ERISA-Tenth Circuit Holds That Withdrawal Liability May Be Asserted Against A Construction Company When A Controlled Group Member Resumes Covered Work

The issue in Ceco Concrete Construction, LLC v. Centennial State Carpenters Pension Trust, Nos. 15-1021, 15-1190 (10th Cir. May 3, 2016), is whether a construction company that stopped contributing to its employees’ pension plan must pay withdrawal liability under the Multiemployer Pension Plan Amendment Act (“MPPAA”).

In this case, Ceco Concrete Construction, LLC (“Ceco”) was a party to a collective bargaining agreement (“CBA”) that required it to contribute to the Centennial State Carpenters Pension Trust (“Trust”), a multiemployer pension plan. After Ceco stopped contributing, the Trust assessed MPPAA withdrawal liability, which is a payment that withdrawing employers must make to pension plans. Ceco disputed the withdrawal liability and initiated arbitration. The arbitrator sided with Ceco, concluding withdrawal liability was improper. Ceco then sued in federal district court to affirm the arbitrator’s decision. The Trust and its Board of Trustees (jointly, “the Plan”) counterclaimed, asking the district court to vacate the arbitrator’s award. The district court granted summary judgment in Ceco’s favor, and the Plan appeals.

Upon reviewing the case, the Tenth Circuit Court of Appeals (the “Court”) overturned the district court’s summary judgement. The Court noted that, under  ERISA § 1301(b)(1), an “employer” means “trades or businesses” under “common control” (i.e., a common-control group), and that all businesses under common control are treated as a single employer for purposes of collecting withdrawal liability, and each is liable for the withdrawal liability of another. Further, for construction employers, ERISA § 1383(b)(2) provides that a withdrawal (which triggers withdrawal liability) occurs when: (1) an employer ceases to have an obligation to contribute under the plan, and (2) either (a) continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required or (b) resumes such work within 5 years after the date on which the obligation to contribute under the plan ceases, and does not renew the obligation at the time of the resumption.

Given these provisions, the Court held that the district court erred by limiting withdrawal liability to entities under common control at the time the obligation to contribute ceases. Rather, the plain language of ERISA § 1301(b)(1)’s definition of employer and ERISA § 1383(b)(2)’s definition of a construction-industry withdrawal allows a pension plan to assert withdrawal liability against any entity under common control on the day the common-control group triggers a § 1383(b)(2) withdrawal by continuing or resuming covered work. Here, the Plan was therefore authorized to assess withdrawal liability against Ceco because another entity became part of the common-control group with Ceco, and resumed the same work as Ceco within the five-year period under the statute.

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