U.S.C. § 1383(e). The “obligation to contribute” arises “(1) under one or more collective bargaining (or relаted) agreements, or (2) as a result of a duty under applicable labor-management relations law.” 29 U.S.C. § 1392(a). Although “all covered operations” is not defined in the statute, we have held that it means the “substantial cessation of normal business activity.”
Crown Cork & Seal Co., Inc. v. Cent. States Se. & Sw. Areas Pension Fund,
SUPERVALU, a wholesale food distributor, was a contributing employer to the Fund, which is a defined benefit multiem-ployer pension plan governed by ERISA, as amended by the MPPAA. Employers agree to contribute to the Fund based on collective bargaining agreements (“CBAs”) with various local Teamsters unions. The Fund, in turn, provides retirement benefits for the employees of the participating employers. SUPERVALU and the Teamsters Local 872 (the “Union”) had CBAs which required SUPERVALU to contribute to the Fund on behalf of employees at SUPERVALU’s Belle Vernon, Pennsylvania facility through January 31, 2003, or the cessation of covered work.
At the beginning of 2002, SUPERVALU decided to close the Belle Vernon facility for business reasons. On March 14, 2002, SUPERVALU informed its employees of the decision, and that the closure would occur by late summer 2002. As a result of the closure, approximately three-hundred employees would lose their jobs. SUPER-VALU and the Union engaged in negotiations from March until May 2002 regarding the effects of the closing.
The negotiations included discussions regarding SUPERVALU’s potential withdrawal liability to the Fund. If SUPER-VALU withdrew prior to June 30, 2002, the end of the Fund’s 2001-2002 plan year, it would incur no withdrawal liability because the Fund did not have any unfunded vested benefits at the end of the prior plan year (2000-2001).
See
29 U.S.C. § 1391(b)(2)(A). However, if withdrawal
It is clear from the record that- SUPER-VALU was aware of its potential liability under both scenarios. First, at SUPER-VALU’s request, the Fund informed it of the status of the Fund’s assets as of April 2002: there was a negative return on the assets during the first three-quarters of the 2001-2002 plan year. Additionally, SUPERVALU informed the Union of the potential withdrawal liability if it were to withdraw in the 2002-2003 plan year. At a bargaining meeting, a SUPERVALU representative stated that terminating the CBAs after June 30, 2002, would place SUPERVALU in another plan year and make it liable for a large unfunded liability. SUPERVALU also explained to the Union that its members would not benefit from SUPERVALU’s continued participation in the Fund, and that SUPERVA-LU would rather the money go directly to its employees.
Based on this knowledge and its desire to maximize its employees’ benefits, SU-PERVALU proposed that the CBAs, which were set to expire on January 31, 2003, be terminated and replaced prior to June 30, 2002. It informed the Union that the early termination would prevent SU-PERVALU from being assessed withdrawal liability for the 2002-2003 plan year, which was estimated at the time to be in the range of $1 to $1.5 million. If the Union agreed to the early termination, SUPERVALU would make additional payments to its employees as consideration for the agreement.
In May 2002, the Union and SUPER-VALU signed a new agreement (the “Termination Agreement”). Under the Termination Agreement, the prior CBAs terminated at 11:59 p.m. on June 29, 2002. The Termination Agreemеnt was identical to the prior CBAs, except that the provisions regarding SUPERVALU’s contributions to the Fund were deleted. Additionally, the new terms provided that employees who were entitled to severance payments would receive a lump sum of $2,600 and that employees that continued working after June 30, 2002, would receive a $2.50 per hour salary increase. 2 The Agreement was ratified by the Union’s members on May 31 and June 1, 2002.
SUPERVALU submitted its final contributions to the Fund on June 26, 2002. It also informed the Fund that its obligations to contribute ceased on June 29, when it would withdraw as a participating employer from the Fund. As SUPERVALU withdrew during the 2001-2002 plan year, it believed that it would not incur any withdrawal liability.
However, in February 2003, the Fund sent SUPERVALU a letter assessing $4,316,996 in withdrawal liability against SUPERVALU because it withdrew during the 2002-2003 plan year.
