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Northwest Dairy Association v. Western Conference of Teamsters Pension Trust Fund

United States District Court, W.D. Washington, Seattle

July 8, 2019

NORTHWEST DAIRY ASSOCIATION and DARIGOLD, INC., Plaintiffs,
v.
WESTERN CONFERENCE OF TEAMSTERS PENSION TRUST FUND, Defendant.

          ORDER CONFIRMING ARBITRATION AWARD

          Robert S. Lasnik United States District Judge

         This matter comes before the Court on “Plaintiffs' Dispositive Motion in Support of Complaint to Vacate Arbitration Award” (Dkt. # 15) and defendant's “Cross Motion for Dispositive Relief” (Dkt. # 17). Plaintiffs seek to vacate the arbitrator's findings that their “obligation to contribute” to the pension trust fund ended in 2012 and that a partial withdrawal occurred as of that date under the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”). The defendant trust fund seeks to have the arbitration award confirmed.

         Burden of Proof in Arbitration

         Pursuant to the MPPAA, disputes regarding withdrawal liability must be resolved through arbitration. 29 U.S.C. § 1401(a)(1). In resolving the dispute, the arbitrator is to presume that any determination made by the trust fund under § 1385 (which includes whether there was a partial cessation of the employer's contribution obligation) is correct “unless the party contesting the determination shows by a preponderance of the evidence that the determination was unreasonable or clearly erroneous.” 29 U.S.C. § 1401(a)(3)(A). The Supreme Court has noted, however, that Congress used the terms “preponderance of the evidence, ” “unreasonable, ” and “clearly erroneous” in an incomprehensible way because it combined the language of trial (a burden of proof) with the language of appeal (standards of review). Concrete Pipe and Prods. of Cal. v. Constr. Laborers Pension Trust for S. Cal., 508 U.S. 602, 622-25 (1993). In order to avoid the substantial question of procedural fairness that would arise if the supposedly impartial arbitrator gave too much weight to the findings of an entity which has an obvious interest in the assessment of withdrawal liability, the Supreme Court has construed § 1401(a)(3)(A) to mean that the employer has the burden “to disprove a challenged factual determination by a preponderance” of the evidence. Concrete Pipe, 508 U.S. at 629.[1]

         Standard of Review of Arbitrator's Decision

         An arbitrator's conclusions of law are reviewed de novo. Penn Cent. Corp. v. W. Conference of Teamsters Pension Trust Fund, 75 F.3d 529, 533 (9th Cir. 1996). An arbitrator's factual findings, on the other hand, are presumed correct and are “rebuttable only by a clear preponderance of the evidence.” 29 U.S.C. § 1401(c). Whether a withdrawal within the meaning of the statute has occurred generally presents a mixed question of law and fact, where “[t]he relevant facts are about the closure of the . . . plant (such as the intent of [the employer] with respect to the plant, its expression of that intent, its activities while the plant was not operating, and the circumstances of the plant's reopening), while the question whether these facts amount to a ‘complete withdrawal' is one of law.” Concrete Pipe, 508 U.S. at 630.

         Background

         In 2010, plaintiff Darigold, Inc., a farmer-owned cooperative that produces dairy products, acquired Cream O'Weber Dairy. Cream O'Weber had a collective bargaining agreement (“CBA”) with the International Brotherhood of Teamsters, Local No. 222, which obligated the employer to make contributions to the defendant trust fund. The trust separately required the employer and the union to certify that the CBA conforms to the trust's policies and to agree to be bound by the trust documents. See Employer-Union Pension Certification (“E-U Certificate”) (Dkt. # 16-6 at 3-4). The E-U Certificate also reiterated that the employer is obligated to make pension contributions under the CBA and required the employer to continue to make those contributions even after the CBA expires “until such time as the undersigned either notifies the other party in writing (with a copy to the trust fund) of its intent to cancel such obligation . . . .” Dkt. # 16-6 at 3. Through its acquisition, Darigold stepped into the shoes of Cream O'Weber Dairy as to both the CBA and the E-U Certificate.

         Darigold decided to close the Cream O'Weber plant and began winding down its milk production. When the CBA expired on August 31, 2011, a replacement agreement was not reached. In February 2012, Darigold asked the fund for an estimate of what its liability would be for a partial withdrawal if it were to close the plant. In or around May 2012, Darigold gave the union oral and written notice that it was closing the plant. The union, in turn, contacted the trust fund to tell it that Darigold was shutting down the operation. The fund then sent Darigold an “Account Status Certification” form, the stated purpose of which was to obtain information regarding Darigold's intentions and activities related to the work performed at the Cream O'Weber plant so the fund could determine whether withdrawal liability had been incurred under the MPPAA. Of relevance here are the following questions and responses:

B. The effective date of cessation of covered operations or obligations to contribute according to our records is: 9/18/12
C.4. Have you transferred such work to another location? Yes
C.5. Are you continuing to perform work of the type for which contributions were previously required at the facility where the obligation to contribute ceased? No

         After reviewing Darigold's responses (and those provided separately by the union), the trust fund concluded that Darigold's obligation to contribute to the fund ceased in September 2012 and assessed partial withdrawal liability. Darigold requested that the fund review the assessment for a number of reasons, but did not assert that it had a continuing obligation to ...


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