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Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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In the 

United States Court of Appeals 

For the Seventh Circuit ____________________

Nos. 15‐3346, 15‐3208

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS

  PENSION FUND and ARTHUR H. BUNTE, JR., Trustee,

Plaintiffs‐Appellees / Cross‐Appellants,

v.

BULK TRANSPORT CORP.,

Defendant‐Appellant / Cross‐Appellee.

____________________

Appeals from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 13 C 9112 — Thomas M. Durkin, Judge.

____________________

ARGUED APRIL 1, 2016 — DECIDED APRIL 29, 2016

____________________

Before POSNER, EASTERBROOK, and KANNE, Circuit Judges.

POSNER, Circuit Judge. The Multiemployer Pension Plan

Amendments Act of 1980 amends ERISA by imposing liabil‐

ity on employers who withdraw, partially or completely,

from participation in an underfunded multiemployer pen‐

sion fund, thus reducing the fund’s resources for providing

the pension money to which employees of the fund’s mem‐

bers are contractually entitled. See 29 U.S.C. §§ 1381 et seq.

Case: 15-3208 Document: 30 Filed: 04/29/2016 Pages: 10
2 Nos. 15‐3346, 15‐3208

Central States, Southeast and Southwest Areas Pension Fund

is such a fund, and Bulk Transport Corp. is a member of the

Fund and has made contributions to the pension account of

Terry Loniewski, one of its employees. Bulk had certified

that Loniewski was entitled by a collective bargaining

agreement between Bulk and a Teamsters local to participate

in the Central States Pension Fund even though the agree‐

ment was limited by its terms to the drivers that Bulk em‐

ployed and Loniewski was a mechanic—he had never been a

driver in the more than 40 years that he had worked for the

company. Although for decades Bulk had treated Loniewski

as though he were covered under the company’s collective

bargaining agreements, it now denies that he was covered

and has demanded that Central States refund the $49,000

that Bulk had contributed to Loniewski’s pension account

between 2002 and 2012. (The rules of the Central States Pen‐

sion Fund limit refunds to money contributed to the Fund

during the ten years preceding the refund request.)

The Fund denied the request and filed this suit, in which

it seeks a declaratory judgment that Bulk is not entitled to

the refund. Bulk counterclaimed, arguing that it is entitled to

the refund, because it contributed to Loniewski’s account by

mistake. The district judge rejected Bulk’s claim. He could

not believe that Bulk had employed Loniewski for more than

40 years as a mechanic, contributing to the Central States

Pension Fund on his behalf, without knowing he’d never

been a driver. In a 2003 settlement agreement between Bulk

and the Fund, Bulk had agreed to continue making contribu‐

tions on Loniewski’s behalf as long as he “continue[d] to be

covered by any collective bargaining agreement” between

Bulk and the Teamsters local. The word “continued” implies

recognition by Bulk that Loniewski was already covered—

Case: 15-3208 Document: 30 Filed: 04/29/2016 Pages: 10
Nos. 15‐3346, 15‐3208 3

but more than that, it implies a commitment to continue con‐

tributing to the Fund on Loniewski’s behalf until such time

as Bulk and the Teamsters adopted a collective bargaining

agreement that excluded him—which didn’t happen. On the

contrary, collective bargaining agreements made in 2004 and

2009 stated that “in accordance with” the 2003 settlement

agreement Bulk agreed to contribute to the Central States

Fund specified amounts for named employees—and one of

the named employees was Loniewski.

Bulk tells us that no one wants to take away Loniewski’s

pension entitlement—and that in fact it’s committed to pay‐

ing the pension if the Fund refuses to do so, though Bulk

hasn’t reduced this “commitment” to writing and of course

wants Central States to fund his pension instead of Bulk. But

if Loniewski has been mistakenly covered by the collective

bargaining agreements between Bulk and the Teamsters lo‐

cal all these years and hence by Central States, which funds

the pension commitments made in those agreements, the

fault is Bulk’s, not Central States’, which didn’t know, or

have a duty to inquire into, whether Loniewski was or was

not a driver. Bulk being at fault, the district court correctly

refused to order a refund—and for the further reason that

the collective bargaining agreements to which Bulk was a

party, and the 2003 settlement agreement that we men‐

tioned, were explicit that Loniewski was covered by the

agreements, and the parties’ conduct was consistent with

that understanding.

