1

11-1322-cv 

Trustees of the Local 138 Pension Trust Fund v. F.W. Honerkamp Co. Inc.

1

2 UNITED STATES COURT OF APPEALS

3

4 FOR THE SECOND CIRCUIT

5

6 August Term 2011

7

8 (Argued: March 26, 2012 Decided: August 17, 2012)

9

10 Docket No. 11-1322-cv

11 -----------------------------------------------------x

12 TRUSTEES OF THE LOCAL 138 PENSION TRUST FUND, 

13

14 Plaintiff-Appellant,

15

16 -- v. --

17

18 F.W. HONERKAMP CO. INC.,

19

20 Defendant-Appellee.

21

22 -----------------------------------------------------x

23

24 B e f o r e : WALKER, LYNCH and LOHIER, Circuit Judges.

25 Appeal from a judgment of the United States District Court

26 for the Southern District of New York (Lewis A. Kaplan, Judge)

27 granting defendant-appellee employer’s motion for summary

28 judgment dismissing claim by plaintiff-appellant -- trustees for

29 a pension plan who sought certain pension contributions from the

30 employer -- and denying the trustees’ cross-motion for summary

31 judgment. The trustees argue that the Pension Protection Act of

32 2006 prevented the employer from withdrawing from the pension

33 plan after the plan entered critical status, and that the

34 district court erred in concluding otherwise. We do not agree

35 and thus AFFIRM the judgment of the district court.
2

1 LARRY CARY (Andrew M. Katz and

2 Charles Pergue, on the brief), Cary

3 Kane LLP, New York, NY, for

4 Plaintiff-Appellant.

5

6 KEVIN L. WRIGHT, Littler Mendelson,

7 P.C., McLean, VA (Deidre A.

8 Grossman, Littler Mendelson, P.C.,

9 New York, NY, on the brief), for

10 Defendant-Appellee.

11

12

13 JOHN M. WALKER, JR., Circuit Judge: 

14 Plaintiff-appellant Trustees (the “Trustees”) of the Local

15 138 Pension Trust Fund (the “Fund”) appeal from a decision of the

16 United States District Court for the Southern District of New

17 York (Lewis A. Kaplan, Judge) granting summary judgment in favor

18 of defendant-appellee F.W. Honerkamp Co. (“Honerkamp”) and

19 denying the Trustees’ cross-motion for summary judgment. 

20 Honerkamp withdrew from the Fund after the Fund had reached

21 “critical status” as defined by the Pension Protection Act of

22 2006 (the “PPA”), an amendment to the Employee Retirement Income

23 Security Act of 1974 (“ERISA”), and after the collective

24 bargaining agreements (“CBAs”) requiring Honerkamp to contribute

25 to the Fund had expired. The Trustees sued, arguing that the PPA

26 prevented Honerkamp from withdrawing and required the company to

27 make certain ongoing pension contributions pursuant to the Fund’s

28 rehabilitation plan. The district court agreed with Honerkamp

29 that the PPA did not forbid its withdrawal or require those

30 contributions. It therefore granted summary judgment to
3

1 Honerkamp and denied the Trustees’ cross-motion for summary

2 judgment.

3 On appeal, the Trustees argue that the district court

4 misconstrued the PPA in denying their cross-motion and granting

5 summary judgment to Honerkamp. For the reasons that follow, we

6 reject the Trustees’ argument and AFFIRM the judgment of the

7 district court.

8 BACKGROUND

9 I. Statutory Background

10 We begin with an overview of the pertinent statutory

11 framework, which provides necessary context for the events of

12 this case:

13 A. ERISA

14 ERISA is a comprehensive statutory scheme regulating

15 employee retirement plans. See generally ERISA § 2 et seq., 29

16 U.S.C. § 1001 et seq. Congress has amended the law periodically

17 since originally enacting it in 1974.

