The United States District Court for the District of New Jersey ruled on May 17, 2010 that an employer waived its right to contest withdrawal liability by not timely pursing its arbitration rights. Granting summary judgment for William J. Einhorn as the plan administrator for the Teamsters Pension Fund of Philadelphia & the Vicinity, the District Court rejected the employer's argument that the arbitration deadline should be equitably tolled because it waived its administrative remedies in reliance on a conversation with a fund trustee who allegedly assured the company that, even though it had stopped employing union members, it would not face withdrawal liability if it hired one union member. The District Court noted that, among other things, the fund clearly notified the produce seller that the hiring of a union member would not remedy its withdrawal liability, and that the company had ample time after that notice to initiate arbitration within the Multiemployer Pension Plan Amendment Act's ("MPPAA") deadline.
By way of background, the fund assessed withdrawal liability against the employer in July 2007 after it determined that the employer had completely withdrawn from the fund when it ceased employing union members and stopped making contributions to the fund as required by collective bargaining agreements with a local union. In late October 2007, after missing its first scheduled payment, the employer contested the fund's determination that it had completely withdrawn from the fund and requested review of the withdrawal liability assessment in accordance with the MPPAA. The employer's letter also informed the fund that it had hired a union employee and would begin making contributions, thereby mooting the withdrawal liability.
The following month, the fund rejected the employer's request for a review and informed it that whether the contributions would abate the withdrawal liability depended on MPPAA Section 4207's provision for the reduction or waiver of complete withdrawal liability. The employer did not respond to this letter and the fund sued in federal district court. After the lawsuit was filed, the employer filed a demand for arbitration.
This is yet another reminder to employers to demand arbitration as to both the existence, and amount, of withdrawal liability. The arbitration requirement is absolute.
By way of background, the fund assessed withdrawal liability against the employer in July 2007 after it determined that the employer had completely withdrawn from the fund when it ceased employing union members and stopped making contributions to the fund as required by collective bargaining agreements with a local union. In late October 2007, after missing its first scheduled payment, the employer contested the fund's determination that it had completely withdrawn from the fund and requested review of the withdrawal liability assessment in accordance with the MPPAA. The employer's letter also informed the fund that it had hired a union employee and would begin making contributions, thereby mooting the withdrawal liability.
The following month, the fund rejected the employer's request for a review and informed it that whether the contributions would abate the withdrawal liability depended on MPPAA Section 4207's provision for the reduction or waiver of complete withdrawal liability. The employer did not respond to this letter and the fund sued in federal district court. After the lawsuit was filed, the employer filed a demand for arbitration.
This is yet another reminder to employers to demand arbitration as to both the existence, and amount, of withdrawal liability. The arbitration requirement is absolute.
