Yellow Corporation

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

In re: Chapter 11

YELLOW CORPORATION, et al., Case No. 23-11069 (CTG)

Debtor. Related Docket Nos. 4834, 4835

MEMORANDUM OPINION

Yellow wound down its business operations in July 2023. That constituted a

withdrawal from the various multiemployer pension plans in which Yellow had

previously participated. In earlier opinions, this Court addressed Yellow’s potential

liability, under ERISA, to various of those multiemployer pension plans arising out

of that withdrawal.1 Yellow’s withdrawal from those multiemployer pension plans

and the basic statutory framework governing withdrawal liability under the

Multiemployer Pension Plan Amendments Act of 1980 are both addressed in the prior

opinions. In the interest of avoiding repetition and so as not to burden the reader

with an unnecessarily long opinion, familiarity with those matters is presumed.

1 See Memorandum Opinion dated March 27, 2024, D.I. 2765 (deciding that claims for

withdrawal liability are properly decided in the claims allowance process, notwithstanding

ERISA’s arbitration provisions); Memorandum Opinion dated September 13, 2024, D.I. 4326

(finding that certain regulations promulgated by the PBGC relating to the calculation of

withdrawal liability for those pension plans that received federal funding under the

American Rescue Plan Act were valid exercises of the agency’s regulatory authority, and

addressing several disputes regarding the calculation of withdrawal liability); Amended

Memorandum Opinion dated November 5, 2024, D.I. 4769 (on motion for reconsideration,

amending certain portions of the September 13, 2024 Memorandum Opinion relating to the

calculation of withdrawal liability). Debtors Yellow Corporation and its affiliates are referred

to collectively as “debtors” or “Yellow.” The Employee Retirement Income Security Act of

1974, as amended, is referred to as “ERISA.” The Pension Benefit Guaranty Corporation is

referred to as the “PBGC.” The Amended Memorandum Opinion dated November 5, 2024 is

referred to as the “Amended Memorandum Opinion.”

The disputes now before the Court arise out of proofs of claim filed by five

multiemployer pension plans.2 These plans filed claims that, in the aggregate, assert

approximately $540 million in withdrawal liability. The debtors objected to the

allowance of these claims.3 The parties filed cross motions for summary judgment,

raising several disputed legal questions that bear on the proper calculation of

withdrawal liability. Three of the issues are now ripe for decision.

First, the most significant issue is a dispute over the meaning of

29 U.S.C. § 1393(a)’s command that the plan’s actuary, in calculating a plan’s

withdrawal liability, use assumptions that “in the aggregate, are reasonable” and

that take “into account the experience of the plan” to produce a figure that reflects

the “actuary’s best estimate of anticipated experience under the plan.”4 On that issue,

three courts of appeals have held that the discount rate must at least be in the same

ballpark as the discount rate used to calculate the plan’s “minimum funding” under

29 U.S.C. § 1084(c), whose statutory language is strikingly similar to that of

§ 1393(a). One district court has reached the opposite conclusion. The Third Circuit

2 The pension plans in question are The Central Pennsylvania Teamsters Pension Fund

Defined Benefit Plan (referred to as “Central Pennsylvania Teamsters Pension Fund”), the

International Brotherhood of Teamsters Union No. Local 710 Pension Fund (referred to as

“Teamsters Local 710 Pension Fund”), the Teamsters Joint Council No. 83 of Virginia Pension

Fund (referred to as “Virginia Teamsters Pension Fund”), the New England Teamsters

Pension Fund (referred to as “New England Teamsters Pension Fund”), and the Teamsters

Pension Trust Fund of Philadelphia & Vicinity (referred to as “Philadelphia Teamsters

Pension Fund”). These plans did not receive federal funds under the American Rescue Plan

Act, so these claims allowance disputes do not involve the questions regarding the validity of

the PBGC regulations addressed in the opinions cited in n.1.

3 D.I. 2595.

4 29 U.S.C. § 1393(a)(1).

has not addressed this question. As further described below, this Court is persuaded

by the statutory analysis set forth in the decisions of the three courts of appeals and

will adopt that reasoning.

Second, the debtors and the Virginia Teamsters Pension Fund have used

different data to calculate the debtors’ “contribution base units,” which is one of the

inputs used to calculate the debtors’ annual payment (i.e., what the debtors owe every

year to pay off their withdrawal liability). The Virginia Teamsters Pension Fund

argues that its data are more reliable than the debtors’ and therefore it should be

entitled to summary judgment. While the Virginia Teamsters Pension Fund makes

a fair case for why its data may be more accurate, this is not a question of law that

should be decided on summary judgment. Rather, this issue requires the factfinder

to make a credibility determination and must be resolved after trial.

