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Nat'l Ret. Fund v. Metz Culinary Mgmt.

United States Court of Appeals for the Second Circuit

February 8, 2018, Argued; January 2, 2020, Decided

Docket No. 17-1211-cv

Opinion

 [*147]  WINTER, Circuit Judge:

Metz Culinary Management, Inc., a contributing employer to the National Retirement Fund, appeals from Judge Caproni's decision vacating Arbitrator Ira F. Jaffe's award. His award held that appellees improperly calculated appellant's [**2]  withdrawal liability based on interest rate assumptions adopted in 2014 after appellant withdrew from the Plan. The district court held that Section 4213 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1393, does not require actuaries to calculate withdrawal liability based on interest rate assumptions used prior to an employer's withdrawal from a plan. The district court further held that interest rate assumptions must be affirmatively reached and may not roll over automatically from the preceding plan year. For reasons stated below, we vacate the district court's judgment.

BACKGROUND

Appellees are a trust fund, established and maintained pursuant to Section 302(c)(5) of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 186(c)(5), and its Board of Trustees ("Trustees"). The Fund -- through its Trustees --sponsors and administers the Legacy Plan of the National Retirement Fund (the "Plan"), a multiemployer plan within the meaning of Section 3(37) of ERISA, 29 U.S.C. § 1002(37).

In multiemployer pension plans, several "employers pool contributions into a single fund that pays benefits to covered retirees who spent a certain amount of time working for one or more of the contributing employers." Trs. of The Local 138 Pension Tr. Fund v. F.W. Honerkamp Co., 692 F.3d 127, 129 (2d Cir. 2012). Appellant was an employer contributing to the Plan until May 16, 2014 [**3]  when it effectuated a complete withdrawal from the Plan. See Section 4203(a) of ERISA, 29 U.S.C. § 1383(a).

] When a plan is underfunded, an employer seeking to withdraw must pay its share of unfunded vested benefits ("UVBs"). See 29 U.S.C. § 1381(b)(1). UVBs are "calculated as the difference between the present value of vested benefits and the current value of the plan's assets." Pension Benefit  [*148]  Guar. Corp. V. R.A. Gray & Co., 467 U.S. 717, 725, 104 S. Ct. 2709, 81 L. Ed. 2d 601 (1984) (citing 29 U.S.C. §§ 1381, 1391). The Multiemployer Pension Plan Amendments Act of 1980 (the "MPPAA") sets forth rules for calculating a withdrawing employer's share of a plan's underfunding. Pursuant to the MPPAA, "[i]f an employer withdraws from a multiemployer plan . . . the employer is liable to the plan in the amount determined under this part to be the withdrawal liability." 29 U.S.C. § 1381(a). "Withdrawal liability is the withdrawing employer's proportionate share of the pension plan's unfunded vested benefits." Honerkamp, 692 F.3d at 130.

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946 F.3d 146 *; 2020 U.S. App. LEXIS 4 **

THE NATIONAL RETIREMENT FUND, EACH ON BEHALF OF THE LEGACY PLAN OF THE NATIONAL RETIREMENT FUND, BOARD OF TRUSTEES OF THE NATIONAL RETIREMENT FUND, EACH ON BEHALF OF THE LEGACY PLAN OF THE NATIONAL RETIREMENT FUND, Plaintiffs — Counter — Defendants — Appellees, v. METZ CULINARY MANAGEMENT, INC., Defendant — Counter — Claimant — Appellant.

Subsequent History: Counsel Amended January 8, 2020.

Petition for certiorari filed at, 05/29/2020

Prior History:  [**1] Appeal from a judgment of the United States District Court for the Southern District of New York (Valerie Caproni, Judge), vacating an arbitration award. The award held that interest rate assumptions for purposes of withdrawal from a multiemployer pension plan liability are those in effect on the last day of the year preceding the employer's withdrawal. The district court held that interest rate assumptions may be determined after withdrawal and retroactively imposed. We disagree and vacate.

Nat'l Ret. Fund v. Metz Culinary Mgmt., 2017 U.S. Dist. LEXIS 44410 (S.D.N.Y., Mar. 27, 2017)

CORE TERMS

withdrawal, actuary, calculate, arbitrator's, retroactive, estimate, multiemployer, vested, unfunded, withdrew, pension, vacate

Pensions & Benefits Law, Multiemployer Plans, Liability Calculations, Liability for Withdrawals, ERISA, Arbitration