3
See
29 U.S.C. § 1382. The letter explained that after conducting an investigation, the Fund believed that SUPERVALU entered the Termination Agreement with a principal purpose of evading or avoiding withdrawal
In a letter dated May 1, 2003, SUPER-VALU requested a review of the Fund’s demand letter as allowed under the Fund’s withdrawal liability procedures and the applicable stаtutory provisions, see 29 U.S.C. § 1399. SUPERVALU argued that its contribution obligations ended on June 29, 2002. Additionally, SUPERVALU argued that the Termination Agreement was a bona fide, arm’s length agreement which took it outside of ERISA’s “evade or avoid” provision. Receiving no response to its letter, SUPERVALU initiated arbitration on October 23, 2002, pursuant to ERISA § 4221, 29 U.S.C. § 1401.
Before the Arbitrator, the parties made cross-motions for summary judgment and agreed to limit argument to the issue of whether SUPERVALU engaged in the transaction to evade or avoid liability under § 4212(c) of ERISA. 5 The Arbitrator found that § 4212(c) was unambiguous and that the plain language applied to the transaction at issue in this case. According to the Arbitrator, SUPERVALU was aware of its potential liability and persuaded the Union to enter the Termination Agreement to enable SUPERVALU to avoid the liability. The Union was willing to agree as SUPERVALU offered a bonus to each employee, as well as a pay increase for the remaining employees. Such an arrangement, according to the Arbitrator, fit squаrely within the plain language of § 4212(c). Therefore, the Arbitrator granted summary judgment in favor of the Fund.
SUPERVALU filed a complaint in the District Court seeking to modify the Arbitrator’s Award pursuant to ERISA §§ 4301 and 4221, 29 U.S.C. §§ 1451 and 1401. The case was initially heard by a magistrate judge, Francis X. Caiazza, and the parties made cross-motions for summary judgment. After considering the motions, the Magistrate Judge issued a report and recommendation, which proposed setting aside the Award. Additionally, the Magistrate recommended granting summary judgment in favor оf SUPERVALU.
According to the Magistrate Judge, the Termination Agreement was not entered into to evade or avoid withdrawal liability. He recognized that SUPERVALU withdrew during the 2001-2002 plan year in order to effect a less costly withdrawal. However, in the Magistrate’s view, because the Agreement was bona fide and made at arm’s length, § 4212(c) was not
The Fund filed objections to the Magistrate’s recommendations, but the District Court adopted the Magistrate’s Report and Recommendations. The Distriсt Court held that the language of § 4212(c) was not plain, and had to be considered in light of the entire statutory scheme. Additionally, it agreed with the Magistrate’s determination that the date of withdrawal is set by the Termination Agreement. The date of withdrawal is based on a statutory formula — when the employer completely withdraws — and nothing in the record enabled the Court to find that a different withdrawal date applied. The District Court concluded by explaining that where it is not clear that an emplоyer acted to evade or avoid, but rather acted to minimize, withdrawal liability, the court would not interfere. In order to find that SU-PERVALU had violated § 4212(c), it would have had to alter the rules governing withdrawal liability, which was not within its province. Such an expansion of § 4212(c) would trump § 4212(a), and only Congress has the power to expand the provision. Therefore, the District Court granted, summary judgment in favor of SUPERVALU. 6
The Fund brought this timely appeal.
II.
We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. Our review of a district court’s grant of summary judgment is plenаry, and we employ the same standard used by the court below.
See Kay Berry, Inc. v. Taylor Gifts, Inc.,
III.
The main issue in this appeal is whether SUPERVALU violated ERISA § 4212(c) by entering the Termination Agreement with the Union. Section 4212(c) provides that “[i]f a principal purpose of any transaction is to evade or avoid liability under this part, this part shall be applied (and liability shall be determined and collected) without regard to such transaction.” 29 U.S.C. § 1392(c). The terms transaction, evade, and avoid are not defined in the statute, and therefore we must construe them in aсcordance with their ordinary and natural meaning,
United States v. E.I. DuPont De Nemours & Co., Inc.,
The noun “transaction” means “[t]he act of transacting or the fact of being transacted,” and the verb “transact” means “[t]o do, carry on, or conduct” or “[t]o conduct business.” Am. Heritage Dictionary 1899-1900 (3d ed.1992). The verb “avoid” means “[t]o stay clear of’ or “[t]o keep from happening” and is synonymous with escape. Id. at 128. The verb “evade” means “[t]o escape or avoid by cleverness or deceit” or “[t]o fail to make а payment of.” Id. at 634. Under a plain language statutory reading the provision applies when a contributing employer enters a transaction with a principal purpose of escaping its duty to pay withdrawal liability to the plan or fund.
