Board of Trustees of IBT Local 863 Pension Fund v. C & S Wholesale Grocers Inc.
5 F. Supp. 3d 707
D.N.J.2014Background
- This ERISA dispute concerns how to calculate withdrawal liability under 29 U.S.C. § 1399(c)(1)(C)(i)(II) and what constitutes the 'highest contribution rate.'
- Woodbridge Wholesale withdrew completely from the IBT Local 863 Pension Fund in February 2011 after three CBAs set varying hourly contribution rates, with the plan in 'critical status' since 2008.
- Segal calculated Woodbridge’s allocable unfunded vested benefits and an annual withdrawal liability, leading to an $8,553,551 annual payment for 20 years, plus a lump-sum option.
- A dispute arose over whether the 'highest contribution rate' should be the absolute highest rate across CBAs or a more nuanced method, and whether automatic surcharges under the PPA/ERISA are included in that rate.
- The parties submitted two issues to arbitration: (1) use of the highest rate across CBAs; (2) inclusion of automatic surcharges in the rate. The arbitrator sided with Woodbridge on the first issue and with the Board on the second.
- This Court reviews the arbitrator’s legal conclusions de novo while giving deference to factual findings, and must decide whether the Board’s or Woodbridge’s interpretation of the statutory language is correct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 'the highest contribution rate' refers to the absolute highest rate across CBAs | Board: literal language demands the single highest rate. | Woodbridge: the phrase permits a higher, more flexible method via multiple rates. | Board prevails; single highest rate governs. |
| Whether automatic surcharges must be included in the 'highest contribution rate' | Board: surcharges are part of the highest rate under §305(e)(7)(B) and related provisions. | Woodbridge: surcharges arise under ERISA, not CBAs, so they should be disregarded in §4219(c)(1)(C)(i)(II). | Woodbridge prevails; surcharges are not included in the highest rate. |
Key Cases Cited
- Trs. of the Local 138 Pension Fund v. F.W. Honerkamp Co. Inc., 692 F.3d 127 (2d Cir. 2012) (recognizes MPPAA structure and withdrawal liability framework)
- Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (U.S. 2002) (ERISA enforcement and statutory structure caution against broad remedies)
- Laborers Health & Welfare Trust Fund for N. Cal. v. Advanced Lightweight Concrete Co., Inc., 484 U.S. 539 (U.S. 1988) (definition of 'obligation to contribute' under ERISA)
- Conn. Nat’l Bank v. Germain, 503 U.S. 249 (U.S. 1992) (statutory interpretation and deference principles)
- In re Marcal Paper Mills, Inc., 650 F.3d 311 (3d Cir. 2011) (unfunded vested benefits and withdrawal liability calculations)