That doesn’t end the case, however, for there is also a

question of what rules govern the arbitration proceedings to

determine Bulk’s withdrawal liability. As we noted, the Mul‐

tiemployer Pension Plan Amendments Act of 1980 imposes

Case: 15-3208 Document: 30 Filed: 04/29/2016 Pages: 10
4 Nos. 15‐3346, 15‐3208

liability on employers who withdraw, partially or complete‐

ly, from an underfunded multiemployer pension fund. The

Central States Fund assessed Bulk with withdrawal liability

of $740,000 for the years 2010 through 2012, and Bulk con‐

tends that the amount is excessive. The issue of Bulk’s obli‐

gation to contribute to Loniewski’s pension account bears on

(though it is distinct from) the issue of withdrawal liability

because if Bulk was never obligated to make those contribu‐

tions, it follows that it withdrew from the Fund completely

in 2009, when the last member of the Teamsters local other

than Loniewski retired, rather than in 2012, as the Fund con‐

tends. The consequence should Bulk prevail would be to re‐

duce its withdrawal liability from $739,700 to $473,300.

The Multiemployer Pension Plan Amendments Act re‐

quires an employer who wants to dispute its withdrawal lia‐

bility to initiate arbitration with the multiemployer pension

fund, 29 U.S.C. § 1401(a)(1), and Bulk did this. (To arbitrate it

had first to deposit with the Central States Fund the amount

in dispute, 29 U.S.C. § 1399(c)(2); it did that as well.) The

parties disagree however about the rules governing the arbi‐

tration. Bulk’s counterclaim asked the district judge to bar

the Fund from enforcing its own rules, which require arbi‐

tration by and conforming to the procedures of the Ameri‐

can Arbitration Association. The judge agreed (in an opinion

separate from his opinion rejecting Bulk’s refund claim);

Central States, cross‐appealing, challenges that ruling.

The Pension Benefit Guaranty Corporation, acronym

PBGC, is a federal agency that regulates pension plans and

guarantees benefit payments, and all arbitrations of disputes

over liability of employers for withdrawing from pension

funds must be “conducted in accordance with fair and equi‐

Case: 15-3208 Document: 30 Filed: 04/29/2016 Pages: 10
Nos. 15‐3346, 15‐3208 5

table procedures ... promulgated by” that agency. 29 U.S.C.

§ 1401(a)(2). The procedures (referred to as the “default

rules” of arbitration) are set forth in 29 C.F.R. §§ 4221.1–13.

But the agency can authorize the use of other procedures to

govern arbitration, see § 4221.14, and it has approved, and

the agreement between Central States and its members re‐

quires the use of, the American Arbitration Association’s

Multi‐employer Pension Plan Arbitration Rules for With‐

drawal Liability Disputes. Those rules require parties want‐

ing arbitration by the AAA to pay fees to the association for

administering its arbitration rules, in addition to the fees the

parties pay the arbitrator. No such administrative fees are

required by the PBGC’s rules.

The latest AAA rules to be approved by the PBGC (the

1986 rules) would have required Bulk to pay only a $650 fee

to initiate AAA arbitration. But in 2013 the association

upped the fees and if the new fees are applicable Bulk will

have to pay not $650 but $6100, consisting of an initial filing

fee of $4350 and a final fee of $1750 when the first hearing by

the arbitrators is scheduled. The new rules have yet to be

approved by the PBGC, however; approval requires the

agency to find that the rules are “substantially fair to all par‐

ties.” 29 C.F.R. §§ 4221.14(a), (d). So the agency not having

yet approved the new rules, the judge ruled that the old

rules govern and Bulk will have to pay just the $650 fee.

