Pantry Pride, Inc. v. Retail Clerks Tri-State Pension Fund

OPINION OF THE COURT SEITZ, Circuit Judge. I. The Retail Clerks Tri-State Pension Fund and its trustees, defendants in this declaratory judgment action, appeal from an order of the district court denying, in part, their motion for interim employer’s withdrawal liability payments demanded under the Multiemployer Pension Plan Amendments Act (the “MPPAA”), 29 U.S.C. §§ 1399(c)(2), 1401(d) (1982). Jurisdiction — 170 — of this appeal is asserted under 28 U.S.C. § 1292(a)(1). II. FACTS Food Fair, Inc., the plaintiffs’ predecessor, operated a chain of grocery stores in Pennsylvania, New Jersey, and Delaware. Beginning in 1959, Food Fair, pursuant to its collective bargaining agreements, began contributing to the Retail Clerks Tri-State Pension Fund (the “Fund”). In 1979, as part of a bankruptcy reorganization, the 101 stores in Pennsylvania and New Jersey were closed. This left, in the geographic area covered by the Fund, only the 5 Delaware stores. In 1981, those 5 stores were also closed. Upon the closing of the Delaware stores, the Fund determined that Pantry Pride Enterprises, Inc. (“Pantry Pride”), Food Fair’s successor in interest, had withdrawn from the pension plan and was liable to the Fund under the MPPAA for its share of the Fund’s total unfunded vested benefits. 29 U.S.C. § 1381 (1982). The Fund calculated Pantry Pride’s share to be $20,935,-000, payable in 79 monthly installments of $326,379.16 and a final payment of $107,-972.06. Pursuant to 29 U.S.C. § 1399(b)(1), the Fund demanded that Pantry Pride pay the withdrawal liability. Pantry Pride brought this action in the district court for a declaratory judgment that the MPPAA was unconstitutional. Although the Act requires arbitration of disputes arising over withdrawal liability, the district court, upon motion by Pantry Pride, stayed arbitration pending the resolution of the constitutional challenge in accordance with this Court’s decision in Republic Industries v. Central Pennsylvania Teamsters Pension Fund, 693 F.2d 290 (3d Cir.1982). The Fund then filed a motion with the district court asking, inter alia, that Pantry Pride be required to pay the withdrawal liability to the Fund during the pendency of the litigation in accordance with the previously calculated schedule. The district court denied this motion in part, limiting the payments required to $15,000 per month. The Fund appeals from this order. III. APPEALABILITY Pantry Pride contends that the order of the district court was not appealable as either a final decision under 28 U.S.C. § 1291, or as an interlocutory order under 28 U.S.C. § 1292(a)(1).1 An interlocutory order “granting, continuing, modifying, refusing, or dissolving injunctions” is appealable under 28 U.S.C. § 1292(a)(1). In determining whether an order is appealable as an order refusing an injunction, there are two requirements. First, the order must have the effect of refusing an injunction. Carson v. American Brands, Inc., 450 U.S. 79, 84, 101 S.Ct. 993, 996, 67 L.Ed.2d 59 (1981). Second, the appeal must “further the statutory purpose of 'permitting] litigants to effectively challenge interlocutory orders of serious, perhaps irreparable consequence.’ ” Id. (quoting Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 181, 75 S.Ct. 249, 252, 99 L.Ed. 233 (1955)). The district court’s order refused, in part, the Fund’s motion for an injunction to compel the interim payment of withdrawal liability. Although the language of the Fund’s motion did not use the word “injunction,” this court must look to the substance of the request, rather than rely only on its language in determining whether an order is an appealable denial of an injunction.2 Cf. Ettelson v. Metropolitan Life — 171 — Insurance Co., 317 U.S. 188, 192, 63 S.Ct. 163, 164, 87 L.Ed. 176 (1942) (interpreting a predecessor to 28 U.S.C. § 1292(a)(1)). In this case, the Fund requested, inter alia, that the court compel Pantry Pride to make future payments according to the schedule in its prior demand which, construed liberally, is a request for an injunction. Also, the denial of the claim to interim withdrawal benefits is a serious one. Congress believed that it was important to insure that the flow of employer withdrawal liability payments was not delayed by an employer disputing liability. See Senate Committee on Labor and Human Resources, Summary and Analysis of S. 1076, 96th Cong., 2d Sess. (1980), reprinted in Special Supp. 310, Pens.Rep. (BNA) 81, 84-85 (1980); H.R.Rep. No. 869, 96th Cong.2d Sess. 84, reprinted in 1980 U.S.Code & Cong. Ad.News 2918, 2952 (payments should continue despite litigation). Further, the loss of the important statutory right to interim payments cannot be effectively reviewed once a final order has been made. If no interlocutory review were possible, the Fund could effectively lose its statutory protection against interruptions in the pre-arbitration flow of contributions that Congress mandated through the interim liability provisions. The order, insofar as it refuses, in part, the request for interim