Decision to Reverse $5.1M Pension Liability Imposed by Ironworker’s Pension Fund
12 Jan 2018
Cavitch, Familo, & Durkin Co., L.P.A., representing a construction company for its ERISA and pension related matters, assisted in achieving a favorable ruling before the Arbitrator, United States District Court of the Northern District of Ohio (“Northern District”), and Sixth Circuit Court of Appeals (“Sixth Circuit”). The decision reversed a $5.1 million pension liability imposed by an ironworker’s pension fund.
On December 13, 2017, the Sixth Circuit held that Stevens did not owe withdrawal liability under the Multiemployer Pension Plan Amendments Act (“MPPAA”). The Sixth Circuit held that the work identified and disputed by the ironworker’s pension fund didn’t fall within the jurisdiction of the ironworker’s collective bargaining agreement. As such, the Sixth Circuit held that Stevens’s use of non-ironworkers to perform such work did not subject Stevens to withdrawal liability.
Withdrawal Liability in a Multiemployer Pension Plan
An employer that participates in a multiemployer pension plan and withdraws from the plan is liable for its share of any underfunded benefits as “withdrawal liability.” In the construction industry, a special exemption applies whereby employers are not subject to this withdrawal liability if they completely withdraw from work that is “in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required.”
The dispute in this matter began because the union’s pension fund alleged that Stevens continued to perform work in the jurisdiction of the collective bargaining agreement after withdrawing from the pension plan. The fund assessed withdrawal liability. Stevens appealed this assessment to the Arbitrator in accordance with statute. The Arbitrator found in favor of Stevens and the Northern District upheld the Arbitrator’s decision that the pension fund wrongly assess the liability against Stevens.
Sixth Circuit Affirmed Withdrawal Liability Assessment was Improper
The pension fund appealed to the Sixth Circuit. The Sixth Circuit affirmed the prior rulings: the pension fund wrongly assessed the multi-million dollar liability. The three-judge panel of the Sixth Circuit held that the work disputed by the pension fund was not work within the jurisdiction of the CBA because the CBA allowed Stevens to assign this work to other unions. Thus, the pension fund’s assessment of withdrawal liability against Stevens for rigging work performed by unions other than the ironworkers was improper.
Judge John M. Rogers issued the opinion, which was joined by Judges Eric L. Clay and Jeffrey S. Sutton.
The Sixth Circuit decision highlights the importance of clear legal guidance in the review of business agreements. The language of the CBA and its related agreements became the key issue in this multi-million dollar dispute.
Cavitch Familio & Durkin Co. LPA and Weston Hurd LLP represented Stevens. Goldstein Gragel LLC represented the fund.
The case is Stevens Eng’rs & Constructors, Inc. & Iron Workers Local 17 Pension Fund, 2017 BL 445041, 6th Cir., Nos 16-4098; 16-4099, order affirming district court opinion 12/13/17.
The full case can be found here:Business Law, Employee Benefits, Employment Law