Advocates for Labor and Progressive Institutions

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Eleventh Circuit affirms dismissal of employer suit challenging rehabilitation plan

May 2017

The United States Court of Appeals for the Eleventh Circuit has issued a decision that will assist pension funds’ efforts to protect worker benefits and to address funding shortfalls, affirming the dismissal of a lawsuit filed by WestRock RKT Company against the PACE Industry Union-Management Pension Fund.

WestRock, a participating employer in the Fund, challenged a provision contained in the Fund’s amended Rehabilitation Plan, which the Fund adopted under the Pension Protection Act to improve its funding status. That provision requires employers that withdraw from the Fund in a year in which the Fund has accumulated a funding deficiency to pay their allocated share of that deficiency. WestRock unsuccessfully argued that such a requirement violates Section 302, Section 305, and Title IV of ERISA. In a unanimous decision written by Judge Wilson, the Court of Appeals held that neither Section 302 nor Section 305 prohibits a critical status fund from requiring a withdrawing employer to pay its share of the accumulated funding deficiency as part of a reasonable measures Rehabilitation Plan. The Court also rejected WestRock’s argument that a pension fund may not levy any charges on a withdrawing employer beyond those authorized by Title IV’s withdrawal liability provisions. Bredhoff & Kaiser represented the Fund and its Trustees before both the District Court and the Court of Appeals. WestRock RKT Co. v. PACE Industry Union-Management Pension Fund, 856 F.3d 1320 (11th Cir. 2017).