For employers who cease to contribute to a multiemployer defined benefit pension plan, withdrawal liability is becoming more and more common. When a pension fund is underfunded, the cessation of the contribution obligation can trigger the obligation to pay off the allocated portion of that unfunded liability which can be substantial. When I am working with employers who are addressing withdrawal liability, I am frequently asked whether the employer can sue the fund or the trustee for causing the unfunded liability. The short answer is no, but a recent case lays out very clearly why that answer is no.
In DiGeronimo Aggregates, LLC v. Zelma, the Sixth Circuit Court of Appeals recently considered a case where a withdrawing employer filed a complaint against the trustees of the multiemployer pension fund for negligent management of the plan that caused the underfunding. The District Court dismissed the complaint and the Sixth Circuit affirmed. The employer sued using ERISA Section 4301, which provides that persons, including employers, can bring a cause of action for appropriate legal or equitable relief. However, the Sixth circuit found that this section confers no actual substantive rights. It only provides who may potentially enforce the sections of ERISA.
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