BOARD OF TRUSTEES, Sheet Metal Workers’ National Pension Fund v.  BES SERVICES, INCORPORATED, formerly known as International Visual Corporation of N.Y.

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 BOARD OF TRUSTEES, Sheet Metal
Workers’ National Pension Fund,
Plaintiff-Appellee,
v. No. 05-1634 
BES SERVICES, INCORPORATED,
formerly known as International
Visual Corporation of N.Y.,
Defendant-Appellant. 
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Thomas Rawles Jones, Jr., Magistrate Judge.
(CA-04-90-1)
Argued: September 19, 2006
Decided: November 29, 2006
Before NIEMEYER, Circuit Judge,
HAMILTON, Senior Circuit Judge, and
Henry F. FLOYD, United States District Judge
for the District of South Carolina, sitting by designation.
Affirmed by published opinion. Judge Niemeyer wrote the opinion,
in which Senior Judge Hamilton and Judge Floyd joined.
COUNSEL
ARGUED: Jason Herbert Ehrenberg, BAILEY & EHRENBERG,
P.L.L.C., Washington, D.C., for Appellant. Marc H. Rifkind,

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SLEVIN & HART, Washington, D.C., for Appellee. ON BRIEF: C.
Wayne Owen, Jr., SLEVIN & HART, Washington, D.C., for Appel-
lee.
OPINION
NIEMEYER, Circuit Judge:
After BES Services, Inc., sold all of its assets in March 2002 and
ceased being obligated to contribute to the Sheet Metal Workers’
National Pension Fund ("the Pension Fund"), the Pension Fund
assessed BES with withdrawal liability of $175,833 under the Mul-
tiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29
U.S.C. § 1381 et seq., which amended the Employee Retirement
Income Security Act of 1974 ("ERISA"). After paying $22,620 of the
assessment, BES declined to make further payments, even though it
did not seek arbitration to dispute the Pension Fund’s assessment, as
would be mandated by 29 U.S.C. § 1401(a)(1) for resolution of such
disputes.
The Pension Fund commenced this action to collect the remainder
of BES’s withdrawal liability and filed a motion for summary judg-
ment. In response, BES claimed that it was entitled to a reduction of
its withdrawal liability by reason of the limitations on such liability
afforded by 29 U.S.C. § 1405 because (1) it sold all of its assets to
an "unrelated" party, and its liquidation value, after the sale, was less
than $2 million, entitling it to an assessment of only 30 percent of its
gross withdrawal liability, see id. § 1405(a); or (2) after the sale of
assets, it was "an insolvent employer undergoing liquidation or disso-
lution and therefore entitled to a 50 percent reduction of its liability,"
see id. § 1405(b).
Concluding that BES waived its right to challenge the amount of
withdrawal liability by not pursuing arbitration under § 1401, the dis-
trict court granted the Pension Fund’s motion for summary judgment
in the full amount of the assessment, less the payment made, plus
interest and liquidated damages. The court also awarded the Pension
Fund attorneys fees of $30,000.
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We conclude that, despite BES’s statutory argument — that § 1405
is not one of the sections explicitly referenced in § 1401 (the manda-
tory arbitration provision) — consideration of the limitations of
§ 1405 is required in making a "determination" of withdrawal liability
under §§ 1381 and 1391, which are explicitly subject to § 1401’s arbi-
tration requirement, and therefore issues arising under § 1405 are sub-
ject to § 1401’s arbitration requirement as well. We also reject BES’s
argument that the issue before us is solely a legal issue of statutory
construction that is exempt from § 1401’s arbitration requirement.
Accordingly, we affirm.
I
BES, a New York corporation owned by Bernard E. Shuman, was
formerly known as International Visual Corporation of N.Y. and was
engaged in the business of manufacturing store displays. Pursuant to
its collective bargaining agreement with the Sheet Metal Workers’
International Association Local Union No. 137, BES was obligated to
contribute to the Sheet Metal Workers’ National Pension Fund, a mul-
tiemployer pension plan governed by the MPPAA.
