Second Circuit Rejects Pension Fund’s Double-Counting Theory and Eliminates $1.8 Million in Withdrawal Liability

In Mar-Can Transportation Co., Inc. v. Loc. 854 Pension Fund, No. 24-1431, —F.4th—-, 2026 WL 452565 (2d Cir. Feb. 18, 2026), the Second Circuit resolved a significant statutory interpretation dispute under ERISA’s Multiemployer Pension Plan Amendments Act (MPPAA), holding that a pension fund may not “double count” transferred assets when calculating withdrawal liability following a certified change in collective bargaining representative. Interpreting ERISA § 1415(c), the Court concluded that the employer’s withdrawal liability must be reduced by the full amount of liabilities transferred to the new plan minus the assets transferred—not by a formula that effectively subtracts assets twice. The ruling eliminated approximately $1.8 million in assessed withdrawal liability.

Mar-Can Transportation withdrew from a Teamsters-affiliated multiemployer pension plan after its employees voted to change bargaining representatives and join a different union. Under ERISA, that certified change triggered two statutory consequences. First, the employer incurred withdrawal liability under 29 U.S.C. § 1381. Second, the old plan was required under 29 U.S.C. § 1415 to transfer certain assets and liabilities attributable to the affected employees to the new union’s pension plan.

The old plan transferred approximately $5.5 million in liabilities and $3.7 million in assets. It then assessed roughly $1.8 million in withdrawal liability. The dispute centered on how § 1415(c) requires withdrawal liability to be reduced after such a transfer.

Section 1415(c) provides that when assets and liabilities are transferred after a change in bargaining representative, withdrawal liability “shall be reduced” by the amount by which the “unfunded vested benefits allocable to the employer” that are transferred exceed the value of the assets transferred. The pension fund argued that “unfunded vested benefits” meant liabilities minus assets. Under that reading, the statute required subtracting transferred assets a second time, effectively wiping out any reduction and preserving the full $1.8 million withdrawal assessment.

Mar-Can argued that “unfunded vested benefits allocable to the employer” referred to the total liabilities transferred. Under that approach, the reduction equals transferred liabilities minus transferred assets—precisely the net amount the old plan shed when the transfer occurred.

The Court’s Interpretation of § 1415(c)

The Second Circuit began by examining the statutory text and structure. Although ERISA defines “unfunded vested benefits” elsewhere in the statute, the Court held that definition did not automatically control here. Section 1415 appears in a different part of ERISA with a distinct purpose, and the phrase used in § 1415(c) is not identical to the definition found in the withdrawal liability provisions of Part 1. The Court therefore found the language ambiguous in context.

Turning to statutory structure, the Court rejected the fund’s interpretation as producing unreasonable and anomalous results. Under the fund’s approach, the plan would both shed $1.8 million in net liabilities through the asset-and-liability transfer and collect $1.8 million in withdrawal liability—resulting in a windfall. The Court found no indication that Congress intended to allow such double recovery.

The Court further explained that related provisions in § 1415 make sense only if the reduction equals the net liability shift (liabilities minus assets). Other subsections establish mechanisms designed to keep plans financially neutral after a bargaining representative change, not overcompensated. Reading § 1415(c) to allow double subtraction of assets would upset that balance and distort the statutory scheme.

The Court also considered the broader purpose of § 1415. Congress enacted the provision to address situations where an employer withdraws because employees change bargaining representatives—an event often outside the employer’s control. Legislative history reflected concern about imposing unfair burdens in those circumstances. The fund’s interpretation would have imposed a harsher financial result on employers forced to withdraw due to union decertification than on employers voluntarily exiting a plan. The Court found that outcome inconsistent with the statute’s design and purpose.

The Second Circuit held that for purposes of § 1415(c), “unfunded vested benefits allocable to the employer” refers to the total amount of liabilities transferred to the new plan. The reduction in withdrawal liability equals transferred liabilities minus transferred assets.

Because Mar-Can’s transferred liabilities exceeded transferred assets by approximately $1.8 million—the same amount as its assessed withdrawal liability—the statutory reduction eliminated the withdrawal liability in full.