Polly's Food Service, Incorporated v. United Food & Commercial Workers International Union - Industry Pension Fund
ORDER granting 9 Motion to Dismiss. Signed by District Judge Terrence G. Berg. (AChu)
Case 2:21-cv-12895-TGB-KGA ECF No. 21, PageID.109 Filed 09/15/22 Page 1 of 10
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
POLLY’S FOOD SERVICE, INC.,
DEFENDANT’S MOTION TO
DISMISS (ECF NO. 10)
UNITED FOOD &
INTERNATIONAL UNION –
INDUSTRY PENSION FUND,
Plaintiff Polly’s Food Service, Inc. (“Polly’s”) brought this action
seeking declaratory and injunctive relief from making interim
withdrawal liability payments it allegedly owes to Defendant United
Food & Commercial Workers International Union – Industry Pension
Fund (“the Fund”) while the parties’ dispute is arbitrated. The
multiemployer pension plan from which Polly’s has allegedly withdrawn
is subject to the Employer Withdrawal provisions of the Multiemployer
Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C. §§ 1381–
1453. The MPPAA mandates that employers and pension plans arbitrate
withdrawal liability disputes and requires the withdrawing employer to
make payments to the pension fund during the pendency of arbitration.
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Because arbitration is ongoing and Polly’s has failed to plead the
existence of special circumstances that warrant judicial intervention
amidst arbitration, Polly’s claims for declaratory and injunctive relief
must be dismissed. For the reasons that follow, Defendant’s Motion to
Dismiss (ECF No. 10) is GRANTED.
Polly’s is a family-owned grocer headquartered in Jackson,
Michigan that contributes to a multiemployer pension plan administered
by the Fund. Complaint, ECF No. 1, PageID.3–4. As a participating
employer in a plan governed by the Employee Retirement Income
Security Act (“ERISA”), Polly’s is subject to the Employer Withdrawal
provisions of the Multiemployer Pension Plan Amendments Act of 1980
(“MPPAA”), 29 U.S.C. §§ 1381–1453.
In March 2019, the Fund assessed Polly’s with partial withdrawal
liability for the plan year ending June 30, 2018. ECF No. 1 at PageID.4;
Mot. to Dismiss, ECF No. 10, Page ID.29. Accordingly, the Fund began
requiring Polly’s to make quarterly interim withdrawal liability
payments pursuant to the MPPAA. ECF No. 1, PageID.4–5; 29 U.S.C. §
1399(b). After Polly’s made its arbitration demand in September 2019,
the Fund assessed Polly’s with additional partial withdrawal liability for
the plan years ending June 30, 2019 and June 30, 2020. ECF No. 1,
PageID.5. As such, the Fund continued to demand that Polly’s make
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quarterly interim withdrawal liability payments based on Polly’s alleged
withdrawal for those plan years. Id.; 29 U.S.C. § 1399(c)(2).
The MPPAA allows employers subject to withdrawal liability
payments to request that the pension fund review its “determination of
the employer’s liability and the schedule of payments.” 29 U.S.C.
§1399(b)(2)(A)(i). In May 2019, after receiving the Fund’s first
assessment of partial withdrawal liability, Polly’s asked the Fund to
revise or withdraw its demands for quarterly payments because Polly’s
contends that the Fund miscalculated the amount Polly’s must pay for
its alleged partial withdrawal liability. ECF No. 1, PageID.4–5. The Fund
declined Polly’s request to review its payment calculations. Id.
Under the MPPAA, any disputes as to withdrawal liability—
including actual liability and the amount owed to the pension fund for
partial withdrawal—must be resolved through arbitration. 29 U.S.C. §
1401(a)(1). Polly’s filed a timely arbitration demand in September 2019.
ECF No. 1, PageID.5. Among other issues, Polly’s seeks to arbitrate
whether the Fund properly calculated the amount that Polly’s is required
to pay for its alleged partial withdrawal liability for the plan years ending
June 30, 2018, June 30, 2019, and June 30, 2020. Id.
Since the Fund first assessed Polly’s with partial withdrawal
liability in March 2019, Polly’s has been required to make interim
withdrawal liability payments based on the Fund’s schedules. Id. The
MPPAA requires Polly’s to make these payments even though it
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maintains that the Fund’s calculations are incorrect and is now
arbitrating the issue. 29 U.S.C. § 1399(c)(2). Polly’s has been complying
with this requirement and making quarterly payments to the Fund. By
the time Polly’s filed its Complaint in December 2021, Polly’s alleges that
it had made $945,445 in interim withdrawal liability payments to the
Fund. ECF No. 1, Page ID.6. But Polly’s insists that at most, its alleged
partial withdrawal liability is $375,000, when applying the proper
interest rate calculation that the Fund failed to use in setting the
payment schedule. Id. at PageID.6–7.
