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GERBER TRUCK SERVICE, INC., Defendant-Appellee.
Reargued En Banc Feb. 9, 1989.
Albert M. Madden, Central States Law Dept., Chicago, Ill., for plaintiffs-appellants.
Ross A. Friedman, Susman, Schermer, Rimmel & Parker, St. Louis, Mo., for defendant-appellee.
Before BAUER, Chief Judge, and CUMMINGS, WOOD, Jr., CUDAHY, POSNER, COFFEY, FLAUM, EASTERBROOK, RIPPLE, MANION and KANNE, Circuit Judges.
Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.
* James H. Gerber, who operated a trucking service as a proprietorship, wanted to expand his operations. Early in 1981 he bought the assets, including the operating authorities, of Fat's Express Truck Service. He hired its three drivers and other employees. The three new drivers, the "Fat's Three", were members of Teamsters Local 50 and had enjoyed pension and welfare coverage under multi-employer pension and welfare plans established by the Teamsters union and employers throughout the motor carrier business. The Fat's Three--two of whom were close to retirement age--wanted to keep that coverage. Gerber's other employees were not union members, and Gerber had no desire to pay union-scale wages to them or to the Fat's Three. He was willing to accommodate their desire to preserve pension and welfare coverage, however.
To achieve this objective, Gerber approached John Gonzales, the business representative of Local 50, with a proposition: Gerber would sign the Teamsters' collective bargaining agreement, if Gonzales would promise not to expect Gerber to do anything beyond making pension and welfare contributions on behalf of the Fat's Three. Gonzales found this acceptable, because it protected three union members who might otherwise get no coverage or have to search for new jobs late in their careers.
[t]he collective bargaining agreement was modified by an understanding reached between Gonzales and Gerber only to extend Health and Welfare and Pension coverage to three employees.... James Gerber and John Gonzales both stated that the sole intent of the parties was to provide benefit coverage to [the Fat's Three]. Gerber and the employees established their own wages and other terms and conditions of employment. The Union did not seek to include any other employees in the [bargaining] Unit.
In other words, Gerber and Gonzales agreed that the documents they signed would not be enforced. They were not enforced. Local 50 treated Gerber as if it were a non-union firm. We shall assume that these oral understandings and practices would have frustrated any attempt by the Teamsters, or by Gerber's employees, to assert rights under the agreements as contracts.
Gerber and Gonzales did not inform the pension and welfare plans of their arrangement. They sent the collective bargaining and participation agreements to the funds. Gerber began to make contributions on behalf of the three drivers; he did not tell the plans that he employed additional drivers and other workers.
In June 1981 Gerber incorporated Gerber Truck Service, Inc., which assumed Gerber's obligations. Gerber Truck grew but continued to make contributions only on behalf of the Fat's Three. In August 1982 Gerber Truck informed Local 50 that it would not sign another collective bargaining agreement, but it did not send the union a written notice of withdrawal, and it continued making pension and welfare payments on behalf of the Fat's Three. One of the Three retired in September 1983, a second in August 1984. The third resigned from the union in April 1984, apparently because someone at Local 50 called his wife a bad name. Gerber Truck sent the funds a notice of termination and stopped paying.
This caught the attention of the plans, which audited Gerber Truck's books. The plans discovered that Gerber Truck had drivers in addition to the Fat's Three and workers with other duties, a total of 18 additional employees apparently covered by the collective bargaining agreement. They opened pension and welfare accounts on behalf of the other employees, giving them credit for covered employment; the plans also demanded that Gerber Truck make contributions on behalf of these employees from February 1, 1981, when Gerber signed the documents, through March 31, 1985, the first contract anniversary after the written notice of cancellation. Gerber Truck refused, and this litigation followed. 29 U.S.C. Sec. 1132(e)(1).
After finding that Gerber and Gonzales agreed that the written documents would be enforced only with respect to the Fat's Three, and then only to the extent they promised pension and welfare coverage--and that this oral restriction had been honored--the district court concluded that the pension and welfare trusts acquired no more than what Gerber and Gonzales had negotiated. The court ordered Gerber Truck to make full payments on behalf of the Fat's Three but otherwise rejected the plans' claims.
The pension and welfare plans are not parties to the collective bargaining and participation agreements. Third-party beneficiaries usually take contracts as they find them. They get no more than the signatories provided, and if there is a flaw in the formation of the contract the third-party beneficiaries get nothing. See Restatement (Second) of Contracts Sec. 309(1) (1981), stating that a voidable contract may not be enforced by the intended beneficiary, and Sec. 309(3), stating that if the contract was properly formed "the right of any beneficiary against the promisor is not subject to the promisor's claims or defenses against the promisee". See also Restatement (Second) of Contracts Sec. 311 (1979), and Price v. Pierce, 823 F.2d 1114, 1119 (7th Cir.1987), both pointing out how the presence of a third-party beneficiary can prevent modification of the contract, once it is properly formed.
Multi-employer pension and welfare plans would be in a bind if this familiar rule applied, so that flaws in the formation cut off third-party claims. Plans rely on documents to determine the income they can expect to receive, which governs their determination of levels of benefits. Multi-employer plans are defined-contribution in, defined-benefit out. Once they promise a level of benefits to employees, they must pay even if the contributions they expected to receive do not materialize--perhaps because employers go broke, perhaps because they are deadbeats, perhaps because they have a defense to the formation of the contract. If some employers do not pay, others must make up the difference in higher contributions, or the workers will receive less than was promised. Lynch, 836 F.2d at 333. Costs of tracking down reneging employers and litigating also come out of money available to pay benefits. The more complex the litigation, the more the plan must spend. Litigation involving conversations between employers and local union officials--conversations to which plans are not privy--may be especially costly, and hold out especially great prospects of coming away empty-handed. How is a pension fund to overcome a jointly advanced claim that there were oral exceptions to the documents?
Costs of this nature would not be large in an industry populated by a few mammoth firms, for then the funds could participate in the formation of the contracts and observe their performance. Many industries with multi-employer plans, including trucking, construction, and mining, are characterized by thousands of small firms, however. Multi-employer plans cover hundreds of local unions.
Our pattern must be common: An employer wants some of its employees to have pension and health benefits, and others not. Some may be only a few years away from vesting. Pension and welfare trusts, like insurers generally, want to avoid "adverse selection", the dropout of persons safer or younger than the pool's average. Funds insist that members of a group be in or out as a bloc: the fund cannot cover the old and infirm at a rate computed from group averages while receiving nothing on behalf of younger employees. Employers often strongly wish it were otherwise. Local unions may not care about selective inclusion in pension plans (since the costs are borne by employers in other parts of the country), and from their perspective having some workers covered is better than having none. So the local and the employer sign a collective bargaining agreement and send it to the pension and welfare trusts. Seeing documents apparently in order, the plans accept the tendered contributions. Later the plans discover the partial payment and try to recover the balance. The employer resists on the ground that it did not "really" agree to do what the documents say. Or the employer may say that the local union induced its signature by fraud, or did not keep its part of the bargain, or was not authorized to represent the employees, or a dozen other lines of defense.
