WestRock Challenge to Pension Change Dies in 11th Circuit

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By Jacklyn Wille

An employer that contributes to a multiemployer pension plan can’t use ERISA to challenge a plan decision forcing employers to contribute more money if they leave the plan, a federal appeals court ruled ( WestRock RKT Co. v. Pace Indus. Union-Mgmt. Pension Fund , 2017 BL 162748, 11th Cir., No. 16-16443, 5/16/17 ).

The case raises a novel 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 U.S. Court of Appeals for the Eleventh Circuit held May 16 that no viable ERISA claim could proceed in this case, rejecting both theories offered by Georgia-based WestRock RKT Co. in its lawsuit against the Pace Industry Union-Management Pension Fund.

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. WestRock said the PPA authorized employers to bring both procedural and substantive challenges to rehabilitation plans, but the court largely sidestepped this novel claim by ruling that the company never alleged that the challenged rehabilitation plan was contrary to law.

WestRock also relied on ERISA’s rules for pension plan withdrawals to challenge Pace’s rehabilitation plan, but the Eleventh Circuit blocked this argument, too. According to the Eleventh Circuit, the disputed rehabilitation plan forced employers to make contributions to address the plan’s funding deficiency when they left the plan. This payment was separate from, and in addition to, any withdrawal liability payments the employer was statutorily required to pay, the Eleventh Circuit concluded.

Pension Funding Dispute

In this case, the Pace pension fund amended its rehabilitation plan in 2010 to require any employer that withdraws from the fund to pay a portion of the accumulated funding deficiency. WestRock sought a court order striking this amendment as contrary to ERISA, and the parties disputed whether any provision of ERISA authorized such a lawsuit.

WestRock first relied on Section 502(a)(10) of the statute, which was added by the PPA to allow employers to challenge rehabilitation plans that fail to comply with certain statutory requirements. Rather than deciding whether Section 502(a)(10) authorized such a lawsuit, the court concluded that no statutory violation had been clearly alleged.

WestRock also tried to bring its claim under Section 4301, which governs disputes over multiemployer withdrawal liability. This tactic also failed, the court said, because nothing in ERISA’s text indicated that Congress intended for withdrawal liability to be “the only payments a withdrawing employer would ever face.”

Judge Charles R. Wilson wrote the decision, which was joined by Senior Judge R. Lanier Anderson and District Judge Barbara Jacobs Rothstein, sitting by designation from the U.S. District Court for the District of Columbia.

Akin Gump Strauss Hauer & Feld LLP and Townsend & Lockett LLC represented WestRock. Bredhoff & Kaiser PLLC and Stanford Fagan represented the pension fund.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

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

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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