Originally from:

World Arbitration and Mediation Review (WAMR) - 2007 Vol. 1 No. 2

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FOURTH CIRCUIT DETERMINES THAT
ARBITRATION IS REQUIRED FOR ALL
DETERMINATIONS OF WITHDRAWAL
LIABILITY PURSUANT TO THE
MULTIEMPLOYER PENSION PLAN
AMENDMENTS ACT

I. OVERVIEW
BES was a manufacturer of retail products and contributed to the Sheet
Metal Workers’ National Pension Fund (Pension Fund) pursuant to a
multiemployer pension plan regulated by the Multiemployer Pension Plan
Amendments Act of 1980 (MPPAA). Board of Tr., Sheet Metal Workers’
Nat’l Pension Fund v. BES Serv., Inc., 469 F.3d 369, 371 (4th Cir. 2006).
BES sold all of its assets to International Visual Corporation of Canada, Inc.
for $3.98 million. Id. BES received $1.45 million, while the rest of the
purchase price was attributed to BES’s outstanding accounts. BES
subsequently paid about $980,000 to International Visual Corporation of
Canada to cover additional BES liabilities. After the sale, Pension Fund
determined that BES owed a total of $175,832.56 for withdrawal liability,
imposed by 29 U.S.C. § 1381. Id. at 371. BES made a single payment of
$22,620.08 towards the balance but did not make additional payments;
Pension Fund then filed a claim in district court to collect the remainder. Id.
Pension Fund moved for summary judgment; in response, BES
contended that its insolvency should have lowered its withdrawal liability.
The district court ruled in favor of Pension Fund and held that the amount of
withdrawal liability should be determined by arbitration and that BES’
failure to initiate arbitration of the withdrawal liability figure waived its
right to challenge Pension Fund’s determination. Id. at 372. BES
subsequently appealed. The Fourth Circuit Court of Appeals held that the
determination of withdrawal liability is subject to arbitration and that the
BES waived any opportunity to appeal the arbitration because they did not
first pursue arbitration.
II. THE COURT’S DECISION
A. The District Court Was Correct in Holding that the Determination of
Withdrawal Liability Is Subject to Mandatory Arbitration
BES claimed that determination of withdrawal liability is not subject to
mandatory arbitration. BES argued that the mandatory arbitration provision
of the act does not specifically list the limitation of withdrawal liability