payments,3 is reviewable as an interlocutory order under 28 U.S.C. § 1292(a)(1) (1982). Because of our resolution of the appealability issue, we need not reach the contention that the order was appealable as a collateral final order under the doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1948). IV. Although we are satisfied that the order denying the Fund’s claim to equitable relief is properly appealable, we do not believe that the district court should have considered the Fund’s motion for affirmative relief in its present procedural posture. The Fund has not filed any counterclaim, and, in these circumstances, is not entitled to seek affirmative relief until it has done so. It is true that the federal courts have abandoned the strict pleading requirements of the common law, and the district court may, in certain cases, liberally construe a pleading, or in this case a motion, to state a complaint or counterclaim. Fed.R.Civ.P. 8(c), 8(f). See also, Cooper v. Anderson, 277 F.2d 449 (5th Cir.1960) (failure to plead a counterclaim is not fatal when evidence introduced reveals a counterclaim and the issue is tried without objection). However, the policy favoring liberal construction does not take precedence over potential prejudice to the opposing party. Pantry Pride may have been under the erroneous assumption that the Fund made a motion for security under Rule 65(c).4 — 172 — The issue of security, however, is separate from, and independent of, the question of whether the Fund has a right to interim payments under the MPPAA. Because of its erroneous assumption, Pantry Pride did not have an opportunity to respond to the motion as a counterclaim and may not have raised all of its defenses, if any,. to the Fund’s motion. Under the circumstances, we cannot say that Pantry Pride was not prejudiced. We believe that in this case the district court should have required that the Fund comply fully with the rules of procedure before affording any relief. Although requiring that a claim for interim payments be filed as a complaint or counterclaim may have the unfortunate effect of delaying payment to the Fund, the rights involved in this case are significant enough to require that a court have the requisite pleadings and record before adjudicating the merits of the claim to interim withdrawal payments. V. The order of the district court will be vacated, and the case will be remanded for further proceedings consistent with this opinion. The mandate will issue forthwith. Footnotes [1] Pantry Pride also contends that the appeal was ■untimely because the notice of appeal was filed more than 60 days after the district court announced orally that the motion would be denied in part. The time to appeal, however, runs from the date that the order is put in writing and entered on the court’s docket. See United States v. Indrelunas, 411 U.S. 216, 93 S.Ct. 1562, 36 L.Ed.2d 202 (1973). The Fund’s notice of appeal filed on November 3, 1983 was clearly timely with respect to the court’s order which was first written and entered on October 6, 1983. [2] The court also thought it was entering an injunction: [counsel for Fund]: Your Honor, may I ask that the Court grant permission that we be able to — 171 — have an interlocutory appeal on an expedited basis on this? THE COURT: I would be happy to do that. So I invite you [counsel for the Fund] to prepare [the order] the way you think best. If you prepare it under 1292(b), which is where I certify that the issue is dispositive of crucial matters in the case, that might be a problem because I am not sure I could certify that in good conscience. But if you frame the bond, the grant of their motion in terms of preliminary equitable relief, I believe you have a direct right of appeal from that. [counsel for Fund]: We’ll submit a proposed order. Ill App. at 179-180. [3] The Fund also requested interest, liquidated damages, and attorney’s fees in its motion. Because of our disposition of the claim to interim withdrawal payments, infra, it is not necessary to reach the issue of whether the denial of these requests is appealable under section 1291 or 1292(a)(1). [4] Pantry Pride in its brief before this court characterizes the Fund’s motion as a one for security under Fed.R.Civ.P. 65(c). Before the district court, Pantry Pride also appeared to believe that the issue was one of security: THE COURT: The next issue is: Where do we stand here on payments and security? [Counsel for Pantry Pride]: ... we are willing to put that up as a bond in Republic, as we mentioned to Your Honor. THE COURT: You suggest that you do this, you want to put this in some kind of escrow fund and have it earn interest? — 172 — [Counsel for Pantry Pride]: That would be fine with us. THE COURT: All right. What else is before me? Ill App. at 143-44. Our decision does not require us to address the serious issue raised by the Fund that a substitution of security for the interim payments may be inconsistent with the Congressional mandate in the MPPAA that the full interim payments be made to the Fund. Cf. Republic Industries, 693 F.2d at 298.