Board of Trustees of the Western States Office and Professional Employees Pension Fund v. International Brotherhood of Electrical Workers Local 483

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

BOARD OF TRUSTEES OF THE Case No. 3:20-cv-00156-IM

WESTERN STATES OFFICE AND (Lead Case)

PROFESSIONAL EMPLOYEES PENSION

FUND, Case No. 3:20-cv-00309-IM

Plaintiff, (Member Case)

v. OPINION AND ORDER

INTERNATIONAL BROTHERHOOD OF

ELECTRICAL WORKERS LOCAL 483,

Defendant.

PACIFIC NORTHWEST IRONWORKERS

AND EMPLOYERS APPRENTICESHIP

AND TRAINING TRUST,

Plaintiff,

v.

BOARD OF TRUSTEES OF THE

WESTERN STATES OFFICE AND

PROFESSIONAL EMPLOYEES PENSION

FUND,

Defendant.

Robert B. Miller, Kilmer, Voorhees & Laurick, P.C., 732 N.W. 19th Ave., Portland, Oregon,

97209. Attorney for the Fund.

Darian Stanford, Tonkon Torp LLP, 888 S.W. Fifth Avenue, Suite 1600, Portland, Oregon

97204, and Joseph A. Hamell, Montgomery Purdue Blankinship & Austin, PLLC, 5500

Columbia Center, 701 Fifth Avenue, Seattle, Washington 98104. Attorneys for Employers.

IMMERGUT, District Judge.

This consolidated matter comes before the Court on cross-motions for summary

judgment.1 ECF 23; ECF 27. The parties seek judicial review of two arbitration awards

determining the proper calculation for withdrawal liability under the Employee Retirement

Income Security Act (“ERISA”). The arbitrators considered the same legal question and reached

opposite results. The narrow question presented is whether, when calculating annual payments

for withdrawal liability from a multiemployer pension plan, the statutory formula—specifically,

the “highest contribution rate at which an employer had an obligation to contribute” “arising

under” a collective bargaining agreement (“CBA”)—includes supplemental contribution rates in

furtherance of a rehabilitation plan2 which are adopted in a CBA.3 29 U.S.C. §§ 1392(a);

1399(c)(1)(C)(i)(II).

1 For the sake of clarity, all citations to ECF docket numbers will refer to the docket

submissions in the lead case, Docket No. 3:20-cv-156, except where otherwise specified.

2 The parties agree that supplemental contribution rates adopted under a rehabilitation

plan during years after the Multiemployer Pension Reform Act of 2014 (“MPRA”) became

effective are not included in this calculation. See 29 U.S.C. § 1085(g)(3)(A); ECF 1 at ¶ 13

(stating that Fund did not include rehabilitation contributions in its calculations for years after the

MPRA became effective); ECF 23 at 14; Bd. of Trs. of IBT Local 863 Pension Fund v. C&S

Wholesale Grocers, Inc., 802 F.3d 534, 538 (3d Cir. 2015) (“This amendment does not affect the

surcharges here as they accrued before December 31, 2014.”).

3 In addition to this narrow question, the parties sparsely brief the question of whether the

supplemental contribution rates at issue might be included on another basis: as an “obligation to

contribute arising” “as a result of a duty under applicable labor-management relations law.” 29

U.S.C. § 1392(a). However, because the parties do not fully argue this issue and because this

In Case No. 3:20-cv-00309-IM, Plaintiff Pacific Northwest Ironworkers and Employers

Apprenticeship and Training Trust (“Ironworkers”) sues the Board of Trustees of the Western

States Office and Professional Employees Pension Fund (“Fund”) to vacate the arbitrator’s

decision that the Ironworkers’ rehabilitation contribution rates are included in the statutory

formula that determines their withdrawal liability annual payment. Case No. 3:20-cv-309 (“20-

309”), ECF 1 at ¶ 4. In Case No. 3:20-cv-00156-IM, the same Fund serves as Plaintiff, suing the

International Brotherhood of Electrical Workers Local 483 (“IBEW”) to vacate the arbitrator’s

decision that the IBEW’s rehabilitation contribution rates are not included in the formula. ECF 1

at ¶ 15. The Ironworkers and IBEW are collectively referred to here as “Employers.”

Oral argument was held on these cross-motions on October 30, 2020. ECF 33. As

explained below, the Court concludes that the withdrawal liability formula includes those pre-

MPRA rehabilitation contribution rates adopted in the CBA. Accordingly, the Court GRANTS

the Fund’s Motion for Summary Judgment, ECF 27, and DENIES the Employers’ Motion for

Summary Judgment, ECF 23. The Court affirms and enforces the Ironworkers Award and

vacates the IBEW Award.

FACTUAL AND PROCEDURAL BACKGROUND

IBEW and Ironworkers participated in the Western States Office and Professional

Employees Pension Fund (“Fund”). ECF 13 at 2–3. The Fund is a multiemployer pension fund

maintained and administered to provide retirement benefits to qualified labor employees. ECF 1

at ¶ 4. It is established and maintained pursuant to ERISA. Id.

