Originally from Dispute Resolution Journal

MULTIEMPLOYER PENSION PLANS

Arbitrability of Withdrawal Liability

The 4th Circuit ruled that under the Multiemployer Pension Plan Amendments Act, amending the 1980 (MPPAA) Employee Retirement Income Security Act of 1974, all disputes over pension liability when a company withdraws from a pension fund must be arbitrated before a company may seek judicial review. The court said it would make no sense, and run counter to Congressional intent, to have companies arbitrate some liability disputes while litigating others.

BES Services Inc., a New York corporation in the business of manufacturing store displays, sold all of its assets and ceased to be obligated to contribute to the Sheet Metal Workers’ National Pension Fund. The Pension Fund then assessed BES $175,833 in withdrawal liability under the MPPAA. BES paid only part of this sum and then refused to make further payments. The Pension Fund sued to collect the balance and sought summary judgment against BES. BES contended that it qualified for a reduction in withdrawal liability under § 1405 of the MPPAA. The trial court found that BES waived its right to challenge the amount of its withdrawal liability because it did not arbitrate this dispute as required by MPPAA § 1401, which provides: “Any dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under §§ 1381 through 1399 of this title shall be resolved through arbitration.” BES appealed. It argued that issues arising under § 1405 (dealing with a limitation on withdrawal liability) are not subject to the arbitration requirement because that section is not specifically mentioned in § 1401.