Bulk tendered $650 to the AAA, which responded that the

fee didn’t comply with the new fee schedule, which the as‐

sociation was discussing with the PBGC. In fact the AAA has

asked the agency to approve the new fee schedule—which is

all that’s new in the new rules—but the agency has yet to act

on the request.

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6 Nos. 15‐3346, 15‐3208

Unfortunately there is ambiguity concerning whether the

agency’s approval of the fee change is required. Section 7 of

the AAA’s Multi‐employer Pension Plan Arbitration Rules

for Withdrawal Liability Disputes (the 1986 rules), requires

payment to the AAA by the party initiating an arbitration,

and by the answering party as well if that party asks for

money in its answer, of “the appropriate administrative fee

as provided in the [AAA’s] Administrative Fee Schedule.” A

separate (unnumbered) section in the rules document, cap‐

tioned “Administrative Fees,” provides that “the AAA shall

prescribe an Administrative Fee Schedule ... [and] the

schedule in effect at the time of filing ... shall be applicable.”

Another section of the document is captioned “Administra‐

tive Fee Schedule” and states that the fee is based on the

“amount in dispute” and specifies three fees, for three dif‐

ferent amounts in dispute. The lowest fee, and it would be

the one applicable in this case on the basis of the amount in

dispute, is $650.

The PBGC had approved the rules in 1986. See Arbitra‐

tion of Disputes in Multiemployer Plans; PBGC‐Approved

Arbitration Procedure, 51 Fed. Reg. 22585 (June 20, 1986).

Although the approval hasn’t been rescinded, the statement

in the rules that the fee “schedule in effect at the time of fil‐

ing” of the request for arbitration should govern implies that

the fee can be changed at any time without agency approval.

If so, Bulk will have to pay the fees adopted by the AAA in

2013. Since the fee schedules are components of the PBGC

arbitration rules, the agency could force the AAA to cut the

fees that it adopted in 2013, see 29 C.F.R. § 4221.14(d), but it

hasn’t done so.

Case: 15-3208 Document: 30 Filed: 04/29/2016 Pages: 10
Nos. 15‐3346, 15‐3208 7

The agency has yet to approve the new rules, containing

the new fee schedule, and if its approval is not required for

the new schedule to go into effect, why has the AAA re‐

quested the agency to approve the new rules and why has

the agency agreed to consider the AAA’s request—going so

far as to publish a notice seeking comments on it, see Pen‐

dency of Request for Approval of Alternative Arbitration

Procedure; American Arbitration Association, 81 Fed. Reg.

15578, 15579 (March 23, 2016)—when the only change made

by the 2013 rules is the change in the fee schedule. (The

“Pendency of Request” statement that we just cited

acknowledges that “other than significant changes to the

Administrative Fee Schedule, the 2013 MPPAR [Multi‐

employer Pension Plan Arbitration Rules for Withdrawal

Liability Disputes] are identical to the 1986 MPPAR that

PBGC previously approved.”)

But although the AAA’s 2013 fee increase was its first fee

increase in 27 years, we have no information about when the

next increase (or decrease) is likely, or the next after that,

and so on. If the increases become frequent, having to get the

PBGC’s permission for every one of them could slow down

the arbitration process. It is more efficient to place the bur‐

den not on the AAA to obtain the PBGC’s permission for

every fee change, but on an aggrieved party to arbitration to

complain that the fee increase is unwarranted. And for this

reason, answering the question left open in Central States,

Southeast & Southwest Areas Pension Fund v. Allega Concrete

Corp., 772 F.3d 499, 501 (7th Cir. 2014), we hold that the

PBGC’s approval of a new fee schedule is not required for

the new fees to be charged. We add that the agency’s delay

in responding to the AAA’s request for approval may reflect

a judgment that, since only the fee schedule is changed by

Case: 15-3208 Document: 30 Filed: 04/29/2016 Pages: 10
8 Nos. 15‐3346, 15‐3208

the new rules and the old rules appear to have allowed fee

changes without separate approval, the agency has no rea‐

son to act quickly on the request.