On March 29, 2002, BES entered into an agreement to sell all of
its assets to International Visual Corporation of Canada Inc., a Cana-
dian corporation, for $3.98 million. At closing, BES was paid $1.45
million and the remainder of the purchase price was attributed to the
Canadian corporation’s assumption of BES’s accounts payable. Shu-
man testified by affidavit that following closing, he and BES paid the
Canadian corporation roughly $980,000 for additional liabilities and
adjustments.
Following the sale, the Pension Fund assessed BES with with-
drawal liability imposed by 29 U.S.C. § 1381 in the amount of
$175,832.56. BES made one payment in July 2003 of $22,620.08
toward discharging this liability. When BES failed to make any fur-
ther payments, however, the Pension Fund commenced this action to
collect the balance, as well as interest, liquidated damages, and attor-
neys fees.
In response to the Pension Fund’s motion for summary judgment,
BES claimed that it was entitled to a reduction of its withdrawal lia-
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bility, as authorized by § 1405, due to (1) the sale of its assets, and
(2) its insolvency. BES presented evidence of the agreement for the
sale of its assets, its income tax return filed following the sale of
assets, and evidence of the subsequent payments made to the Cana-
dian corporation for various additional liabilities and adjustments.
The district court refused to consider making the claimed reduc-
tions because BES "was required to arbitrate the issue of whether its
withdrawal liability could be reduced or limited under 29 U.S.C.
§ 1405." Accordingly, the court entered judgment in favor of the Pen-
sion Fund in the amount that it claimed. This appeal followed.
II
BES contends that it is entitled to have a federal court grant the
reductions of withdrawal liability afforded by 29 U.S.C. § 1405 and
that it need not proceed first to arbitration because § 1405 is not one
of the provisions of the MPPAA that is explicitly made subject to
mandatory arbitration by § 1401. While § 1401(a)(1) subjects disputes
under "sections 1381 through 1399" to arbitration, it makes no refer-
ence to § 1405, by which BES seeks to limit its withdrawal liability.
BES argues:
Under the doctrine of expressio unius est exclusio[ ]
alterius, one can logically conclude from the omission of
Section [1405] in Section 1401(a)(1)’s arbitration provision
that Congress did not intend that disputes arising under
[1405](a) or (b) of ERISA would be subject to the afore-
mentioned arbitration requirement.
It requests that we remand this case to the district court to determine
the amount of withdrawal liability, taking into consideration the limi-
tations of liability described in § 1405.
Thus, the issue presented is whether a claim to the reductions in
withdrawal liability authorized by 29 U.S.C. § 1405 must be arbi-
trated by reason of the mandatory arbitration provision in § 1401(a).
Section 1401(a)(1) provides:
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Any dispute between an employer and the plan sponsor of
a multiemployer plan concerning a determination made
under sections 1381 through 1399 of this title shall be
resolved through arbitration. Either party may initiate the
arbitration proceeding within a 60-day period [after speci-
fied dates].
As BES points out, § 1405 is conspicuously absent from the list of
sections that § 1401(a)(1) explicitly subjects to mandatory arbitration.
Without looking further, the failure of § 1401(a) to reference
§ 1405 might suggest that parties may proceed directly to federal
court, without first initiating arbitration proceedings, to resolve dis-
putes over whether to limit an employer’s withdrawal liability under
§ 1405.
Additionally, § 1405 is explicitly referred to further on in § 1401.
Section 1401(a)(3) provides that "any determination made by a plan
sponsor under sections 1381 through 1399 of this title and section
1405 of this title is presumed correct" in any arbitration proceeding.
