Trustees of the Local 138 Pension Trust Fund v. F.W. Honerkamp Co. Inc. 1

1
11-1322-cv
Trustees of the Local 138 Pension Trust Fund v. F.W. Honerkamp Co. Inc.
1
UNITED STATES COURT OF APPEALS 2
3
FOR THE SECOND CIRCUIT 4
5
August Term 2011 6
7
(Argued: March 26, 2012 Decided: August 17, 2012) 8
9
Docket No. 11-1322-cv 10
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TRUSTEES OF THE LOCAL 138 PENSION TRUST FUND, 12
13
Plaintiff-Appellant, 14
15
-- v. -- 16
17
F.W. HONERKAMP CO. INC., 18
19
Defendant-Appellee. 20
21
-----------------------------------------------------x 22
23
B e f o r e : WALKER, LYNCH and LOHIER, Circuit Judges. 24
Appeal from a judgment of the United States District Court 25
for the Southern District of New York (Lewis A. Kaplan, Judge) 26
granting defendant-appellee employer’s motion for summary 27
judgment dismissing claim by plaintiff-appellant -- trustees for 28
a pension plan who sought certain pension contributions from the 29
employer -- and denying the trustees’ cross-motion for summary 30
judgment. The trustees argue that the Pension Protection Act of 31
2006 prevented the employer from withdrawing from the pension 32
plan after the plan entered critical status, and that the 33
district court erred in concluding otherwise. We do not agree 34
and thus AFFIRM the judgment of the district court. 35

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2
LARRY CARY (Andrew M. Katz and 1
Charles Pergue, on the brief), Cary 2
Kane LLP, New York, NY, for 3
Plaintiff-Appellant. 4
5
KEVIN L. WRIGHT, Littler Mendelson, 6
P.C., McLean, VA (Deidre A. 7
Grossman, Littler Mendelson, P.C., 8
New York, NY, on the brief), for 9
Defendant-Appellee. 10
11
12
JOHN M. WALKER, JR., Circuit Judge: 13
Plaintiff-appellant Trustees (the “Trustees”) of the Local 14
138 Pension Trust Fund (the “Fund”) appeal from a decision of the 15
United States District Court for the Southern District of New 16
York (Lewis A. Kaplan, Judge) granting summary judgment in favor 17
of defendant-appellee F.W. Honerkamp Co. (“Honerkamp”) and 18
denying the Trustees’ cross-motion for summary judgment. 19
Honerkamp withdrew from the Fund after the Fund had reached 20
“critical status” as defined by the Pension Protection Act of 21
2006 (the “PPA”), an amendment to the Employee Retirement Income 22
Security Act of 1974 (“ERISA”), and after the collective 23
bargaining agreements (“CBAs”) requiring Honerkamp to contribute 24
to the Fund had expired. The Trustees sued, arguing that the PPA 25
prevented Honerkamp from withdrawing and required the company to 26
make certain ongoing pension contributions pursuant to the Fund’s 27
rehabilitation plan. The district court agreed with Honerkamp 28
that the PPA did not forbid its withdrawal or require those 29
contributions. It therefore granted summary judgment to 30

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Honerkamp and denied the Trustees’ cross-motion for summary 1
judgment. 2
On appeal, the Trustees argue that the district court 3
misconstrued the PPA in denying their cross-motion and granting 4
summary judgment to Honerkamp. For the reasons that follow, we 5
reject the Trustees’ argument and AFFIRM the judgment of the 6
district court. 7
BACKGROUND 8
I. Statutory Background 9
We begin with an overview of the pertinent statutory 10
framework, which provides necessary context for the events of 11
this case: 12
A. ERISA 13
ERISA is a comprehensive statutory scheme regulating 14
employee retirement plans. See generally ERISA § 2 et seq., 29 15
U.S.C. § 1001 et seq. Congress has amended the law periodically 16
since originally enacting it in 1974. 17
Among other things, ERISA “was designed to ensure that 18
employees and their beneficiaries would not be deprived of 19
anticipated retirement benefits by the termination of pension 20
plans before sufficient funds have been accumulated in the 21
plans.” Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 22
214 (1986) (internal quotation marks omitted). To that end, the 23
statute created an agency, the Pension Benefit Guaranty 24

