Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Employers that contribute to union pension plans can’t use ERISA to challenge plan decisions forcing them to contribute more money if they leave their plans, a federal judge ruled ( Keyes Fibre Corp. v. Pace Indus. Union-Management Pension Fund , 2017 BL 372047, M.D. Tenn., NO. 3:17-cv-00613, order granting motion to dismiss 10/17/17 ).
The case raises a rarely litigated legal question: Can an employer use the Employee Retirement Income Security Act to challenge changes made to an underfunded multiemployer pension fund’s rehabilitation plan? The judge Oct. 17 said no, explaining that ERISA only allows employers to bring a narrow subset of claims against the union benefit funds covering their workers.
Keyes Fibre Corp.'s claim challenging the rehabilitation plan adopted by the Pace Industries Union-Management Pension Fund didn’t fall within that subset, the judge said.
The dispute has roots in the Pension Protection Act of 2006, which requires multiemployer pension funds in “critical status"—in general, those that are less than 65 percent funded—to develop rehabilitation plans aimed at boosting funding levels. These plans often require employers to increase the contributions they make to the fund.
The judge’s ruling follows a May decision by the U.S. Court of Appeals for the Eleventh Circuit, which also held that ERISA provides no relief to employers that disagree with a pension fund’s rehabilitation plan. It also follows a 2014 ruling by the U.S. Court of Appeals for the Sixth Circuit, which said a local Girl Scouts council couldn’t use ERISA to hold the national Girl Scouts organization liable for unilaterally increasing contribution rates for its multiple-employer pension plan.
In this case, the judge also found no way for the employer to proceed under the Labor Management Relations Act.
Judge Aleta A. Trauger of the U.S. District Court for the Middle District of Tennessee wrote the decision.
Littler Mendelson PC represented Keyes Fibre. Bredhoff & Kaiser PLLC. Provost Umphrey Law Firm LLP represented the pension fund.
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