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Sixth Circuit Holds that a Union’s Indemnification of an Employer’s Withdrawal Liability Does Not Violate Public Policy
In a case of first impression, the U.S. Court of Appeals for the Sixth Circuit held that a union’s agreement in a collective bargaining agreement to indemnify an employer for its withdrawal liability under a multiemployer plan does not violate public policy and is therefore enforceable. In this case, the General Drivers, Warehousemen and Helpers Local Union No. 89 specifically agreed in its collective bargaining agreement with Shelter Distribution, Inc. that the union “shall indemnify [Shelter] for any contingent liability which may be imposed under the Multiemployer Pension Plan Amendment Acts of 1980.” The court reasoned that (i) the indemnity was analogous to obtaining a policy from an insurance company to cover any potential liability for fiduciary breaches as described in Section 1110(b) of the Multiemployer Pension Plan Amendments Act; (ii) the indemnity is not a violation of any “well defined and dominant” public policy; and (iii) the goals of… Continue Reading
PBGC Issues Guidance on Reportable Events
The Pension Benefit Guaranty Corporation (PBGC) released a Technical Update providing temporary guidance on compliance with certain reportable events requirements under Section 4043 of ERISA. The update addresses two issues: (1) valuing assets, vested benefits and unfunded vested benefits for plan years beginning in 2012, and (2) the waiver of or a simplified notice for reporting certain missed quarterly contributions for small plans for the 2012 plan year. This guidance is available here.
Asset Purchaser May Have Successor Liability for Delinquent Contributions to Multiemployer Plan
The Third Circuit ruled that the purchaser of assets of an employer obligated to contribute to a multiemployer plan may, under certain circumstances, be held liable for the seller’s delinquent contributions to that plan. According to the Court, successor liability may exist where the purchaser had notice of the liability prior to the sale and there exists sufficient evidence of continuity of operations between the purchaser and seller. Einhorn v. M.L. Ruberton Construction Co., No. 09-4204 (3rd Cir. Jan. 21, 2011).
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