Early in the history of multi-employer pension and welfare plans, the Supreme Court established that breach by the union would not relieve the employer of its obligation to make pension contributions. Lewis v. Benedict Coal Corp., 361 U.S. 459, 469-71, 80 S.Ct. 489, 495-96, 4 L.Ed.2d 442 (1960). The Court observed that the trusts have independent obligations to workers, and that if one employer drops out on account of a union's misconduct (in Benedict, a strike), other employers must make up the difference, or the funds will default. Lewis did not address defenses to the formation of the contract, however, and employers continued to press them, putting plans to high costs of litigation and risk of failing to collect.
Congress added Sec. 515 to ERISA in 1980 to deal with these collection problems. Two cases in particular caught the eye of the sponsors: Washington Area Carpenters' Welfare Fund v. Overhead Door Co., 488 F.Supp. 816 (D.D.C.1980), and Western Washington Laborers-Employers Health & Security Trust Fund v. McDowell, 103 L.R.R.M. 2219 (W.D.Wash.1979). Each of the employers signed an agreement common in the construction business, promising to recognize the union and adhere to the collective bargaining agreement as soon as it had hired its complement of employees for the job. "Pre-hire" agreements avoid the need to negotiate separately for each project when the employer assembles a new labor force for each site, sometimes from day-to-day. The Supreme Court held in NLRB v. Bridge Workers, 434 U.S. 335, 98 S.Ct. 651, 54 L.Ed.2d 586 (1978), that pre-hire agreements are valid only if a majority of those ultimately hired wish to be represented by the union. Employers predictably repudiated pre-hire agreements for many construction jobs and refused to make pension and welfare contributions. Overhead Door and McDowell held that because the union's failure to achieve majority status prevented the pre-hire agreement from coming into force, the employer was relieved of obligations to pension and welfare funds. As the court put it in Overhead Door, 488 F.Supp. at 819: "These cases [such as Lewis ] involved collateral defenses to enforcement of agreements. The defense in the instant case, on the other hand, concerns the validity of the very agreement that sought to establish a contractual relationship between Funds and Overhead." Overhead Door drew the same distinction as the Restatement (Second) of Contracts between defenses to formation, which cut off third-party beneficiaries' claims, Sec. 309(1), and defenses arising out of the course of performance, which do not, Sec. 309(3).
Recourse available under current law for collecting delinquent contributions is insufficient and unnecessarily cumbersome and costly. Some simple collection actions brought by plan trustees have been converted into lengthy, costly, and complex litigation concerning claims and defenses unrelated to the employer's promise and the plans' entitlement to the contributions. This should not be the case. Federal pension law must permit trustees of plans to recover delinquent contributions efficaciously, and without regard to issues which might arise under labor-management relations law--other than 29 U.S.C. 186. Sound national pension policy demands that employers who enter into agreements providing for pension contributions not be permitted to repudiate their pension promises.
In this regard we endorse judicial decisions such as Lewis v. Benedict Coal Corp..... Cases such as Western Washington Laborers-Employers Health and Security Trust Fund v. McDowell ... and Washington Area Carpenters' Welfare Fund, et al. v. Overhead Door Company ... are considered to have been incorrectly decided and this legislation is intended to clarify the law in this respect by providing a direct, unambiguous ERISA cause of action to a plan against a delinquent employer.
126 Cong.Rec. 23039 (Rep. Thompson). Senator Williams, the manager in the Senate, read into the record the third and fourth paragraphs of Rep. Thompson's statement, id. at 23288. The first three paragraphs of Rep. Thompson's statement appear verbatim in a Senate committee print explaining the scope and effects of the pending bill. Senate Committee on Labor & Human Resources, S. 1076--The Multiemployer Pension Plan Amendments Act of 1980: Summary and Analysis of Consideration, 96th Cong., 2d Sess. 43-44 (April 1980).
The text of Sec. 515 is adapted to its purpose, making promises enforceable "to the extent not inconsistent with law". If the contract provides for the commission of unlawful acts, it will not be enforced. Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 86-88, 102 S.Ct. 851, 861-62, 70 L.Ed.2d 833 (1982). If the employer simply points to a defect in its formation--such as fraud in the inducement, oral promises to disregard the text, or the lack of majority support for the union and the consequent ineffectiveness of the pact under labor law--it must still keep its promise to the pension plans.
Whether or not the plans are obligated to Gerber Truck's workers, nothing in ERISA makes the obligation to contribute depend on the existence of a valid collective bargaining agreement; the repudiation of cases such as McDowell and Overhead Door shows the opposite. Section 515 interacts with a provision of the labor laws in a way that strengthens its effects. No employer may agree with a union to contribute to a pension plan without a "written agreement" under Sec. 302(c)(5)(B) of the National Labor Relations Act, 29 U.S.C. Sec. 186(c)(5)(B). This need not be a formal collective bargaining agreement, Gariup v. Birchler Ceiling & Interior Co., 777 F.2d 370, 375 (7th Cir.1985). Local 50 and Gerber signed and sent to the plans a participation agreement, separate from the collective bargaining agreement, in which Gerber promised to contribute on behalf of all of its drivers. Section 302(c)(5)(B), like Sec. 515, prevents a court from giving force to oral understandings between union and employer that contradict the writings. E.g., Mo-Kan Teamsters Pension Fund v. Creason, 716 F.2d 772, 777 (10th Cir.1983); Waggoner v. Dallaire, 649 F.2d 1362, 1366 (9th Cir.1981). So ERISA and NLRA work together rather than at cross purposes.
Gerber Truck asks us to give Sec. 515 the least possible scope because its arrangement with Local 50 so clearly negated the presence of a collective bargaining agreement. It implies that the pension plans would not bear high costs of litigation if they would recognize the obvious and desist from litigating. Costs always can be held down by accepting defeat in advance. But a legal system in which the Gerbers of the world can avoid their commitments creates opportunities for similar firms. One is obvious: write a broad contract and claim later that it "really" meant something else, if employees do not qualify for benefits. If they qualify, the employer pays; if not, it doesn't. This is strategic behavior, and sifting strategic from ingenuous conduct through the tools of litigation will be difficult (and time consuming, and expensive, and error-prone). Kemmis v. McGoldrick, 706 F.2d 993, 996 (9th Cir.1983). Defenses based on fraud in the inducement, oral side agreement, course of performance, want of consideration, failure of the union to have majority support--the sort of defenses Gerber Truck's position would make available--are as a class the defenses most likely to breed litigation even when asserted in good faith, and they create manifold opportunities for manipulation by crafty operators.
Administrative problems and litigation costs, although stressed in the legislative history, are not the only effects plans fear. Gerber and Gonzales tried to arrange things so that Gerber would not need to make contributions on behalf of employees who did not expect to receive benefits. Gerber would support the expectations of two employees close to retirement but introduce no young employees into the plans. Yet pension and welfare plans are insurance vehicles. Insurers depend on receiving contributions from persons who collect far in the future or not at all.