18 Among other things, ERISA “was designed to ensure that

19 employees and their beneficiaries would not be deprived of

20 anticipated retirement benefits by the termination of pension

21 plans before sufficient funds have been accumulated in the

22 plans.” Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211,

23 214 (1986) (internal quotation marks omitted). To that end, the

24 statute created an agency, the Pension Benefit Guaranty
4

1 Corporation (“PBGC”), to administer an insurance system by

2 collecting premiums from covered pension plans and paying out

3 accrued benefits to employees in the event a pension plan has

4 insufficient funds. See ERISA § 4006, 29 U.S.C. § 1306; Bd. of

5 Trs. of W. Conference of Teamsters Pension Trust Fund v. Thompson

6 Bldg. Materials, Inc., 749 F.2d 1396, 1399-1403 (9th Cir. 1984).

7 B. The MPPAA

8 One type of pension plan regulated by ERISA is the

9 multiemployer pension plan, in which multiple employers pool

10 contributions into a single fund that pays benefits to covered

11 retirees who spent a certain amount of time working for one or

12 more of the contributing employers. Plans of this sort offer

13 important advantages to employers and employees alike. For

14 example, employers in certain unionized industries likely would

15 not create their own pension plans because the frequency of

16 companies going into and out of business, and of employees

17 transferring among employers, make single-employer plans

18 unfeasible. Multiemployer plans allow companies to offer pension

19 benefits to their employees notwithstanding these practicalities,

20 and at the same time to share the financial costs and risks

21 associated with the administration of pension plans. See

22 Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension

23 Trust Fund for S. Cal., 508 U.S. 602, 605-07 (1993).

24
5

1 However,

2 [a] key problem of ongoing multiemployer plans,

3 especially in declining industries, is the problem of

4 employer withdrawal. Employer withdrawals reduce a

5 plan’s contribution base. This pushes the contribution

6 rate for remaining employers to higher and higher

7 levels in order to fund past service liabilities,

8 including liabilities generated by employers no longer

9 participating in the plan, so-called inherited

10 liabilities. The rising costs may encourage -— or

11 force -— further withdrawals, thereby increasing the

12 inherited liabilities to be funded by an

13 ever-decreasing contribution base. This vicious

14 downward spiral may continue until it is no longer

15 reasonable or possible for the pension plan to

16 continue.

17 Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 722

18 n.2 (1984)(quoting Pension Plan Termination Insurance Issues:

19 Hearings before the Subcommittee on Oversight of the House

20 Committee on Ways and Means, 95th Cong., 2nd Sess., 22 (1978)

21 (statement of Matthew M. Lind)) (internal quotation marks

22 omitted).

23 ERISA as originally enacted did not adequately address and

24 even exacerbated these problems. This was because of certain

25 now-obsolete provisions, which we need not detail here, that had

26 the effects of (1) encouraging employers to withdraw from weak

27 multiemployer pension plans, which they often could do without

28 compensating the plans for the inherited liabilities that

29 remaining participants would incur; and (2) encouraging employers

30 who did not withdraw to terminate deteriorating pension plans

31 sooner rather than later. See Concrete Pipe, 508 U.S. at 607-08;
6

1 R.A. Gray & Co., 467 U.S. at 721; Bd. of Trs. of W. Conference of

2 Teamsters Pension Trust Fund, 749 F.2d at 1402. The potential of

3 widespread termination of pension plans caused by cascading

4 withdrawals threatened to impose too heavy a burden on the PBGC

5 (the insurer of protected pension benefits) and, in turn, to

6 “collapse . . . the plan termination insurance program.” R.A.

7 Gray & Co., 467 U.S. at 721.

8 In 1980, Congress responded to this concern by enacting the

9 Multiemployer Pension Plan Amendments Act of 1980 (the “MPPAA”),

10 Pub. L. No. 96-364, 94 Stat. 1208 (codified as amended in

11 scattered sections of 26 and 29 U.S.C.). Under this amendment to

12 ERISA, “an employer [that] withdraws from a multiemployer plan

13 . . . is liable to the plan in the amount determined . . . to be

14 the withdrawal liability.” ERISA § 4201(a), 29 U.S.C. § 1381(a). 

15 Withdrawal liability is the withdrawing employer’s proportionate

16 share of the pension plan’s unfunded vested benefits. See R.A.