In
Dorn’s Transportation, Inc. v. Teamsters Pension Trust Fund of Philadelphia & Vicinity,
The facts of Dorn’s are too dissimilar to the facts of this case for the opinion to provide much guidance. However, the case is important beсause we explained that § 4212(c) “was designed to guard against the intentional evasion of liability.” Id. at 902. There was no violation in Dorn’s because a “ ‘principal purpose of the transaction’ as a whole [was not] to escape liability.” Id. In other words, § 4212(c) is violated when one of the main reasons for entering a transaction is to effectuate that goal. 7
There is no doubt that SUPERVA-LU had the intent required by the statute. SUPERVALU was aware of the significant withdrawal liability that it would incur by withdrawing during the 2002-2003 plan year when the facility closed and all covered operations ceased. Based on its desire to avoid such liability, SUPERVALU offered enhanced severance benefits and wages to the Union’s members as consideration for the Union’s agreement to enter the Termination Agreement. By entering the Termination Agreement, SUPERVA-LU withdrew from the Fund during the 2001-2002 plan year, which enabled it to avoid incurring the significant liability that existed for withdrawal during the 2002-2003 plan year. The record indicates that the only reason that SUPERVALU chose
As noted above, when interpreting undefinеd terms in a statute, we may also consider the statute’s policies and objectives. SUPERVALU’s entering of the Termination Agreement was also contrary to the purpose of the MPPAA. As discussed above, Congress enacted the MPPAA to “protect multiemployer pension plans from the adverse consequences that result when individual employers terminate their participation or withdraw.”
Warner-Lambert,
The arguments raised by SUPER-VALU do not persuade us that it did not violate § 4212(c).
11
First, it argues that as a matter of law it withdrew on June 29, 2002, when its obligation to contribute ceased. SUPERVALU misunderstands the language of § 4212(c), which provides that any transaction that violates the provision must be disregarded. As we have determined that the Termination Agreement violated § 4212(c), the Agreement must be disregarded. Therefore, we return to the statute to determine when
The date of complete withdrawal is the day on which the employer’s obligation to contribute to the plan ceаses or when .all covered operations cease. 29 U.S.C. §§ 1383(a), (e). Because we must ignore the Termination Agreement, the prior CBAs govern SUPERVALU’s obligation to contribute. The prior CBAs required SUPERVALU to continue contributing until January 2003. However, the definition of a complete withdrawal is disjunctive; it is either when the obligation to contribute ceases or the cessation of all covered operations. SUPERVALU’s cessation of all covered operations occurred before its оbligation to contribute ceased. In other words, SUPERVALU actually withdrew when it ceased all covered operations. As noted above, we have defined “all covered operations” as “the substantial cessation of normal business activity.”
Crown Cork & Seal,
SUPERVALU’s main argument is that § 4212(c) does not apply to bona fide collective bargaining agreements or other transactions that are negotiated at arm’s length. Essentially SUPERVALU is suggesting, and the District Court agreed, that bona fide, arm’s length transactions are exempt. We disagree.
As discussed above, § 4212(c) is unambiguous. The text in no way suggests that it only applies to sham or fraudulent transactions. The
statutory criterion is not whether the transaction is a sham, having no purpose other than to defeat the goals of the [MPPAA] by leaving the other employers in the multiemployer pension plan holding the bag. It is whether the avoidance of withdrawal liability ... is one of the principal purposes of the transaction.
Santa Fe Pac. Corp. v. Cent. States, Se. & Sw. Areas Pension Fund,
Additionally, SUPERVALU claims that there is some support for its proposition in the legislative history.
14
We
IV.