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4
Corporation (“PBGC”), to administer an insurance system by 1
collecting premiums from covered pension plans and paying out 2
accrued benefits to employees in the event a pension plan has 3
insufficient funds. See ERISA § 4006, 29 U.S.C. § 1306; Bd. of 4
Trs. of W. Conference of Teamsters Pension Trust Fund v. Thompson 5
Bldg. Materials, Inc., 749 F.2d 1396, 1399-1403 (9th Cir. 1984). 6
B. The MPPAA 7
One type of pension plan regulated by ERISA is the 8
multiemployer pension plan, in which multiple employers pool 9
contributions into a single fund that pays benefits to covered 10
retirees who spent a certain amount of time working for one or 11
more of the contributing employers. Plans of this sort offer 12
important advantages to employers and employees alike. For 13
example, employers in certain unionized industries likely would 14
not create their own pension plans because the frequency of 15
companies going into and out of business, and of employees 16
transferring among employers, make single-employer plans 17
unfeasible. Multiemployer plans allow companies to offer pension 18
benefits to their employees notwithstanding these practicalities, 19
and at the same time to share the financial costs and risks 20
associated with the administration of pension plans. See 21
Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension 22
Trust Fund for S. Cal., 508 U.S. 602, 605-07 (1993). 23
24

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5
However, 1
[a] key problem of ongoing multiemployer plans, 2
especially in declining industries, is the problem of 3
employer withdrawal. Employer withdrawals reduce a 4
plan’s contribution base. This pushes the contribution 5
rate for remaining employers to higher and higher 6
levels in order to fund past service liabilities, 7
including liabilities generated by employers no longer 8
participating in the plan, so-called inherited 9
liabilities. The rising costs may encourage -— or 10
force -— further withdrawals, thereby increasing the 11
inherited liabilities to be funded by an 12
ever-decreasing contribution base. This vicious 13
downward spiral may continue until it is no longer 14
reasonable or possible for the pension plan to 15
continue. 16
Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 722 17
n.2 (1984)(quoting Pension Plan Termination Insurance Issues: 18
Hearings before the Subcommittee on Oversight of the House 19
Committee on Ways and Means, 95th Cong., 2nd Sess., 22 (1978) 20
(statement of Matthew M. Lind)) (internal quotation marks 21
omitted). 22
ERISA as originally enacted did not adequately address and 23
even exacerbated these problems. This was because of certain 24
now-obsolete provisions, which we need not detail here, that had 25
the effects of (1) encouraging employers to withdraw from weak 26
multiemployer pension plans, which they often could do without 27
compensating the plans for the inherited liabilities that 28
remaining participants would incur; and (2) encouraging employers 29
who did not withdraw to terminate deteriorating pension plans 30
sooner rather than later. See Concrete Pipe, 508 U.S. at 607-08; 31

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6
R.A. Gray & Co., 467 U.S. at 721; Bd. of Trs. of W. Conference of 1
Teamsters Pension Trust Fund, 749 F.2d at 1402. The potential of 2
widespread termination of pension plans caused by cascading 3
withdrawals threatened to impose too heavy a burden on the PBGC 4
(the insurer of protected pension benefits) and, in turn, to 5
“collapse . . . the plan termination insurance program.” R.A. 6
Gray & Co., 467 U.S. at 721. 7
In 1980, Congress responded to this concern by enacting the 8
Multiemployer Pension Plan Amendments Act of 1980 (the “MPPAA”), 9
Pub. L. No. 96-364, 94 Stat. 1208 (codified as amended in 10
scattered sections of 26 and 29 U.S.C.). Under this amendment to 11
ERISA, “an employer [that] withdraws from a multiemployer plan 12
. . . is liable to the plan in the amount determined . . . to be 13
the withdrawal liability.” ERISA § 4201(a), 29 U.S.C. § 1381(a). 14
Withdrawal liability is the withdrawing employer’s proportionate 15
share of the pension plan’s unfunded vested benefits. See R.A. 16
Gray & Co., 467 U.S. at 725 (citing ERISA §§ 4201, 4211, 29 17
U.S.C. §§ 1381, 1391). Under the MPPAA, the employer pays its 18
withdrawal liability in annual installments, which are calculated 19
based on the employer’s historical contribution amounts. See 20
ERISA §§ 4211(c), 4219(c), 29 U.S.C. §§ 1391(c), 1399(c). The 21
statute limits the employer’s obligation to make these payments 22
to 20 years, even if it would take more than 20 payments for the 23
employer to pay its full withdrawal liability. See ERISA 24