17 Gray & Co., 467 U.S. at 725 (citing ERISA §§ 4201, 4211, 29

18 U.S.C. §§ 1381, 1391). Under the MPPAA, the employer pays its

19 withdrawal liability in annual installments, which are calculated

20 based on the employer’s historical contribution amounts. See

21 ERISA §§ 4211(c), 4219(c), 29 U.S.C. §§ 1391(c), 1399(c). The

22 statute limits the employer’s obligation to make these payments

23 to 20 years, even if it would take more than 20 payments for the

24 employer to pay its full withdrawal liability. See ERISA
7

1 § 4219(c)(1)(B), 29 U.S.C. § 1399(c)(1)(B); Nat’l Shopmen Pension

2 Fund v. DISA Indus., Inc., 653 F.3d 573, 576 (7th Cir. 2011).

3 C. The PPA

4 By 2005, a confluence of economic circumstances –- including

5 the actual or forecasted termination of various large pension

6 plans and the erosion of many employees’ retirement savings –-

7 again threatened ERISA’s system for federally insuring

8 multiemployer pension plans. See Janice Kay McClendon, The Death

9 Knell of Traditional Defined Benefit Plans: Avoiding a Race to

10 the 401(k) Bottom, 80 Temp. L. Rev. 809, 809-12 (2007). Thus, in

11 2006, Congress revisited the problems associated with underfunded

12 pension plans by enacting the Pension Protection Act of 2006,

13 Pub. L. 109-280, 120 Stat. 780 (codified as amended in scattered

14 sections of 26 and 29 U.S.C.). The law is far-reaching, totaling

15 approximately one thousand pages, and introduced a number of

16 mechanisms aimed at stabilizing pension plans and ensuring that

17 they remain solvent. See generally Sarah D. Burt, Note, Pension

18 Protection? A Comparative Analysis of Pension Reform in the

19 United States and the United Kingdom, 18 Ind. Int’l & Comp. L.

20 Rev. 189, 199 (2008); Douglas L. Lineberry, The Pension

21 Protection Act of 2006, S.C. Law. July 2007, at 16.

22 As relevant to this case, the PPA includes measures designed

23 to protect and restore multiemployer pension plans in danger of

24 being unable to meet their pension distribution obligations in
8

1 the near future. The statute created two categories for such

2 plans: “endangered” and “critical.” Under the PPA, a pension

3 plan is endangered if, inter alia, it is less than eighty percent

4 funded, and it is in critical status if, inter alia, it is less

5 than sixty-five percent funded. ERISA § 305(b), 29 U.S.C. §

6 1085(b). If a pension plan falls into critical status, the plan

7 sponsor must notify the participating employers and unions, ERISA

8 § 305(b)(3)(D), 29 U.S.C. § 1085(b)(3)(D), and each participating

9 employer must contribute an additional surcharge of five to ten

10 percent of the contribution amount required under the applicable

11 CBA. See ERISA § 305(e)(7), 29 U.S.C. § 1085(e)(7).

12 Additionally, upon a multiemployer pension plan’s entry into

13 critical status, the plan’s sponsor must adopt a rehabilitation

14 plan to restore the Fund’s financial health going forward: 

15 A rehabilitation plan is a plan which consists of --

16

17 (i) actions, including options or a range of options to

18 be proposed to the [employers and unions], formulated,

19 based on reasonably anticipated experience and

20 reasonable actuarial assumptions, to enable the plan to

21 cease to be in critical status by the end of the [ten22 year] rehabilitation period and may include reductions

23 in plan expenditures (including plan mergers and

24 consolidations), reductions in future benefit accruals

25 or increases in contributions, if agreed to by the

26 [employers and unions], or any combination of such

27 actions, or

28

29 (ii) if the plan sponsor determines that, based on

30 reasonable actuarial assumptions and upon exhaustion of

31 all reasonable measures, the plan can not reasonably be

32 expected to emerge from critical status by the end of

33 the rehabilitation period, reasonable measures to

34 emerge from critical status at a later time or to

35 forestall possible insolvency . . . .
9

1 ERISA § 305(e)(3)(A), 29 U.S.C. § 1085(e)(3)(A). The

2 rehabilitation plan must set forth new schedules of reduced

3 benefits and increased contributions, from which participating

4 employers and unions may choose when it is time to negotiate

5 successor CBAs. See ERISA § 305(e), 29 U.S.C. § 1085(e). One of

6 those schedules must be designated as the “default schedule,”

7 which “assume[s] that there are no increases in contributions

8 under the plan other than the increases necessary to emerge from

9 critical status after [benefits] . . . have been reduced to the

10 maximum extent permitted by law.” ERISA § 305(e)(1), 29 U.S.C.

11 § 1085(e)(1).