Court does not need to reach this issue to rule on these cross-motions, the Court declines to

address it.

In 2009, the Fund “notified all participating employers,” including both IBEW and

Ironworkers, “that the Pension Fund was in critical status, that each participating employer was

obligated to pay a statutory surcharge,” and “that the Pension Fund had adopted a rehabilitation

plan.” ECF 1 at ¶ 7. The Fund “unilaterally adopted a rehabilitation plan” on October 16, 2009.

ECF 1-1 at 3. The rehabilitation plan included two contribution schedules, one of which was

designated the default schedule. ECF 26-2 at 431; ECF 23 at 15.

In and after 2010, the Ironworkers adopted a new CBA. 20-309, ECF 1 at ¶ 11. In and

after 2010, IBEW adopted a new CBA. ECF 1 at ¶ 11. In these CBAs, the Employers “agreed to

make supplemental contributions in order to contribute at a rate consistent with those published

by the Pension Fund in furtherance of the rehabilitation plan.” Id. at ¶ 12. See also 20-309, ECF

1 at ¶ 11 (describing these facts as paying the “rate required by the Rehabilitation Plan”).

In 2014, Congress passed the Multiemployer Pension Reform Act (“MPRA”), which

provided that “supplemental contribution rates for plan years beginning after December 31, 2014

were excluded from the highest contribution rate for the purpose of computing withdrawal

liability under 29 U.S.C. § 1399(c)(1)(C)(i).” ECF 1 at ¶ 13.

On September 1, 2016, the Ironworkers withdrew from the Fund. 20-309, ECF 1 at ¶ 12.

In 2016, IBEW also withdrew from the Fund. ECF 1 at ¶ 9. In its calculation of withdrawal

liability for both Employers, the Fund included “the pre-MPRA supplemental contributions”

included in the Employers’ respective CBAs. Id. at ¶ ¶ 14–15. Both Employers disputed this

inclusion within the withdrawal liability formula, and the parties proceeded to arbitration.

In IBEW’s arbitration, the arbitrator concluded that the Fund erred by including the pre-

MPRA rehabilitation contribution rates which were included in IBEW’s CBA in its calculation

of IBEW’s withdrawal liability. Id. In the Ironworkers’ arbitration, the arbitrator concluded that

the Fund did not err by including these contribution rates. 20-309, ECF 1 at ¶ 18. In both matters,

the losing party appealed the arbitration award. The IBEW and Ironworkers cases are now

consolidated before this Court. See ECF 16.

LEGAL STANDARDS

The Employee Retirement Income Security Act (“ERISA”) authorizes judicial review “to

enforce, vacate, or modify the arbitrator’s award.” 29 U.S.C. § 1401(b)(2). The arbitrator’s

findings of fact are presumed correct, id. at § 1401(c), but “the court may review de novo all

conclusions of law.” Trs. of Amalgamated Ins. Fund v. Geltman Indus., Inc., 784 F.2d 926, 929

(9th Cir. 1986). “Statutory interpretation is a question of law subject to de novo review.” Id.

STATUTORY BACKGROUND

The Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C.

§§ 1381–1461, amended ERISA to include mandatory liability for employers withdrawing from

established pension plans. CMSH Co. v. Carpenters Tr. Fund for N. Cal., 963 F.2d 238, 239 (9th

Cir. 1992). If a dispute arises between the employer and the plan sponsor regarding a withdrawal

liability determination, the parties are required to resolve it through arbitration. 29 U.S.C.

§ 1401(a)(1).

The Pension Protection Act of 2006 (“PPA”), codified as amended throughout Chapter

26 and Chapter 29 U.S.C., “is designed to help severely underfunded multiemployer pension

plans recover.” Lehman v. Nelson, 862 F.3d 1203, 1207 (9th Cir. 2017). “The law is far-

reaching, totaling approximately one thousand pages, and introduced a number of mechanisms

aimed at stabilizing pension plans and ensuring that they remain solvent.” Trs. of Local 138

Pension Tr. Fund v. F.W. Honerkamp Co., 692 F.3d 127, 130 (2d Cir. 2012). Among these

mechanisms are the rehabilitation plan and surcharge requirements. Id. at 130–31; see also 29

U.S.C. § 1085(e)(3) (rehabilitation plan); 29 U.S.C. § 1085(e)(7) (surcharge).

In 2014, Congress further amended ERISA by passing the Multiemployer Pension

Reform Act (“MPRA”), which directs that “increase[s] in the contribution rate” that are made “in

order to enable the plan to meet the requirement of the . . . rehabilitation plan” are not to be

included in the calculation of “the highest contribution rate under section 1399(c),” which

determines withdrawal liability. 29 U.S.C. § 1085(g)(3)(A).