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7
§ 4219(c)(1)(B), 29 U.S.C. § 1399(c)(1)(B); Nat’l Shopmen Pension 1
Fund v. DISA Indus., Inc., 653 F.3d 573, 576 (7th Cir. 2011). 2
C. The PPA 3
By 2005, a confluence of economic circumstances –- including 4
the actual or forecasted termination of various large pension 5
plans and the erosion of many employees’ retirement savings –- 6
again threatened ERISA’s system for federally insuring 7
multiemployer pension plans. See Janice Kay McClendon, The Death 8
Knell of Traditional Defined Benefit Plans: Avoiding a Race to 9
the 401(k) Bottom, 80 Temp. L. Rev. 809, 809-12 (2007). Thus, in 10
2006, Congress revisited the problems associated with underfunded 11
pension plans by enacting the Pension Protection Act of 2006, 12
Pub. L. 109-280, 120 Stat. 780 (codified as amended in scattered 13
sections of 26 and 29 U.S.C.). The law is far-reaching, totaling 14
approximately one thousand pages, and introduced a number of 15
mechanisms aimed at stabilizing pension plans and ensuring that 16
they remain solvent. See generally Sarah D. Burt, Note, Pension 17
Protection? A Comparative Analysis of Pension Reform in the 18
United States and the United Kingdom, 18 Ind. Int’l & Comp. L. 19
Rev. 189, 199 (2008); Douglas L. Lineberry, The Pension 20
Protection Act of 2006, S.C. Law. July 2007, at 16. 21
As relevant to this case, the PPA includes measures designed 22
to protect and restore multiemployer pension plans in danger of 23
being unable to meet their pension distribution obligations in 24

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8
the near future. The statute created two categories for such 1
plans: “endangered” and “critical.” Under the PPA, a pension 2
plan is endangered if, inter alia, it is less than eighty percent 3
funded, and it is in critical status if, inter alia, it is less 4
than sixty-five percent funded. ERISA § 305(b), 29 U.S.C. § 5
1085(b). If a pension plan falls into critical status, the plan 6
sponsor must notify the participating employers and unions, ERISA 7
§ 305(b)(3)(D), 29 U.S.C. § 1085(b)(3)(D), and each participating 8
employer must contribute an additional surcharge of five to ten 9
percent of the contribution amount required under the applicable 10
CBA. See ERISA § 305(e)(7), 29 U.S.C. § 1085(e)(7). 11
Additionally, upon a multiemployer pension plan’s entry into 12
critical status, the plan’s sponsor must adopt a rehabilitation 13
plan to restore the Fund’s financial health going forward: 14
A rehabilitation plan is a plan which consists of -- 15
16
(i) actions, including options or a range of options to 17
be proposed to the [employers and unions], formulated, 18
based on reasonably anticipated experience and 19
reasonable actuarial assumptions, to enable the plan to 20
cease to be in critical status by the end of the [ten- 21
year] rehabilitation period and may include reductions 22
in plan expenditures (including plan mergers and 23
consolidations), reductions in future benefit accruals 24
or increases in contributions, if agreed to by the 25
[employers and unions], or any combination of such 26
actions, or 27
28
(ii) if the plan sponsor determines that, based on 29
reasonable actuarial assumptions and upon exhaustion of 30
all reasonable measures, the plan can not reasonably be 31
expected to emerge from critical status by the end of 32
the rehabilitation period, reasonable measures to 33
emerge from critical status at a later time or to 34
forestall possible insolvency . . . . 35

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9
ERISA § 305(e)(3)(A), 29 U.S.C. § 1085(e)(3)(A). The 1
rehabilitation plan must set forth new schedules of reduced 2
benefits and increased contributions, from which participating 3
employers and unions may choose when it is time to negotiate 4
successor CBAs. See ERISA § 305(e), 29 U.S.C. § 1085(e). One of 5
those schedules must be designated as the “default schedule,” 6
which “assume[s] that there are no increases in contributions 7
under the plan other than the increases necessary to emerge from 8
critical status after [benefits] . . . have been reduced to the 9
maximum extent permitted by law.” ERISA § 305(e)(1), 29 U.S.C. 10
§ 1085(e)(1). 11
Most importantly for present purposes, the PPA provides as 12
follows: 13
(C) Imposition of default schedule where failure to 14
adopt rehabilitation plan 15
16
(i) In general 17
18
If– 19
20
(I) a collective bargaining agreement 21
providing for contributions under a 22
multiemployer plan that was in effect at the 23
time the plan entered critical status 24
expires, and 25
26
(II) after receiving one or more schedules 27
from the plan sponsor [under a rehabilitation 28
plan], the bargaining parties with respect to 29
such agreement fail to adopt a contribution 30
schedule with terms consistent with the 31
rehabilitation plan and a schedule from the 32
plan sponsor . . . , 33
the plan sponsor shall 34
implement the default schedule 35
[of the rehabilitation plan] 36

