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Appeals court rejects novel withdrawal liability challenge

Employers contributing to multiemployer pension funds cannot use ERISA to challenge the withdrawal liability forced on them when they leave a distressed fund that is operating under a rehabilitation plan, the 11th U.S. Circuit Court of Appeals in Atlanta ruled Tuesday.

The ruling affirmed a U.S. District Court decision against Westrock RKT Co., which had sought to challenge the actions of the board of the Pace Industry Union-Management Pension Fund to impose withdrawal liability on Westrock.

Westrock had argued such challenges were allowed under the Pension Protection Act of 2006 requiring multiemployer pension funds in critical status, typically less than 65% funded, to develop rehabilitation plans to increase funding levels. When the pension fund board added a provision to its rehabilitation plan requiring employers to pay part of underfunding, Westrock argued that the amendment violated ERISA, but Judge Charles Wilson of the appellate court said in the order that Westrock did not have a valid cause of action.