A. Entry into Critical Status and Enforcement

29 U.S.C. § 1085 provides “[a]dditional funding rules for multiemployer plans in

endangered status or critical status.” For purposes of this matter, two relevant statutory

provisions are triggered when a plan enters critical status: (1) the rehabilitation plan requirement,

governed by 29 U.S.C. § 1085(e)(3); and (2) an automatic surcharge requirement, governed by

29 U.S.C. § 1085(e)(7).

1. The Rehabilitation Plan

Upon a plan’s entry into critical status, the plan sponsor is required to “adopt and

implement a rehabilitation plan” formulated “to enable the plan to cease to be in critical status by

the end of the rehabilitation period.” 29 U.S.C. §§ 1085(a)(2)(A), (e)(3)(A)(i). A rehabilitation

plan includes, among other things, “options or a range of options to be proposed to the

bargaining parties” that will enable the plan to leave critical status. Id. at § 1085(e)(3)(A)(i).

“One schedule shall be designated as the default schedule.” Id. at § 1085(e)(1)(B).

The process for implementing rehabilitation plans is as follows. “[W]ithin 30 days after

the [plan sponsor’s] adoption of the rehabilitation plan,” the sponsor “shall provide to the

bargaining parties 1 or more schedules showing revised benefit structures, revised contribution

structures, or both, which, if adopted, may reasonably be expected” to move the plan out of

critical status. Id. at § 1085(e)(1)(B). The plan sponsor “may . . . provide the bargaining parties

with additional information.” Id. When the CBA that was in effect when the fund enters critical

status expires, the parties have 180 days to bargain over which, if any, of these rehabilitation

schedules will be adopted in the next CBA. Id. at § 1085(e)(3)(C).

Section 1085(e)(3)(C) is titled “Imposition of schedule where failure to adopt

rehabilitation plan.” Id. at § 1085(e)(3)(C). Under this provision, if the bargaining parties “fail to

adopt a contribution schedule with terms consistent with the rehabilitation plan and a schedule

from the plan sponsor” within the allotted time, “the plan sponsor shall implement the [default]

schedule.” Id. at § 1085(e)(3)(C)(i). If a party fails to make a contribution under a section

1085(e)(3)(C)-imposed schedule, that obligation is enforced through section 1085(e)(3)(C)(iv).

This enforcement provision states, “Any failure to make a contribution under a schedule of

contribution rates provided under this subsection shall be treated as a delinquent contribution

under section 1145 of this title and shall be enforceable as such.” Id. at § 1085(e)(3)(C)(iv).

“Section 1145” here refers to 29 U.S.C. § 1145, ERISA’s enforcement provision that

predates the passage of the PPA. ERISA’s enforcement provision, section 1145, provides,

“[e]very employer who is obligated to make contributions to a multiemployer plan under the

terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not

inconsistent with law, make such contributions.” 29 U.S.C. § 1145. Section 1145 “plainly

describes the employer’s contractual obligation to make contributions but omits any reference to

a noncontractual obligation.” Laborers Health & Welfare Tr. Fund for N. Cal. v. Advanced

Lightweight Concrete Co., Inc., 484 U.S. 539, 546 (1988). Therefore, if (1) the bargaining parties

fail to adopt in their CBA a rehabilitation contribution rate that is consistent with the

rehabilitation plan and a provided schedule, and (2) a party then fails to make a contribution

under an imposed schedule, this non-CBA-imposed obligation is treated as though it is a

“delinquent contribution” within section 1145, the enforcement provision that governs CBA

obligations. 29 U.S.C. at § 1085(e)(3)(C)(iv); see also id. at § 1085(e)(3)(C)(i) (referring to the

provision directing that one schedule “provide[d] to the bargaining parties” “shall be designated

as the default schedule”); id. at § 1085(e)(1)(B) (that provision).

2. The Automatic Employer Surcharge

Upon a fund’s entry into critical status, in addition to the initiation of the rehabilitation

plan process, an “[a]utomatic employer surcharge” is imposed on the employer. Id. at

§ 1085(e)(7)(A). This surcharge payment ends “beginning on the effective date of a [CBA] that

includes terms consistent with [a plan sponsor-provided schedule].” Id. § 1085(e)(7)(C).

Compliance with the surcharge requirement is assured by the enforcement provision

within section 1085(e)(7), which states that “[a]ny failure to make a surcharge payment shall be

treated as a delinquent contribution under section 1145 of this title and shall be enforceable as

such.” Id. at § 1085(e)(7)(B). Thus, the PPA enforces this statutory obligation again by

referencing ERISA’s existing contractual-obligation enforcement provision, section 1145.

B. Withdrawal and Calculation of Withdrawal Liability

Under the MPPAA, “when an employer completely withdraws from a multiemployer

pension plan, the employer incurs withdrawal liability that corresponds to the value of benefits in

the plan that have vested and are attributable to its employees.”4 Bd. of Trs. of IBT Local 863

Pension Fund v. C&S Wholesale Grocers, Inc., 802 F.3d 534, 537 (3d Cir. 2015); 29 U.S.C.

