Withdrawal Liability-Trustee Discretion-Pension Plan Trust Agreement

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7^th Circuit Court of Appeals

Case Name: Penske Truck Leasing, LP v. Central States Southeast and Southwest Areas Pensi

Case No.: 25-1872

Officials: Hamilton, St. Eve, and Pryor, Circuit Judges.

Focus: Withdrawal Liability-Trustee Discretion-Pension Plan Trust Agreement

The Penske Truck Leasing, LP (Penske) engaged in a nationwide truck-leasing business contributed to a multiemployer pension plan on behalf of employees in several bargaining units, including a unit represented by Local 745 in Dallas, Texas. Following negotiations between Penske and Local 745, the parties agreed to a one-year extension of their collective-bargaining agreement. The pension plan’s trustees, however, rejected the extension, expressing concern that Penske was coordinating contract expiration dates to reduce potential withdrawal liability. The plan subsequently informed Penske that, unless it agreed to treat any withdrawal by Local 745 in 2022 as having occurred in 2021, Local 745’s participation in the plan would be terminated. When Penske declined, the trustees voted to terminate Local 745’s participation effective December 25, 2021.

Penske filed suit in the Northern District of Illinois, seeking to enjoin the termination and contending that the trustees lacked authority under the plan’s Trust Agreement to expel Local 745. Although the district court initially issued a temporary restraining order, it later vacated that order and denied Penske’s request for a preliminary injunction. Following discovery, the court granted summary judgment in favor of the pension plan, concluding that the trustees possessed authority under the Trust Agreement to terminate Local 745’s participation and that their decision was neither arbitrary nor capricious. The district court also dismissed the plan’s counterclaim seeking a judicial declaration regarding Local 745’s withdrawal date, holding that federal law required the issue to be resolved through mandatory arbitration before judicial intervention.

The  Seventh Circuit found that the Trust Agreement conferred discretionary authority on the trustees to interpret and administer the plan, and that their decision to expel Local 745 represented a reasonable exercise of that authority rather than arbitrary or capricious action. The court further agreed that the plan’s counterclaim had been properly dismissed because disputes concerning withdrawal liability and related determinations must first be submitted to arbitration before becoming subject to judicial review. The case was remanded for further proceedings regarding attorney-fee issues.

Affirmed and remanded.

Decided 05/29/26

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