Collective bargaining agreements may call for, say, an annual contribution of $2000 on behalf of each employee for medical coverage.2 The trust pays only if the employee needs care. Older employees need more care, on average. If employers can put only their oldsters, or those who actually need hospitalization, into the plan, the assumptions do not hold. A retirement plan is the same. A defined-benefit plan promises a specified benefit at retirement age after, say, 10 years of work. Computations underlying such a plan include two important assumptions: (a) many persons who work in the industry, and have contributions made on their behalfs, will never collect because they do not satisfy the vesting rule (they may quit or die before doing so); (b) many persons who qualify for pensions will work more than ten years. These two categories of workers fatten the pot and support the benefit levels. Gerber was trying to have only those who will qualify for pensions contribute to the fund. Yet without contributions on behalf of others, the plan's assumptions are unsound. Cf. Stinson v. Ironworkers District Council Benefit Trust, 869 F.2d 1014, 1016, 1021 -1022 (7th Cir.1989).
In a defined-contribution plan, no other employee (or employer) loses anything if a firm such as Gerber Truck neglects to pay. It is easy to match the payments in and the payments out, to say that those who will not receive anything need not pay in. For a defined-benefit plan, however, there is no such matching. The scheme works only if the plan receives contributions on behalf of persons who will not get benefits.3 These characteristics of multi-employer defined-benefit plans may well account for the unwillingness of other circuits to allow an employer to achieve partial coverage of its work force, as Gerber Truck frankly wants to do.
Nothing depends on proof that a given plan will be unable to satisfy its obligations if a given employer avoids payment. Actuarial computations are the reason plans want to include or exclude bargaining units as groups, but this reason is the basis of a rule. A life insurance company may offer a plan for non-smokers only, computing its rates on the basis of actuarial tables applying to non-smokers. If a smoker should lie about his habit and enroll in the plan, a court could not permit him to stay--or to require the insurer to pay up--simply because he died in a plane crash rather than from lung cancer, or because payment of his claim would not bankrupt the plan. He would be booted out (or, if he had died, the insurer would be excused from payment) on the ground that he did not meet a contractual requirement of admission. Just why the insurer imposed this requirement would not be the measure of its entitlement to enforce its rules. Smith v. North American Co. for Life & Health Insurance, 775 F.2d 777 (7th Cir.1985). So too with pension and welfare trusts. No matter why the plans have a rule of all-in-or-all-out, they have it, and an employer must play by the rules.
We recognize that the upshot may be harsh. Had Gerber known that Gonzales could not keep his pledge to withhold enforcement, he would not have signed; the cost of covering the Fat's Three would have been too steep. Section 515 does not admit of such an equitable defense; there is a wide gap between an "inequitable" result and an "illegal" one. More, Gerber's position is not all that "equitable". Gerber signed documents promising to make contributions on behalf of all bargaining-unit employees (in the collective bargaining agreement) and all "drivers" (in the participation agreement). He knew when he signed that he did not plan to live up to his commitment. Gerber Truck's defense is essentially that if the employer signs with its fingers crossed behind its back, it does not "really" agree to remit, and what it doesn't agree to do it needn't.
If Gerber and Local 50 had approached the pension and welfare trusts and said: "We want to continue the benefits for the Fat's Three, without making contributions on behalf of the current employees of Gerber", the funds would have replied "No."4 It would be a poor rule that allowed persons to do in secrecy what they could not do openly. Gerber and Gonzales sent the plans two documents containing promises neither intended to honor. The district court allowed the stratagem to succeed precisely because it was a sham--because it did not even amount to a collective bargaining agreement. Gerber doubtless acted with the interest of his three older employees at heart. But the employer's wish to set the terms on which he will deal with a pension trust is not a self-fulfilling prophesy.
The district court did not address the question whether the reference to "drivers" in the participation agreement establishes the measure of the plans' entitlements, or whether instead the plans could collect contributions on behalf of the larger class of employees mentioned in the collective bargaining agreement. That question is open on remand.
The district court held not only that Gerber Truck's obligations were limited to the Fat's Three but also that even with respect to them--and presumably with respect to any others--Gerber Truck's undertaking ended in 1982 when it told Local 50 that it would not sign a new collective bargaining agreement. Both the collective bargaining agreement and the participation agreement permit a party to terminate; both, however, require the notice to be in writing and provide that in the absence of such notice the agreement is automatically extended from year to year. Gerber's statement that he would not sign another agreement, even if taken as a notice of termination of the existing agreement (dubious at best), is ineffectual because not in writing.
The first writing came in May 1984, when Gerber sent the funds a letter stating that because the last of the Fat's Three had resigned from the union, Gerber Truck would make no further contributions. This writing did not purport to cancel the collective bargaining agreement, however, and so it too was ineffectual. In November 1984 Gerber Truck finally gave a notice that complied with the collective bargaining and participation agreements. These provide that cancellation takes effect on an anniversary date, in this case March 31, 1985. Gerber Truck therefore had to contribute to the pension and welfare funds, under the terms of the participation agreement, through the end of March 1985.
One final issue wraps up the case. The plans sought liquidated damages and attorneys' fees on the authority of Sec. 502(g)(2) of ERISA, 29 U.S.C. Sec. 1132(g)(2). Although the district court awarded the plans their attorneys' fees, it declined to impose liquidated damages or other penalties because it found that there was a legitimate dispute about the extent of Gerber Truck's obligations. This is not the legal standard established by Sec. 502(g)(2), however. Awards of liquidated damages are "mandatory in an action in which judgment in favor of the plan is awarded." Gilles v. Burton Construction Co., 736 F.2d 1142, 1144 (7th Cir.1984). Liquidated damages compensate the plans for delay and give employers an incentive to be forthcoming with payments. The structure of the multi-employer amendments of 1980, of which Sec. 502(g)(2) is a part, is pay-now-argue-later. Even on the district court's view of the case, the pension and welfare trusts were prevailing parties. The district court must add the penalties provided by Sec. 502(g)(2) to whatever sums it ultimately awards to the plans as past-due contributions.
The judgment is reversed, and the case is remanded for further proceedings in accordance with this opinion.
The majority opinion is long on legal, economic and actuarial theory and short on facts and a sense of proportion. This case was originally heard by a unanimous panel that required Mr. Gerber to make contributions through the end of March 31, 1985, and to pay liquidated damages and attorneys' fees (as reiterated in Part II of the majority en banc opinion), but confined the required contributions to those on behalf of the "Fat's Three." The panel, however, required Gerber, in order to escape the broader liability now imposed by the en banc court, to prove to the district court that "no employee (other than the Fat's Three) has a colorable potential claim to benefits from the [pension and welfare] Funds and that no employee has ever had a reasonable basis for believing himself entitled to make such a claim." Only if Gerber could make such a difficult and demanding showing, would the panel relieve him of the broader obligations purportedly owed on behalf of the other employees pursuant to the written documents. I rely principally on the panel opinion, 854 F.2d 1074 (7th Cir.1988), as furnishing an alternative--and fairer--solution of this difficult problem. I note that the conditions imposed by the panel opinion are so rigorous and virtually impossible of fulfillment in the general case that it is hardly a precedent for the chicanery the majority purports to foresee.
