In July, the Third Circuit upheld a District of New Jersey decision to throw out a withdrawal liability assessment, finding the multiemployer pension fund was barred from pursuing its claim because the fund unreasonably delayed notification of a withdrawal liability assessment for 12 years.Withdrawal Liability Assessments Under ERISAThe Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multiemployer Pension Plan Amendments Act of 1980 (MPPA), sets minimum funding and other standards for multiemployer defined benefit pension plans. Under ERISA and MPPA, an employer that exits a multiemployer plan must pay “withdrawal liability” to the fund to cover the employer’s “share” of the fund’s unfunded vested liabilities.When an employer triggers a withdrawal, multiemployer pension funds must “notify the employer” as “soon as practicable” of the “amount of the liability” and “the schedule for liability payments.” 29 U.S.C.A. § 1399(1)(A). This provides the employer the chance to analyze a fund’s alleged assessment, challenge any inaccuracies in it, and if necessary, initiate arbitration over disagreements related to the assessed liability.Decision Highlights Affirmative Responsibilities of Multiemployer Pension Funds“[D]iligence is what the Multiemployer Pension Plan Amendments Act of 1980 requires.” Allied Painting & Decorating, Inc. v. Int'l Painters & Allied Trades Indus. Pension Fund, 107 F.4th 190, 193 (3d Cir. 2024). The Third Circuit held that the fund may not pursue its claim for failing to practice such diligence.In Allied Painting, the fund alleged that the company effectuated withdrawal in 2005. The fund did not make a withdrawal liability demand until 2017 – a full 12 years later.In arbitration, the employer argued that under the doctrine of laches, there could be no liability because of this unreasonable delay. Under the usual laches argument, a party must show both that a delay in the seeking of remedy e

The Fund assessed withdrawal liability requiring DISA to pay $652/month for 20 years. This amount was calculated pursuant to 29 U.S.C. § 1399(c)(1)(C)(1)(I), which provides that withdrawal liability shall be calculated based upon the employer’s average number of contribution base units for the highest “3 consecutive plan years” during the 10 years preceding the plan year in which the withdrawal occurred. As DISA had only been a contributing for two years, the Fund had initially calculated a zero for the third year.The Fund subsequently changed its interpretation of the statute and concluded that because the third year was a zero-hour year, only DISA’s two years of contributions should be averaged, without taking into account a zero-hour third year.