29 U.S.C. § 1401(a)(3)(A) (emphasis added). The inclusion of § 1405
in this provision might suggest that its exclusion from § 1401(a)(1)
was meaningful. "Where Congress includes particular language in one
section of a statute but omits it in another section of the same Act, it
is generally presumed that Congress acts intentionally and purposely
in the disparate inclusion or exclusion." INS v. Cardoza-Fonseca, 480
U.S. 421, 432 (1987) (citations omitted). This is especially true when
the disparate exclusion and inclusion are only lines away from each
other.
On the other hand, the inclusion of a reference to § 1405 in
§ 1401(a)(3)(A) might mean that § 1405 considerations must be taken
into account during arbitration proceedings. Indeed, a closer look at
the entire MPPAA removes all doubt and leads decisively to the con-
clusion that the limitations in § 1405 must be considered in making
a "determination" under §§ 1381 through 1399, which are themselves
subject to mandatory arbitration.
The analysis is straightforward. Section 1401(a)(1), which requires
arbitration, refers to determinations "made under sections 1381
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through 1399." In turn, § 1381, which is clearly subject to arbitration,
creates withdrawal liability and establishes its amount, stating:
If an employer withdraws from a multiemployer plan in a
complete withdrawal or partial withdrawal, then the
employer is liable to the plan in the amount determined
under this part [§§ 1381-1405] to be the withdrawal liability.
29 U.S.C. § 1381(a). Subsection (b) fixes the amount of withdrawal
liability, stating:
The withdrawal liability of an employer to a plan is the
amount determined under section 1391 of this title to be the
allocable amount of unfunded vested benefits, adjusted . . .
in accordance with section 1405 of this title.
Id. § 1381(b) (emphasis added). Thus, any determination of with-
drawal liability under § 1381 must take into consideration an employ-
er’s sale of assets or insolvency under § 1405. Indeed, a § 1381
determination of withdrawal liability cannot be accomplished in
accordance with the statutory mandate unless it is "adjusted" in accor-
dance with § 1405. See id. § 1381(b)(1)(D). Since consideration of
§ 1405 is a necessary step in determining withdrawal liability under
§ 1381, disputes arising under § 1405 are subject to arbitration under
§ 1401(a)(1), which explicitly refers to § 1381.
Furthermore, § 1405 itself is a supporting provision that serves no
other role than to limit liability in § 1381’s general formula for calcu-
lating an employer’s withdrawal liability. That § 1405 is merely a
computational support provision is further shown by the fact that the
specific computational instructions given in § 1391 for determining
withdrawal liability are again stated to be subject to the limitations of
§ 1405. See, e.g., 29 U.S.C. § 1391(b)(4)(B)(ii); id. § 1391(d)(2).
Section 1401(a)(1) (mandating arbitration), though clumsy, none-
theless speaks clearly. Even though § 1401(a) omits a direct reference
to § 1405, it includes a direct reference to § 1381, which in turn
includes a direct reference to § 1405. Section 1401(a) thus incorpo-
rates § 1405 indirectly. Even though § 1401(a)(1) could just as well
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have directly referenced § 1405, as § 1401(a)(3)(A) does, the absence
of a reference to § 1405 in § 1401(a)(1) does not create doubt as to
what is intended. Because withdrawal liability determinations that are
"made under" § 1381 necessarily and explicitly include consideration
of the § 1405 limitations and because § 1405 is only relevant as a step
in making a withdrawal liability calculation under § 1381, we readily
conclude that disputes with respect to § 1405 limitations must be arbi-
trated as § 1401(a) commands.
To conclude otherwise would lead to inexplicable and perverse
results, especially in light of the MPPAA’s structure. Every other
determination that a plan sponsor must make in calculating an
employer’s withdrawal liability pursuant to § 1381’s formula must be
arbitrated under § 1401, and § 1405 would become the sole outlier.
