Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
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.
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 firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
Text of the decision is at http://www.bloomberglaw.com/public/document/WESTROCK_RKT_COMPANY_Plaintiff__Appellant_versus_PACE_INDUSTRY_UN.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)