Trs. of Local 138 Pension Trust Fund v. F.W. Honerkamp Co. Inc., No. 11-1322 (2d Cir. 2012)
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The Fund is a multiemployer defined-benefit pension plan. Honerkamp, a New York employer, contributed to the Fund pursuant to collective bargaining agreements with its employees. In 2008, the trustees announced that the Fund was in critical status as defined by the Pension Protection Act of 1996, 29 U.S.C. 1085(b)(2) and began drafting a rehabilitation plan. Because the rehabilitation plan would figure prominently in negotiations between Honerkamp and the union, the parties extended existing agreements. The final rehabilitation plan set forth new schedules of reduced benefits and increased contributions. According to the plan, the Fund was unlikely to emerge from critical status within the statutory 10-year rehabilitation period because employer contribution rates required for that result would exceed amounts that employers would have had to pay to withdraw from the Fund. The trustees therefore designed schedules “to impose approximately the same burden actuarially on employers that a withdrawal from the [Fund] would produce.” Following negotiations, Honerkamp withdrew from the Fund. The trustees sued, arguing that the PPA prevented Honerkamp from withdrawing and required the company to make certain ongoing pension contributions pursuant to the rehabilitation plan. The district court granted summary judgment to Honerkamp. The Second Circuit affirmed.
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11-1322-cv Trustees of the Local 138 Pension Trust Fund v. F.W. Honerkamp Co. Inc. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term 2011 (Argued: March 26, 2012 Decided: August 17, 2012) Docket No. 11-1322-cv -----------------------------------------------------x TRUSTEES OF THE LOCAL 138 PENSION TRUST FUND, Plaintiff-Appellant, -- v. -F.W. HONERKAMP CO. INC., Defendant-Appellee. -----------------------------------------------------x B e f o r e : WALKER, LYNCH and LOHIER, Circuit Judges. 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. 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. 35 and thus AFFIRM the judgment of the district court. The trustees argue that the Pension Protection Act of 1 We do not agree 1 2 3 4 5 6 7 8 9 10 11 12 13 14 LARRY CARY (Andrew M. Katz and Charles Pergue, on the brief), Cary Kane LLP, New York, NY, for Plaintiff-Appellant. KEVIN L. WRIGHT, Littler Mendelson, P.C., McLean, VA (Deidre A. Grossman, Littler Mendelson, P.C., New York, NY, on the brief), for Defendant-Appellee. JOHN M. WALKER, JR., Circuit Judge: 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. 26 prevented Honerkamp from withdrawing and required the company to 27 make certain ongoing pension contributions pursuant to the Fund s 28 rehabilitation plan. 29 that the PPA did not forbid its withdrawal or require those 30 contributions. The Trustees sued, arguing that the PPA The district court agreed with Honerkamp It therefore granted summary judgment to 2 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. 6 reject the Trustees argument and AFFIRM the judgment of the 7 district court. 8 9 For the reasons that follow, we BACKGROUND 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. 16 U.S.C. § 1001 et seq. 17 since originally enacting it in 1974. 18 See generally ERISA § 2 et seq., 29 Congress has amended the law periodically 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. 23 214 (1986) (internal quotation marks omitted). 24 statute created an agency, the Pension Benefit Guaranty Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 3 To that end, the 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. 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). See ERISA § 4006, 29 U.S.C. § 1306; Bd. of 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. 13 important advantages to employers and employees alike. 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. 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. 22 Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension 23 Trust Fund for S. Cal., 508 U.S. 602, 605-07 (1993). Plans of this sort offer For Multiemployer plans allow companies to offer pension 24 4 See 1 However, 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 [a] key problem of ongoing multiemployer plans, especially in declining industries, is the problem of employer withdrawal. Employer withdrawals reduce a plan s contribution base. This pushes the contribution rate for remaining employers to higher and higher levels in order to fund past service liabilities, including liabilities generated by employers no longer participating in the plan, so-called inherited liabilities. The rising costs may encourage - or force - further withdrawals, thereby increasing the inherited liabilities to be funded by an ever-decreasing contribution base. This vicious downward spiral may continue until it is no longer reasonable or possible for the pension plan to 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; 5 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. 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. 7 Gray & Co., 467 U.S. at 721. The potential of R.A. 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.). 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. 15 Withdrawal liability is the withdrawing employer s proportionate 16 share of the pension plan s unfunded vested benefits. 17 Gray & Co., 467 U.S. at 725 (citing ERISA §§ 4201, 4211, 29 18 U.S.C. §§ 1381, 1391). 19 withdrawal liability in annual installments, which are calculated 20 based on the employer s historical contribution amounts. 21 ERISA §§ 4211(c), 4219(c), 29 U.S.C. §§ 1391(c), 1399(c). 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. Under this amendment to ERISA § 4201(a), 29 U.S.C. § 1381(a). See R.A. Under the MPPAA, the employer pays its 6 See ERISA See The 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. 