The third issue arises out of the fact that Yellow paused its contributions to

the New England Teamsters Pension Fund in 2008, when it was experiencing

financial turmoil during the financial crisis. In light of Yellow’s financial

circumstances at that time, the New England Teamsters Pension Fund, like many

other plans at the time, allowed Yellow to pause its contributions without assessing

withdrawal liability. When Yellow rejoined the plan in 2011, its plan contributions

were only 25 percent of what they had been when it paused contributions in 2008.

But Yellow’s return to the plan was conditioned on its agreement to pay withdrawal

liability based on the level of contributions it was making in 2008 if it were to

withdraw in the future. Honoring that agreement would impose withdrawal liability

that exceeds what Yellow would owe if the liability were calculated in accordance

with the statutory formula. Yellow argues that the agreement should be set aside

because it is inconsistent with the statute. This Court addressed a similar question

in its Amended Memorandum Opinion and found no reason to invalidate an

agreement under which an employer agrees (in exchange for other consideration) to

pay withdrawal liability in an amount that exceeds what strict application of the

statute would yield. The Court sees no reason to reach a different conclusion here.5

Jurisdiction

This claims allowance dispute arises under § 502 of the Bankruptcy Code and

thus falls within the district court’s “arising under” jurisdiction set forth in

28 U.S.C. § 1334(b). As provided in 28 U.S.C. § 157(a), the district court has referred

this matter to this Court under the district court’s February 29, 2012 standing order

of reference. This dispute is a core matter under 28 U.S.C. § 157(b)(2)(B).

Analysis

The current dispute arises on cross motions for summary judgment. Summary

judgment is appropriate when “there is no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law.”6 When conflicting

evidence is presented and inferences must be drawn, the court must draw all

5 While the summary judgment briefing also includes other issues, the parties reached

various agreements that either resolve those issues or reflect an agreement that they need

not be considered at this stage of the litigation. To the extent appropriate, the form of order

submitted by the parties that reflects this ruling should also include the disposition of those

other issues.

6 Fed. R. Civ. P. 56, as made applicable to this contested matter by Fed. R. Bankr. P. 9014(c)

and Fed. R. Bankr. P. 7056.

reasonable inferences in the light most favorable to the non-moving party. The court

cannot resolve genuinely disputed questions of fact.7 The judge does not weigh the

evidence, but only determines whether the issue, as presented, is definitively

resolved.8

I. The assumptions underlying the plans’ withdrawal liability

calculations must relate to the “anticipated plan experience.”

When an employer withdraws from a multiemployer pension plan outside of

bankruptcy, ERISA sets out a process for determining the employer’s withdrawal

liability. The pension plan makes an initial calculation of the withdrawal liability.9

An employer that seeks to challenge that calculation would do so through

arbitration.10 In that arbitration, the plan’s determination “is presumed correct

unless a party contesting the determination shows by a preponderance of the evidence

that” either “(i) the actuarial assumptions and methods used in the determination

were, in the aggregate, unreasonable (taking into account the experience of the plan

and reasonable expectations), or (ii) the plan’s actuary made a significant error in

applying the actuarial assumptions or methods.”11

7 Ciarlante v. Brown & Williamson Tobacco Corp., 143 F.3d 139, 145, 148 (3d Cir. 1998);

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

8 Ciarlante, 143 F.3d at 145, 148; Anderson, 477 U.S. at 249.

9 29 U.S.C. § 1382(1).

10 Id. § 1401(a)(1).

11 Id. § 1401(a)(3)(B). See also United Mine Workers of America 1974 Pension Plan v. Energy

West Mining Company, 39 F.4th 730, 735-736 (D.C. Cir. 2022) (describing statutory scheme);

Concrete Pipe & Prod. of Cal. v. Construction Laborers Pension Trust for S. Cal., 508 U.S.

602, 615 (1993) (finding that imposing burden of proof on employer to show that the actuary’s

calculations are unreasonable does not deprive employer of due process).

In this Court’s March 2024 Memorandum Opinion, it denied a motion by the

plans for relief from stay to have the debtors’ withdrawal liability decided through

arbitration, instead concluding that this claims allowance question could properly be

decided in this Court.12 In substance, the plans calculated their withdrawal liability

(as ERISA contemplates) in the proofs of claim they filed in this bankruptcy case.

This Court’s role is substantively identical to the one otherwise played by the

arbitrator. As such, the applicable procedural standard in this claims allowance

dispute is the same one that the statute directs the arbitrator to apply when

determining whether the assumptions used by the actuary were unreasonable, taking

account of the experience of the plan and reasonable expectations.

A. Sofco Erectors and the cases that follow it correctly hold that an

actuary’s assumption must be based on a plans anticipated

experience.

