Board of Trustees of the IBT Local 863 Pension Fund v. C & S Wholesale Grocers, Inc.
802 F.3d 534
3rd Cir.2015Background
- C&S Wholesale Grocers/Woodbridge withdrew completely from the IBT Local 863 multiemployer pension Fund in 2011; the Fund’s unfunded vested benefits allocable to Woodbridge were $189,606,875.
- Woodbridge had contributed under three separate CBAs (Warehouse, Mechanics, Porters) that established different hourly contribution rates (range $1.50–$3.69).
- Woodbridge elected to amortize its withdrawal liability in annual payments under 29 U.S.C. § 1399(c)(1)(C)(i), which requires use of the “highest contribution rate at which the employer had an obligation to contribute.”
- The Fund’s trustees used the single highest CBA rate ($3.69/hr) and added a 10% PPA surcharge (statutory, not in the CBAs) to reach $4.06/hr, producing annual payments much larger than Woodbridge’s historical contributions.
- An arbitrator ordered a weighted/contract-by-contract approach and allowed the surcharge; the district court reversed, holding the statute unambiguous: use the single highest CBA rate and exclude the PPA surcharge. The Third Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1399(c)(1)(C)(i)(II) requires using a single highest contribution rate when multiple CBAs exist | Woodbridge: use a contract-by-contract (weighted average or sum of per-contract calculations) approach based on legislative history and PBGC guidance | Board: apply the single highest contribution rate among all CBAs | Court: statute unambiguous—use the single highest contribution rate from the CBAs |
| Whether the 10% PPA surcharge (29 U.S.C. §1085(e)(7)(A)) is included in the “highest contribution rate” for annual withdrawal payments | Board: surcharge should be included because PPA treats surcharges like contributions for delinquency and Congress did not except surcharges from §1399(c) before MPRA | Woodbridge: surcharge is statutory, noncontractual, and not a CBA-set contribution rate; §1392(a) limits "obligation to contribute" for rate purposes to CBA rates or duties under applicable labor-management law | Court: surcharge is not part of the CBA contribution rate and thus is excluded from the §1399(c)(1)(C)(i)(II) calculation |
Key Cases Cited
- Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359 (discusses ERISA’s remedial purpose to secure promised pension benefits)
- Concrete Pipe & Prods. v. Contr. Laborers Pension Tr. for S. Cal., 508 U.S. 605 (describes incentives to withdraw from underfunded multiemployer plans)
- Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717 (defines withdrawal liability as proportionate share of unfunded vested benefits)
- Milwaukee Brewery Workers’ Pension Plan v. Joseph Schlitz Brewing Co., 513 U.S. 414 (explains MPPAA’s approach to withdrawal charges and that exact actuarial fairness was not required)
- Bay Area Laundry & Dry Cleaning Pension Tr. Fund v. Ferbar Corp. of Cal., 522 U.S. 192 (clarifies that periodic withdrawal payments approximate prior contributions)
- Russello v. United States, 464 U.S. 16 (negative-implication canon — omission of language in one provision suggests purposeful exclusion elsewhere)