ERISA-Seventh Circuit Uphold’s Arbitrator’s Ruling That Withdrawal Liability Is Not Imposed When An Exemption For The Building And Loan Industry Applies

 

In Laborers’ Pension Fund v. W.R. Weis Company, Inc., Nos. 16-2079, 16-2944 (7th Cir. 2018), the Laborers’ Pension Fund administers the pension fund (the “Fund”) for the Laborers’ International Union of North America (the “Laborer’s Union”).  W.R. Weis Company, a Chicago-area stonework firm, was required by a collective-bargaining agreement to contribute to the Fund for each hour worked by members of the Laborers’ Union.  The company complied with this obligation for many years.  Over time, however, the firm transitioned to using more highly skilled marble setters and finishers on its jobs, so it gradually stopped hiring members of the Laborers’ Union and ceased paying into the Fund.  In 2012 the Weis Company terminated its collective bargaining agreement with the Laborers’ Union.

The Fund, a multiemployer pension plan governed by ERISA and the Multiemployer Pension Plan Amendment Act (“MPPAA”), served notice that the Weis Company owed more than $600,000 in withdrawal liability for ceasing to contribute to the Fund.  The company paid the assessment but challenged it via arbitration, invoking an exemption for the building and construction industry. See29 U.S.C. § 1383(b).  The arbitrator agreed with the company, ruling that the exemption bars the imposition of withdrawal liability, and awarded the Weis Company a refund of the amount it had paid in.  A district judge confirmed the arbitrator’s award, but denied the Weis Company’s motion for attorney’s fees.  Both sides appealed.

In reviewing the case, the Seventh Circuit Court of Appeals (the “Court”) noted that the Fund seeks de novo review of the arbitrator’s award, raising a legal argument about the language and purpose of the § 1383(b) exemption.  The Weis Company responds that the deferential clear-error standard applies because the parties treated their dispute as entirely factual, as did the arbitrator.  The Court concluded that the Weis Company is right, as the Fund waived its statutory-interpretation argument by failing to raise it in the arbitration.  And because the Fund has not meaningfully challenged the arbitrator’s factual determinations, which easily survive clear-error review in any event, the Court affirmed the arbitrator’s award and the district court’s judgment.  Further, the Court rejected Weis Company’s request for attorney’s fees.

 

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