As the Court described in its Amended Memorandum Opinion (particularly at

pp. 5-8), multiemployer pension plans present particular regulatory challenges.

These plans are subject to ERISA’s reticulated statutory and regulatory scheme that

is designed to ensure the plans’ financial viability. One aspect of this scheme involves

the “minimum funding standards” that such plans must satisfy on an annual basis.

ERISA requires that “the employers make contributions to or under the plan for any

plan year which, in the aggregate, are sufficient to ensure that the plan does not have

an accumulated funding deficiency … as of the end of the plan year.”13

12 See D.I. 2765.

13 29 U.S.C. § 1082(a)(2)(C).

An “accumulated funding deficiency” is, in substance, any amount that is

“needed to ensure [that the plan] has enough assets to pay for the employees’ vested

pension benefits when they retire.”14 Calculating that amount necessarily requires

the plan actuary to make certain assumptions, including an assumption about the

rate of return the plan is likely to earn on its current assets. ERISA provides direction

regarding the assumptions the actuary should make: “For purposes of this section,

all costs, liabilities, rates of interest, and other factors under the plan shall be

determined on the basis of actuarial assumptions and methods — (A) each of which

is reasonable (taking into account the experience of the plan and reasonable

expectations), and (B) which, in combination, offer the actuary’s best estimate of

anticipated experience under the plan.”15

The assumed performance of the fund’s investments effectively operates as the

discount rate that should be applied to determine the present value of the plan’s

future obligations. To use a stylized example, a fund that would owe $1 million in

benefits for each of the next ten years would need more than $8.5 million in present

assets to pay those benefits if the annual return it would receive on those assets were

only three percent. But at a nine percent annual return, those same benefits would

be adequately funded with just over $6.4 million in current assets. Accordingly, for

the purpose of calculating minimum funding, “a higher interest rate-assumption is

14 United Mine Workers of Am. 1974 Pension Plan, 39 F.4th at 734. See also Milwaukee

Brewery Workers’ Pension Plan v. Jos. Schlitz, 513 U.S. 414, 416 (1995) (ERISA requires

“employers to make contributions that would produce pension plan assets sufficient to meet

future vested pension liabilities”).

15 29 U.S.C. § 1084(c)(3).

more favorable for the fund because it makes it easier to meet minimum-funding

standards.”16

The calculation of withdrawal liability involves a similar exercise. As the

Amended Memorandum Opinion (at p. 7) explained, the first step in calculating

withdrawal liability is the determination of the plan’s “unfunded vested benefits.”

Not unlike an “accumulated funding deficiency,” a plan’s unfunded vested benefits

are “the value of the nonforfeitable benefits under the plan” less “the value of the

assets of the plan.”17 So like with the accumulated funding deficiency, the calculation

of unfunded vested benefits requires one to determine the present value of the

benefits the plan owes in the future. That present discount calculation similarly

requires one to choose a discount rate, which requires one to make an assumption

about the likely future performance of the fund’s investments.

So, it may come as no surprise that ERISA’s statutory direction to the actuary

calculating withdrawal liability is quite similar to that provided in the minimum

funding context. Here, the statute states that withdrawal liability “shall be

determined by each plan on the basis of … actuarial assumptions and methods which,

in the aggregate, are reasonable (taking into account the experience of the plan and

reasonable expectations) and which, in combination, offer the actuary’s best estimate

of anticipated experience under the plan.”18 But unlike minimum funding, “[f]or

16 Sofco Erectors v. Trustees of the Ohio Operating Engineers Pension Fund, 15 F.4th 407 (6th

Cir. 2021).

17 29 U.S.C. § 1391(b)(1).

18 Id. § 1393(a)(1).

withdrawal-liability purposes, a lower interest-rate assumption is more favorable” to

the plan since a lower rate of return on the plan’s investments would increase the

amount that a withdrawing employer would be required to pay.19

For the sake of comparison, the markup below shows the difference in the

relevant statutory language between sections 1084(c)(3) (which addresses minimum

funding) and 1393(a)(1) (which addresses withdrawal liability). The language of

§ 1084(c)(3) is shown as the original language and that of § 1393(a)(1) is the revised

version. In short, withdrawal liability:

shall be determined by each plan on the basis of — (1) actuarial

assumptions and methods which, in the aggregate, are (A) each of

which is reasonable (taking into account the experience of the plan and

reasonable expectations) and (B) which, in combination, offer the

actuary’s best estimate of anticipated experience under the plan.