This case is quite atypical, however. Gerber was a truck driver1 who acquired Fat's trucking business as a sole proprietor and with it the Fat's Three. Fat's had been a party to the 1979-1982 National Freight Agreement, which, among other things, entitled the Fat's Three, who were members of Teamsters' Local 50, to employer-paid health and pension benefits administered by the plaintiff funds. Gerber had no intention of conducting a unionized operation but apparently generously sought to continue pension and health benefits for the Fat's Three (two of whom were approaching retirement age). Gonzales, the union business agent, testified that neither party intended anything but benefits specifically for the Fat's Three. There is no evidence in the record that anyone, including any Gerber employee, had any other understanding.
ERISA does not repeal basic contract law. What was intended and agreed to was not a collective bargaining agreement since it did not give the parties or any employees who knew about it any rights beyond the specific, limited benefits to the Fat's Three. This, of course, does not mean that Gerber did not have problems with the Funds based on ERISA and the written documents which he ill-advisedly signed--on a sort of estoppel principle--but it is simply incorrect to say that the "contract" amounted to anything more than what both parties unequivocally intended and to what they testified. In this respect, this case is different than any other I have seen. Typically, in these cases, an employer signs a broad agreement (which is unarguably a "collective bargaining" agreement), the union hopes he will perform and the employer later cuts corners, with or without the union's tacit consent. Here the intention of both union and employer was clear from the very start. The employer reinforced their understanding by securing health insurance for his other employees from another source. The implication of the majority that Gerber acted with sinister motives or possibly engaged in "strategic behavior" is preposterous. Gerber was a truck driver, unassisted by lawyers and accountants, who apparently sought nothing more sinister than to keep in force the pensions of three older employees who came to him from a failed firm. He may have erred in attempting to accomplish this by using the National Master Freight Agreement form, but the district court did not find, nor does the record disclose, that he was attempting to cheat or mislead anyone. And the majority opinion is totally off base in its charge that Gerber failed to "live up to his commitment." In the view of the union and of Gerber's employees, as well as of Gerber himself, his only commitment at any time was to the Fat's Three.
The majority opinion fails to clarify one very puzzling aspect of the written documents. The majority notes the rather broad description of job categories covered by the Master Agreement ("all truckdrivers, helpers, dockmen, warehousemen, checkers ... and such other employees as may be presently or hereafter represented by the Union"). It also notes the much more limited description contained in the Participation Agreement ("DRIVERS represented by the Union"). The latter description was specifically intended to describe the Fat's Three. And it literally does describe them since the union never purported to represent any other drivers. If the district court so finds on remand, the en banc rehearing may result in a nullity. In any event, this discrepancy in description, although patent on the face of the documents, was never noted or questioned by the Funds, whose reliance on documents we are told is so crucial.
Of course, in 99% of the cases it is necessary to enforce the written pension or welfare contribution requirements in order to avoid backsliding by employers--possibly abetted by unions. But here is a case where a miniscule employer's effort to help three superannuated truckdrivers has brought down on his head the full fury of a rule that knows no exceptions. A Gerber with his handful of trucks is no match for adversaries with platoons of accountants, actuaries and lawyers out to maximize his liabilities (in a good cause, no doubt). Yet, it seems to me that the Gerbers of the world (as the majority refers to them), starting to build a business beginning with their own single truck, deserve some consideration in preserving a common-sense balance.
I am of the view that Judge Cudahy had it right in his opinion writing for the original panel, 854 F.2d 1074 (7th Cir.1988). I therefore concur with the majority en banc opinion insofar as it assesses liability against Gerber for the "Fat's Three" and dissent as to the broader liability which may be imposed for additional Gerber employees without the opportunity for an equitable exception.

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In re Joseph Matthias MILLER, Debtor. Terri A. Running, Appellant v. Joseph Matthias Miller, Appellee. National Association of Consumer Bankruptcy Attorneys, Amicus on Behalf of Appellee(s).
Michael Sherwood Dove, argued, New Ulm, MN. for Appelant. Thomas H. Olive, argued, Minneapolis, MN, for Appellee.
JoAnne Mulder Nagjee, of Chicago, IL, for amicus brief.
Before MURPHY, SMITH, and GRUENDER, Circuit Judges. GRUENDER, Circuit Judge.
Terri Running, a bankruptcy trustee, appeals from a decision of the Bankruptcy Appellate Panel (“BAP”) that affirmed the bankruptcy court's conclusion that an annuity owned by bankruptcy debtor Joseph Miller is exempt from the bankruptcy estate. We affirm.
The Honorable Gregory F. Kishel, Chief Judge, United States Bankruptcy Court for the District of Minnesota.
The relevant facts are not in dispute. Miller purchased an annuity from Minnesota Life Insurance Company (“Minnesota Life”). Under the annuity contract, Miller agreed to make a lump-sum “Purchase Payment” of $267,319.48 to Minnesota Life. Miller used funds from his individual retirement account to make this payment. In return, Minnesota Life agreed to make an annual “Income Payment” of $40,497.95 to Miller for the next eight years. Miller later filed for Chapter 7 bankruptcy and claimed that the annuity was exempt from the bankruptcy estate. Running objected to this classification. The bankruptcy court overruled her objection, and the BAP affirmed. This appeal followed.
When reviewing an appeal from a decision of the BAP, “we act as a second reviewing court of the bankruptcy court's decision, independently applying the same standard of review as the BAP.” In re Lasowski, 575 F.3d 815, 818 (8th Cir.2009). The relevant facts here are not disputed, and we review the bankruptcy court's conclusions of law de novo. Id.
In his bankruptcy petition, Miller identified the funds in his annuity as exempt from the bankruptcy estate under 11 U.S.C. § 522(b)(3)(C). This exemption allows a bankruptcy debtor to protect from creditors “retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section ... 408 ... of the Internal Revenue Code.” Id. Section 408 of the Internal Revenue Code, in turn, provides that an individual retirement account and an individual retirement annuity are exempt from taxation; that is, they are qualified retirement plans. 26 U.S.C. § 408(a), (b), (e)(1); Griswold v. Comm'r, 85 T.C. 869, 871 (T.C.1985). Thus, if retirement funds are held in either of these qualified retirement plans, then the funds can be exempted from creditors' claims in bankruptcy. This exemption generally applies even if the debtor transferred the retirement funds to the qualified retirement plan from another qualified retirement plan. 11 U.S.C. § 522(b)(4)(C) (“A direct transfer of retirement funds from 1 fund or account that is exempt from taxation under section ... 408 ... shall not cease to qualify for exemption under [§ 522(b)(3)(C) ] ... by reason of such direct transfer.”); id. § 522(b)(4)(D) (explaining that § 522(b)(3)(C) applies if “[a]ny distribution that ... has been distributed from a fund or account that is exempt from taxation under section ... 408 ... and [ ] to the extent allowed by law, is deposited in such a fund or account not later than 60 days after the distribution of such amount”).