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10
beginning on the date 1
specified in clause (ii). 2
3
(ii) Date of implementation 4
5
The date specified in this clause is the date 6
which is 180 days after the date on which the 7
collective bargaining agreement described in 8
clause (i) expires. 9
ERISA § 305(e)(3)(C), 29 U.S.C. § 1085(e)(3)(C). As will be 10
seen, it is this provision and the extent to which it bears on 11
the facts of this case that are at the core of this appeal. 12
II. Factual Background 13
The facts, which are not in dispute, are as follows: 14
The Fund is a multiemployer defined-benefit pension plan. 15
The Trustees are its sponsor. 16
Honerkamp is a distributor of wood chips operating out of 17
two New York facilities -- one in the Bronx and one in Central 18
Islip. In early 2008, Honerkamp and the Bakery Drivers Local 19
Union No. 802 (the “Union”) were parties to CBAs that covered 20
Honerkamp’s unionized employees in its two facilities. The CBAs, 21
which were set to expire in late 2008, obligated Honerkamp to 22
contribute to the Fund on behalf of the company’s employees. 23
In March 2008, the Trustees announced that the Fund was in 24
critical status as defined by the PPA, see ERISA § 305(b)(2), 29 25
U.S.C. § 1085(b)(2). They therefore began drafting a 26
rehabilitation plan. But they did not expect to complete the 27
rehabilitation plan until late 2008, around the time the two 28

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11
Honerkamp CBAs were due to expire. Because the rehabilitation 1
plan would figure prominently in any negotiations between 2
Honerkamp and the Union over successor CBAs, the two sides agreed 3
to extend the existing Bronx and Central Islip agreements through 4
February 10 and March 27, 2009, respectively. 5
In November 2008, the Trustees finalized the rehabilitation 6
plan, which, as required by the PPA, set forth several new 7
schedules of reduced benefits and increased contributions. See 8
ERISA § 305(e), 29 U.S.C. § 1085(e). According to the 9
rehabilitation plan, the Trustees had determined that the Fund 10
was unlikely to emerge from critical status within the statutory 11
ten-year rehabilitation period. See ERISA § 305(e)(4), 29 U.S.C. 12
§ 1085(e)(4). This was because the employer contribution rates 13
required for such a result would have exceeded the amounts that 14
employers would have had to pay to withdraw from the Fund under 15
the MPPAA. As explained by the rehabilitation plan, the Trustees 16
“assum[ed] that employers would be unwilling to continue to 17
participate . . . if the cost of doing so were to exceed the cost 18
of withdrawing.” Joint Appendix (“J.A.”) at 84. The Trustees 19
therefore designed four primary, or non-default, schedules “to 20
impose approximately the same burden actuarially on employers 21
that a withdrawal from the [Fund] would produce.” Id. at 85. 22
Participating employers’ adoption of the non-default schedules 23
was estimated to push back the Fund’s projected date of 24
insolvency from 2021 to 2024. 25

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12
The Trustees also included in the rehabilitation plan a 1
default schedule, which, in accordance with the PPA, outlined the 2
Fund’s emergence from critical status. See ERISA § 305(e)(1), 29 3
U.S.C. § 1085(e)(1). But because the Trustees believed that the 4
contribution levels required for the Fund to emerge from critical 5
status were “unrealistic[ally high],” J.A. at 84, they expected 6
the default schedule to be implemented only if a participating 7
employer and union did not agree on one of the four non-default 8
schedules. Presumably, this expectation was due to the earlier- 9
excerpted portion of the PPA that requires a multiemployer 10
pension plan in critical status to “implement the default 11
schedule” in the event such deadlock persists for 180 days. See 12
ERISA § 305(e)(3)(C), 29 U.S.C. § 1085(e)(3)(C). 13
With the rehabilitation plan finalized, Honerkamp and the 14
Union proceeded to negotiate their successor CBAs. They 15
considered the rehabilitation plan’s schedules as well as the 16
possibility of Honerkamp’s withdrawal from the Fund. As part of 17
that consideration, Honerkamp requested and the Trustees provided 18
an estimate of Honerkamp’s withdrawal liability under the MPPAA. 19
On July 22, 2009, Honerkamp sent the Union a “Last, Best, 20
and Final Offer” for each facility. Both offers provided that, 21
as of August 1 of that year, Honerkamp would withdraw from the 22
Fund and create instead a 401(k) retirement plan for the 23
company’s employees. The Central Islip employees voted to ratify 24
the offer and, together with Honerkamp, entered into a new CBA on 25