12 Most importantly for present purposes, the PPA provides as

13 follows:

14 (C) Imposition of default schedule where failure to

15 adopt rehabilitation plan

16

17 (i) In general

18

19 If–

20

21 (I) a collective bargaining agreement

22 providing for contributions under a

23 multiemployer plan that was in effect at the

24 time the plan entered critical status

25 expires, and

26

27 (II) after receiving one or more schedules

28 from the plan sponsor [under a rehabilitation

29 plan], the bargaining parties with respect to

30 such agreement fail to adopt a contribution

31 schedule with terms consistent with the

32 rehabilitation plan and a schedule from the

33 plan sponsor . . . ,

34 the plan sponsor shall

35 implement the default schedule

36 [of the rehabilitation plan]
10

1 beginning on the date

2 specified in clause (ii).

3

4 (ii) Date of implementation

5

6 The date specified in this clause is the date

7 which is 180 days after the date on which the

8 collective bargaining agreement described in

9 clause (i) expires.

10 ERISA § 305(e)(3)(C), 29 U.S.C. § 1085(e)(3)(C). As will be

11 seen, it is this provision and the extent to which it bears on

12 the facts of this case that are at the core of this appeal.

13 II. Factual Background

14 The facts, which are not in dispute, are as follows:

15 The Fund is a multiemployer defined-benefit pension plan. 

16 The Trustees are its sponsor.

17 Honerkamp is a distributor of wood chips operating out of

18 two New York facilities -- one in the Bronx and one in Central

19 Islip. In early 2008, Honerkamp and the Bakery Drivers Local

20 Union No. 802 (the “Union”) were parties to CBAs that covered

21 Honerkamp’s unionized employees in its two facilities. The CBAs,

22 which were set to expire in late 2008, obligated Honerkamp to

23 contribute to the Fund on behalf of the company’s employees.

24 In March 2008, the Trustees announced that the Fund was in

25 critical status as defined by the PPA, see ERISA § 305(b)(2), 29

26 U.S.C. § 1085(b)(2). They therefore began drafting a

27 rehabilitation plan. But they did not expect to complete the

28 rehabilitation plan until late 2008, around the time the two
11

1 Honerkamp CBAs were due to expire. Because the rehabilitation

2 plan would figure prominently in any negotiations between

3 Honerkamp and the Union over successor CBAs, the two sides agreed

4 to extend the existing Bronx and Central Islip agreements through

5 February 10 and March 27, 2009, respectively. 

6 In November 2008, the Trustees finalized the rehabilitation

7 plan, which, as required by the PPA, set forth several new

8 schedules of reduced benefits and increased contributions. See

9 ERISA § 305(e), 29 U.S.C. § 1085(e). According to the

10 rehabilitation plan, the Trustees had determined that the Fund

11 was unlikely to emerge from critical status within the statutory

12 ten-year rehabilitation period. See ERISA § 305(e)(4), 29 U.S.C.

13 § 1085(e)(4). This was because the employer contribution rates

14 required for such a result would have exceeded the amounts that

15 employers would have had to pay to withdraw from the Fund under

16 the MPPAA. As explained by the rehabilitation plan, the Trustees

17 “assum[ed] that employers would be unwilling to continue to

18 participate . . . if the cost of doing so were to exceed the cost

19 of withdrawing.” Joint Appendix (“J.A.”) at 84. The Trustees

20 therefore designed four primary, or non-default, schedules “to

21 impose approximately the same burden actuarially on employers

22 that a withdrawal from the [Fund] would produce.” Id. at 85. 

23 Participating employers’ adoption of the non-default schedules

24 was estimated to push back the Fund’s projected date of

25 insolvency from 2021 to 2024.
12

1 The Trustees also included in the rehabilitation plan a

2 default schedule, which, in accordance with the PPA, outlined the

3 Fund’s emergence from critical status. See ERISA § 305(e)(1), 29

4 U.S.C. § 1085(e)(1). But because the Trustees believed that the

5 contribution levels required for the Fund to emerge from critical

6 status were “unrealistic[ally high],” J.A. at 84, they expected

7 the default schedule to be implemented only if a participating

8 employer and union did not agree on one of the four non-default

9 schedules. Presumably, this expectation was due to the earlier10 excerpted portion of the PPA that requires a multiemployer

11 pension plan in critical status to “implement the default

12 schedule” in the event such deadlock persists for 180 days. See

13 ERISA § 305(e)(3)(C), 29 U.S.C. § 1085(e)(3)(C).

14 With the rehabilitation plan finalized, Honerkamp and the

15 Union proceeded to negotiate their successor CBAs. They

16 considered the rehabilitation plan’s schedules as well as the

17 possibility of Honerkamp’s withdrawal from the Fund. As part of

18 that consideration, Honerkamp requested and the Trustees provided

19 an estimate of Honerkamp’s withdrawal liability under the MPPAA.