There is no dispute that the funds used to purchase Miller's annuity were retirement funds that came from Miller's individual retirement account, which was a qualified individual retirement account under 26 U.S.C. § 408(a). If Miller simply had left these funds in his individual retirement account, there is no question that the funds would be exempt from the bankruptcy estate. See 11 U.S.C. § 522(b)(3)(C). However, because Miller used the funds to purchase his annuity, Running contends that the funds became the property of the bankruptcy estate. Critical to Running's argument is her assertion that Miller's annuity is not a qualified individual retirement annuity as defined by 26 U.S.C. § 408(b). This provision enumerates several requirements for an annuity to be a qualified individual retirement annuity, two of which are at issue here. First, “[u]nder the contract ... the premiums are not fixed.” Id. § 408(b)(2)(A). And second, “[u]nder the contract ... the annual premium on behalf of any individual will not exceed the dollar amount in effect under section 219(b)(1)(A) [of the Internal Revenue Code].” Id. § 408(b)(2)(B). This amount was $6,000 for the taxable year in question. Id. § 219(b)(1)(A), (b)(5)(A), (b)(5)(B).
Running argues that Miller's annuity fails both of these requirements. Because Miller's annuity contract required him to pay a lump-sum amount to Minnesota Life, $267,319.48, Running characterizes the annuity's “premium [ ]” as “fixed,” in violation of § 408(b)(2)(A). And because the annuity contract allowed Miller to pay more than $6,000 in one year for the annuity, Running urges that the annuity's “annual premium” exceeds the limit set by §§ 408(b)(2)(B) and 219(b)(1)(A). Miller responds that the funds he used to purchase the annuity, which came from his qualified individual retirement account, were not a “premium” subject to § 408(b).
We conclude that Miller has the better of this argument. A premium does not include funds, such as Miller's, that are taken from a qualified individual retirement account to pay for an individual retirement annuity. Though § 408 does not define the term “premium,” § 408(b)(2)(B) sets the maximum annual premium by incorporating the amount from § 219(b)(1)(A). This linkage of statutory provisions is significant, for it conveys that an annual premium does not encompass funds that already were contributed to a qualified retirement plan. To explain, § 219(b)(1)(A) lists the maximum “qualified retirement contribution[ ]” that is “allowed as a deduction ... for the taxable year.” Id. § 219(a), (b)(1)(A). Section 219 defines a qualified retirement contribution as “any amount paid in cash for the taxable year by or on behalf of an individual to an individual retirement plan for such individual's benefit.” Id. § 219(e)(1). Section 219(b)(1)(A) thus concerns retirement contributions being made for the first time, not the disposition of retirement contributions that were made in the past. See also id. § 219(d)(2). By incorporating this provision, § 408(b)(2)(B) connotes that its annual-premium limitation applies only to funds that are being contributed to an individual retirement annuity in the first instance. It therefore follows that the term “premium” in § 408(b) does not include funds that are taken from a qualified individual retirement account to purchase an individual retirement annuity.
The distinction that § 408 draws between a “rollover contribution” and a “premium” buttresses this interpretation of § 408(b). As relevant here, § 408(d)(3) defines a rollover contribution as “any amount paid or distributed out of an individual retirement account ... to the individual for whose benefit the account ... is maintained ... [that] is paid into an ... individual retirement annuity [within sixty days].” Section 408 makes clear that a rollover contribution is distinct from a premium. Starting with the obvious, § 408 uses different terms to describe each type of payment, which, at a minimum, implies that the terms have different meanings. Cf. United States v. Bean, 537 U.S. 71, 76 n. 4, 123 S.Ct. 584, 154 L.Ed.2d 483 (2002) (“The use of different terms within related statutes generally implies that different meanings were intended.”) (quoting 2A Norman Singer, Sutherland on Statutes and Statutory Construction § 46:06 (6th ed.2000)). Furthermore, a rollover contribution can be “any amount,” 26 U.S.C. § 408(d)(3)(A), whereas the amount of an annual premium is expressly limited, id. § 408(b)(2)(B). Lastly, § 408 provides that “excess contributions” to an individual retirement annuity each year are taxed but specifically excludes a rollover contribution from the calculus for determining how much an individual contributed in excess of “the amount allowable as a deduction under section 219.” See id. §§ 408(r), 4973(a), (b)(1). For these reasons, a rollover contribution is not a premium, thus bolstering our conclusion that a premium does not include funds from a qualified individual retirement account that are used to purchase an individual retirement annuity.
Indeed, Running concedes in her brief that “if the Annuity qualifies as an individual retirement annuity under [§ 408(b) ], the proceeds from the sale of the individual retirement account ... would qualify as a ‘rollover contribution’ and would be tax exempt” and therefore exempt from the bankruptcy estate. To avoid the effect of this admission, Running simply restates her position that Miller's annuity was not a qualified individual retirement annuity because Miller's lump-sum payment of $267,319.48 was “fixed” by the annuity contract and exceeded the $6,000 limit for an annual premium. But this argument assumes that Miller's payment for his annuity constituted a premium. Because we rejected this proposition for the reasons outlined above, Running effectively concedes that Miller's payment for his annuity using funds from his qualified individual retirement account was a rollover contribution under § 408(d)(3).
The only other court to consider this issue reached a similar conclusion. In In re LeClair, 461 B.R. 86 (Bankr.D.Mass.2011), the court considered a bankruptcy trustee's argument that the bankruptcy debtor's payment of $86,000 for an annuity exceeded the $6,000 limit in § 408(b)(2)(B). Id. at 90. The court agreed with the bankruptcy trustee that this contribution exceeded the limit from § 408(b)(2)(B) but reasoned that “[t]he trustee has adduced no evidence that the $86,000 payment was a cash contribution subject to the $6,000 limitation as opposed to a rollover from some other retirement vehicle.” Id. at 90–91. The LeClair court therefore recognized, as we do here, the difference between using funds from a qualified retirement plan to buy an annuity and paying a premium subject to the limitations of § 408(b). See id. at 91.
In support of her contrary position, Running refers us to several cases holding that an annual premium in excess of § 408(b)(2)(B)'s limit disqualifies an annuity from being treated as a qualified individual retirement annuity. But Running admitted during oral argument that none of her favored cases involved the use of funds from a qualified individual retirement account to pay for the annuity, as this case does. See In re Cherwenka, 508 B.R. 228, 233, 240–41 (Bankr.N.D.Ga.2014); In re Ludwig, 345 B.R. 310, 312–13, 317 (Bankr.D.Colo.2006); In re Rogers, 222 B.R. 348, 349–50 (Bankr.S.D.Cal.1998).