§ 1381. Employers may satisfy the withdrawal liability with a single payment of the sum or

4 Employers state that withdrawal liability is incurred for withdrawal from an

“underfunded plan,” ECF 23 at 10, but it appears that the withdrawals liability applies whether or

not the plan is underfunded. See 29 U.S.C. § 1381 (“If an employer withdraws from a

multiemployer plan . . . .”); CMSH, 963 F.2d at 239 (“The [MPPAA] amended ERISA to include

mandatory liability on employers withdrawing from established pension plans.”).

through annual payments. Annual payments are calculated using the “highest contribution rate at

which the employer had an obligation to contribute under the plan during the 10 plan years

ending with the plan year in which the withdrawal occurs.” 29 U.S.C. § 1399(c)(1)(C)(i). For the

purpose of this calculation, the MPPAA defines “Obligation to Contribute” under 29 U.S.C.

§ 1392(a) as:

an obligation to contribute arising –

(1) under one or more collective bargaining (or related)

agreements, or

(2) as a result of a duty under applicable labor-management

relations law, but

does not include an obligation to pay withdrawal liability under

this section or to pay delinquent contributions.

In this case, the parties dispute whether supplemental contribution rates adopted in furtherance of

the rehabilitation plan and included in a CBA constitute “an obligation to contribute arising”

“under” a CBA. Id. at § 1392(a).5

C. The MPRA

In 2014, Congress enacted the MPRA, which added to the PPA 29 U.S.C.

§ 1085(g)(3)(A). This statutory amendment explicitly excludes “increase[s] in the contribution

rate” that are made “in order to enable the plan to meet the requirement of the . . . rehabilitation

5 The parties also dispute in their cross-motions whether these rehabilitation contribution

rates constitute “an obligation to contribute arising” “as a result of a duty under applicable labor-

management relations law,” 29 U.S.C. § 1392(a), though the parties do not spend nearly as much

time on this question. See ECF 23 at 37–39; ECF 27 at 31; ECF 29 at 21; ECF 30 at 19. The

Court declines to address this question because the basis for inclusion discussed in text—as an

obligating arising under a CBA—provides a sufficient ground on which to resolve these cross-

motions.

plan” from the calculation of “the highest contribution rate under section 1399(c),” which

determines withdrawal liability. Id. This provision provides:

Any increase in the contribution rate (or other increase in

contribution requirements unless due to increased levels of work,

employment, or periods for which compensation is provided) that

is required or made in order to enable the plan to meet the

requirement of the funding improvement plan or rehabilitation plan

shall be disregarded in determining the allocation of unfunded

vested benefits to an employer under section 1391 of this title and

in determining the highest contribution rate under section 1399(c)

of this title, except for purposes of determining the unfunded

vested benefits attributable to an employer under section

1391(c)(4) of this title or a comparable method approved under

section 1391(c)(5) of this title.

29 U.SC. § 1085(g)(3)(A). The Fund did not include rehabilitation contribution rates in its

calculations for years after the MPRA became effective. ECF 1 at ¶ 13-14. The MPRA

amendments “are likely not retroactive amendments,” Serv. Emps. Int’l Union Nat. Indus.

Pension Fund v. Jersey City Healthcare Providers, LLC, 358 F. Supp. 3d 12, 21 (D.D.C. 2019),

and no party to these cross-motion suggests they are. See note 2. As such, the MPRA does not

govern the issue presented in this case, which concerns only pre-MPRA years’ rehabilitation

contribution rates that are included in a CBA.6

DISCUSSION

To calculate a withdrawal liability under § 1399, the Fund must use the “highest

contribution rate at which the employer had an obligation to contribute under the plan during the

10 plan years ending with the plan year in which the withdrawal occurs.” 29 U.S.C.

§ 1399(c)(1)(C)(i). For this calculation, the term “obligation to contribute” means “an obligation

6 Both the Fund and Employers make arguments regarding the MPRA through a

legislative history analysis, addressed below.

to contribute arising – (1) under one or more collective bargaining (or related) agreements, or (2)

as a result of a duty under applicable labor-management relations law . . . .” Id. at § 1392(a).

A. Arising Under the CBAs

The Employers contend that the statute’s plain language, the interpretive canon that all

provisions of a statute must be given effect, and persuasive precedent support the conclusion that

pre-MPRA rehabilitation contribution rates adopted in a CBA are not an “obligation to

contribute” arising under a CBA for purposes of calculating withdrawal liability. See ECF 23 at

19–25.

1. Plain Meaning of “Arising”

Whether rehabilitation contribution rates that are adopted in a CBA arise under the CBA

for purposes of calculating ERISA withdrawal liability is a question of first impression in the

Ninth Circuit. See ECF 30 at 20.

“To determine the meaning of a term in a federal regulation, we look to the common

meaning of the word.” Cleveland v. City of Los Angeles, 420 F.3d 981, 989 (9th Cir. 2005).

Employers explain that in this Circuit, “arise” is “understood to mean originating from, having

its origin in, growing out of or flowing from.” ECF 23 at 25 (quoting United States ex rel. Welch

v. My Left Foot Child.’s Therapy, LLC, 871 F.3d 791, 798 (9th Cir. 2017)); see also Trs. of W.