As the markup reveals, the most significant difference is that in the context of

minimum funding, the assumptions must be reasonable in the aggregate whereas for

purposes of calculating withdrawal liability, each of the assumptions must be

reasonable. Perhaps that means that there is more flexibility for individual

assumptions in the minimum funding context so long as the assumptions “in the

aggregate” are reasonable, whereas in the withdrawal liability context the

reasonableness of “each” assumption is considered in isolation.20 But to the extent

this minor wording difference might conceivably make a difference in some

19 Sofco Erectors, 15 F. 4th at 419.

20 See United Mine Workers of America 1974 Pension Plan v. Energy West Mining Co., 464 F.

Supp. 3d 104, 114 (D.D.C. 2020) (suggesting that this language “gives actuaries some room

to maneuver”), rev’d, United Mine Workers of Am. 1974 Pension Plan, 39 F.4th at 730.

circumstance, no party has argued that there is anything about the factual

circumstances here that would make this such a case.21

The nub of the debtor’s challenge to the plans’ calculation of their withdrawal

liability stems from the fact that the plans used lower rates to present value their

future liabilities for the purpose of calculating withdrawal liability than they did to

determine their minimum funding obligations. Three of the plans, the Central

Pennsylvania Teamsters Pension Fund, the New England Teamsters Pension Fund,

and the Virginia Teamsters Pension Fund, used a method referred to as the “Segal

Blend” to determine the present value of their future obligations. 22

The Segal Blend is an actuarial technique used to calculate a plan’s withdrawal

liability. An actuary applying the Segal Blend will blend the minimum funding rate

(calculated under 29 U.S.C. § 1084(c)(3)) and the PBGC’s published interest rates on

annuities, which is a nearly risk-free rate of return.23 While rates fluctuate over time,

under current rates the use of the Segal Blend typically results in a lower projected

investment return. The debtors assert, and the plans do not contest, that the

21 See also Concrete Pipe, 508 U.S. at 632-633 (“The use of the same language to describe the

actuarial assumptions and methods to be used in these different contexts [of minimum

funding and withdrawal liability] tends to check the actuary’s discretion in each of them.”).

Note that at the time of the Supreme Court’s decision in Concrete Pipe, the language of the

two provisions was in fact identical. The history of the various amendments is helpfully

described in the district court’s opinion in Manhattan Ford Lincoln v. UAW Local 259 Pension

Fund, 331 F. Supp. 3d 365, 389-390 n.41 (D.N.J. 2018).

22 D.I. 4834-1, Ex. 1 ¶¶ 24-25 (Central Pennsylvania Teamsters Fund Dec.); id., Ex. 2 ¶¶ 22-

23 (New England Teamsters Pension Fund Dec.); id., Ex. 3 at 11 (Culp Dep. Tr.); id., Ex. 4 at

106 (Culp Dep. Tr.).

23 Pension, Hospitalization & Benefit Plan of Elec. Indus. v. ConvergeOne Dedicates Servs.,

730 F. Supp. 3d 41, 43 (S.D.N.Y. 2024).

difference between the Segal Blend rate and the rate they used in calculating

minimum funding is nearly four percent. And none of the so-called “Segal Plans”

actually hold annuities.24

The differences between the minimum funding rate and the Segal Blend rate

are illustrated in the table below, the accuracy of which is not contested.

Minimum Funding

Plan Segal Blend Rate

Rate

Central Pennsylvania 3.9% for first 20 years.

7.5%

Teamsters Pension Fund25 3.65% for remainder.

New England Teamsters 4.21% for first 25 years.

8.5%

Pension Fund26 4.34% for remainder.

Virginia Teamsters Pension 3.9% for first 20 years.

7.0%

Fund27 3.65% for remainder.

Two other plans used IRS current liability rates, which are essentially interest

rates for 30-year U.S. Treasury securities. These rates also approximate a “risk free”

rate of return.

Minimum Funding

Plan IRS Rate

Rate

Teamsters Local 710

6.5% 2.57%

Pension Fund28

Philadelphia Teamsters

7% 2.53%

Pension Fund29

24 See D.I. 4834-1, Ex. 5 at 41, 106 (Dixon Dep. Tr.); Id. Ex. 1 ¶ 29 (Central Pennsylvania

Fund Teamsters Dec.); Id. Ex. 4 at 85 (Culp Dep. Tr.).

