IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

EUSA-ALLIED AQUISITION CORP.,

 Plaintiff,

v.

TEAMSTERS PENSION TRUST FUND

OF PHILADELPHIA & VICINITY, et

al.,

 Defendants.

HON. JEROME B. SIMANDLE

Civil No. 11-3181 (JBS/AMD)

MEMORANDUM OPINION

SIMANDLE, Chief Judge:

Before the Court is a motion to vacate an arbitration award

brought by Defendant Teamsters Pension Trust Fund of Philadelphia

& Vicinity (“the Fund” or “Defendant”). [Docket Item 65.] The

dispute concerns the meaning of the phrase “the number of years

required for vesting under the plan” in the Multiemployer Pension

Plan Amendment Act (“MPPAA”), 29 U.S.C. §§ 1390(a)(2). In this

case, an arbitrator ruled that the Fund, a jointly administered

multiemployer defined benefit pension plan, could not demand a

withdrawal penalty from Plaintiff EUSA-Allied Acquisition Corp.

(“EUSA”) under the MPPAA when EUSA withdrew from the Fund after

four years and 11 months of making contributions. The “free-look”

provision of the MPPAA permits employers to withdraw from a

pension plan without liability if withdrawal is made before “the

number of years required for vesting under the plan,” or six

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consecutive plan years, whichever comes first. In this case, the 1

arbitrator found that “the number of years required for vesting”

meant “a specific number of consecutive 12 month periods,” and

because the Teamsters Pension Plan of Philadelphia & Vicinity

(“the Plan”) requires five years of vesting service, EUSA was

protected by the “free-look” provision of the MPPAA, as it only

had contributed to the Plan for four years and 11 months -- less

than the five years of service required for vesting. (Award &

Opinion [Docket Item 65-2] at 9-10.)

Defendant argues that the arbitrator erred as a matter of

law, and moves for the Court to “rescind the assessment, and

grant the Fund the appropriate remedies under MPPAA.” (Def. Mot.

Br. at 2.) For the reasons explained below, the Court agrees with

the reasoning set forth in the arbitrator’s award and will deny

Defendant’s motion to vacate the arbitrator’s award.

1. The Court has recited the facts of the underlying dispute

in three previous opinions, which are incorporated here by

 29 U.S.C. § 1390(a)(2). The MPPAA, which amended the 1

Employment Retirement Income Security Act (“ERISA”), 29 U.S.C. §

1001, et seq., provides: 

An employer who withdraws from a plan in complete or

partial withdrawal is not liable to the plan if the

employer . . . had an obligation to contribute to the

plan for no more than the lesser of -- (A) 6 consecutive

plan years preceding the date on which the employer

withdraws, or (B) the number of years required for

vesting under the plan[.]

29 U.S.C. § 1390(a)(2).

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reference. See EUSA-Allied Acquisition Corp. v. Teamsters Pension

Trust Fund of Philadelphia & Vicinity, No. 11-3181, 2011 WL

2457695, at *1-*2 (D.N.J. June 16, 2011); EUSA-Allied Acquisition

Corp. v. Teamsters Pension Trust Fund of Philadelphia & Vicinity,

2011 WL 3651315, at *1-*2 (D.N.J. Aug. 18, 2011); EUSA-Allied

Acquisition Corp. v. Teamsters Pension Trust Fund of Philadelphia

& Vicinity, 2012 WL 1033012, at *1-*3 (D.N.J. Mar. 26, 2012).2

2. The facts relevant to this motion are not in dispute.

Pursuant to a collective bargaining agreement, EUSA had an

obligation to contribute to the Fund from February 8, 2006, to

December 31, 2010, a period of approximately four years and 11

months. (Def. Mot. Br. at 3.) According to the Plan, to be

eligible for a pension benefit, the employee “must be ‘vested’ --

that is, you must either retire from Covered Employment after

attaining Normal Retirement Age or satisfy the Plan’s minimum

service requirement of five (5) years of Vesting Service . . . .”