Polly’s filed suit in this Court seeking: (1) a declaration that Polly’s
is not required to continue making interim withdrawal liability payments
to the Fund for its alleged partial withdrawal; and (2) an injunction
barring the Fund from collecting additional interim withdrawal liability
payments for Polly’s alleged partial withdrawal. The Fund moves to
dismiss Polly’s complaint for failure to state a claim under Federal Rule
of Civil Procedure 12(b)(6), arguing that the MPPAA requires the parties
to arbitrate the dispute and judicial intervention is impermissible at this
Federal Rule of Civil Procedure Rule 12(b)(6) authorizes the Court
to dismiss a lawsuit if it “fails to state a claim upon which relief can be
granted.” This includes where the claims at issue are subject to
arbitration before judicial review. See Telecom Decision Makers, Inc. v.
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Access Integrated Networks, Inc., 654 F. App’x 218, 223 (6th Cir. 2016);
High v. Cap. Senior Living Properties 2-Heatherwood, Inc., 594 F. Supp.
2d 789, 795–96 (E.D. Mich. 2008). Federal Rule of Civil Procedure 8(a)
requires only that pleadings contain “a short and plain statement of the
claim showing that the pleader is entitled to relief.” Though this
standard is liberal, courts have held that plaintiffs must provide “more
than labels and conclusions, and a formulaic recitation of the elements
of a cause of action” in support of their entitlement to relief. Albrecht v.
Treon, 617 F.3d 890, 893 (6th Cir. 2010) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 554, 555 (2007)).
Courts must construe the complaint in the light most favorable to
the plaintiff and accept all well-pled factual allegations as true. League
of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir.
2007) (citing Kottmyer v. Maas, 436 F.3d 684, 688 (6th Cir. 2006)). Rule
12(b)(6) also requires the Court to limit its considerations to the
allegations contained in the pleadings. Jones v. City of Cincinnati, 521
F.3d 555, 562 (6th Cir. 2008).
A. The MPPAA Requires Polly’s to Arbitrate Withdrawal
Liability Disputes and Make Interim Withdrawal Liability
The MPPAA provides an unequivocal arbitration mandate: “Any
dispute between an employer and the plan sponsor of a multiemployer
plan concerning a determination made under sections 1381 through 1399
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of this title shall be resolved through arbitration.” 29 U.S.C. § 1401(a)(1).
As relevant here, Sections 1381, 1385, and 1386 of the MPPAA cover
establishing an employer’s partial withdrawal liability and the amount
of the employer’s liability, subjecting these issues to arbitration under
Section 1401(a)(1). Moreover, only “[u]pon completion of the arbitration
proceedings,” may a party challenge the arbitrator’s award in federal
court. 29 U.S.C. §1401(b)(2). The Sixth Circuit has held that because the
MPPAA reflects “Congress’s clear command to resolve MPPAA disputes
initially by arbitration,” a district court errs when it rules on MPPAA
claims that are pending in arbitration. Mason & Dixon Tank Lines, Inc.
v. Cent. States, Se. & Sw. Areas Pension Fund, 852 F.2d 156, 158 (6th
Cir. 1988); see also Findlay Truck Line, Inc. v. Cent. States, Se. & Sw.
Areas Pension Fund, 726 F.3d 738, 756 (6th Cir. 2013) (affirming the
district court’s dismissal because whether the plaintiff’s withdrawal
liability dispute falls within the scope of the MPPAA “is a question for
The MPPAA also makes clear that after a plan sponsor assesses
withdrawal liability on an employer, the employer must make interim
withdrawal liability payments “in accordance with the schedule set forth
by the plan sponsor . . . notwithstanding any request for review or
appeal of the determinations of the amount of such liability or of the
schedule.” 29 U.S.C. § 1399 (c)(1)(D)(ii) (emphasis added). Similarly, the
employer must continue making payments “until the arbitrator issues
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a final decision with respect to the determination . . . , with any
necessary adjustments in subsequent payments for overpayments or
underpayments arising out of the [arbitrator’s decision].” 29 U.S.C. §
1401(d) (emphasis added). The MPPAA’s interim payment scheme has
been colloquially described as a “pay now, dispute later” policy. Findlay,
726 F.3d at 742.
Here, Polly’s acknowledges that the MPPAA permits the Fund to
demand that it make interim withdrawal liability payments based on the
Fund’s assessment of partial withdrawal liability. Opp. to Mot. to
Dismiss, ECF No. 12, PageID.49. Polly’s also agrees that the MPPAA’s
“pay now, dispute later” policy requires it to make interim payments even
as it contests the issues of actual liability and the amount it owes to the
Fund. Id. at PageID.50. And consistent with the MPPAA, Polly’s itself
has demanded arbitration of the disputes it alleges concerning
withdrawal liability. Id. at PageID.56.
