Background
Penske Truck Leasing, L.P. and the Central States, Southeast and Southwest Areas Pension Plan were involved in a dispute over withdrawal liability. Penske sought to align the expiration dates of its collective bargaining agreements to facilitate a complete withdrawal from the plan in 2022. The plan trustees, concerned about the financial impact, rejected an extension for Local 745 and subsequently expelled that bargaining unit from the plan effective in 2021. Penske sued to enjoin the expulsion, while the plan counterclaimed to establish the 2021 withdrawal date. The district court granted summary judgment to the plan on the expulsion issue but dismissed the counterclaim, ruling that the withdrawal date dispute required mandatory arbitration under the Multiemployer Pension Plan Amendments Act.
The court’s reasoning
The court determined that the Trust Agreement granted the trustees discretionary authority to interpret the plan documents, necessitating a deferential standard of review under Firestone Tire & Rubber Co. v. Bruch. Under this standard, the trustees’ decision to expel Local 745 was reasonable and not arbitrary or capricious. The court rejected arguments that the expulsion violated uniformity requirements or the National Labor Relations Act. Regarding the counterclaim, the court affirmed the dismissal because 29 U.S.C. Section 1401 mandates that disputes concerning withdrawal liability determinations, including the effective date, be resolved through arbitration before federal court intervention.
What it means going forward
The ruling clarifies that multiemployer pension plans may expel specific bargaining units under their trust agreements if the trustees reasonably determine it protects the fund’s actuarial soundness. It also reinforces that employers and plans must exhaust arbitration procedures under Section 1401 before litigating withdrawal liability dates in federal court.
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