Trustees of the IAM National Pension Fund v. M & K Employee Solutions, LLC

The United States Court of Appeals for the District of Columbia Circuit affirmed in part, reversed in part, and remanded a district court judgment involving multiemployer pension withdrawal liability. The court addressed whether separate corporate entities should be treated as a single employer and clarified the rules for allocating partial payments and applying interest rate amendments.

Background

The case involves the IAM National Pension Fund seeking withdrawal liability and delinquent contributions from M & K Employee Solutions and affiliated entities. The Fund alleged that separate companies operating truck dealerships should be treated as a single employer under ERISA and the Multiemployer Pension Plan Amendments Act. The district court had granted summary judgment to the Fund on all issues, including liability for work performed by separate entities, the allocation of a partial payment, the application of a retroactive interest rate, and the personal liability of the company owners.

The court’s reasoning

The court assumed without deciding that the National Labor Relations Board test applies to delinquent contribution claims under ERISA. It found the complaint insufficient because it alleged only common ownership, failing to plead interrelated operations, common management, or centralized control of labor relations. Regarding the partial payment, the court applied the common law United States Rule, which allows creditors to allocate payments to interest first, finding no statutory displacement of this rule. On the interest rate, the court held that contractual obligations cease upon termination of the collective bargaining agreement unless expressly stated otherwise, and the amendment imposing a higher rate could not bind the employer after withdrawal. Finally, the court found genuine disputes of material fact regarding whether the owners’ house-flipping activity constituted a trade or business under common control.

We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

Opinion for the Court filed by Circuit Judge Katsas

What it means going forward

The decision requires the district court to recalculate interest using the rate in effect at the time of withdrawal and to retry issues regarding single-employer status for delinquent contributions and the personal liability of the owners. It clarifies that partial payments are presumed to apply to interest and that interest rate amendments cannot retroactively bind withdrawn employers.