States Office & Pro. Emps. Pension Fund v. Welfare & Pension Admin. Serv., Inc., No. 3:19-cv-

00811-SB, 2020 WL 2545315, at *5–6 (D. Or. May 19, 2020) (describing similar definitions

used by courts such as “come into being,” “originate,” and “spring up”).

The Employers draw a distinction between (1) the origin of the rehabilitation contribution

rates that are adopted in the CBA, and (2) the collective bargaining process. They argue that the

“rehabilitation plan supplemental contributions cannot fall within [the definition of collective

bargaining] because they were never subject to ‘negotiation’ by the bargaining parties.” ECF 23

at 26 (emphasis omitted). They argue that the rehabilitation contributions are “[l]ike the

surcharge,” because “employers have no opportunity to bargain down the rates, or raise the rates

in exchange for other concessions. If there is no opportunity to bargain over the level of rates,

they by definition cannot ‘originate from’ the collective bargaining process or a CBA.” ECF 29

at 7.

However, an inability to “bargain down the rates” does not mean that the adoption of a

given rehabilitation contribution schedule within the CBA was not negotiated. As every relevant

provision to the process for implementing and enforcing the rehabilitation plan shows, the

inclusion of a given rehabilitation contribution rate is subject to negotiation during collective

bargaining.

After a pension fund enters critical status, an employer has choices as to rehabilitation

contribution rates. 29 U.S.C. § 1085(e)(3)(A) explains that a rehabilitation plan is a proposal that

sets out “a range of options to be proposed to the bargaining parties . . . to enable the plan to

cease to be in critical status . . . if agreed to by the bargaining parties” (emphasis added). 29

U.S.C. § 1085(e)(1)(B)(i) explains that the various rehabilitation schedules “provide[d] to the

bargaining parties,” “if adopted,” should each “reasonably be expected to” help the plan “emerge

from critical status.” As such, the statutory language referring to the rehabilitation plan process

explicitly states that none of the plan sponsor-provided schedules are required to be included in a

post-critical status CBA, and repeatedly refers to “bargaining parties.” Only if the bargaining

parties “adopt” or “agree[] to” any of the proposals does inclusion of a rehabilitation contribution

schedule in a CBA occur.

The statute also includes a provision titled “Imposition of schedule where failure to adopt

rehabilitation plan.” 29 U.S.C. § 1085(e)(3)(C). This provision provides for the situation where,

“after receiving one or more schedules from the plan sponsor . . . the bargaining parties . . . fail

to adopt a contribution schedule with terms consistent with the rehabilitation plan.” Id. at

§ 1085(e)(3)(C)(i)(II) (emphasis added). Not only are the schedules proposed for potential

“adoption,” but the statute anticipates that the Employers might not choose to adopt a plan

sponsor-provided schedule in the CBA.

Further, the statutory language repeatedly refers to the post-critical status, newly

negotiated CBA as potentially “consistent” or “in accordance” with the plan sponsor’s

rehabilitation plan and provided schedule. See, e.g., 29 U.S.C. § 1085(e)(3)(C)(i)(II) (“fail to

adopt a contribution schedule with terms consistent with the rehabilitation plan and a schedule

from the plan sponsor”); 29 U.S.C. § 1085(e)(3)(C)(ii)(I) (“a [CBA] providing for contributions

under a multiemployer plan in accordance with a schedule provided by the plan sponsor pursuant

to a rehabilitation plan”); 29 U.S.C. § 1085(e)(3)(C)(ii)(II) (“fail to adopt a contribution schedule

with terms consistent with the updated rehabilitation plan and a schedule from the plan

sponsor”). The text of 29 U.S.C. § 1085(e) demonstrates that the parties have choices and that

the inclusion of rehabilitation contribution rates in a CBA is subject to bargaining. The statutory

language recognizes the distinction between negotiated inclusion of rehabilitation contribution

rates and unilaterally imposed rates. A rehabilitation contribution rate adopted in a CBA

therefore “originates from” those negotiations, and thus from the CBA.

2. Precedent

There is limited case law interpreting the “obligation to contribute” provision. Employers

seek to draw an analogy between this case and Board of Trustees of IBT Local 863 Pension Fund

v. C&S Wholesale Grocers, Inc., 802 F.3d 534 (3d Cir. 2015). In that case, as here, a pension

fund entered critical status. As explained above, when a fund enters critical status, the plan

sponsor must “adopt and implement a rehabilitation plan.” Id. at 538. However, C&S focused on

another consequence of entry into critical status: the automatic surcharge. “[T]he PPA imposes

an automatic surcharge from 30 days after the employer has been notified that the plan is in

critical status until the adoption of a new CBA in accordance with the rehabilitation plan.” Id. In

C&S, the pension fund included that surcharge in its calculation of the withdrawal liability, and

the Third Circuit found this inclusion incorrect as a matter of law. It explained that the

surcharge’s enforcement provision, 29 U.S.C. § 1085(e)(7)(B), is necessary because “surcharges

are noncontractual obligations created by Section 1085(e)(7), [and] they are not within the scope

of Section 1145,” the enforcement provision for CBA obligations. Id. at 543. C&S also stated

that “[i]n order to give effect to Section 1085(e)(7)(B) [the surcharge enforcement provision],”

the surcharge cannot “arise under the CBAs.” Id. at 544. The Third Circuit further explained that

the surcharge cannot be included in the withdrawal liability calculation “unless it is part of the

highest contribution rate.” Id. at 544 (emphasis in original).

