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ERISA – Employer Withdrawal

By: Derek Hawkins//August 3, 2015//

ERISA – Employer Withdrawal

By: Derek Hawkins//August 3, 2015//

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Civil

7th Circuit Court of Appeals

Officials: BAUER, ROVNER, and WILLIAMS, Circuit Judges

ERISA – Employer Withdrawal

No. 14-1618 James Tsareff v. Manweb Services

Where district court abuses discretion in review of withdrawal liability where arbitration should control.

“Finally we turn to the district court’s analysis of Tiernan & Hoover’s underlying liability. The Plan argues that the question of whether or not Tiernan & Hoover withdrew under the statute was a question reserved for the arbitrator and, since Tiernan & Hoover’s withdrawal was conclusively established once it waived arbitration, the merits of this determination were removed from the district court’s purview and should not have been reviewed. We agree. The statute is clear: “any dispute over withdrawal liability shall be arbitrated.” Robbins, 846 F.2d at 1056 (quoting I.A.M. Nat’l Pension Fund v. Clinton Engines Corp., 825 F.2d 415, 417 (D.C. Cir. 1987)). Arbitration is treated as an administrative remedy exhaustion requirement and courts interpreting § 1401(a)(1) have been consistent in their conclusion that “‘[a]rbitrate first’ is indeed a rule Congress stated unequivocally.” Robbins, 846 F.2d at 1056. The result may be harsh, but “the statute embodies a strong public policy that any dispute [over withdrawal liability] be submitted to arbitration.” Chicago Truck Drivers, Helpers & Warehouse Workers Union (Indep.) Pension Fund v. Louis Zahn Drug Co., 890 F.2d 1405, 1410 (7th Cir. 1989). In short, “[a]rbitration reigns supreme under the MPPAA,” Clinton Engines, 825 F.2d at 422, thus the district court’s substantive review of Tiernan & Hoover’s underlying withdrawal liability constitutes an error of law, and by definition, an abuse of discretion.”

Reversed and Remanded

Full Text


Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.

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