25 D.I. 4834-1, Ex. 1 ¶ 24.

26 Id., Ex. 2 ¶ 22.

27 Id., Ex. 6 at 1.

28 Id., Ex. 7 ¶ 23; id., Ex. 8 at 166.

29 Id., Ex. 9 at 115-116.

The prevailing view, which this Court will follow, is that the similarity of the

language ERISA uses to describe the minimum funding rate and the withdrawal

liability rate means that a variation between the two that is as substantial the one

here is inconsistent with the statute. The Sixth Circuit’s decision on this point in

Sofco Erectors is persuasive. The court there emphasized that the relevant statutory

language requires the use of assumptions that “offer the actuary’s best estimate of

anticipated experience under the plan.”30 And the Segal Blend rate is not the

actuary’s “best estimate of anticipated experience under the plan.”31 Instead, the

Segal Blend “dilutes the actuary’s best estimate with rates on investments that the

plan is not required to and might never buy, based on a set formula that is not tailored

to the unique characteristics of the plan.”32

Since the Sixth Circuit’s decision in Sofco Erectors, two other courts of appeals

have adopted its reasoning. In United Mine Workers of America 1974 Pension Plan

v. Energy West Mining Co., upon the employer’s withdrawal from the plan, the plan’s

actuary, rather than relying on the plan’s historic investment performance (which

was approximately 7.5 percent) used a “risk-free” rate of less than 2.8 percent.33 The

parties there disputed whether § 1393(a)(1) imposes any substantive limitation on

the actuary’s selection of a rate, or whether (as the plans argued) the statute merely

“requires that the assumptions be developed independently by the actuary but

30 15 F.4th at 420 (quoting 29 U.S.C. § 1393(a)(1) (emphasis omitted)).

31 Id. at 421.

32 Id. (internal quotations and citation omitted).

33 United Mine Workers of Am. 1974 Pension Plan, 39 F.4th at 736.

otherwise imposes no substantive requirements on the assumptions made.”34 Relying

on the language of the statute and on the Sofco Erectors decision, the D.C. Circuit

held that when “calculating withdrawal liability, actuaries must select a discount

rate based on the plan’s actual anticipated investment experience.”35

The Ninth Circuit decision in GCIU-Employer Retirement Fund is to the same

effect.36 There, the actuary “did not take into consideration the future experience of

the GCIU fund or its expected returns on the plan’s funds as currently invested,” but

instead used a risk-free rate of return.37 The Ninth Circuit followed the Sixth and

D.C. Circuits in concluding that this approach was inconsistent with § 1393(a)(1).

“We follow our sister circuits and interpret the statute to require that the actuary’s

assumptions and methods reflect the plan’s characteristics.”38

It bears note that none of these opinions goes so far as to say that the

withdrawal liability rate needs to be precisely the same as the minimum funding rate.

It is true, as noted above, that there is a slight difference in statutory language. But

as the D.C. Circuit explained, “the assumptions need not be identical but must be

34 Id. at 738.

35 Id.

36 GCIU-Employer Retirement Fund v. MNG Enterprises, Inc., 51 F.4th 1092 (9th Cir. 2022).

37 Id. at 1099 (internal quotation omitted).

38 Id. (citing United Mine Workers of Am. 1974 Pension Plan, 39 F.4th at 738; Sofco Erectors,

15 F.4th at 422-423).

similar because they both must be ‘the actuary’s best estimate of anticipated

experience under the plan.’”39

B. None of the plans’ arguments for a contrary reading of the

statute is persuasive.

The plans respond to these points primarily by relying on a series of older court

of appeals decisions that, in their view, hold that the test established by § 1393(a)(1)

is purely “procedural” and only requires that a qualified and independent actuary

certify that the rate used was the actuary’s best estimate of the plan’s anticipated

experience.40 On the strength of these cases, the plans contend that Sofco Erectors

and the cases that follow it have created a circuit split.41

That is incorrect. The Sixth Circuit explained this point in Sofco Erectors. It

is true that § 1393(a)(1) establishes a procedural requirement. The Sixth Circuit had

said as much in Rhoades, a case that relied on the same court of appeals cases from

which the plans contend that Sofco Erectors split.42 But Rhoades, and the other court

of appeals cases on which it relied, is not inconsistent with Sofco Erectors.

39 United Mine Workers of Am. 1974 Pension Plan, 39 F.4th at 741 (quoting

29 U.S.C. § 1393(a)(1)). For this reason, nothing in this line of caselaw calls into question

the Third Circuit’s determination in Huber v. Casablanca Indus. Inc., 916 F.2d 85, 94 (3d Cir.

1990), that ERISA does not require an actuary to use the minimum funding rate in

calculating withdrawal liability. See also PBGC Opinion Letter 86-24 (stating that “[t]here

is no requirement that the actuarial assumptions used to determine withdrawal liability be

the same” as those used to the calculate minimum funding rate).

40 See Wachtell, Lipton, Rosen & Katz v. Commissioner of Internal Revenue, 26 F.3d 291, 296

(2d Cir. 1994); Vinson & Elkins v. Commissioner of Internal Revenue, 7 F.3d 1235, 1238 (5th

Cir. 1993); Chicago Truck Drivers, Helpers & Warehouse Workers Union (Indep.) Pension

Fund v. CPC Logistics, Inc., 698 F.3d 346, 357 (7th Cir. 2012).