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13
August 1 reflecting this change. The Bronx employees initially 1
rejected Honerkamp’s offer. With the parties then at an impasse, 2
Honerkamp unilaterally implemented its offer -- withdrawing from 3
the Fund in favor of the 401(k) plan -- as permitted by the 4
National Labor Relations Act, 29 U.S.C. § 151 et seq. The Bronx 5
employees and Honerkamp eventually entered into a new CBA in 6
April 2010. Like the agreement reached with the Central Islip 7
employees, the new Bronx CBA provided for Honerkamp’s withdrawal 8
from the Fund in favor of a 401(k) plan. 9
On July 31, 2009, Honerkamp informed the Trustees that it 10
would be withdrawing from the Fund for both locations effective 11
August 1. The Trustees responded that the PPA required Honerkamp 12
to contribute to the Fund under the rehabilitation plan’s default 13
schedule if the company and Union did not agree to a non-default 14
schedule within 180 days of the CBAs’ expiration. Honerkamp 15
countered that withdrawal was permissible and that it would be 16
liable only to pay withdrawal liability as calculated under the 17
MPPAA. 18
III. Procedural Background 19
In February 2010, the Trustees brought this suit against 20
Honerkamp. They argued that the PPA prevented Honerkamp from 21
withdrawing from the Fund after the Fund entered critical status. 22
The Trustees sought to compel Honerkamp to make retroactive and 23
prospective contributions under the rehabilitation plan’s default 24

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14
schedule. Honerkamp moved and the Trustees cross-moved for 1
summary judgment. The magistrate judge submitted to the district 2
court a report and recommendation in favor of summary judgment 3
for Honerkamp. Following oral argument on the parties’ motions, 4
the district court adopted the recommendation. 5
The Trustees appeal from the district court’s grant of 6
summary judgment in favor of Honerkamp and denial of their cross- 7
motion for summary judgment. 8
DISCUSSION 9
I. Standard of Review 10
We review de novo the district court’s grant of summary 11
judgment, which relied entirely on its construction of the PPA. 12
See Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (“We 13
review de novo a district court’s application of law to 14
undisputed facts . . . .”). 15
II. The PPA’s Effect on Withdrawal 16
At issue here is the extent to which the PPA, in these 17
circumstances, abrogates the ability of a participating employer 18
to withdraw from a multiemployer pension plan in critical status. 19
Honerkamp claims that it may withdraw from the Fund as long as it 20
pays withdrawal liability as calculated under the MPPAA. The 21
Trustees do not dispute that this would have been correct before 22
the enactment of the PPA. But they contend that under that more 23
recent statute, Honerkamp cannot withdraw and must continue 24

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15
participating in the Fund while contributing in accordance with 1
the rehabilitation plan’s default schedule. See ERISA 2
§ 305(e)(3)(C), 29 U.S.C. § 1085(e)(3)(C). 3
To our knowledge, no other court besides the district court 4
in this action has considered whether the PPA prohibits employers 5
from withdrawing from multiemployer pension plans in critical 6
status. On this issue, the PPA itself is silent. But, as is 7
always the case in issues of statutory interpretation, the 8
“ultimate question” here “is one of congressional intent.” In re 9
Lehman Bros. Mortg.-Backed Secs. Litig., 650 F.3d 167, 180 (2d 10
Cir. 2011) (internal quotation marks omitted). For the reasons 11
that follow, we agree with the district court and Honerkamp that, 12
in enacting the PPA, Congress did not intend to prevent employers 13
from withdrawing from multiemployer pension plans in critical 14
status. 15
“Because our task is to ascertain Congress’s intent, we look 16
first to the text and structure of the statute” as the surest 17
guide to congressional intent. Lindsay v. Ass’n of Prof’l Flight 18
Attendants, 581 F.3d 47, 52 (2d Cir. 2009). While the text of 19
the PPA does not speak to the issue at hand directly, it does 20
evidence Congress’s understanding that employers can and will 21
withdraw from plans in critical status. Although there is no 22
explicit statement of the right to withdraw, the statute appears 23
to assume withdrawals in these circumstances by revising the 24
calculation of withdrawal liability where the pension plan 25

