Chicago Truck Drivers, Helpers & Warehouse Workers Union (Independent) Pension Fund v. CPC Logistics, Inc.
698 F.3d 346
| 7th Cir. | 2012Background
- CPC withdrew from a multiemployer defined-benefits pension plan in 2005, triggering withdrawal liability under ERISA 29 U.S.C. §§ 1381-1461 and related rules.
- The plan used default rules to allocate a pro rata share of unfunded vested benefits (UVBs) to withdrawing employers, based on a five-year window of contributions and 20 annual pools discounted at 5% per year.
- Pools reflect year-to-year changes in the plan’s funding shortfall; discounted pools are allocated among employers by their contributions in the pool year and the preceding four years.
- CPC’s liability was affected by two factors: (i) a 2004 decision to remove a cap on Segal Blend UVBs, increasing 2004 UVBs, and (ii) a prior increase in CPC’s share of the fund’s total contributions from 1.26% (2000) to 3.67% (2004).
- Trustees previously capped UVBs (1996–2004) to lower withdrawal liability; in 2004 they uncapped, substantially raising CPC’s liability and making CPC’s 2004 pool disproportionately large.
- The arbitrator ruled CPC’s withdrawal liability had been overassessed by $1,093,000, and the district court upheld that ruling; the plan appealed, challenging the arbitrator’s analysis and the trustees’ rate-behavior.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the withdrawal-liability calculation complied with ERISA’s best-estimate requirement | CPC | Plan | Arbitration supported use of best estimate; plan’s cap-and-switch violated best-estimate duty. |
| Whether the plan’s use of the Funding Rate vs Segal Blended Rate violated ERISA or the plan’s safe harbors | CPC | Plan | Use of Segal Blended Rate as best estimate, not funding rate, was required; switch unjustified. |
| Whether the plan’s 2004 reversion to Segal Blended Rate caused CPC’s spike in liability | CPC | Plan | 2004 switch contributed to CPC’s larger 2004 pool and higher liability. |
| Whether the arbitrator correctly reviewed the trustees’ decisions under ERISA and 29 U.S.C. § 1401(a)(3)(B) | CPC | Plan | Arbitrator’s scope proper; trustees must apply actuary’s best estimate. |
Key Cases Cited
- CenTra, Inc. v. Central States, Southeast & Southwest Areas Pension Fund, 578 F.3d 592 (7th Cir. 2009) (default rules govern allocation of shortfalls among employers)
- Israel Goldowitz & Ralph L. Landy, — (—) (scholarly discussion of ERISA special rules for multiemployer plans)
- Congruent references: Central States, Southeast & Southwest Areas Pension Fund v. Midwest Motor Express, Inc., 181 F.3d 799 (7th Cir. 1999) (appellate review of withdrawal-liability determinations)
- Board of Trustees, Sheet Metal Workers National Pension Fund v. BES Services, Inc., 469 F.3d 369 (4th Cir. 2006) (judicial review of withdrawal liability calculations)
- Chicago Truck Drivers v. El Paso CGP Co., 525 F.3d 591 (7th Cir. 2008) (arbitrator review and withdrawal-liability disputes)
- Concrete Pipe & Prods. v. Construction Laborers Pension Trust, 508 U.S. 602 (1993) (actuary best-estimate concept and safe-harbor considerations)
- Masters, Mates & Pilots Pension Plan v. USX Corp., 900 F.2d 727 (4th Cir. 1990) (best-estimate requirements in ERISA determinations)