(Summary Plan Description (“SPD”) [Docket Item 65-3] at 10 §

III.) A participant employee earns “a year of Vesting Service” if

he or she is “credited with at least 750 Hours of Service” during

“a calendar year.” (Id. at 14 § IV(A)(2).) On August 7, 2006,

several months after EUSA began contributing to the Fund, EUSA

hired Karl Williams, who earned enough hours of credited service

to become fully vested in Fund benefits by June 1, 2010, after

 These opinions appear as Docket Items 22, 51 & 60. 2

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just three years and 10 months of employment and before EUSA

withdrew from the Plan. (Def. Mot. Br. at 3-5.) 3

3. The Fund assessed EUSA a withdrawal penalty of

$679,325.13, after EUSA stopped contributing to the Fund in 2010.

EUSA brought this action to prevent the Fund from collecting the

penalty. The case was referred to arbitration. The arbitrator

Norman Brand, in San Francisco, Calif., defined the issue before

him as follows: 

Does the [phrase] ‘the number of years required for

vesting under the plan’ mean the number of years of

Vesting Service required for an employee to be entitled

to a non-forfeitable benefit, or the actual period of

time in which any employee of the employer accrues

sufficient credited hours to become entitled to a nonforfeitable benefit?

(Award & Opinion at 2.)

4. The arbitrator ruled that “[t]he plain language of the

statute” supports a reading that “the number of years required

for vesting” means “a specific number of consecutive 12 month

periods” -- in this case, the number of years of required vesting

service or five years. (Id. at 4-6, 9.) He advanced four

rationales. First, citing Black’s Law Dictionary, he stated that

“the ordinary unmodified meaning of ‘year’ is a 12 consecutive

month period.” (Id.) Noting the language variations in §

1390(a)(2)(A) (“6 consecutive plan years”) and subsection

 Williams earned 836.88 hours of credited service in 2006, 3

1,216 hours in 2007, 1,607.04 hours in 2008, 2,034.96 hours in

2009, and 1,929.84 hours in 2010. (Def. Mot. Br. at 5.)

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(a)(2)(B) (“the number of years required for vesting”) (emphasis

added), the arbitrator found that although the two phrases have

distinct meanings -- a “plan year” means either a “calendar,

policy, or fiscal year,” under 29 C.F.R. § 4001.2 -- “those

meanings share a common element: the 12 consecutive month

period.” (Id. at 7.) Second, the arbitrator cited Department of

Labor regulations, which permit a plan to “designate any 12-

consecutive-month period as the vesting computation period.” (Id.

at 7-8) (citing 29 C.F.R. § 2530.203-2(a)). Because the Plan

requires five years of vesting service and uses calendar years as

its vesting period, the “‘number of years required for vesting’

refers to the number of 12 month periods the Fund uses to

determine when benefits are nonforfeitable.” (Id. at 8.) Third,

the arbitrator reasoned that the Fund’s position “implicitly

relies on substituting new language -- the period of time

required for vesting under the plan -- for the statutory language

‘the number of years required for vesting under the plan.’” (Id.)

(emphasis in original). The Fund’s interpretation “would create a

Free Look period that is unknowable at the time an employer

becomes obligated to contribute” because it would be 

determined by future needs of workers, individual hire

dates, and individual availability to work. If Congress

had wanted to make the exception contingent on the date

any employee earned enough credited hours to qualify for

non-forfeitable benefits it could have done so. But it

did not. Instead, it chose to measure the length of the

Free Look exception by ‘the number of years required for

vesting.’ 

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(Id.) Finally, the arbitrator rejected the Fund’s argument that

“number of years” was ambiguous. “Giving the phrase its ordinary

meaning leaves no ambiguity to be resolved so as to protect the

participants and beneficiaries.” (Id. at 9) The arbitrator added

that if there were ambiguity, “it is not clear that protecting

participants is the same as simply deciding for the Fund whenever

it argues it is entitled to withdrawal liability.” (Id. at 9

n.8.) The arbitrator’s reading of the statute “construes the

exception” to withdrawal liability “narrowly,” limiting “the

meaning of ‘the number of years required for vesting’ to the

number of years specified in the Plan.” (Id.) The arbitrator

ruled that the Fund is “not entitled to demand withdrawal

liability form [sic] EUSA. It is required to return the

withdrawal liability payments EUSA had made, together with

statutory interest.” (Id. at 10.)

