ERISA-Sixth Circuit Affirms Dismissal Of Claim By Employer Seeking Declaratory and Injunctive Relief To Prevent Collection Of Withdrawal Liability

In Findlay Truck Line, Inc. v. Central States, Southeast & Southwest Areas Pension Fund, Nos. 12-3450 and 12-3531 (6th Cir. 2013), the plaintiff, Findlay Truck Line, Inc. (“Findlay”), brought this action seeking relief from a withdrawal liability payment it allegedly owes to the defendant, Central States, Southeast & Southwest Areas Pension Fund (“the Fund”).

In this case, Findlay was involved in a labor dispute, and as a result, ceased making contributions to a pension plan administered by the Fund. Shortly thereafter, the Fund demanded Findlay pay withdrawal liability in excess of $10 million. Findlay then filed a complaint in federal district court seeking declaratory and injunctive relief to prevent such payment. Findlay argued that the Fund’s assessment of withdrawal liability was improper, since: (1) the withdrawal occurred as the result of a labor dispute, (2) Findlay should not be forced to arbitrate (part of the collection process for withdrawal liability) the dispute because the withdrawal was “union-mandated” and (3) despite ERISA’s interim payment requirement, Findlay should not be forced to make interim payments (before the arbitrator rules on the case) because it would suffer irreparable harm if made to do so. The district court dismissed the case, holding that ERISA required the dispute to be arbitrated, and also issued an injunction enjoining the Fund from collecting withdrawal liability payments pending arbitration, as such payments would cause irreparable harm to Findlay. The Fund appeals the district court’s injunction, and Findlay cross-appeals the district court’s dismissal.

Upon reviewing the case, the Sixth Circuit Court of Appeals (the “Court”) reversed the injunctive order, but affirmed the dismissal of the case, for the following reasons:

As to the injunction, the Court said that, under ERISA, the interim payment rule- under which an employer is required to pay withdrawal liability claimed by the plan up front, and dispute the liability later-has no exceptions, such as irreparable harm. Thus, the injunction has no basis in law.

As to the dismissal of the case, the Court said that the requirement to arbitrate disputed withdrawal liability has several exceptions, but they do not apply here. Thus, the district court properly dismissed the case, with the result that Findlay will be required to arbitrate if it wishes to contest the withdrawal liability.

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