New York Times Wants $25.7M Pension Liability Award Reversed

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By Carmen Castro-Pagan

The New York Times Co. asked a federal judge to toss out a $25.7 million arbitrator’s award related to the newspaper’s pension liabilities ( The New York Times Co. v. Newspaper & Mail Deliverers'-Publishers’ Pension Fund , S.D.N.Y., No. 1:17-cv-06178, complaint filed 8/15/17 ).

The Newspaper and Mail Deliverers-Publishers’ Pension Fund wrongfully declared that the Times withdrew from the plan under the Employee Retirement Income Security Act, according to a lawsuit filed Aug. 15 in federal court in New York. The fund has sought to extract the highest possible amount of liability from the Times by “manufacturing” a withdrawal liability where none existed, “manipulating” actuarial assumptions to maximize liability, and “exempting itself from the rules it imposes on others,” the Times alleges.

The dispute arises from the closure of the Times’ distribution business in 2008. Many employees were laid off, but the Times agreed to hire about 65 distribution business employees to “promote labor peace” and prevent a partial withdrawal under ERISA, the lawsuit said.

An employer that participates in a multiemployer pension plan and withdraws from the plan is liable for its share of any underfunded benefits, also known as withdrawal liability, according to ERISA. In addition, ERISA provides that an employer must pay liability if it incurs a partial withdrawal, which occurs if the employer’s contribution base units fall by 70 percent within a certain period.

In the lawsuit, the Times challenged the fund’s assessment of liability because it allegedly rested on an erroneous interpretation of the law and the parties’ collective bargaining agreement. The fund declared a partial withdrawal by treating “shifts worked” by the Times’ employees—not their wages—as the contribution base, the newspaper alleged. Although total wages hadn’t decreased by 70 percent, mainly because the Times rehired some affected employees, the total number of shifts worked by the employees had fallen by 70 percent, the lawsuit said.

The Times also challenged the amount of liability assessed by the fund. The fund inflated the Times’ liability by using a lower, more conservative investment-return rate, instead of its actual 7.5 percent “best estimate” rate, to calculate the Time’s share of underfunding, the lawsuit said. This had the effect of inflating the liability by a “staggering” 33 percent, according to the lawsuit.

Finally, the Times asked the court to impose an 18 percent interest rate on the $4.85 million the fund must repay to the Times after the arbitrator concluded that the amount had been improperly calculated. The Times alleged that because the fund had earlier charged it 18 percent interest on a late installment, the fund must reimburse the $4.85 million at the same rate.

The pension fund couldn’t be reached for comment on the lawsuit.

Jones Day represents the Times.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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