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16
withdrawn from is in critical status. See ERISA § 305(e)(9), 29 1
U.S.C. § 1085(e)(9). Specifically, the PPA provides that 2
calculations of an employer’s withdrawal liability should not 3
take into account (1) contribution surcharges imposed 4
automatically once a pension plan enters critical status, or (2) 5
benefit reductions required by a rehabilitation plan. See id. 6
In enacting the PPA, Congress also amended other portions of 7
ERISA dealing with withdrawal and withdrawal liability without 8
the slightest indication that it intended to abrogate employers’ 9
ability to withdraw from pension plans in critical status. See 10
PPA § 204(a)(2) (codified at ERISA § 4225(a)(2), 29 U.S.C. 11
§ 1405(a)(2)) (changing the calculation of the limitation on 12
withdrawal liability where the employer company is sold); PPA 13
§ 204(b)(1) (codified at ERISA § 4205(b)(2), 29 U.S.C. § 14
1385(b)(2)) (amending the imposition of partial withdrawal 15
liability when, inter alia, the employer’s obligation to 16
contribute to a plan ceases under some but not all CBAs or 17
regarding some but not all facilities); see also PPA 18
§ 502(b)(codified at ERISA § 101(l)(1), 29 U.S.C. 19
§ 1021(l)(l))(redesignating and restating the requirement that 20
the plan sponsor provide an estimate of withdrawal liability upon 21
the employer’s request). That Congress did not hint at -- let 22
alone explicitly state -- such an abrogation, despite clearly 23
having withdrawal and withdrawal liability on its mind, is 24

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17
significant. This is so in part because, in at least one other 1
clause of the PPA, Congress unambiguously disclaimed an older 2
portion of ERISA that it wished no longer to apply in the context 3
of critical-status pension plans. See PPA § 202(a) (codified at 4
ERISA § 305(e)(8)(A)(i), 29 U.S.C. § 1085(e)(8)(A)(i)) (allowing 5
the retroactive cutting of certain benefits that typically would 6
be prohibited). 7
The Trustees respond that Congress, in considering 8
withdrawal and withdrawal liability when enacting the PPA, had in 9
mind only “involuntary withdrawals” from plans, such as those 10
caused by an employer’s going out of business or a pension plan’s 11
liquidation. But this interpretation is unpersuasive. Nowhere 12
in the PPA’s repeated references to withdrawal did Congress 13
suggest any voluntary/involuntary distinction, notwithstanding 14
the decades-long precedent of employers “voluntarily” withdrawing 15
from pension plans when financially expedient. 16
Our conclusion that Congress did not intend the PPA to 17
foreclose withdrawal in these circumstances finds further support 18
external to the statute’s text. The PBGC, the agency charged 19
with administering the withdrawal-liability provisions under 20
ERISA, is traditionally afforded substantial deference in its 21
reasonable interpretations of the statute. See Pension Benefit 22
Guar. Corp. v. LTV Corp., 496 U.S. 633, 647-48 (1990); Kinek v. 23
Paramount Commc’ns, Inc., 22 F.3d 503, 511 n.5 (2d Cir. 1994); 24
see also Cent. States Se. & Sw. Areas Pension Fund v. O’Neill 25

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18
Bros. Transfer & Storage Co., 620 F.3d 766, 774 (7th Cir. 2010);. 1
In its interpretation of the PPA, the PBGC has adopted 2
regulations for calculating employer liability for withdrawal 3
from plans in critical status. See 73 Fed. Reg. 79628-02, 79632- 4
33 (Dec. 30, 2008)(section titled “Withdrawal Liability 5
Computations for Plans in Critical Status--Employer Surcharges”) 6
(explaining 29 C.F.R. § 4211.4). Like the PPA itself, these 7
regulations say nothing about mandatory contributions under 8
rehabilitation plans or prohibiting withdrawals. Nor do they 9
suggest a distinction between voluntary and involuntary 10
withdrawals. To be sure, the PBGC does not appear to have issued 11
an interpretation on the precise question at issue –- whether the 12
PPA forecloses withdrawal in these circumstances –- to which we 13
might defer if we found Congress’s intent unclear. But from 14
every indication, the PBGC’s understanding of the PPA accords 15
with our reading of Congress’s intent in enacting the law. 16
It is noteworthy that the Trustees themselves, before 17
bringing this lawsuit, believed that participating employers like 18
Honerkamp had the option of withdrawing from the Fund after it 19
had entered critical status. The rehabilitation plan stated that 20
its goals would “be met if,” inter alia, “withdrawal liability is 21
imposed and collected with respect to employers that withdraw 22
from the [Fund].” J.A. at 83. Moreover, the Trustees 23
contemplated the possibility of “voluntary” withdrawals. The 24
rehabilitation plan explained that it did not contain only the 25