For the reasons stated above, we will reverse the District Court’s grant of summary judgment in favor of SUPERVALU and remand the proceeding with directions that the District Court enforce the Arbitrator’s Award.
Notes
. Although statutory provisions exist that exempt withdrawing employers from incurring withdrawal liability in various situations, none of the exemptions are appliсable to this case. See, e.g., 29 U.S.C. § 1384.
. Most employees continued working at the facility until July 27, 2002.
. The $4,316,996 was SUPERVALU's pro rata share, twenty-three percent, of the Fund's unfunded vested benefits at the end of the 2001-2002 plan year. See, e.g., 29 U.S.C. 1391(b)(2)(A).
. The Fund’s letter also asserted an alternative theory of liability: SUPERVALU’s obligations to employees who were injured during the 2001-2002 plan year continued into the 2002-2003 plan year. As the Fund agreed during the proceedings before the Arbitrator to waive this argument, it is unnecessary for us to consider whether SUPERVALU could bе held liable under such a theory.
. Depending on the outcome before the Arbitrator, the parties reserved questions such as whether SUPERVALU was required to continue contributing to the Fund on behalf of employees injured during the 2001-2002 plan year, and the calculations and methods used to determine the withdrawal liability. However, the parties later agreed not to make any additional arguments and the Arbitrator’s Award became final.
. The District Court amended its order on September 1, 2006, granting SUPERVALU's motion to require the Fund to refund to SU-PERVALU the money that it paid in withdrawal liability. SUPERVALU had paid $3,948,569 to the Fund. The District Court ordered the refund (plus interest) within ten days of the order.
. SUPERVALU cites our decision in
Board of Trustees of the Truking Employees of North Jersey Welfare Fund, Inc.
—Pension
Fund v. Centra,
. We note that this case does not present the question of whether SUPERVALU could have withdrawn without liability had it simply closed the facility before the end of the 2001-2002 plan year. As that question is not before us, it is unnecessary for us to determine whether such a situation would violate § 4212(c).
. We note that although the timing of SU-PERVALU's withdrawal under the Termination Agreement was suspicious, our determination is not based on the fact that it withdrew on the last day of the 2001-2002 plan year. Rather, it is the transaction itself that violates the statute, regardless of what day SUPERVALU and the Union agreed to terminate the obligation to contribute to the Fund.
. The parties and the lower courts relied heavily on
Cuyamaca Meats, Inc. v. San Diego & Imperial Counties Butchers’ & Food Employers’ Pension Trust Fund,
.It is unnecessary for us to reach the additional arguments made by the Fund as we hold that SUPERVALU violated the statute based on its plain and unambiguous meaning.
. We also reject SUPERVALU’s argument that ignoring the Termination Agreement enables the Fund to just pick a withdrawal date, which it is not authorized to do under the MPPAA. As evidenсed by the discussion below, ignoring the Termination Agreement does not enable the Fund to pick SUPERVA-LU's withdrawal date on a whim. Rather, once the Termination Agreement is out of the picture, we return to the statute, which provides that a withdrawal occurs when the obligation to contribute ceases, as dictated by a CBA, or when all covered operations cease. See 29 U.S.C. §§ 1383(a), 1392(a).
. Similarly, we reject SUPERVALU’s argument that the Arbitrator misunderstood how to calculate withdrawal liability. It is clear from his decision that he understood that a statutory formula was used which based the amount of liability on the unfunded vested benefits existing in the plan year prior to the year in which the employer withdrew. To the extent that SUPERVALU appears to argue that the calculation of withdrawal liability was improper in this case, SUPERVALU has waived any such argument as it agreed to not make such an argument before the Arbitrator.
. The lower courts engaged in extensive discussions of
International Typographical Union Negotiated Pension Plan & Ft. Worth Star Telegram,
5 E.B.C. (BNA) 1193 (1984) (Mittel-man, Arb.) (hereinafter
“ITU”).
According to the arbitrator, "evade or avoid” refers to fraudulent transaсtions, therefore, a bona fide transaction does not violate the provision.
Id.
at 1197. In part, the arbitrator reached this decision based on legislative history. As explained above, we believe that the statute is
. We have fully considered the remaining arguments raised by SUPERVALU and we find them also to be without merit.