Employers argue that C&S determines the outcome of this case, ECF 23 at 23–25, but

C&S is distinguishable on multiple grounds. First, unlike a surcharge, a rehabilitation

contribution rate is clearly a “rate” capable of inclusion within the withdrawal liability

calculation. Second, the surcharge is a statutorily mandated payment that occurs automatically

upon a fund’s entering critical status rather than a negotiated contribution rate adopted in a CBA.

In this case, the post-critical status CBA explicitly includes a rehabilitation contribution rate

when the Employers had the choice not to include it. Unlike with the statutorily mandated

surcharge, the parties in this case could have included the rehabilitation contribution rate within

the CBA, not included it and accepted the default rate, or withdrawn from the Fund. Given those

options, the Employers agreed to a new CBA that included a rehabilitation contribution rate.

Third, the C&S court’s concern about giving effect to all statutory provisions is not

determinative here. Unlike with the automatic surcharge, there are multiple rehabilitation

schedules. The fact that contractual obligations to pay rehabilitation contributions are enforced

under section 1145 does not render section 1085(e)(3)(C)(iv) meaningless. Section

1085(e)(3)(C)(iv) continues to be a necessary mechanism to enforce noncontractual

rehabilitation contributions imposed by law under section 1085(e)(3)(C). This Court accepts that

some rehabilitation contribution rates do not arise under a CBA, but some do—including the

ones at issue in this case. As such, Employers go too far here in arguing that C&S “confirms”

that “rehabilitation plan contribution rates must be excluded from withdrawal liability

payments.” ECF 23 at 23.

The same issue exists with Employers’ reliance on Trustees of Western States Office and

Professional Employees Pension Fund v. Welfare & Pension Administration Service, Inc.

(“WPAS”), No. 3:19-cv-00811-SB, 2020 WL 2545315 (D. Or. May 19, 2020). See ECF 23 at

30–31. WPAS does not address the precise question presented in this case. That case, like C&S,

addressed only the “10 percent surcharge that the PPA imposes on an employer as a result of the

plan reaching critical status,” rather than rehabilitation contribution rates included in a CBA.

WPAS, 2020 WL 2545315, at *5 (quotations omitted). In WPAS, the court found the surcharge

was not properly included in the calculation of withdrawal liability because “[h]ad Congress not

enacted the PPA in 2006 and imposed a surcharge on an employer when a plan reaches ‘critical

status,’ as defined by the PPA, WPAS would not have incurred a surcharge based solely on its

status as a contributing employer under the CBA.” Id. at *6. Here, however, the Employers are

not subject to a rehabilitation contribution rate included within their CBA solely by reason of

their being a contributing employer under a CBA. They are subject to it because they agreed,

during negotiations subsequent to the plan’s entry into critical status, to put a rehabilitation

contribution rate in the new CBA.

The Employers’ reliance on two arbitration decisions, Domtar Corp. v. Pace Industry

Union-Management Pension Fund, ECF 25-1, and Commencement Bay Corrugated, Inc. (CBC)

v. Pace Industry Union-Management Pension Fund, ECF 25-2, is similarly unavailing. See ECF

23 at 31. Although those decisions concluded that certain rehabilitation contribution rates should

not have been included in withdrawal liability calculations, the rehabilitation contribution rates at

issue in those arbitrations were not included in the CBAs. As the Ironworkers arbitrator

explained, “those cases address the different question of whether contribution increases, imposed

by law pursuant to 29 U.S.C. § 1085(e)(3)(C) following expiration of the parties’ collective

bargaining agreement, should be included in the calculation.” ECF 26-2 at 439. In Domtar, the

rehabilitation contribution rates at issue were “imposed by operation of law after the Employer’s

Agreement with the Union expired and a new Agreement complying with scheduled increases

set forth in the default schedule of the Rehabilitation Plan[] was not adopted.” ECF 25-1 at 36.

These rehabilitation contributions “were not agreed upon in any [CBA] or related agreement.

Instead, they were implemented under a Rehabilitation Plan issued, unilaterally, by the Fund.”

Id. at 53; see also ECF 25-2 at 10 (CBC).

In contrast, at issue here is a rehabilitation contribution rate that was expressly adopted in

a CBA, not one imposed by law under section 1085(e)(3)(C). See ECF 26-2 at 439 (Ironworkers

arbitrator explaining “Domtar and CBC . . . are inapposite here” because, “[i]n the language of

the C & S court, neither Domtar nor CBC involved contribution rates . . . set by CBA’s . . .”)

