653 F.3d 573
7th Cir.2011Background
- DISA Industries withdrew from the National Shopmen Pension Fund in 2002, triggering withdrawal liability under ERISA/MPPAA.
- Fund notified DISA of liability in 2006, setting a 20-year payment schedule at $652/month; later revised to $978/month after calculating a different amount.
- DISA paid the original $652/month while challenging the revised calculation alleging misinterpretation of 29 U.S.C. § 1399(c)(1)(C)(i).
- Fund revised its calculation by applying a different interpretation of the three-year average used to compute annual liability payments.
- DISA sought arbitration on the revised calculation; fund later filed suit for interim payments; arbitration proceedings were terminated by DISA in 2009.
- District court held DISA was not in default and dismissed; Seventh Circuit reversed, holding exhaustion requirements apply and plan revisions may be corrected, but employer must arbitrate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether exhaustion applies to plan revisions. | DISA contends exhaustion is moot because the Fund revised the assessment and DISA seeks merits defenses. | Fund argues plan revisions trigger arbitration and exhaustion under §1401(a). | Exhaustion applies; plan revisions require arbitration before challenging in court. |
| Whether the three-year average calculation correctly interprets §1399(c)(1)(C)(i). | DISA argues the statute requires a three-year average including years with zero contributions. | Fund argues the average should only include years with an obligation to contribute. | Court adopts three-year average including zero-year contribution for calculation consistency and solvency concerns. |
Key Cases Cited
- Milwaukee Brewery Workers' Pension Plan v. Joseph Schlitz Brewing Co., 513 U.S. 414 (1995) (MPPAA purpose to ensure full liability and solvency rely on amortization mechanics)
- Robbins v. Lady Baltimore Foods, Inc., 868 F.2d 258 (7th Cir.1989) (withdrawal liability framework and default consequences)
- Hunt Truck Lines, Inc., 272 F.3d 1000 (7th Cir.2001) (pay-now, arbitrate-later framework and timelines)
- Masters, Mates & Pilots Pension Plan v. USX Corp., 900 F.2d 727 (4th Cir.1990) (plan may revise withdrawal liability when correcting errors, no prejudice to employer)
- Central States, Se. & Sw. Areas Pension Fund v. O'Neill Bros. Transfer and Storage Co., 620 F.3d 766 (7th Cir.2010) (policy aims and solvency considerations in MPPAA context)
- Central States, Se. & Sw. Areas Pension Fund v. Safeway, Inc., 229 F.3d 605 (7th Cir.2000) (statutory and regulatory complexity in withdrawal liability)