9 Knell of Traditional Defined Benefit Plans: Avoiding a Race to See Janice Kay McClendon, The Death 10 the 401(k) Bottom, 80 Temp. L. Rev. 809, 809-12 (2007). 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.). 15 approximately one thousand pages, and introduced a number of 16 mechanisms aimed at stabilizing pension plans and ensuring that 17 they remain solvent. 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 Thus, in The law is far-reaching, totaling See generally Sarah D. Burt, Note, Pension 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 7 1 the near future. 2 plans: endangered and critical. 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. 6 1085(b). 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. 12 The statute created two categories for such Under the PPA, a pension ERISA § 305(b), 29 U.S.C. § If a pension plan falls into critical status, the plan See ERISA § 305(e)(7), 29 U.S.C. § 1085(e)(7). 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 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 A rehabilitation plan is a plan which consists of -(i) actions, including options or a range of options to be proposed to the [employers and unions], formulated, based on reasonably anticipated experience and reasonable actuarial assumptions, to enable the plan to cease to be in critical status by the end of the [tenyear] rehabilitation period and may include reductions in plan expenditures (including plan mergers and consolidations), reductions in future benefit accruals or increases in contributions, if agreed to by the [employers and unions], or any combination of such actions, or (ii) if the plan sponsor determines that, based on reasonable actuarial assumptions and upon exhaustion of all reasonable measures, the plan can not reasonably be expected to emerge from critical status by the end of the rehabilitation period, reasonable measures to emerge from critical status at a later time or to forestall possible insolvency . . . . 8 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. 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 See ERISA § 305(e), 29 U.S.C. § 1085(e). 10 maximum extent permitted by law. 11 One of § 1085(e)(1). 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 ERISA § 305(e)(1), 29 U.S.C. Most importantly for present purposes, the PPA provides as follows: (C) Imposition of default schedule where failure to adopt rehabilitation plan (i) In general If (I) a collective bargaining agreement providing for contributions under a multiemployer plan that was in effect at the time the plan entered critical status expires, and (II) after receiving one or more schedules from the plan sponsor [under a rehabilitation plan], the bargaining parties with respect to such agreement fail to adopt a contribution schedule with terms consistent with the rehabilitation plan and a schedule from the plan sponsor . . . , the plan sponsor shall implement the default schedule [of the rehabilitation plan] 9 1 2 3 4 5 6 7 8 9 beginning on the date specified in clause (ii). (ii) Date of implementation The date specified in this clause is the date which is 180 days after the date on which the collective bargaining agreement described in 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. 20 Union No. 802 (the Union ) were parties to CBAs that covered 21 Honerkamp s unionized employees in its two facilities. 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 early 2008, Honerkamp and the Bakery Drivers Local The CBAs, 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 10 1 Honerkamp CBAs were due to expire. 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 Because the rehabilitation 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. 9 ERISA § 305(e), 29 U.S.C. § 1085(e). See 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. 13 § 1085(e)(4). 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. 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. 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. 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. See ERISA § 305(e)(4), 29 U.S.C. This was because the employer contribution rates As explained by the rehabilitation plan, the Trustees Joint Appendix ( J.A. ) at 84. 11 The Trustees Id. at 85. 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. 4 U.S.C. § 1085(e)(1). 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. See ERISA § 305(e)(1), 29 But because the Trustees believed that the Presumably, this expectation was due to the earlier- 10 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. 13 ERISA § 305(e)(3)(C), 29 U.S.C. § 1085(e)(3)(C). 14 See With the rehabilitation plan finalized, Honerkamp and the 15 Union proceeded to negotiate their successor CBAs. 16 considered the rehabilitation plan s schedules as well as the 17 possibility of Honerkamp s withdrawal from the Fund. 18 that consideration, Honerkamp requested and the Trustees provided 19 an estimate of Honerkamp s withdrawal liability under the MPPAA. 20 They As part of 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. 25 the offer and, together with Honerkamp, entered into a new CBA on The Central Islip employees voted to ratify 12 1 August 1 reflecting this change. 2 rejected Honerkamp s offer. 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. 6 employees and Honerkamp eventually entered into a new CBA in 7 April 2010. 8 employees, the new Bronx CBA provided for Honerkamp s withdrawal 9 from the Fund in favor of a 401(k) plan. 10 The Bronx employees initially With the parties then at an impasse, The Bronx Like the agreement reached with the Central Islip On July 31, 2009, Honerkamp informed the Trustees that it 11 would be withdrawing from the Fund for both locations effective 12 August 1. 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. 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 The Trustees responded that the PPA required Honerkamp Honerkamp 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 13 1 schedule. Honerkamp moved and the Trustees cross-moved for 2 summary judgment. 3 court a report and recommendation in favor of summary judgment 4 for Honerkamp. 