Running raises one additional argument. She contends that even if Miller's use of funds from his qualified individual retirement account complied with § 408(b), his annuity contract still violates § 408(b)(2)(B) because it does not require Miller to pay an annual premium. As Running puts it, § 408(b)(2)(B) requires Miller to pay “multiple, annual premiums” in order for his annuity to be a qualified individual retirement annuity. We disagree. Section 408(b)(2)(B) merely states that “[u]nder the contract ... the annual premium on behalf of any individual will not exceed [$6,000].” This provision does not mandate the payment of an annual premium for an unspecified number of years; rather, it requires that the annuity contract limit the funds being contributed in the first instance. Cf. Sadberry v. Comm'r, 153 Fed.Appx. 336, 340 (5th Cir.2005) (per curiam) (“Because the [annuity] at issue does not limit its annual premiums, it does not qualify as an individual retirement annuity according to the Internal Revenue Code or for a tax-free rollover.”); LeClair, 461 B.R. at 88 (stating that “[t]here have been no other premiums paid” after the initial payment of $86,000). Miller's annuity agreement, which modifies his annuity contract, accomplishes this requirement. The agreement states that Miller's “annual cash purchase payment,” i.e. his annual premium, may not exceed, as relevant here, “$2,000, or such other maximum amount as may be allowed by law.” By limiting Miller's ability to pay an annual premium in this manner, his annuity contract complies with § 408(b)(2)(B).
For the reasons described above, we affirm.


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Republika Srpska military commander Ratko Mladić, regarded by some in the 1990s as a modern-day Prince Lazar, also spoke out openly against “the Turks” and “Islamicization.” After the fall of Srebrenica, Mladić addressed a local television camera: “Here we are, on the eleventh of July of the year 1995, in Serbian Srebrenica. On the eve of yet another great Serb holiday we present this town as a gift to the Serb nation. The moment has finally arrived when, after the revolt against the Dahijas, we will have vengeance against the Turks in this place.” The Battle of Kosovo occurred long ago, yet it has not ended: its memory has been used continually to reinforce victimization of Serbs and more recently to inspire the eradication of Bosnian Muslims.
The long-lasting memory of the Battle of Kosovo can be a lesson to the United States (“U.S.”), whose government abolished slavery as recently as 1865. To Justice Brennan in Regents of the University of California v. Bakke, however, “the Equal Protection Clause . . . was largely moribund . . . . Worse than desuetude, the Clause was early turned against those whom it was intended to set free, condemning them to . . . a status always separate but seldom equal.” It was only in 1954 in Brown v. Board of Education that the U.S. Supreme Court held segregation in public schools unconstitutional. Desegregation efforts expanded slowly, but only twenty years after Brown v. Board of Education, the Court in Milliken v. Bradley held that school districts could only take remedial measures countering segregation and unequal opportunity for racial minorities in the face of de jure segregation. Various justices in dissenting opinions have protested the “myopia” of decisions that restrain efforts to counter the lasting effects of racial oppression. However, the Court has continued to deny remedial action for de facto segregation, ignoring the immense challenges of making up for “more than two centuries of firmly entrenched official discrimination.” This near-sightedness is especially alarming given the short history of the U.S. and the severe ramifications of the lasting memory of the Battle of Kosovo.
The perpetuation of the Battle of Kosovo can also be a lesson to the French government, which seems to have failed to see parallels between oppression of Judaism prior to the Holocaust and current oppression of Islam. Nazis began to segregate German Jews in the 1930s, and Germany passed the Nuremburg Laws in 1935. These laws denied citizenship, attendance in schools, and military participation to German Jews, and they forbade marriages between Jews and non-Jews. In Comparative Equality and Anti-Discrimination Law: Cases, Codes, Constitutions, and Commentary, David B. Oppenheimer, Sheila R. Foster, & Sora Y. Han compare these regulations in 1930s Germany to the growing popularity of France’s National Front party known for its anti-immigrant views, the 2004 French law prohibiting the display of conspicuous religious symbols in schools, especially impacting Muslim women, the 2010 French National Assembly’s bill prohibiting women from wearing clothing that covers the face in any public place in France, and France’s 2011 banning of Muslims from praying outside crowded mosques. Amid increasing regulations and growing sentiments against immigrants and Islamic expression in Europe, Oppenheimer expresses surprise that parallels between the Holocaust and current regulations against the practice of Islam are not more evident to French lawmakers, exposing France’s myopia to the perpetuation of oppression.
[victim/ persecutor mentality] is the logic that keeps coming up in the Balkans: our group X is a historical victim of group Y. We need to protect ourselves from group Y. Therefore, we should expel members of group Y from our territories. X and Y at different periods have been various ethnic groups and political leaders have . . . invoked the notion of historical victimhood to justify their political and military campaigns.
Former Republika Srpska President Radovan Karadžić exemplified Jungić’s insight during his trial at the ICTY: “There is not a Serb or any man in the world that would convince the Serbs that there wasn’t a threat of a genocide against them.” These differentiations persisted despite many years of attempts for a unified Yugoslavia, and their contribution to a victim/ persecutor mentality played a significant role in the eventual Bosnian genocide.
Perpetuation of victim/ persecutor mentality is evident in the denial of the Bosnian genocide by former and present presidents of Serbia and Republika Srpska. During his trial at the ICTY, Karadžić denied the Bosnian genocide and claimed, “I never made any discrimination, my hairdresser of many years was a Muslim.” Republika Srpska’s current president Milorad Dodik argued, “Bosnian Serbs will never accept that the 1995 Srebrenica massacre of some 8,000 Muslims was genocide. . . . If a genocide happened then it was committed against Serb people of this region where women, children, and the elderly were killed en mass.” Current Serbian president Tomislav Nikolić recently shared Dodik’s sentiment: “[t]here was no genocide in Srebrenica.” These denials have sparked worldwide critique, and show that the ramifications of the Battle of Kosovo and its victimization have not ended.
Since the last half of the twentieth century, the U.S. has strived for unification of groups that have been perceived historically as different. Although academics and judges contest racial classification and apply strict scrutiny in Court decisions, explicit incorporations of racial classifications continue in censuses, school exams, and Court considerations. This enables the collection of statistics that courts may use to identify systemic discrimination. However, the explicit use of race in legislation often leads to denial of race-conscious remedial measures against disparately impacted groups, perpetuating unequal segregation and thus subordination.
The use of racial classification has the danger of creating a victim/ persecutor mentality. There is no law in the U.S. against the denial of slavery or oppression of minorities, although Justices’ dissents in Missouri v. Jenkins, Parents Involved in Community Schools v. Seattle School District No. 1, and Grutter v. Bollinger have equated majority opinions with ignorance or perpetuation of continued oppression. These cases also illuminate victim/ persecutor mentality, such as where plaintiffs complained of “reverse discrimination.” Further exposing victimization mentality in the U.S., Arkansas Representative Jon Hubbard recently claimed that slavery was “good for black people,” whose integration in the U.S. has “rewarded” them citizenship “in the greatest nation ever established” but has brought “white” people down.