We note that Congress ordered the agency to promul‐

gate arbitration procedures, 29 U.S.C. § 1401(a)(2), and that

the agency’s own regulations require it to approve “alterna‐

tive arbitration procedure[s]” that satisfy the standard of

substantial fairness to all parties, 29 C.F.R. §§ 4221.14(a), (d),

and an agency’s interpretation of its own regulations is enti‐

tled to a measure of judicial deference. Thomas Jefferson Uni‐

versity v. Shalala, 512 U.S. 504, 512 (1994). It’s true that in ap‐

proving the 1986 rules the agency had said that “the revised

rules will continue to satisfy the criteria for approval ... .

This approval is effective June 20, 1986 and will remain effec‐

tive until revoked by the PBGC through a Federal Register notice.”

Arbitration of Disputes in Multiemployer Plans; PBGC‐

Approved Arbitration Procedure, supra, 51 Fed. Reg. at

22585 (emphasis added); see also Arbitration of Disputes in

Multiemployer Plans; PBGC‐Approved Arbitration Proce‐

dure, 50 Fed. Reg. 38046‐03 (Sept. 19, 1985) (similar language

approving the 1981 AAA rules). But the agency did not say

that every fee change must be approved before it can be put

into effect.

Fearful that the AAA, which is not a party to this litiga‐

tion, would continue to refuse to arbitrate until the agency

decided whether to approve the new rules, and not knowing

when the agency would act, the district judge ordered the

parties to arbitrate their dispute under the PBGC’s default

rules of arbitration. He said that a “finding that Bulk

Transport has properly initiated arbitration is cold comfort if

the AAA refuses to accept its $650 payment and the Pension

Case: 15-3208 Document: 30 Filed: 04/29/2016 Pages: 10
Nos. 15‐3346, 15‐3208 9

Fund insists that the parties utilize the AAA. The Court un‐

derstands from the parties’ representations that the AAA has

not completely ruled out the possibility that it will accept the

$650 payment. But the Court is unwilling to delay the matter

any further pending open‐ended discussions between two

parties (the AAA and the PBGC) that are not before the

Court. Thus, the Court directs the parties to arbitrate their

dispute pursuant to the PBGC’s default rules.” Those rules,

cited earlier in this opinion, are elaborate, consisting of 13

subsections some of which have their own subsections. We

have been given no reason to think them inferior to the AAA

rules. And because they don’t impose a fee for initiating ar‐

bitration, they don’t trip over the fee‐increase issue. Remit‐

ting the parties to those rules would therefore permit the ar‐

bitration to proceed without anyone’s having to wait for the

PBGC to decide whether to approve the AAA’s new (2013)

fee schedule. But if our earlier analysis is correct, the AAA is

not required to await the agency’s approval of the 2013

rules; it can go ahead and charge Bulk $6100 to initiate its

arbitration against Central States.

Now $6100 is a significant multiple of $650. But to Bulk it

must be chicken feed. Bulk is a substantial trucking and

truck‐rental company, owning at last count 87 trucks and

tractors and other heavy equipment. See Bulk Transport

Corp., www.quicktransportsolutions.com/truckingcompany/

indiana/bulk‐transport‐corp‐usdot‐125525.php; www.manta.

com/c/mmcszfc/bulk‐transport‐corp; www.bulkequip.com/f

aqs.html (all three websites visited April 27, 2016). Its fierce

opposition to having to pay a $6100 fee for arbitration by the

AAA, preferring arbitration under the PBGC’s default rules

(with their zero fee), is more likely to reflect a belief that

those rules are more favorable to it than a belief that the ex‐

Case: 15-3208 Document: 30 Filed: 04/29/2016 Pages: 10
10 Nos. 15‐3346, 15‐3208

tra expense of initiating AAA arbitration under the 2013

rules instead of the 1986 rules will jeopardize the company’s

solvency.

We therefore affirm the district judge’s ruling on the re‐

fund issue but reverse and remand with respect to the appli‐

cable arbitration rules.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

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