41 D.I. 5042 at 4.

42 See Rhoades, McKee, & Boer v. United States, 43 F.3d 1071 (6th Cir. 1995).

Rhoades held that the statutory requirement that the actuary provide a “best

estimate” does not mean that the estimate must “withstand the scrutiny of ‘outside

experts’ who suggest that a different figure is ‘best.’”43 The point of the “best estimate”

requirement is to “ensure that the chosen assumptions actually represent the

actuary’s own judgment, rather than the dictates of plan administrators or

sponsors.”44

Nothing in those cases, however, permits an actuary to “disregard the statute’s

requirement that they base their estimates on the ‘anticipated experience under the

plan.’”45 That substantive obligation is in addition to the procedural requirement that

the actuaries be independent and make their best estimate.

It is true that Rhoades and the other court of appeals cases on which it relied

generally upheld calculations in which actuaries used interest rates that

approximated a risk-free rate. But those cases involved circumstances in which a

party simply argued that its alternative assumptions were more accurate than those

chosen by the actuary. Those courts rejected the challenges. The decisions, however,

did not engage (and had no occasion to engage) the question whether the rate used to

calculate withdrawal liability violated the statute because it was not in fact based on

the actuary’s estimate of anticipated experience under the plan. Accordingly, there

43 Sofco Erectors, 15 F.4th at 421 (citing Rhoades, 43 F.3d at 1074).

44 Id. at 422 (citing Rhoades, 43 F.3d at 1075).

45 Id. (quoting 29 U.S.C. § 1393(a)(1)).

is no conflict between the Sofco Erectors line of cases and the court of appeals

decisions on which the plans rely.

The plans are correct, however, in pointing to a district court opinion that did

engage this question and came out their way. In Manhattan Ford Lincoln v. UAW

Local 259, the employer withdrew from its multiemployer pension plan and the plan

assessed withdrawal liability on the company. 46 The plan used the Segal Blend to

calculate its withdrawal liability.47 Manhattan Ford challenged this approach and

argued that the plan should have used the minimum funding rate. The company

argued that the plan was required to calculate its withdrawal liability using the

minimum funding rate because the plan was not “principally invested in risk-free

assets.”48 The arbitrator found that the plan was permitted to use the Segal Blend

and the district court affirmed. It held that the “best estimate” test was a procedural

one and that the purpose of the “best estimate” test was to ensure that the actuary’s

assumptions were not the result of undue influence from the plan.49

The Manhattan Ford court noted the similarity of the statutory language used

to describe the assumptions that govern minimum funding and those that govern

withdrawal liability.50 Even so, the court found that the “best estimate” provision

“does not embody a substantive standard so much as it commits the issue to the

46 331 F. Supp. 3d at 372.

47 Id. at 373.

48 Id. at 393-394.

49 Id. at 396.

50 Id. at 387.

judgment of the actuary.”51 The opinion is a thoughtful one and it makes a fair

argument for reading the statute as imposing only a procedural requirement but

otherwise establishing a regime of deference to the conclusions of the actuary. At the

end of the day, however, this Court does not believe that the analysis of Manhattan

Ford provides a sufficient basis to overcome the force of the statutory language, which

requires a court to decide whether the assumptions used reflect the “actuary’s best

estimate of anticipated experience under the plan.”52 On that issue, there is no

avoiding the legal conclusion that a rate that has so little grounding in the plan’s

actual investments is incorrect as a matter of law.

The plans advance several other arguments to support their use of

substantially lower rates in their withdrawal liability calculation than those used for

minimum funding. They argue that their blended rates are intended to reflect a

conservative growth rate. This, they contend, is proper because an employer’s

withdrawal from a multiemployer pension plan creates the risk of an additional

financial burden on the remaining employers.

It is certainly true that the use of a higher rate runs the risk that the plan’s

actual return will be lower, and therefore that the plan will face a funding shortfall.

Because withdrawal liability is fixed, if this turns out to be the case, the burden will

fall on the remaining plan members to make the plan whole. So, the plans argue, it

51 Id. at 396.

52 29 U.S.C. § 1393(a)(1).

is therefore appropriate to use more conservative assumptions to calculate a plan’s

withdrawal liability.53

The Sofco Erectors court considered and rejected this very argument. As that

court said, while this may well be a fair “policy proposal,” there is no “suggestion that

Congress intended to give an actuary the discretion to dilute her best estimate of

anticipated experience under the plan in order to shift risk onto the departing

employer.”54

The plans also point to a PBGC regulation that requires pension plans that

received federal funding under the American Rescue Plan Act to use a risk-free rate

of return.55 That regulation, they contend, supports their use of similar rates here.