5 the district court adopted the recommendation. The magistrate judge submitted to the district Following oral argument on the parties motions, 6 The Trustees appeal from the district court s grant of 7 summary judgment in favor of Honerkamp and denial of their cross- 8 motion for summary judgment. 9 10 11 DISCUSSION I. Standard of Review 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. 22 Trustees do not dispute that this would have been correct before 23 the enactment of the PPA. 24 recent statute, Honerkamp cannot withdraw and must continue The But they contend that under that more 14 1 participating in the Fund while contributing in accordance with 2 the rehabilitation plan s default schedule. 3 § 305(e)(3)(C), 29 U.S.C. § 1085(e)(3)(C). 4 See ERISA 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. 8 always the case in issues of statutory interpretation, the 9 ultimate question here is one of congressional intent. On this issue, the PPA itself is silent. But, as is In re 10 Lehman Bros. Mortg.-Backed Secs. Litig., 650 F.3d 167, 180 (2d 11 Cir. 2011) (internal quotation marks omitted). 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 For the reasons 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. 19 Attendants, 581 F.3d 47, 52 (2d Cir. 2009). 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. 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 Lindsay v. Ass n of Prof l Flight 15 While the text of Although there is no 1 withdrawn from is in critical status. 2 U.S.C. § 1085(e)(9). 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. 7 See ERISA § 305(e)(9), 29 Specifically, the PPA provides that See id. 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). 23 alone explicitly state -- such an abrogation, despite clearly 24 having withdrawal and withdrawal liability on its mind, is That Congress did not hint at -- let 16 1 significant. 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. 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 9 This is so in part because, in at least one other See PPA § 202(a) (codified at The Trustees respond that Congress, in considering 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. 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. But this interpretation is unpersuasive. Nowhere 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. 20 with administering the withdrawal-liability provisions under 21 ERISA, is traditionally afforded substantial deference in its 22 reasonable interpretations of the statute. 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 The PBGC, the agency charged 17 See Pension Benefit 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. 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). 8 regulations say nothing about mandatory contributions under 9 rehabilitation plans or prohibiting withdrawals. See 73 Fed. Reg. 79628-02, 79632- Like the PPA itself, these Nor do they 10 suggest a distinction between voluntary and involuntary 11 withdrawals. 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. 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 To be sure, the PBGC does not appear to have issued But from 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. 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]. 24 contemplated the possibility of voluntary withdrawals. 25 rehabilitation plan explained that it did not contain only the The rehabilitation plan stated that J.A. at 83. Moreover, the Trustees 18 The 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. 7 course, the ultimate question of statutory interpretation is for 8 the Court and not the Trustees. 9 plaintiffs own expressed understanding that voluntary withdrawal Id. Of But we are reassured by the 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. 15 protect beneficiaries of multiemployer pension plans by keeping 16 such plans adequately funded. 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]. 20 Consequently, Honerkamp s withdrawal from the Fund while paying 21 liability under the MPPAA largely comports with the goals of the 22 PPA. 23 withdrawal liability such that in some cases the amount paid by 24 withdrawing employers may not fully refund a pension plan. 25 ERISA § 4219(c)(1)(B), 29 U.S.C. § 1399(c)(1)(B) (withdrawn Both statutes aim to Indeed, the Trustees designed the Id. at 85. It is true, as the Trustees point out, that the MPPAA caps 19 See 1 employers are liable only for twenty years of withdrawal- 2 liability payments). 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 non- 6 default schedules not to prevent but only to delay the point of 7 insolvency. 8 pursue the same basic ends, broadly conceived. 9 But implementation of a rehabilitation plan In any case, it remains true that the MPPAA and PPA Against the weight of these considerations, the Trustees 10 offer very little in support of their proposed interpretation of 11 the PPA. 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. 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)). 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. 21 the default schedule now goes into effect 180 days after the 22 pertinent CBA expires. 23 this amendment to close a loophole through which employers, via 24 impasse and withdrawal, could escape contributing under 25 rehabilitation plans. For example, in arguing that Congress sought to See Worker, Retiree, and Employer Recovery Act of 2008, The In 2008, Congress eliminated the former date, so The Trustees argue that Congress enacted However, if Congress had been trying to 20 1 eliminate the withdrawal option, one would think that it would 2 have done so explicitly -- not cryptically through a timing 3 amendment. 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 8 9 10 Moreover, the Trustees argument would prohibit only CONCLUSION Because we agree with the district court s conclusion that the PPA does not forbid Honerkamp s withdrawal from the Fund, we AFFIRM the judgment of the district court. 21
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