In France, the government explicitly avoids use of racial and ethnic classifications, in part because of the memory of the use of census information in persecuting Jews during the Holocaust. Therefore, providing statistical evidence for systemic discrimination has been a challenge in courts. In lieu of race, disparate impacts in education and employment occur based on photographs, names, geographic location, immigration status, and economic status, enabling ignorance of the unequal treatment of individuals who are still perceived as different by the majority of the populous. In contrast, Holocaust denial is illegal and something about which France has been extremely cognizant, perhaps due to France’s participation in the persecution of Jews during World War II. For example, Professor Robert Faurisson was criminally convicted under the Gayssot Act of 1990 for denying “this policy of extermination of Jews,” “the magic gas chamber,” and “the myth of the gas chambers.” Persecutor/victim mentality was evident in Faurisson’s claims that he has been “a victim of violations of his human rights by France.” Sensitivity to the memory of the Holocaust adds support to Oppenheimer’s surprise at the increasing regulations targeting Islamic expression.
The Battle of Kosovo provides an important lesson because it exposes how strongly an interpretation of historical oppression may perpetuate social divides and foster new conflicts. Its continued impacts also illuminate the complexity of the perpetuation of oppression: despite years of attempts at unification in the former Yugoslavia, constructed divisions persevered and fed a mentality of victim/ persecutor. Although the U.S. explicitly identifies race, religion, and ethnic difference in its censuses, Courts feed victimization mentality and allow continued oppression by denying remedial action against unequal segregation when legislation or school districts use racial classifications, such as in Parents Involved in Community Schools v. Seattle School District No. 1. Although French laws refute racial constructs and strongly penalize Holocaust denial in memory of oppression of Judaism, minority populations and religions such as Islam remain disparately impacted under the government’s laws and the population’s practices. The Battle of Kosovo further illuminates the importance of attention to oppression. At some point, the constructed victims of oppression may retaliate and ensure the victim/ persecutor cycle persists in future generations.
For qualifications and sources of statements, please contact detar@berkeley.edu.

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BOSTON AND MAINE CORPORATION & SPRINGFIELD TERMINAL RAILWAY COMPANY-ADVERSE DISCONTINUANCE OF OPERATING AUTHORITY-MILFORD-BENNINGTON RAILROAD COMPANY, INC.
DECISION DENIED AN APPLICATION FILED BY BOSTON AND MAINE CORPORATION AND THE SPRINGFIELD TERMINAL RAILWAY COMPANY FOR THIRD-PARTY, OR “ADVERSE,” DISCONTINUANCE OF THE OPERATING AUTHORITY OF MILFORD-BENNINGTON RAILROAD COMPANY, INC. OVER APPROXIMATELY 5.36 MILES OF RAIL LINE BETWEEN WILTON AND MILFORD, N.H.
BOSTON AND MAINE CORPORATION & SPRINGFIELD TERMINAL RAILWAY COMPANY—APPLICATION FOR ADVERSE DISCONTINUANCE OF OPERATING AUTHORITY—MILFORD-BENNINGTON RAILROAD COMPANY, INC.
Digest: In this decision, the Board denies an application filed by Boston and Maine Corporation and the Springfield Terminal Railway Company for third‑party, or “adverse,” discontinuance of the operating authority of Milford‑Bennington Railroad Company, Inc. over approximately 5.36 miles of rail line between Wilton and Milford, N.H.
On April 13, 2018, Boston and Maine Corporation (B&M) and Springfield Terminal Railway Company (Springfield Terminal) (collectively, Pan Am), filed an application under 49 U.S.C. § 10903 asking the Board to find that the public convenience and necessity (PC&N) require or permit the third-party, or “adverse,” discontinuance of operating authority held by Milford-Bennington Railroad Company, Inc. (MBR) over approximately 5.36 miles of rail line owned by B&M between milepost 16.36 in Wilton and milepost 11.00 in Milford, N.H. (the Line). Notice of Pan Am’s application was served and published in the Federal Register on May 3, 2018 (83 Fed. Reg. 19,591). MBR filed a protest in opposition to the discontinuance on May 29, 2018. On June 12, 2018, Pan Am filed a reply to MBR’s protest. Granite State Concrete Inc. (Granite State), the sole active shipper served by MBR on the Line, and Monadnock Paper Mills, Inc. (Monadnock), a potential rail shipper, as well as other business entities, members of the public, and affected communities, filed comments in opposition to Pan Am’s proposed discontinuance. For the reasons set forth below, the Board will deny Pan Am’s application.
In 1990, MBR filed a feeder line application under former 49 U.S.C. § 10910 to acquire the Line. (MBR Protest 3.) Pan Am opposed the application. Milford-Bennington R.R.—Feeder Line Acquis.—Bos. & Me. Corp. Hillsborough Branch, FD 31701 (ICC served July 6, 1992). In 1992, MBR and Pan Am voluntarily entered into a Trackage Rights Agreement (1992 TRA) as part of a settlement of the feeder line proceeding, granting MBR the trackage rights over the Line. In view of the settlement, MBR and Pan Am jointly requested that the feeder line application be withdrawn, which it was. Id.; (see also MBR Protest 4; Pan Am Appl. 3).
Under 49 U.S.C. § 10903(d), the standard governing any application to abandon or discontinue service over a line of railroad, including an adverse abandonment or discontinuance, is whether the PC&N require or permit the proposed abandonment or discontinuance. Under this standard, the Board balances the competing benefits and burdens of abandonment or discontinuance on all interested parties, including the railroad, the shippers on the line, the communities involved, and interstate commerce generally. Waterloo Ry.—Adverse Aban.—Lines of Bangor & Aroostook R.R. in Aroostook Cty., Me., AB 124 (Sub-No. 2) et al., slip op. at 4 (STB served May 3, 2004) (citing City of Cherokee v. ICC, 727 F.2d 748 (8th Cir. 1984)); see also N.Y. Cross Harbor R.R. v. STB, 374 F.3d 1177, 1183 (D.C. Cir. 2004).
“The function of the Board’s regulatory authority with respect to abandonments or discontinuance of rail service is to provide the public with a degree of protection against the unnecessary discontinuance, cessation, interruption, or obstruction of available rail service.” Waterloo Ry., AB 124 (Sub-No. 2) et al., slip op. at 5. Additionally, “the Board shall consider whether the abandonment or discontinuance will have a serious, adverse impact on rural and community development.” 49 U.S.C. § 10903(d). In an adverse discontinuance case, the burden of proof is on the applicant. State of S.D. ex rel. Dept. of Transp.—Adverse Discontinuance of Operating Auth.—Napa-Platte Reg’1 R.R. Auth., AB 1253 (STB served June 27, 2018). After considering the evidence presented and balancing the interests of all concerned, the Board concludes that Pan Am has failed to demonstrate that the adverse discontinuance of MBR’s authority to operate over the Line via trackage rights meets the PC&N standard, as explained below.