Practice under the Act would become impossibly chaotic. A partici-
pating employer raising multiple objections to a plan sponsor’s with-
drawal liability calculation could proceed in a piecemeal fashion,
raising the § 1405 limitation issues in federal court while arbitrating
the other issues. Not only would such a fractured procedure make no
sense, it would create innumerable problems. Would an arbitrator
make a gross and tentative calculation under § 1391, only to wait for
a proceeding in federal court, including trial and appeal, to determine
any § 1405 adjustments to that gross number? On common issues of
fact, whose factfinding would prevail? Moreover, under any such
scheme, a solvent employer that contested its withdrawal assessment
would be forced to present its issues to an arbitrator, while an insol-
vent employer would be free to proceed directly in federal court. BES
has not presented any reasons, and we cannot think of any, why Con-
gress would have countenanced the possibility of such a disjointed,
Kafkaesque process.
Finally, requiring § 1405 disputes to be arbitrated furthers Con-
gress’ overarching purpose of enacting the MPPAA to amend ERISA.
Congress enacted the MPPAA to shore up the financial stability of
multiemployer pension plans. Before the MPPAA, ERISA did not
adequately protect multiemployer pension plans from the adverse
consequences of individual employers terminating their participation
in such plans and leaving behind unfunded vested benefits. An
employer’s withdrawal from a multiemployer plan reduced the contri-
bution base, which necessitated an increase in the contribution rate of
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remaining employers in order to cover the plan’s existing unfunded
vested benefits. As employers withdrew, the rising costs of continued
participation in multiemployer plans increased the incentives for fur-
ther withdrawals. See Pension Benefit Guar. Corp. v. R.A. Gray, 467
U.S. 717, 722 n.2 (1984). To reverse this trend, the MPPAA required
withdrawing employers to pay their fair share of a plan’s unfunded
vested benefits by creating withdrawal liability, see Connolly v. Pen-
sion Benefit Guar. Corp., 475 U.S. 211, 216 (1986), and provided a
streamlined process for resolving disputes over withdrawal liability
determinations, thereby limiting dispute-resolution costs and preserv-
ing plans’ assets. Congress did not intend to create a new, broad cate-
gory of litigation that would force benefit plans to spend their assets
on court costs and attorneys fees. Rather, it chose to require arbitra-
tion, with judicial review, to create a more efficient dispute-resolution
process. See I.A.M. Nat’l Pension Fund v. Clinton Engines Corp., 825
F.2d 415, 426 (D.C. Cir. 1987).
In short, the arbitration process prescribed by the MPPAA is a sig-
nificant part of Congress’ efforts to shore up the financial stability of
multiemployer pension plans. And issues under § 1405 are rightfully
committed to that arbitration process.
III
Alternatively, BES argues that the issues it has raised under 29
U.S.C. § 1405 are exempt from § 1401(a)’s arbitration requirement
because the issues are purely legal ones, "requir[ing] statutory inter-
pretation." As it contends, employing overly generalized statements
of principles:
Arbitration was not the proper forum for determination of
the issue of whether BES is entitled to reduction in assessed
withdrawal liability pursuant to [section 1405] because
determination of that issue requires statutory interpretation.
The central facts in this action are not in dispute — namely,
the fund assessed withdrawal liability and BES did not initi-
ate arbitration. The disposition of the withdrawal liability
claim in the proceedings below, therefore, hinged on the
applicability of the statutory deductions in withdrawal liabil-
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ity for employers that are insolvent or that have undergone
a sale of substantially all of their assets.
There is some general support for the proposition that the prelimi-
nary legal question of whether an employer is subject to the MPPAA
at all need not be arbitrated, because it is the MPPAA, after all, that
contains the arbitration requirement. See Teamsters Joint Council No.
83 v. Centra, Inc., 947 F.2d 115, 122-23 (4th Cir. 1991) (citing Flying
Tiger Line v. Teamsters Pension Trust Fund of Philadelphia, 830
F.2d 1241, 1250-51 (3d Cir. 1987); Banner Indus., Inc. v. Central
States, Southeast & Southwest Area Pension Fund, 875 F.2d 1285,
1291 (7th Cir. 1989)). It does not follow, however, that any purely
legal question involving statutory interpretation is exempted from the
arbitration mandate in 29 U.S.C. § 1401(a)(1). To sustain that propo-
sition would require us to ignore the specific characteristics of the
MPPAA’s arbitration mechanism.
