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Dorn's Transportation Inc. v. Teamsters Pension Trust Fund of Philadelphia and Vicinity

submitted: June 11, 1986.


On Appeal from the United States District Court for the District of New Jersey (D.C. Civ. No. 83-2012-D)

Author: Becker

Before HUNTER, BECKER, Circuit Judges, and HUYETT, District Judge.*fn*


BECKER, Circuit Judge.

This opinion addresses a motion for attorneys' fees made pursuant to 29 U.S.C. § 1451(e), the fee-shifting provision of the Multiemployer Pension Plan Amendments Act ("MPPAA"), 29 U.S.C. § 1381 et seq., which modified the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. The motion papers require us to determine the standard for an award of attorneys' fees under MPPAA to employers who prevail in a suit seeking a determination of their withdrawal liability thereunder. The motion was filed by Dorn's Transportation, Inc. ("Dorns") and Oneida Motor Freight, Inc. ("Oneida") to recover attorneys' fees and expenses in connection with an appeal to this court. In that appeal, we affirmed the district court's grant of summary judgment for Dorn's and Oneida and against the Teamsters Pension Trust Fund of Philadelphia and Vicinity ("the Plan"), thus absolving Dorn's and Oneida of withdrawal liability. Our opinion is reported at 787 F.2d 897 (3d Cir. 1986).

Dorn's and Oneida contend that the standard for reviewing their application for attorneys' fees should be the same as that applied to prevailing plaintiffs in civil rights actions, see 42 U.S.C. § 1988, under which attorney's fees are awarded almost as a matter of course. We conclude, however, that the civil rights attorneys' fees standard for prevailing plaintiffs is not the proper one for a prevailing employer under MPPAA. Instead, we adopt the test established in Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 54 L. Ed. 2d 648, 98 S. Ct. 694 (1978), for prevailing defendants in civil rights actions, and hold that a prevailing employer is to be awarded attorneys' fees under MPPAA only if the underlying claim against it was frivolous, unreasonable, or without foundation. Applying the Christiansburg test, we conclude that Dorn's and Oneida are not entitled to an award of attorneys' fees and expenses.


The facts and procedural history of the underlying litigation are set forth in our opinion on the merits and need only be summarized. Dorn's, a motor freight carrier, was a contributing member of the Plan, which was a qualified ERISA plan. When Dorn's closed its terminal in Pennsauken, New Jersey, Oneida contracted to buy all of Dorn's outstanding stock. Oneida also offered employment to all twelve Dorn's employees at the Pennsauken facility,*fn1 and ten accepted. All ten were union members on whose behalf Dorn's had made contributions to the Plan under a collective bargaining agreement. Because Oneida had a virtually identical agreement with the Plan, payments continued to be made on behalf of the ten employees.

A hitch in the stock sale transaction occurred when Oneida learned that Dorn's faced potential withdrawal liability to the Plan for which Oneida might be jointly liable under 29 U.S.C. § 1301. When Oneida therefore refused to pay the agreed-upon price for the outstanding Dorn's stock, legal action ensued. Eventually, the two companies reached an accommodation and the sale was consummated. The Plan later notified Dorn's that it had assessed the company over $315,000 in withdrawal liability. Dorn's and Oneida thereupon brought an action for a declaratory judgment that Dorn's was not subject to withdrawal liability under the circumstances.

The district court granted summary judgment for Dorn's and Oneida on the ground that under two sections of the MPPAA, 29 U.S.C. §§ 1301 and 1398, no withdrawal had taken place. The court also denied the Plan's motion for additional discovery on the question whether the Dorn's stock sale transaction had been bona fide and arm's length, as required by 29 U.S.C. § 1392. According to the Plan, this evidence was crucial because, unless the transaction had been conducted in good faith, Dorn's could not be exempt from withdrawal liability.

On appeal, we affirmed the judgment of the district court. The appeal presented the question whether, under MPPAA, an employer-member of an ERISA pension plan may be assessed withdrawal liability when it sells all of its stock to another employer that assumes the operations of the corporate seller, employs most of the seller's employees, and, under its independent collective bargaining agreement with the same local union, continues to make payments to the same pension plan as the seller did. In what we described as "the unusual circumstances" of the case, 787 F.2d at 898, in which the purchasing company's agreement concerning payments to the Plan was identical to that of the seller, we held that Dorn's was exempt from liability under 29 U.S.C. § 1398. Id. at 902. We did not decide whether the § 1398 exemption from withdrawal would apply if a buyer and seller had different agreements with the Plan. We also limited our holding to the § 1398 ground, leaving for another day "the correctness of the district court's problematic holding with respect to § 1301," Id. at 900.*fn2

After construing the good faith requirement of § 1392, we further held that the district court's denial of additional discovery on the issue of bona fides had been correct, for since Oneida was unaware of any attempt to escape withdrawal liability, and even refused to pay the purchase price when it discovered that withdrawal liability might be assessed against Dorn's, the "principal purpose of the transaction" as a whole could not have been to escape liability. Finally, we held that the district court did not err in bypassing arbitration because the issues presented were matters of pure statutory interpretation. In reaching this conclusion, we relied on I.A.M. National Pension Fund Benefit Plan C v. Stockton TRI Industries, 234 U.S. App. D.C. 105, 727 F.2d 1204, 1210 (D.C. Cir. 1984).

Dorn's and Oneida have now moved this court, pursuant to 29 U.S.C. § 1451(e), for an award of costs and expenses, including a reasonable attorneys' fee, incurred in connection with their successful defense of the Plan's appeal from the district court judgment in favor of Dorn's and Oneida. We begin with a determination of the ...

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