The regulation, however, does little to advance the plans’ position. Section 1393(a)

provides that the actuarial assumptions used must be either those that reflect the

actuary’s best estimate of anticipated experience under the plan (under § 1393(a)(1))

or those set forth in PBGC regulations (under § 1393(a)(2)). The plans at issue here

did not receive American Rescue Plan Act funding and do not contend that any PBGC

regulations govern their calculation of withdrawal liability. The fact that a different

statutory provision (§ 1393(a)(2)) that applies in different circumstances might

permit a different set of actuarial assumptions provides no reason to break from the

ordinary meaning of the language in § 1391(a)(1).

53 D.I. 5201 at 3-4.

54 Sofco Erectors, 15 F.4th at 422.

55 See 29 C.F.R. § 4262.16(g).

Finally, the plans correctly point out that while annuity rates today are low by

historical standards, there certainly was a time when those rates were higher than

the traditional expected return on investment. In those days, using annuity rates to

calculate withdrawal liability would have led to lower withdrawal liability than

would using the expected return on investment assets.56 And the plans point out that

the same may well be true at some point in the future. But that does not respond at

all to the fact that § 1393(a)(1) requires withdrawal liability to be calculated by

reference to the anticipated experience of the plan. Whether the words Congress

chose lead, at any point in time, to greater or lesser withdrawal liability does not alter

the Court’s obligation to give effect to the words of the statute as they are written.

Accordingly, while it is true that the district court in Manhattan Ford makes

a reasoned argument for a contrary reading of the statute, this Court adopts the

reasoning articulated in Sofco Erectors, United Mine Workers, and GCIU-Employer

Retirement Fund. Under that reasoning, the statutory requirement that the

assumptions used in calculating withdrawal liability be based on the actuary’s “best

estimate of anticipated experience under the plan” precludes the use of discount rates

that sharply diverge from those used in calculating minimum funding. That is not to

say that the rates need to be identical; some variance may well be permissible, so long

as it is grounded in differences that find a home in the statutory language. The Court

will accordingly grant partial summary judgment in favor of the debtors on their

contention that, in light of the funds’ minimum funding rates, the discount rates used

56 See D.I. 5201 at 8.

by the plan actuaries to calculate the plans’ withdrawal liability are inconsistent with

the statutory requirements. The debtors’ motion for partial summary judgment on

this issue is granted; the plans’ motion for partial summary judgment on this point

will be denied.57

II. There is a genuine issue of material fact about which contribution

base units should be used to calculate the annual payment owed to the

Virginia Teamsters Pension Fund.

The parties dispute whether a discrepancy in the calculation of the Virginia

Teamsters Pension Fund’s contribution rate requires re-calculation of the debtors’

annual payment using the debtors’ figures. This is fundamentally a dispute about

which side’s calculations are more likely to be correct. The Court views this dispute

as the type of contest over credibility that is not properly resolved at the summary

judgment stage.58

ERISA requires multiemployer pension plans to measure plan contributions

by “contribution base unit,” which is the unit of activity for which an employer has

an obligation to contribute to the plan.59 In this instance, the debtors were obligated

57 The debtors and the plans have also both filed motions in limine to exclude the testimony

of each other’s expert witnesses, contending that the testimony should be excluded under

Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993).

Substantial portions of those motions are likely overtaken by the foregoing ruling on

summary judgment. To the extent the issues remain live, as the Court noted during the

January 13, 2025 argument, the Court will grant the motions to the extent that a witness

purports to offer a legal conclusion, with the specific scope of that exclusion to be preserved

for trial to the extent a witness purports to offer testimony that is objectionable on this basis.

The Court will otherwise deny the motions in limine, as the Court is satisfied that the

witnesses are qualified to serve as experts and that the testimony is admissible under Rule

702 and Daubert. The arguments advanced in the motions in limine bear on the weight to

be afforded to the testimony rather than its admissibility.

58 See In re U.S. Wireless Corp., 386 B.R. 556, 559-560 (Bankr. D. Del. 2008).

59 29 U.S.C. §§ 1301(a)(11), 1399(c)(1)(C)(i).

to contribute $97.40 a week for “regular employees” and $10 a week for “casual

employees” (i.e., part time employees). The annual payments are calculated by

multiplying (x) the highest contribution rate in the prior ten years times (y) the

highest average number of contribution base units over three consecutive plan years

within the 10-year withdrawal liability period. Therefore, an undercounting of the

contribution base units will understate the annual payment amount.