20 On July 22, 2009, Honerkamp sent the Union a “Last, Best,

21 and Final Offer” for each facility. Both offers provided that,

22 as of August 1 of that year, Honerkamp would withdraw from the

23 Fund and create instead a 401(k) retirement plan for the

24 company’s employees. The Central Islip employees voted to ratify

25 the offer and, together with Honerkamp, entered into a new CBA on
13

1 August 1 reflecting this change. The Bronx employees initially

2 rejected Honerkamp’s offer. With the parties then at an impasse,

3 Honerkamp unilaterally implemented its offer -- withdrawing from

4 the Fund in favor of the 401(k) plan -- as permitted by the

5 National Labor Relations Act, 29 U.S.C. § 151 et seq. The Bronx

6 employees and Honerkamp eventually entered into a new CBA in

7 April 2010. Like the agreement reached with the Central Islip

8 employees, the new Bronx CBA provided for Honerkamp’s withdrawal

9 from the Fund in favor of a 401(k) plan.

10 On July 31, 2009, Honerkamp informed the Trustees that it

11 would be withdrawing from the Fund for both locations effective

12 August 1. The Trustees responded that the PPA required Honerkamp

13 to contribute to the Fund under the rehabilitation plan’s default

14 schedule if the company and Union did not agree to a non-default

15 schedule within 180 days of the CBAs’ expiration. Honerkamp

16 countered that withdrawal was permissible and that it would be

17 liable only to pay withdrawal liability as calculated under the

18 MPPAA.

19 III. Procedural Background

20 In February 2010, the Trustees brought this suit against

21 Honerkamp. They argued that the PPA prevented Honerkamp from

22 withdrawing from the Fund after the Fund entered critical status. 

23 The Trustees sought to compel Honerkamp to make retroactive and

24 prospective contributions under the rehabilitation plan’s default
14

1 schedule. Honerkamp moved and the Trustees cross-moved for

2 summary judgment. The magistrate judge submitted to the district

3 court a report and recommendation in favor of summary judgment

4 for Honerkamp. Following oral argument on the parties’ motions,

5 the district court adopted the recommendation.

6 The Trustees appeal from the district court’s grant of

7 summary judgment in favor of Honerkamp and denial of their cross8 motion for summary judgment.

9 DISCUSSION

10 I. Standard of Review

11 We review de novo the district court’s grant of summary

12 judgment, which relied entirely on its construction of the PPA. 

13 See Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (“We

14 review de novo a district court’s application of law to

15 undisputed facts . . . .”).

16 II. The PPA’s Effect on Withdrawal

17 At issue here is the extent to which the PPA, in these

18 circumstances, abrogates the ability of a participating employer

19 to withdraw from a multiemployer pension plan in critical status. 

20 Honerkamp claims that it may withdraw from the Fund as long as it

21 pays withdrawal liability as calculated under the MPPAA. The

22 Trustees do not dispute that this would have been correct before

23 the enactment of the PPA. But they contend that under that more

24 recent statute, Honerkamp cannot withdraw and must continue
15

1 participating in the Fund while contributing in accordance with

2 the rehabilitation plan’s default schedule. See ERISA

3 § 305(e)(3)(C), 29 U.S.C. § 1085(e)(3)(C).

4 To our knowledge, no other court besides the district court

5 in this action has considered whether the PPA prohibits employers

6 from withdrawing from multiemployer pension plans in critical

7 status. On this issue, the PPA itself is silent. But, as is

8 always the case in issues of statutory interpretation, the

9 “ultimate question” here “is one of congressional intent.” In re

10 Lehman Bros. Mortg.-Backed Secs. Litig., 650 F.3d 167, 180 (2d

11 Cir. 2011) (internal quotation marks omitted). For the reasons

12 that follow, we agree with the district court and Honerkamp that,

13 in enacting the PPA, Congress did not intend to prevent employers

14 from withdrawing from multiemployer pension plans in critical

15 status.