MBR also states that Pan Am has failed to support its claims related to the safety of MBR’s operations on the Line, that Pan Am’s allegations focus on issues that arose nearly a decade ago, (see MBR Protest 7), and that MBR complies with NORAC rules, (id. V.S. Leishman 10).
Interests of Shippers, Affected Communities, and the Public. The Board received comments from Granite State, Monadnock, business entities, members of the public, and affected communities in opposition to Pan Am’s proposed discontinuance.
PC&N Analysis. Both parties addressed the impact of Pan Am’s proposed rail service. As noted, Pan Am contends that its proposed operating plan would be equivalent to the service that Granite State currently receives from MBR. On the other hand, MBR, Granite State, Monadnock, and the other commenters are concerned about the harm the proposed discontinuance would cause to rail service in the area and the possibility that trucking could increase. As discussed below, Pan Am has not met its burden to show its proposed operating plan would not negatively impact rail service.
While Pan Am asserts that its proposed operating plan would result in essentially the same service to Granite State, the record before the Board does not support that assertion. Pan Am’s proposal to have MBR and Pan Am interchange multiple times a day to replace the on demand, single-line service MBR currently provides to Granite State would not be operationally similar to or as efficient as the existing service. Nor has Pan Am consulted with MBR on the details of joint-line service or reached out to Granite State to discuss the shipper’s requirements or whether the proposed change in operations would be feasible for the shipper. (Granite State Comment 3.) Indeed, MBR has raised valid questions about whether Pan Am’s proposed operations are even feasible. Further, Pan Am’s claim that it “is fully committed to providing service to all shippers,” (Pan Am Appl. 14), is not supported by the record. Monadnock, a potential shipper in the area, states that Pan Am has never solicited Monadnock’s interest in rail service, despite its continued investment and demonstrated interest in using rail. (Monadnock Comment 2, May 24, 2018.). Additionally, the fact that no other interested parties support Pan Am’s application belies Pan Am’s suggestion that MBR and Granite State are impeding service to other shippers. After balancing all the relevant interests in this matter, the Board cannot find that Pan Am has shown that the present or future public convenience and necessity justifies Pan Am’s proposed adverse discontinuance, and will deny Pan Am’s application.
Pan Am cites the decisions in Jacksonville and in Tacoma as examples of adverse discontinuance cases that were granted, based on facts it asserts are similar to the facts in this proceeding. However, those cases are inapposite. Both involved situations where the record showed that discontinuance would result in no change in operations, and neither discontinuance was opposed by shippers. See Tacoma, AB 548, slip op. at 7; Jacksonville, AB 469, slip op. at 4.
The Board also disagrees with Pan Am’s arguments that MBR’s operating authority should be discontinued because of Pan Am’s safety concerns about MBR’s operations. FRA has primary responsibility over rail safety matters and sets track standards based on the condition of the track. See Tyrrell v. Norfolk S. Ry., 248 F.3d 517, 523-24 (6th Cir. 2001); Granite State Concrete Co. v. Bos. & Me. Corp., FD 42083, slip. op at 3 (STB served Sept. 24, 2004). Here the track has been classified as FRA excepted track because of its condition, and there is nothing in the record showing that MBR is not complying with the FRA requirements that pertain to excepted track or that FRA has raised concerns about MBR’s safety practices. Moreover, the majority of the safety allegations that Pan Am alleges occurred nearly a decade ago or earlier, and the more recent claims of NORAC rule violations are insufficiently clear for the Board to conclude there are ongoing safety issues.
Finally, the Board rejects Pan Am’s argument that its application should be granted based on the fact that the 1992 TRA has expired and its assertion that MBR has failed to compensate Pan Am for the trackage rights. Pan Am cites to Fore River as support for the Board granting adverse discontinuance where an operator is not fulfilling its obligations and, as a result, has become a burden on the public and interstate commerce. (See Pan Am Appl. 19.) Fore River does not support Pan Am’s petition, however. Fore River involved a carrier that had a consistent pattern of failing to meet its obligations to its shippers, employees, and the owner of the line. The record here shows that a New Hampshire court determined that MBR owes Pan Am for MBR’s use of the Line from 2012 until 2016. However, the record also indicates MBR’s willingness to pay for this past amount due and for its use of the Line going forward. (MBR Protest, V.S. Leishman 8‑9.) Although the parties have made some attempts to negotiate terms for a new agreement, to date they have been unable to come to a resolution on their own. (Id. at 7-9.) Given these circumstances, as well as the prior findings that Pan Am’s operating plan would not meet Granite State’s shipping needs and that MBR’s relationship with Granite State is not impeding service to other shippers, the Board finds that Pan Am has not shown that the PC&N permits adverse discontinuance.
The Board favors the resolution of disputes, including the terms for trackage rights, through alternative dispute resolution, such as mediation and arbitration procedures, in lieu of formal Board proceedings, whenever possible. The Board reminds interested parties that they may contact the Board’s Rail Customer and Public Assistance (RCPA) office, for informal facilitation assistance. The RCPA office may be reached at (866) 254-1792; faxing to (202) 245‑0461; or by email at rcpa@stb.gov.
1. Pan Am’s application for adverse discontinuance is denied.
2. MBR’s motion to strike is denied as moot.
3. This decision is effective on its service date.
 The digest constitutes no part of the decision of the Board but has been prepared for the convenience of the reader. It may not be cited to or relied upon as precedent. See Policy Statement on Plain Language Digests in Decision, EP 696 (STB served Sept. 2, 2010).
 An adverse discontinuance application seeks a Board finding that the PC&N require or permit the discontinuance of service by a carrier over a rail line, when that application is filed by someone other than that carrier. Such filings are also known as third-party applications and are termed “adverse” because they are often, though not always, opposed by the carrier holding the authority to operate.
 In a decision served on June 23, 2017, the Board granted in part Pan Am’s March 17, 2017 petition seeking waiver of certain Board regulations and exemptions.
 On June 22, 2018, MBR filed a motion to partially strike the contents of Pan Am’s reply. The Board will deny as moot the motion to strike because this decision does not rely on the information that MBR moves to strike.
 Comments were submitted by the following individuals and entities: Richard B. Putnam; Ronald Brown; Sopurkh Khalsa; Deana Darby; Jacqueline Kahle; Gail and Andrew Hoar; Edward and Joanne Wood; Matthew Cosgro; Lara Crandall; Donna Crane; Malissa Knight; Kevin Federico; Chalmers Hardenbergh; Elizabeth G. Torre; American Steel & Precast Erectors; Wilton Heritage Commission; Wilton N.H. Economic Development Team; Towns of Greenfield, Wilton, and Milford; and Nashua Regional Planning Commission. Some of the public comments were filed after the May 29, 2018 comment deadline, but in the interest of compiling a complete record the Board will accept these late-filed public comments.
 Approximately half of the move is on the NH Line and half on the Line.
 Additionally, unlike here, in Fore River the two shippers on the line supported the discontinuance. Fore River R.R., 8 I.C.C.2d at 311.