The MPPAA mandates arbitration under § 1401(a) for every "de-
termination" of withdrawal liability made under the MPPAA. The
scope of this arbitration is not limited simply to resolving disputes
over facts; it covers "any dispute concerning a determination" of with-
drawal liability. The subject of the dispute — not whether the issue
is factual or legal — defines the scope of arbitration. Thus, when
there is a dispute concerning the determination of withdrawal liability,
the dispute, whether over law, facts, or both, is committed in the first
instance to arbitration. And that arbitration proceeding is conducted
as any arbitration would be conducted under the Federal Arbitration
Act. See 29 U.S.C. § 1401(b)(3).
But unlike the Federal Arbitration Act, the MPPAA treats an award
issuing from such a § 1401 arbitration like an agency determination
— the arbitrator decides the issues in the first instance but then the
decision is subject to judicial review. See 29 U.S.C. § 1401(b)(2); id.
§ 1451; see also Teamsters Joint Council No. 83, 947 F.2d at 122
(analogizing MPPAA’s mandatory arbitration to a requirement to
exhaust administrative remedies). Unlike arbitrations generally, courts
review legal questions arising from § 1401 arbitration awards de
novo, see Central States, Southeast & Southwest Areas Health & Wel-
fare Fund v. Cullum Cos., Inc., 973 F.2d 1333, 1337 (7th Cir. 1992),
and factual questions for clear error, see 29 U.S.C. § 1401(c); Joseph
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Schlitz Brewing Co. v. Milwaukee Brewery Workers’ Pension Plan,
3 F.3d 994, 998-99 (7th Cir. 1993). Thus, if a party commences an
action in federal court without having first exhausted the mandatory
arbitration process, it will be subject to a failure-to-exhaust defense.
In short, the MPPAA requires arbitration in the first instance for
any dispute concerning a determination of withdrawal liability,
whether the dispute is about a legal or factual matter, and then affords
judicial review of the arbitration award in a federal court. Failure to
follow this specified process will lead to dismissal of the federal
action on the basis of waiver.
In this case, the prequalifying legal question of whether BES is
subject to the MPPAA is not in play. The only question BES has
raised is whether the plan sponsor properly calculated withdrawal lia-
bility imposed by the MPPAA when it did not grant BES the reduc-
tions that it now claims under 29 U.S.C. § 1405. As we have already
noted above, this issue "concerns" a "determination" of withdrawal
liability and therefore must, even if it were an issue of pure statutory
interpretation, be arbitrated in the first instance.
Moreover, we do not, in any event, agree with BES’s contention
that the limitation issues under § 1405 are pure questions of law.
Numerous factual questions exist about, for example, whether Inter-
national Vision Corporation of Canada, the purchaser, was a corpora-
tion "unrelated" to International Vision of N.Y. (BES’s name before
the sale of assets). See 29 U.S.C. § 1405(a)(1). There are factual ques-
tions about the "liquidation or dissolution value" of BES at the time
of the sale of its assets. See id. § 1405(a)(1), (2); id. § 1405(d). There
are factual questions about whether, after the sale, BES was insolvent.
See id. § 1405(b). Not only were these and other related factual issues
well suited for arbitration, but, as we have held, they were required
to be resolved in arbitration by an arbitrator charged with resolving
every dispute concerning a determination made about withdrawal lia-
bility.
Because BES failed to pursue arbitration, as required by 29 U.S.C.
§ 1401(a)(1), the issues it now seeks to raise for the first time in fed-
eral court about its withdrawal liability are deemed waived. Accord-
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ingly, we affirm the judgment of the district court.
AFFIRMED
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