5. A district court reviews an arbitrator’s legal

conclusions de novo. See SUPERVALU, Inc. v. Bd. of Trustees of

Sw. Pa. & W. Md. Area Teamsters & Employers Pension Fund, 500

F.3d 334, 340 (3d Cir. 2007) (“An arbitrator’s findings of fact

are subject to clear error review, but his or her legal

conclusions are subject to de novo review.”). The Court of

Appeals thus recognized that an arbitrator’s conclusion as to

withdrawal liability is a legal conclusion subject to de novo

review. Id. For the reasons set forth in the arbitrator’s award

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and opinion, and those set forth below, the Court will deny

Defendant’s motion to vacate.

6. Defendant argues that the text of statute favors its

interpretation. According to Defendant, because Mr. Williams

actually vested in three years and 10 months of employment, “the

number of years required for vesting” can be no greater than the

amount of time that was required for Mr. Williams to vest, and

EUSA is therefore liable because its obligation to contribute to

the Fund exceeded that period of time by a year and a month.

(Def. Mot. Br. at 8-9.) Defendant further argues that the

different formulations in the statute -- “6 consecutive plan

years” versus “number of years required for vesting” -- evince a

distinction drawn by Congress. (Id. at 9-10.) Defendant concludes

that “while ‘plan years’ in Subsection (a)(2)(A) means 12-month

periods, ‘years’ in Subsection (a)(2)(B) must include fractions

of years.” (Id. at 10.) Plaintiff responds that the plain

meaning, as determined by the arbitrator, of a “twelve-month

consecutive period,” is the ordinary meaning of the word “year.”

(Pl. Opp’n at 11.)4

7. The plain meaning of the word “year” in Subsection

 In a letter to the Court in further support of its motion, 4

the Fund suggests that if Congress had meant the “number” of

years to mean whole numbers, it would have stated so, or used the

word “integer.” (Def. Letter [Docket Item 71] at 2-3.] The Court

considers the additional arguments made in Defendant’s letter

about statutory construction, but they do not alter the

conclusions reached herein.

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(a)(2)(B) is a 12-month period. Likewise, the plain meaning of

“number of years” is the number of 12-month periods. If Congress

had meant something else, Congress could have drafted the

subsection to read “the amount of time sufficient to enable an

employee to vest,” or Congress could have prohibited employers

from withdrawing without liability after an employee, whose

service commenced after the employer began contributing to the

fund, actually vested under the Plan. As the arbitrator noted,

Congress did not draft the statute this way. The number of years

required “for vesting under the Plan” is and has always been

five, even for Mr. Williams, whose service spanned five calendar

years. The fact that the Plan here permits employees to earn a

year’s worth of vesting service in less than a year should not

affect the statute or its interpretation, nor does it change the

requirements of the Plan. 

8. Section 1390(a)(2)(A) expressly refers to the Plan itself

(“years required for vesting under the plan”) (emphasis added).

The Plan requires employees to accrue sufficient hours of vesting

service within five calendar years. The plan does not “require”

employees to achieve vesting service in less time, although it so

permits. The Plan makes no references to fractions of years, no

references to three years and 10 months; it only references the

number five when discussing the number of years required for

vesting.

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9. Defendant would prefer that Congress had written: “the

number of plan years required for vesting under the plan” or “the

whole number of calendar years,” or “the number of years

expressed as an integer,” or “the minimum window of time,

expressed as a fraction of calendar years, within which an

employee may accrue a sufficient number of hours of vesting

service to fully vest under the plan.” These formulations might

be more precise, but the excess verbiage is hardly necessary to

convey the meaning already expressed when according the words

their ordinary meaning. The Court agrees with the arbitrator’s

sensible explanation to distinguish the language of the two

subsections of the provision as having two meanings, even if they

both require the word “year” to carry its ordinary meaning of 12

months.

