Michigan Paving and Materials Co. v. Operating Engineers Local 324 Pension Fund

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
MICHIGAN PAVING AND
MATERIALS CO.,
Plaintiff/Counter-Defendant,
v.
OPERATING ENGINEERS LOCAL
324 PENSION FUND,
Defendant/Counter-Plaintiff.
Case No. 23-cv-12019
Hon. Brandy R. McMillion
Mag. Judge Kimberly G. Altman
_________________________________________/
ORDER VACATING THE ARBITRATION AWARD, DIRECTING THE
PLAN SPONSOR TO RECALCULATE PLAINTIFF’S WITHDRAWAL
LIABILITY AND CLOSING THE CASE
This case involves a dispute between Michigan Paving and Materials Co.
(“Michigan Paving” or “Plaintiff”) and the Operating Engineers Local 324 Pension
Fund (the “Fund”), along with its Trustees (collectively, “Defendants”), regarding
the calculation of withdrawal liability for Plaintiff’s partial withdrawal from the
Fund’s multiemployer pension plan (the “Plan”). 	The parties’ filed cross-motions
for summary judgment, which ask the Court to determine whether the Arbitrator
correctly found that the Fund’s actuary reasonably used the Pension Benefit
Guaranty Corporation rate (the “PBGC rate”) to calculate Plaintiff’s withdrawal
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liability 	in 	accordance 	with 	the 	Employee 	Retirement 	Income 	Security 	Act
(“ERISA”), 29 U.S.C. § 1001 et seq. See ECF Nos. 19, 20.
On July 31, 2024, the Court issued an Order granting in part Plaintiff/Counter-
Defendant’s Motion for Summary Judgment to Vacate the Arbitral Award (ECF No.
19) 	and 	denying 	Defendant/Counter-Plaintiff’s 	Cross-Motion 	for 	Summary
Judgment (ECF No. 20). The Court disagreed with the Arbitrator’s legal conclusion
that using the PBGC rate to calculate the withdrawal liability complied with ERISA.
See generally ECF No. 28. 	The Court found that the PBGC rate was overly
conservative and did not align with the Plan’s historical investment experience; and
that the actuary’s application of actuarial professional standards to justify risk
transfer in the partial withdrawal liability context was erroneous and contrary to
ERISA and MPPAA. ECF No. 28, PageID.2764. Falling short of compliance with
the statutory standard, the Court found the Arbitration Award unreasonable and,
therefore, unlawful, so it vacated the Award. Id.
Both parties appealed. See ECF Nos. 30, 32. On August 27, 2025, the Sixth
Circuit issued an Opinion and Judgment affirming the judgment of this Court, in
light of its decision in Ace-Saginaw Paving Co. v. Operating Eng’rs Local 324
Pension Fund, 150 F.4th 502 (6th Cir. 2025). The appellate court instructed that on
remand, the Fund’s actuary was to recalculate Michigan Paving Company’s
withdrawal liability using assumptions and 	methods that are consistent with
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ERISA’s requirements, as clarified by Ace-Saginaw Paving Co. 	See ECF No. 34,
PageID.2776.
In Ace-Saginaw Paving Co, the Sixth Circuit held that 29 U.S.C. § 1393
requires that “[w]ithdrawal liability must be calculated ‘by a plan actuary . . . on the
basis of . . . actuarial assumptions and methods which, in the aggregate, are
reasonable 	(taking 	into 	account 	the 	experience 	of 	the 	plan 	and 	reasonable
expectations) and which, in combination offer the actuary’s best estimate of the
anticipated experience under the plan.’” 150 F.4th at 508. The court instructed that
“Section 1393 ‘established a two-part test for actuarial assumptions: (1) they must
be reasonable; and (2) they must be the actuary’s best estimate.’” 	Id. at 510. The
withdrawal liability calculation will fail the best estimate test if “‘the chosen
assumptions’ represent ‘the dictates of plan administrators or sponsors’ instead of
‘the actuary’s own judgment’” or if “the interest rate is not ‘based on the unique
characteristics of the plan.’” 	Id. at 510-11. The “assumptions and methods” must
also offer the actuary’s “best” estimate – not focusing on “whether the actuary’s
assumptions and methods in fact lead to the most accurate calculation of withdrawal
liability. [but] [r]ather . . . the actuary [thinks] his assumptions and methods would
do so.” Id. at 511.
Accordingly, 	the 	Arbitration 	Award 	is 	VACATED, 	and 	the 	case 	is
REMANDED back to the Plan Sponsor to recalculate Plaintiff’s Withdrawal
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Liability using the principals set forth in Ace-Saginaw Paving Co. v. Operating
Eng’rs Local 324 Pension Fund, 150 F.4th 502 (6th Cir. 2025), that reflects “the
actuary’s best estimate of anticipated experience under the plan,” pursuant to 29
U.S.C. § 1391(a)(1).
This is a Final Order that closes the case.
IT IS SO ORDERED.
Dated: October 23, 2025 	s/Brandy R. McMillion
HON. BRANDY R. MCMILLION
U.S. District Court Judge
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