By: Meg Troy and Mark Casciari

Seyfarth Synopsis: The Seventh Circuit has now applied a clear error standard of review to a withdrawal liability arbitrator’s interpretation of a collective bargaining agreement, thus enhancing the role of the arbitrator in resolving withdrawal liability disputes.

On January 8, 2018, in Laborers’ Pension Fund v. W.R. Weis Company, Inc., — F.3d —, 2018 WL 316555 (7th Cir. Jan. 8, 2018), the Seventh Circuit applied the clear error standard of review to a withdrawal liability arbitrator’s interpretation of the parties’ underlying collective bargaining agreement (CBA) that required contributions to a multiemployer pension fund.

The Court enforced the arbitrator’s findings, a victory for the employer whose withdrawal liability was consequently reduced from over $600,000 to $0.

W.R. Weis Company, a stonework firm, was required by a CBA to contribute to the Laborers’ Pension Fund for work performed by members of the Laborers’ Union. In 2012, after several years of laborers performing no work for Weis and Weis remitting no contributions to the Fund, Weis formally terminated the CBA and the Fund issued a complete withdrawal assessment. Weis argued that it fell under the withdrawal liability building and construction industry exception, 29 U.S.C. § 1383(b).

Section 1383(b) states, in pertinent part:

In the case of an employer that has an obligation to contribute under a plan for work performed in the building and construction industry . . . .

A withdrawal occurs if (A) an employer ceases to have an obligation to contribute under the plan, and (B) the employer continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required. (Emphasis added.)

An arbitrator found that the language of the Weis Laborers’ CBA was ambiguous as to whether Weis continued to perform Laborers’ CBA work after ceasing Laborers’ Fund contributions. The arbitrator looked to past practice to resolve a CBA ambiguity. She focused on the fact that two previous audits and Fund business manager testimony showing Weis did not owe the Laborers’ Fund delinquent contributions for discontinued work.

The Seventh Circuit said that the arbitrator’s findings of fact may be set aside only if clearly erroneous, while the arbitrator’s legal conclusions are subject to de novo review.

The Laborers’ Fund sought de novo review. Weis argued that the clear error standard applied because the arbitrator’s review during the arbitration was limited to applying the facts to the language of the CBA rather than interpreting the statute itself. The Seventh Circuit agreed, and found no clear error.

This decision is significant because many withdrawal liability disputes turn on the meaning of a CBA. For example, 29 U.S.C. § 1385, in part, defines a partial withdrawal as a permanent cessation of an obligation to contribute “under one or more but fewer than all collective bargaining agreement[s].”