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19
high-contribution schedules necessary for the Fund to emerge from 1
critical status because such contribution rates “would 2
undoubtedly drive employers to withdraw from the [Fund],” given 3
the Trustees’ “reasonable assumption that employers would be 4
unwilling to continue to participate in the [Fund] if the cost of 5
doing so were to exceed the cost of withdrawing.” Id. Of 6
course, the ultimate question of statutory interpretation is for 7
the Court and not the Trustees. But we are reassured by the 8
plaintiffs’ own expressed understanding that voluntary withdrawal 9
was permissible notwithstanding the operation of the PPA’s 10
mechanism for dealing with pension plans in critical status. 11
Finally, to pursue the PPA’s aims, it was not necessary for 12
Congress to forbid withdrawal, accompanied by MPPAA liability, 13
from pension plans in critical status. Both statutes aim to 14
protect beneficiaries of multiemployer pension plans by keeping 15
such plans adequately funded. Indeed, the Trustees designed the 16
rehabilitation plan’s non-default schedules “to impose 17
approximately the same burden actuarially on employers that 18
withdrawal from the [Fund] would [have] produce[d].” Id. at 85. 19
Consequently, Honerkamp’s withdrawal from the Fund while paying 20
liability under the MPPAA largely comports with the goals of the 21
PPA. It is true, as the Trustees point out, that the MPPAA caps 22
withdrawal liability such that in some cases the amount paid by 23
withdrawing employers may not fully refund a pension plan. See 24
ERISA § 4219(c)(1)(B), 29 U.S.C. § 1399(c)(1)(B) (withdrawn 25

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20
employers are liable only for twenty years of withdrawal- 1
liability payments). But implementation of a rehabilitation plan 2
under the PPA may not restore a pension plan’s solvency either. 3
Indeed, the Trustees here determined that the Fund was unlikely 4
to emerge from critical status, and therefore designed the non- 5
default schedules not to prevent but only to delay the point of 6
insolvency. In any case, it remains true that the MPPAA and PPA 7
pursue the same basic ends, broadly conceived. 8
Against the weight of these considerations, the Trustees 9
offer very little in support of their proposed interpretation of 10
the PPA. For example, in arguing that Congress sought to 11
foreclose withdrawal in circumstances of the sort presented in 12
this case, the Trustees rely largely on a 2008 amendment to the 13
PPA. See Worker, Retiree, and Employer Recovery Act of 2008, 14
Pub. L. 110-458 § 102, 122 Stat. 5092, 5100 (2008) (codified at 15
ERISA § 305(e)(3)(C)(ii), 29 U.S.C. § 1085(e)(3)(C)(ii)). The 16
relevant subsection previously stated that the default schedule 17
should be implemented at the earlier of a bargaining impasse 18
between an employer and union or 180 days after expiration of the 19
operative CBA. In 2008, Congress eliminated the former date, so 20
the default schedule now goes into effect 180 days after the 21
pertinent CBA expires. The Trustees argue that Congress enacted 22
this amendment to close a loophole through which employers, via 23
impasse and withdrawal, could escape contributing under 24
rehabilitation plans. However, if Congress had been trying to 25

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21
eliminate the withdrawal option, one would think that it would 1
have done so explicitly -- not cryptically through a timing 2
amendment. Moreover, the Trustees’ argument would prohibit only 3
a voluntary withdrawal upon impasse, and would not prohibit a 4
voluntary withdrawal agreed to by an employer and union (as 5
happened here with respect to the Central Islip employees). 6
CONCLUSION 7
Because we agree with the district court’s conclusion that 8
the PPA does not forbid Honerkamp’s withdrawal from the Fund, we 9
AFFIRM the judgment of the district court. 10

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