WASHINGTON -- The statute of limitations for multiemployer pension plans to recover money after an employer withdraws from a pension plan was liberalized last week by the Supreme Court.
Justice Ruth Bader Ginsburg, writing the opinion for the nation's highest court, said the six-year statute of limitations doesn't begin until an employer fails to make a scheduled payment that is set by the plan's trustees.
The unanimous decision by the Supreme Court also unifies -- observers hope -- the issues for the federal circuit courts, which were split on the issue.
Defendant Ferbar Corp. argued that the statute of limitations begins as soon as the employer withdraws from the pension plan and that failure to sue within six years frees the employer from paying the entire withdrawal liability.
That argument was supported by the U.S. Court of Appeals for the 9th Circuit in San Francisco.
Ms. Ginsburg, writing in favor of the Bay Area Laundry and Dry Cleaning Pension Trust Fund, Oakland, Calif., stated a "limitations period ordinarily does not begin to run until the plaintiff has a 'complete and present cause of action.'
"A cause of action does not ripen under the Multiemployer Pension Amendments Act until the employer fails to make a payment on the schedule set by the fund," the opinion said.
"Applying the ordinary applicable accrual rule, we hold that the statute of limitations does not be~gin to run on withdrawal liability until a scheduled payment is missed."
Each missed payment creates a separate cause of action with its own six-year limitation period, Ms. Ginsburg wrote; if a plan sues more than six years after the first missed payment is due, but before subsequent payments, it is entitled to the balance of the withdrawal liability.
The Bay Area Laundry and Dry Cleaning Pension Trust Fund is therefore not entitled to the first payment of $345.50 because its suit was filed eight days after the statute of limitations expired.
The pension plan is still owed a total withdrawal liability of about $45,000 plus interest, said Geoffrey White, lawyer for the plan.
The $45,000 question is who will pay. Ferbar, an Oakland, Calif., holding company for several laundries, is out of business, Mr. White said
Stephen J. Barnes and Robert Ferreira, principals of Ferbar, also are listed as defendants.
Telephone calls to William Terheyden, Ferbar's attorney, were not returned.
Ferbar withdrew from the pension fund in March 1995. On Dec. 12, 1986, the pension plan sent Ferbar a notice of a $45,580.80 withdrawal liability.
Ferbar had the option of making a lump sum payment or installment payments, according to a schedule established by the plan.
The first payment was due Feb. 1, 1987. Ferbar did not pay it. The company on Feb. 27 exercised its right to review the assessment.
On April 14, 1987, the plan's trustees notified Ferbar that the first payment was delinquent and it had 60 days before it defaulted on the liability. Ferbar did not pay.
The pension plans sued Ferbar on Feb. 9, 1993, six years and eight days after the due date of the first payment, but less than six years after the second and succeeding payments were due.
Two lower courts ruled in favor of Ferbar before last week's Supreme Court decision overturned those rulings.
The decision also clarifies the law for the federal appeals courts, which differed on whether the entire withdrawal liability was forfeited if a claim for the first scheduled payment was filed after the expiration of the statute of limitations.