Nevertheless, Polly’s contends that it is not asking the Court to
improperly inject itself into pending arbitration over mandatory interim
withdrawal liability payments. Polly’s repeatedly insists that its claims
are not subject to arbitration under the MPPAA because “Polly’s is only
asking that it not be required to continue making these payments,”
given that, according to Polly’s, “it has already substantially overpaid any
potential withdrawal liability.” Id. at PageID.57. Polly’s thus dedicates
significant portions of its briefing to explaining why the Fund improperly
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calculated Polly’s interim withdrawal liability payments, which allegedly
resulted in Polly’s substantial overpayment. Despite Polly’s framing and
without regard to the merits of its arguments, Polly’s claims revolve
around questions that the MPPAA clearly subjects to arbitration: (1)
whether Polly’s is liable for partial withdrawal; (2) if Polly’s is liable,
whether the amount Polly’s has paid to the Fund exceeds its actual
liability; and (3) whether Polly’s has overpaid because the Fund
miscalculated the payment schedule for interim liability payments.
Because the MPPAA makes abundantly clear that such issues are
subject to arbitration and an employer must make interim liability
payments during the pendency of arbitration, Polly’s has not stated a
claim for which this Court can grant relief.
B. Polly’s Fails to State a Claim for this Court to Issue
Declaratory or Injunctive Relief While Arbitration Is
Although the MPPAA requires parties to arbitrate withdrawal
liability disputes, a court may intervene under certain special
circumstances. For example, in Findlay, the Sixth Circuit carefully
parsed the divergent views of Circuit courts as to “whether the MPPAA’s
‘pay now, dispute later’ principle abrogates the courts’ equitable
authority.” 726 F.3d at 750. The Findlay Court articulated three narrow
situations that permit federal courts to enjoin interim withdrawal
liability payments notwithstanding the MPPAA’s arbitration mandate:
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“(1) an employer’s ‘facial constitutional attack’; (2) an employer’s
verifiable claim that arbitration would lead to irreparable injury; [and]
(3) the determination of whether a company is an ‘employer’ within the
meaning of the MPPAA.” Id. at 755 (quoting Mason & Dixon, 852 F.2d at
165–67). Polly’s also cites Trustees of Plumbers & Pipefitters National
Pension Fund v. Mar-Len, Inc., a Fifth Circuit case holding that a federal
district court has “limited” discretion to enjoin interim withdrawal
liability payments pending MPPAA arbitration where the pension fund’s
assessment of withdrawal liability “against a withdrawing employer is
frivolous” or “not colorable.” 30 F.3d 621, 626 (5th Cir. 1994).
Polly’s claims must be dismissed because it has failed to plead the
existence of any of these circumstances for the Court’s intervention. First,
Polly’s concedes that none of the three Findlay scenarios, including
irreparable harm, apply here. ECF No. 12, PageID.56–58. Second, setting
aside that Polly’s asks the Court to rely on nonbinding precedent, Polly’s
has plainly failed to plead facts to plausibly demonstrate that the Fund’s
withdrawal liability assessment was frivolous. In its briefing, Polly’s
merely recycles its merits argument that the Fund miscalculated Polly’s
alleged partial withdrawal liability, making the Fund’s interim
withdrawal liability payment demands frivolous. Id. at PageID.60–61.
But as discussed above, Polly’s must arbitrate the dispute over the
amount of its partial withdrawal liability and has failed to state a claim
for this Court to exercise its equitable powers pending arbitration.
Case 2:21-cv-12895-TGB-KGA ECF No. 21, PageID.118 Filed 09/15/22 Page 10 of 10
For all of the foregoing reasons, Defendant’s Motion to Dismiss
(ECF No. 10) is GRANTED. Plaintiff’s case is DISMISSED without
prejudice to permit Plaintiff to reraise its claims in the event of an
adverse decision in arbitration.
IT IS SO ORDERED.
15, s/Terrence G. Berg
TERRENCE G. BERG
UNITED STATES DISTRICT JUDGE
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