Seventh Circuit Affirms District Court Decision Holding that Employers’ post-2014 Contribution Rate Increases Should be Excluded from Withdrawal Liability Obligations

In Cent. States, Se. & Sw. Areas Pension Fund v. Event Media Inc., No. 24-1739, 2025 WL 1185368 (7th Cir. Apr. 24, 2025), the Seventh Circuit addressed a statutory interpretation issue concerning the calculation of withdrawal liability for employers withdrawing from multiemployer pension plans. The court affirmed the district court’s ruling that certain post-2014 contribution rate increases should be excluded from the calculation of withdrawal liability under the Multiemployer Pension Reform Act of 2014.

Event Media Inc. and Pack Expo Services, LLC (collectively, the Employers) were contributing employers to the Central States, Southeast and Southwest Areas Pension Fund. Following the Fund’s actuary certification of “critical and declining status,” the Employers withdrew and incurred withdrawal liability obligations. The dispute centered on calculating these obligations, specifically whether post-2014 contribution rate increases should include those mandated by a rehabilitation plan.

The court explained that initially, ERISA ensured that employers withdrawing from underfunded pension plans were liable for a proportionate share of the plan’s unfunded vested benefits. The Multiemployer Pension Plan Amendments Act of 1980 further required such employers to pay withdrawal liability, calculated based on the employer’s highest contribution rate within the past ten years. The Pension Protection Act of 2006 mandated underfunded plans to adopt rehabilitation or funding improvement plans, often leading to increased employer contribution rates. These increased rates, while aimed at reducing unfunded liabilities, inadvertently raised withdrawal liabilities, potentially discouraging employers from continuing their contributions. To counter this disincentive, the Multiemployer Pension Reform Act of 2014 provided that certain post-2014 increases required by rehabilitation plans should be disregarded when calculating withdrawal liability payments.

The Seventh Circuit focused on interpreting 29 U.S.C. § 1085(g)(3), which outlines the exclusion of certain contribution rate increases from withdrawal liability calculations. The statute states that any increase required to meet a rehabilitation plan is disregarded unless it falls within specific exceptions.

The first exception under § 1085(g)(3)(B) is for contribution increases due to increased work levels, which was not applicable here. The second exception pertains to increases used for benefit enhancements permitted by § 1085(f)(1)(B), requiring amendments and actuarial certification. The Employers argued, and the court agreed, that since no such amendments or certifications were present, the post-2014 increases should be excluded.

The Fund contended that § 1085(g)(3) should be interpreted to include all increases unless explicitly excepted. However, the court emphasized the statutory language’s plain meaning, which clearly disregards increases unless they meet the exceptions outlined.

The Seventh Circuit affirmed the district court’s ruling, holding that the Fund should calculate the Employers’ withdrawal liability based on the 2014 contribution rate, excluding subsequent increases mandated by the rehabilitation plan. The court highlighted the importance of adhering to statutory text, noting that while the Fund’s arguments on legislative intent were reasonable, the explicit statutory language must prevail.