16 “Because our task is to ascertain Congress’s intent, we look

17 first to the text and structure of the statute” as the surest

18 guide to congressional intent. Lindsay v. Ass’n of Prof’l Flight

19 Attendants, 581 F.3d 47, 52 (2d Cir. 2009). While the text of

20 the PPA does not speak to the issue at hand directly, it does

21 evidence Congress’s understanding that employers can and will

22 withdraw from plans in critical status. Although there is no

23 explicit statement of the right to withdraw, the statute appears

24 to assume withdrawals in these circumstances by revising the

25 calculation of withdrawal liability where the pension plan
16

1 withdrawn from is in critical status. See ERISA § 305(e)(9), 29

2 U.S.C. § 1085(e)(9). Specifically, the PPA provides that

3 calculations of an employer’s withdrawal liability should not

4 take into account (1) contribution surcharges imposed

5 automatically once a pension plan enters critical status, or (2)

6 benefit reductions required by a rehabilitation plan. See id.

7 In enacting the PPA, Congress also amended other portions of

8 ERISA dealing with withdrawal and withdrawal liability without

9 the slightest indication that it intended to abrogate employers’

10 ability to withdraw from pension plans in critical status. See

11 PPA § 204(a)(2) (codified at ERISA § 4225(a)(2), 29 U.S.C.

12 § 1405(a)(2)) (changing the calculation of the limitation on

13 withdrawal liability where the employer company is sold); PPA

14 § 204(b)(1) (codified at ERISA § 4205(b)(2), 29 U.S.C. §

15 1385(b)(2)) (amending the imposition of partial withdrawal

16 liability when, inter alia, the employer’s obligation to

17 contribute to a plan ceases under some but not all CBAs or

18 regarding some but not all facilities); see also PPA

19 § 502(b)(codified at ERISA § 101(l)(1), 29 U.S.C.

20 § 1021(l)(l))(redesignating and restating the requirement that

21 the plan sponsor provide an estimate of withdrawal liability upon

22 the employer’s request). That Congress did not hint at -- let

23 alone explicitly state -- such an abrogation, despite clearly

24 having withdrawal and withdrawal liability on its mind, is
17

1 significant. This is so in part because, in at least one other

2 clause of the PPA, Congress unambiguously disclaimed an older

3 portion of ERISA that it wished no longer to apply in the context

4 of critical-status pension plans. See PPA § 202(a) (codified at

5 ERISA § 305(e)(8)(A)(i), 29 U.S.C. § 1085(e)(8)(A)(i)) (allowing

6 the retroactive cutting of certain benefits that typically would

7 be prohibited).

8 The Trustees respond that Congress, in considering

9 withdrawal and withdrawal liability when enacting the PPA, had in

10 mind only “involuntary withdrawals” from plans, such as those

11 caused by an employer’s going out of business or a pension plan’s

12 liquidation. But this interpretation is unpersuasive. Nowhere

13 in the PPA’s repeated references to withdrawal did Congress

14 suggest any voluntary/involuntary distinction, notwithstanding

15 the decades-long precedent of employers “voluntarily” withdrawing

16 from pension plans when financially expedient.

17 Our conclusion that Congress did not intend the PPA to

18 foreclose withdrawal in these circumstances finds further support

19 external to the statute’s text. The PBGC, the agency charged

20 with administering the withdrawal-liability provisions under

21 ERISA, is traditionally afforded substantial deference in its

22 reasonable interpretations of the statute. See Pension Benefit

23 Guar. Corp. v. LTV Corp., 496 U.S. 633, 647-48 (1990); Kinek v.

24 Paramount Commc’ns, Inc., 22 F.3d 503, 511 n.5 (2d Cir. 1994);

25 see also Cent. States Se. & Sw. Areas Pension Fund v. O’Neill
18

1 Bros. Transfer & Storage Co., 620 F.3d 766, 774 (7th Cir. 2010);. 

2 In its interpretation of the PPA, the PBGC has adopted

3 regulations for calculating employer liability for withdrawal

4 from plans in critical status. See 73 Fed. Reg. 79628-02, 79632-

5 33 (Dec. 30, 2008)(section titled “Withdrawal Liability

6 Computations for Plans in Critical Status--Employer Surcharges”)

7 (explaining 29 C.F.R. § 4211.4). Like the PPA itself, these

8 regulations say nothing about mandatory contributions under

9 rehabilitation plans or prohibiting withdrawals. Nor do they

10 suggest a distinction between voluntary and involuntary

11 withdrawals. To be sure, the PBGC does not appear to have issued

12 an interpretation on the precise question at issue –- whether the

13 PPA forecloses withdrawal in these circumstances –- to which we

14 might defer if we found Congress’s intent unclear. But from

15 every indication, the PBGC’s understanding of the PPA accords

16 with our reading of Congress’s intent in enacting the law.