Here, the plan seeks summary judgment that its proposed annual payment

(calculated using the plan’s data) is the correct amount. The debtors do not seek

summary judgment on this issue but argue that there is a genuine issue of material

fact about whether the data used by the plan to calculate its annual payment were

reliable.60

In support of this contention, the debtors point to record evidence indicating

that the Virginia Teamsters Pension Fund’s data were unreliable because (1) the

plan’s actuary “did not independently verify the accuracy of the plan’s records;” (2) a

2022 audit letter cast doubt on the accuracy of the plan’s historical data; and (3) the

debtors’ expert was unable to reconcile his figures with the plan’s figures (though the

plan asserts that this is of no moment because the debtors’ figures are incomplete and

would therefore never match).61

In response, the Virginia Teamsters Pension Fund makes what appears on

first blush to be a fairly persuasive argument that the debtors’ data does not include

60 D.I. 5045 at 20-21.

61 D.I. 5045-5 at 18; D.I. 5045-1 (Ex. 2) at 36; D.I. 5045-5 (Ex. 13); D.I. 4835 at 25-27.

casual employees and therefore understates the number of contribution base units.62

But even so, this issue ultimately boils down to the question of which party’s records

are more likely to be the accurate ones. And even if the Court could form an

impression of how that credibility determination might ultimately come out, that is

not the task on summary judgment, where all reasonable inferences must be drawn

in favor of the non-moving party. The Court will therefore deny the Virginia

Teamsters Pension Fund’s motion for partial summary judgment on this issue.

III. The New England Teamsters Pension Fund’s withdrawal liability

calculation is appropriate.

The final issue is presented in cross motions for summary judgment filed by

the New England Teamsters Pension Fund and the debtors. The New England

Teamsters Pension Fund calculated the debtors’ withdrawal liability in a manner

that comports with an agreement reached between the debtors and the New England

Teamsters Pension Fund but exceeds the liability that would be imposed by simple

application of the statute.

This Court considered similar issues in the Amended Memorandum Opinion

and concluded that nothing in ERISA provided a basis for relieving the debtors of

their contractual commitment, made upon reentry to certain pension plans, to pay

greater withdrawal liability in the event of a subsequent withdrawal than they would

otherwise owe under the statute.63

62 D.I. 4835 at 25-28; D.I. 5201 at 11-12.

63 D.I. 4769 at 39-41.

The debtors argue that this circumstance is different because the debtors are

not a party to a specific agreement that outlines the terms of their reentry. Rather,

the term at issue is set forth in the New England Teamsters Pension Fund’s plan

documents.64 The debtors do not dispute, however, that such plan documents may

bind an employer in a multiemployer plan. Nor is there any real dispute that the

debtors in fact agreed, at the time they reentered the plans, to pay increased

withdrawal liability in the event of a subsequent withdrawal.

The debtors further argue that even if the Court’s earlier decision was correct

in its context, the plan rules at issue here are subject to 29 U.S.C. § 1399(c)(7), which

allows plans to “adopt rules for other terms and conditions for the satisfaction of an

employer’s withdrawal liability” so long as they are “consistent with this chapter.”65

And the debtors argue that these rules, which provide greater liability than ERISA

otherwise would impose, are not “consistent with this chapter.”

But for the same reasons as those set forth in the Amended Memorandum

Opinion, the consensual agreement reached between the New England Teamsters

and the debtors is not inconsistent with the statute. The statute certainly provides a

methodology for calculating withdrawal liability. And, to be sure, there are some

64 D.I. 4836-2, Ex. B at § 15.06(a)(iv) (New England Teamsters Plan); See D.I. 4836-3, Ex. C

at Art. 65(b) (“The Employer agrees to and has executed a copy of the New England

Teamsters and Trucking Industry Pension Fund Agreement and Declaration of Trust dated

April 11, 1958, and accepts such Agreement and Declaration of Trust, as amended….). The

debtors do not dispute the notion that they are parties to the New England Teamsters

governing pension documents. See D.I. 5045 at 21-22 (contesting the New England

Teamsters’ arguments but not disputing the notion that the debtors are a party to the New

England Teamsters’ plan documents).

65 29 U.S.C. § 1399(c)(7).

statutes that prevent parties from agreeing by contract to terms that change the rules

imposed by statute (such as the Bankruptcy Code’s prohibition on ipso facto

clauses).66 But the parties have pointed to no provision of ERISA that purports to

prevent a plan and an employer from reaching an agreement under which an

employer would agree to pay more in withdrawal liability, in exchange for some other

valid form of consideration (such as the right to reenter the plan, at a lower

contribution rate, after having suspended participation). The Court will accordingly

grant partial summary judgment in favor of the New England Teamsters Pension

Fund and against the debtors on this issue.

Conclusion

For the foregoing reasons, the summary judgment motions are granted in part

and denied in part. The parties are directed to submit a form of order reflecting these

rulings.

□□

Dated: February 5, 2025

CRAIG T. GOLDBLATT

UNITED STATES BANKRUPTCY JUDGE

66 See 11 U.S.C. §§ 365(e)(1) and 541(c).

24