10. Defendant argues that the arbitrator misreads the

Department of Labor regulations and conflates the concepts of a

“computation period,” which the Plan defines as the calendar year

during which an employee can earn a year of vesting service, and

a “year of vesting service” itself. (Def. Mot. Br. at 11-13.)

Defendant suggests that the regulations draw a “sharp

distinction” between a computation period and a year of vesting

service, and that “[n]othing in these regulations supports the

Arbitrator’s finding that ‘the number of years required for

vesting under the plan’ amounts to 5 periods of 12 months each.”

9

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(Id. at 13.) Plaintiff responds that the arbitrator was correct

to harmonize the definitions of vesting compensation periods,

“years of service,” and “years required for vesting.” (Pl. Opp’n

at 12).

11. These regulations do not help Defendant. The regulations

do distinguish between a computation period and a year of vesting

service, which can be achieved in less than a calendar year. But

the regulations do not change the fact that number of years of

service required for vesting is five. If the computation period

for vesting service is a 12-month period, and employees are

required to achieve the requisite hours of service in five

computation periods, the most logical reading of the “number of

years required for vesting under the plan” is five years, which,

given the computation period of 12 months, is a total of 60

months.

12. Defendant further argues that its interpretation of the

statute would not lead to an “unknowable” free-look period, as

the arbitrator stated, because “the employer could readily

determine the timeframe for the free look by simply reading the

Pension and the applicable collective bargaining agreement.”

(Def. Mot. Br. at 13-14.) This argument is not responsive to the

arbitrator’s point, which aptly observes that Defendant’s

interpretation of the statutory language renders unpredictable

exactly when the employer could withdraw without incurring

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liability. To argue, as Defendant does, that the employer could

simply identify the number of hours sufficient to be credited

with a year of service is to ignore the fact that the employer

has no way to predict when such vesting service could, or would,

be achieved. 

13. It is telling that Defendant cannot say with certainty

what the “number of years required for vesting” is under its

interpretation of the statute. Although Mr. Williams fully vested

within a span of three years and 10 months, he worked 836.88

hours in 2006 and 1,929.84 hours in 2010. To earn a year of

vesting service he need only have worked 750 hours in each of

those years. Therefore, Mr. Williams likely achieved the 750 hour

threshold in less than three years and 10 months. But even now,

Defendant cannot say how long it took for Mr. Williams to vest,

and other workers could have vested in even less time. It is

unlikely Congress intended to create this confusion and

uncertainty by using the language it did.

14. Defendant next argues that the arbitrator improperly

conducted this analysis in the first place. Defendant contends

that “the plain language of the statute trumps the Arbitrator’s

views about the possible consequences of complying with that

statute.” (Def. Mot. Br. at 15.) Having concluded that

Defendant’s interpretation conflicts with the plain language of

the statute, Defendant’s argument loses its force. But even if

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the language were ambiguous, Courts frequently look at the

purpose or legislative history of a statute to confirm or rule

out an interpretation of the text. See, e.g., Univ. of Texas Sw.

Med. Ctr. v. Nassar, 133 S. Ct. 2517, 2532 (2013) (“That result

would be inconsistent with both the text and purpose of Title

VII.”); Muscarello v. United States, 524 U.S. 125, 132 (1998)

(“We conclude that neither the statute’s basic purpose nor its

legislative history support” the position advocated by the

appellant). Here, the purpose of the MPPAA was “to encourage new

employers to join” multiemployer funds “by providing various

incentives, including the ‘free look’ provision and the rule

limiting any new employer’s liability for unfunded vested

benefits to those obligations created after the enactment of the

MPPAA.” Textile Workers Pension Fund v. Standard Dye & Finishing

Co., Inc., 725 F.2d 843, 856-57 (2d Cir. 1984). The legislative

history of the MPPAA shows that the act “was designed to foster

plan continuation and growth because [such] provide participants

and beneficiaries [with the] greatest security against benefit

loss.” Id. at 856 (citing H.R. Rep. No. 869, 96th Cong., 2d Sess.

