Con-way Inc. filed a lawsuit in U.S. District Court in San Francisco seeking a declaration that the company isn’t liable for the $662 million in withdrawal liability sought by the $26.8 billon Teamsters Central States, Southeast and Southwest Areas Pension Fund, Rosemont, Ill., according to a filing Oct. 10 to the SEC by the San Mateo, Calif.-based company.
Central States claims the withdrawal liability was incurred by Consolidated Freightways Corp., a former subsidiary of Con-way, which was spun off to stockholders in 1996, the filing states.
“CFC subsequently went bankrupt in 2002” and the multiemployer pension Central States fund assessed CFC a share of the unfunded vested benefits in the pension plan.
Central States further claims the trigger date for assessing the CFC withdrawal liability was the unrelated sale by Con-way in 2004 of its Menlo Worldwide Forwarding Co. unit to United Parcel Service Inc., the filing states. Central States contends that sale resulted in Con-way’s “complete withdrawal” from the pension fund and CFC’s permanent end to its obligation to contribute to it, the filing states.
That later date raised the withdrawal liability to $662 million from $319 million, the higher amount primarily reflecting “the fact that Central States' overall level of underfunding increased substantially from 2002 to 2004,” the filing said.
Payment of all or a significant part of the withdrawal liability claim “could have a material adverse effect on Con-way's financial condition,” the filing said.
Con-way, a transportation and logistics company, has a non-union workforce and has no employees in the Central States fund, said Gary Frantz, communications director.
Thomas C. Nyhan, Central States executive director, and Mark F. Angerame, CFO, were out of the office and unavailable for comment.