17 It is noteworthy that the Trustees themselves, before

18 bringing this lawsuit, believed that participating employers like

19 Honerkamp had the option of withdrawing from the Fund after it

20 had entered critical status. The rehabilitation plan stated that

21 its goals would “be met if,” inter alia, “withdrawal liability is

22 imposed and collected with respect to employers that withdraw

23 from the [Fund].” J.A. at 83. Moreover, the Trustees

24 contemplated the possibility of “voluntary” withdrawals. The

25 rehabilitation plan explained that it did not contain only the
19

1 high-contribution schedules necessary for the Fund to emerge from

2 critical status because such contribution rates “would

3 undoubtedly drive employers to withdraw from the [Fund],” given

4 the Trustees’ “reasonable assumption that employers would be

5 unwilling to continue to participate in the [Fund] if the cost of

6 doing so were to exceed the cost of withdrawing.” Id. Of

7 course, the ultimate question of statutory interpretation is for

8 the Court and not the Trustees. But we are reassured by the

9 plaintiffs’ own expressed understanding that voluntary withdrawal

10 was permissible notwithstanding the operation of the PPA’s

11 mechanism for dealing with pension plans in critical status.

12 Finally, to pursue the PPA’s aims, it was not necessary for

13 Congress to forbid withdrawal, accompanied by MPPAA liability,

14 from pension plans in critical status. Both statutes aim to

15 protect beneficiaries of multiemployer pension plans by keeping

16 such plans adequately funded. Indeed, the Trustees designed the

17 rehabilitation plan’s non-default schedules “to impose

18 approximately the same burden actuarially on employers that

19 withdrawal from the [Fund] would [have] produce[d].” Id. at 85. 

20 Consequently, Honerkamp’s withdrawal from the Fund while paying

21 liability under the MPPAA largely comports with the goals of the

22 PPA. It is true, as the Trustees point out, that the MPPAA caps

23 withdrawal liability such that in some cases the amount paid by

24 withdrawing employers may not fully refund a pension plan. See

25 ERISA § 4219(c)(1)(B), 29 U.S.C. § 1399(c)(1)(B) (withdrawn
20

1 employers are liable only for twenty years of withdrawal2 liability payments). But implementation of a rehabilitation plan

3 under the PPA may not restore a pension plan’s solvency either. 

4 Indeed, the Trustees here determined that the Fund was unlikely

5 to emerge from critical status, and therefore designed the non6 default schedules not to prevent but only to delay the point of

7 insolvency. In any case, it remains true that the MPPAA and PPA

8 pursue the same basic ends, broadly conceived.

9 Against the weight of these considerations, the Trustees

10 offer very little in support of their proposed interpretation of

11 the PPA. For example, in arguing that Congress sought to

12 foreclose withdrawal in circumstances of the sort presented in

13 this case, the Trustees rely largely on a 2008 amendment to the

14 PPA. See Worker, Retiree, and Employer Recovery Act of 2008,

15 Pub. L. 110-458 § 102, 122 Stat. 5092, 5100 (2008) (codified at

16 ERISA § 305(e)(3)(C)(ii), 29 U.S.C. § 1085(e)(3)(C)(ii)). The

17 relevant subsection previously stated that the default schedule

18 should be implemented at the earlier of a bargaining impasse

19 between an employer and union or 180 days after expiration of the

20 operative CBA. In 2008, Congress eliminated the former date, so

21 the default schedule now goes into effect 180 days after the

22 pertinent CBA expires. The Trustees argue that Congress enacted

23 this amendment to close a loophole through which employers, via

24 impasse and withdrawal, could escape contributing under

25 rehabilitation plans. However, if Congress had been trying to
21

1 eliminate the withdrawal option, one would think that it would

2 have done so explicitly -- not cryptically through a timing

3 amendment. Moreover, the Trustees’ argument would prohibit only

4 a voluntary withdrawal upon impasse, and would not prohibit a

5 voluntary withdrawal agreed to by an employer and union (as

6 happened here with respect to the Central Islip employees).

7 CONCLUSION

8 Because we agree with the district court’s conclusion that

9 the PPA does not forbid Honerkamp’s withdrawal from the Fund, we

10 AFFIRM the judgment of the district court.