51, reprinted in 1980 U.S. Code Cong. & Ad. News at 2919).

Defining with predictability conduct that would incur liability

is consistent with the purpose of encouraging employers to

participate in funds. At the same time, forcing employers to pay

penalties to help ensure funding of vested employees is

12

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consistent with the scheme of the MPPAA and ERISA as a whole, as

well. The Court’s reading of the text certainly can be said to be

consistent with the purposes of the Act, and it is not improper

to consider whether a strained reading of the text would yield an

absurd or impractical result. See Molzof v. United States, 502

U.S. 301, 309 (1992) (“The Government’s interpretation of

‘punitive damages’ would be difficult and impractical to

apply.”).

15. Defendant invokes two canons of statutory construction

which it says must be applied here. First, Defendant argues the

Court must construe the MPPAA liberally in order to protect plan

participants and beneficiaries. (Def. Mot. Br. at 17.) Second,

Defendant argues that the Court should construe the free-look

defense narrowly as an exception to the general statutory scheme

established by the MPPAA. (Id. at 20.) Canons of construction are

of limited use in a case such as this, where the language of the

statute is clear, where giving the words their ordinary meaning

aligns with the purpose of the statutory scheme, and where the

proffered alternative interpretation relies on a strained reading

of the text and would lead to impractical results. See J.E.

Faltin Motor Transp., Inc. v. Eazor Exp., Inc., 273 F.2d 444, 445

n.6 (3d Cir. 1959) (citing Karl N. Llewellyn, Remarks On the

Theory of Appellate Decision & The Rules or Canons About How

Statutes Are to Be Construed, 3 VAND. L. REV. 395, 401-404 (1950),

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which highlights the “thrust” and “parry” of contradictory canons

of construction).

16. Finally, the arbitrator’s award is consistent with the

Fund’s own interpretation of the period for an employer’s “free

look” and withdrawal. According to Article IX, Section G, of the

Plan, as amended and restated as of January 1, 2005, “an employer

who withdraws from the Plan in a complete or partial withdrawal

is not liable to the Plan if the employer . . . (b) had an

obligation to contribute to the Plan for no more than five

consecutive plan years preceding the date on which the employer

withdraws . . . .” (Certification of James P. Anelli, Esq., Ex.

A. [Docket Item 69-1] at 47) (emphasis added). This reading was

confirmed in a “Free Look Agreement” between EUSA and the Fund in

February 2006: 

EUSA shall be treated as a new Covered Employer under the

Pension Plan for all purposes including, without

limitation, Article IX, Section G of the Pension Plan,

which provides new Covered Employers with an opportunity

or ‘free look’ under the Pension Plan to contribute to

the Plan for no more than five consecutive plan years

with no potential for withdrawal liability.

(Id. Ex G ¶ 2) (emphasis added). The governing free-look

provision was adopted by the board of trustees for the Fund in

1999, at which time William Einhorn, the Fund’s current

administrator, explained that a five-year free look provision was

necessary in light of the Congressionally mandated five-year

vesting schedule, which became effective on January 1, 1999. (Id.

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Ex. E. ¶ 12; see also Einhorn Decl. 31:19-32:20 (recounting the

amendments of the free-look and vesting periods to five years).)

These references to five years -- not fractions of years, not the

amount of time required to accumulate sufficient vesting service

-- confirm the Court’s textual analysis of the statute and the

conclusion that the language refer to five 12-month periods.

17. Plaintiff seeks an award of attorneys’ fees under 29

U.S.C. § 1132(g)(1), as did Defendant in filing this motion to

vacate the arbitration award. The Court does not decide whether

Defendant is entitled to recover attorneys’ fees, but the Court

sets a briefing schedule for Plaintiff to file its motion within

fourteen (14) days of the entry of the accompanying Order.

18. Defendant’s motion to vacate is denied. An accompanying

Order will be entered. 

July 29, 2013 s/ Jerome B. Simandle 

Date JEROME B. SIMANDLE

Chief U.S. District Judge

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