(internal quotation marks omitted). In sum, the decisions cited by Employers, see ECF 23 at 31;

ECF 29 at 11–13, do not undercut, but rather reinforce, the conclusion that a rehabilitation

contribution rate adopted in a CBA is an obligation to contribute arising under that CBA, and

therefore should be included when calculating withdrawal liability.

Most adjudications which address the precise question presented to this Court—whether

pre-MPRA rehabilitation contribution rates recorded in the CBA should be included when

calculating annual payments for withdrawal liability based on obligations arising under a CBA—

conclude that these rates should be included.7 In Seattle Area Plumbing & Pipefitting Industry

Journeyman & Apprentice Training Trust (SAPP) v. Western States Office and Professional

Employees Pension Fund, ECF 28-2, the arbitrator rejected the same arguments that Employers

bring here. See ECF 28-2 at 9-10. The SAPP arbitrator explained:

There is some force in SAPP’s argument that ‘arising out of’

means more than simply ‘contained in.’ For example, if ERISA

provided that an employer who remains in a pension plan in

critical status must enter into a collective bargaining agreement

providing for contribution rates consistent with the supplemental

schedules in the rehabilitation plan, it could justifiably be argued

that the ‘obligation to contribute’ arose out of the statute, not the

CBA. . . . [W]hile Section 1085(e) imposes obligations on the

Fund to adopt a rehabilitation plan and provide schedules of

contribution rates, it does not contain any provision requiring the

bargaining parties to adopt those rates in their CBAs. Under the

statutory scheme, upon receiving the Fund’s rehabilitation plan and

schedules, SAPP had several options.

Id. at 9 (emphasis added). The SAPP arbitrator went on to discredit the employer’s argument that

“the statutory limits on its freedom to bargain for contribution rates means that the supplement

schedules’ rate did not ‘arise out of’ the CBA . . . . [L]ack of complete freedom to select

contribution rates in its CBAs (without incurring statutory surcharges) does not, in my opinion,

7 See ECF 1 at ¶ 16 (“The Arbitrator’s Award [in IBEW] is unprecedented.”).

mean that the supplement schedules agreed to in SAPP’s CBA did not ‘arise out of’ those

CBAs.” Id. at 10 (emphasis in original). This Court agrees.

As the SAPP arbitrator explained, the Employers “had several options.” ECF 28-2 at 9.

They could, of course, exit the Fund. But they could also stay in the Fund and choose between

rehabilitation contribution rate options that the plan sponsor was statutorily required to “provide

to the bargaining parties” and “which, if adopted, may reasonably be expected to enable the

multiemployer plan to emerge from critical status.” 29 U.S.C. § 1085(e)(1)(B)(i). They could

choose not to “adopt a contribution schedule with terms consistent with the rehabilitation plan

and a schedule from the plan sponsor,” thereby triggering imposition of one of the sponsor’s

provided schedules, designated as the default, instead. Id. at § 1085(e)(3)(C). As detailed more

below, section 1085(e) consistently characterizes post-critical status decision-making regarding

rehabilitation schedules as bargaining and as a process in which the employers have choices. See

also Honerkamp, 692 F.3d at 132 (describing how a “rehabilitation plan would figure

prominently in any negotiations” and how negotiating parties “considered the rehabilitation

plan’s schedules as well as the possibility of [the employer’s] withdrawal” from the fund). The

“lack of complete freedom” to choose what levels of rates might be included in the CBA does

not mean that a “bargaining part[y]” did not negotiate. ECF 28-2 at 9-10.

3. Giving Effect to All Statutory Provisions

Employers argue that rehabilitation contribution rates cannot “arise” from a CBA because

so holding would render the provision that enforces the schedules imposed under section

1085(e)(3)(C), section 1085(e)(3)(C)(iv), meaningless. ECF 23 at 21–23. “[O]ne of the most

basic interpretive canons [is] that ‘[a] statute should be construed so that effect is given to all its

provisions, so that no part will be inoperative or superfluous, void or insignificant . . . .’” Corley

v. United States, 556 U.S. 303, 314 (2009) (quoting Hibbs v. Winn, 542 U.S. 88, 101 (2004)).

Indeed, the Supreme Court has been “hesitant to adopt an interpretation of a congressional

enactment which renders superfluous another portion of that same law.” United States v.

Jicarilla Apache Nation, 564 U.S. 162, 185 (2011) (quoting Mackey v. Lanier Collection Agency

& Service, Inc., 486 U.S. 825, 837 (1988)).

However, because section 1085(e)(3)(C)(iv) is properly read as enforcing noncontractual,

section 1085(e)(3)(C)-imposed rehabilitation contribution rates while section 1145 enforces

contractual ones, no portion of the statute is superfluous. Employers argue that section

1085(e)(3)(C)(iv) enforces all rehabilitation contribution rates, regardless of whether they have

been contractually adopted in a CBA or were imposed by law under section 1085(e)(3)(C). ECF

23 at 24-25. Section 1085(e)(3)(C)(iv) states, “Any failure to make a contribution under a

schedule of contribution rates provided under this subsection shall be treated as a delinquent

contribution under section 1145 of this title and shall be enforceable as such.” The plain

language of section 1085(e)(3)(C)(iv), and its structural location within section 1085(e)(3)(C),

which details the procedures imposing a schedule by law after a failure to adopt, make clear that

the enforcement provision applies where the parties have not adopted a CBA. This Court agrees

with the Ironworkers arbitrator, who distinguished between contribution increases “imposed by

law pursuant to [section] 1085(e)(3)(C)” and those “set by CBA’s.” ECF 26-2 at 439. The

enforcement provision within section 1085(e)(3)(C) thus does not enforce all rehabilitation plan

contributions without distinction, as Employers claim.

While contractual contribution rate obligations are enforced through section 1145,

section 1085(e)(3)(C)(iv) remains necessary to enforce noncontractual contribution rate

obligations imposed under section 1085(e)(3)(C). Further, all the statutory terms defining and

outlining the rehabilitation process throughout section 1085(e) make it clear that the inclusion of

a rehabilitation schedule is subject to bargaining. See, e.g., 29 U.S.C. § 1085(e)(1) (plan sponsor

“shall provide to the bargaining parties 1 or more schedules . . . which, if adopted, may” help);

29 U.S.C. § 1085(e)(3) (describing a rehabilitation plan as including “options or a range of

options to be proposed to the bargaining parties”); 29 U.S.C. § 1085(e)(3)(B)(iii) (limiting the

ability to change any “schedule of contribution rates provided by the plan sponsor and relied

upon by bargaining parties in negotiating” a CBA); 29 U.S.C. § 1085(e)(3)(C)(i)(II) (describing

consequences if “the bargaining parties . . . fail to adopt a contribution schedule with terms

consistent . . .”); see also Honerkamp, 692 F.3d at 132 (describing how a “rehabilitation plan

would figure prominently in any negotiations” and how negotiating parties “considered the

rehabilitation plan’s schedules as well as the possibility of [the employer’s] withdrawal” from

the fund). Accordingly, giving effect to all the words in the statute requires the conclusion that

rehabilitation contribution rates adopted in a CBA “arise under” that CBA for purposes of

calculating withdrawal liability.

4. Legislative History

The question posed in this case is limited to rehabilitation contribution rates in effect

before the effective date of the MPRA, a 2014 statutory amendment to the PPA. See ECF 1 at

¶ 15 (describing the issue as whether “the pre-MPRA supplemental contributions” could be

included in calculating withdrawal liability). The MPRA amendment excludes from withdrawal

liability calculations any “increase in the contribution rate (or other increase in contribution

requirements unless due to increased levels of work, employment, or periods for which

compensation is provided) that is required or made in order to enable the plan to meet the

requirement of the funding improvement plan or rehabilitation plan.” 29 U.S.C. § 1085(g)(3)(A).

Employers argue that the MPRA amendments clarify the law, and thus rehabilitation

contribution rates adopted in a CBA were never intended by Congress to be included in

calculating withdrawal liability. ECF 23 at 33. The Fund argues the MPRA amendments

“effected a substantive change in the law,” excluding rehabilitation contribution rates adopted in

a CBA from withdrawal liability calculations going forward when the statute had not done so

before. ECF 27 at 24–25.

In statutory interpretation, “[w]here the statute’s language is plain, the sole function of

the courts is to enforce it according to its terms.’” Cleveland, 420 F.3d at 989 (quoting United

States v. Ron Pair Enters., Inc., 489 U.S. 235, 241 (1989) (citations and quotations omitted).

“The inquiry must cease if the statutory language is unambiguous and ‘the statutory scheme is

coherent and consistent.’” Id. (quoting Ron Pair Enters., 489 U.S. at 240).

Here, the statutory scheme as written before the 2014 amendment is coherent and

consistent, and the statutory language is unambiguous. As explained above, the statute’s

treatment of the rehabilitation plan’s implementation, the plan sponsor’s obligations, the

bargaining parties’ choices, and enforcement given those choices are coherent and consistent

across multiple subsections. Accordingly, this Court will “enforce it according to its terms.” Id.

There is no need to wade into legislative history arguments.

Further, as the Third Circuit noted when faced with similar legislative history arguments

concerning the 2014 amendment in C&S, “the views of a subsequent Congress form a hazardous

basis for inferring the intent of an earlier one.” C&S, 802 F.3d at 546 (quoting Consumer Prod.

Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 117 (1980)) (internal quotation marks

omitted). The legislative history arguments in this case are no more compelling than the ones

rejected in C&S, and this Court accordingly finds no reason to engage in that “hazardous”

exercise.

CONCLUSION

The Ironworkers arbitrator correctly determined that pre-MPRA rehabilitation

contribution rates included in CBAs are included in withdrawal liability calculations. The IBEW

arbitrator was incorrect to conclude otherwise. The Court GRANTS the Fund’s Motion for

Summary Judgment, ECF 27, and DENIES the Employers’ Motion for Summary Judgment, ECF

23.

IT IS SO ORDERED.

DATED this 11th day of December, 2020.

/s/ Karin J. Immergut

Karin J. Immergut

United States District Judge