Seyfarth Synopsis: The Court of Appeals for the Seventh Circuit recently held that once a multi-employer pension fund accelerates withdrawal liability periodic payments into a lump sum liability, there is no statutory mechanism to revoke that acceleration. So the Court affirmed a finding that the fund’s trustees waited too long to collect on the lump sum debt when it sued more than six years after the initial acceleration.
Bauwens v. Revcon Tech. Grp. et al., No. 18-3306, — F.3d –, 2019 WL 3797983 (7th Cir. Aug. 13, 2019) concerned the decade-long quest of multiemployer pension fund trustees to recover defaulted withdrawal liability payments triggered by a withdrawal in 2003 (and 2004).
In 2008, the employer defaulted on its quarterly payments and, after it failed to cure the default in a timely fashion, the trustees accelerated the remaining liability, and filed suit to recover the liability in a lump sum. The trustees voluntarily dismissed the suit when the company agreed to resume quarterly payments. In April 2009 the same scenario happened again. And then it happened three more times, in 2011, 2013 and 2015.
In 2018, after yet another non-payment, the trustees sued again for the lump sum. This time, the employer moved to dismiss on the ground that the six-year statute of limitations accrued upon the 2008 acceleration and expired in 2014. The trustees argued that they had revoked the acceleration after each of the voluntary dismissals (so that the statute of limitations ceased to run). The district court sided with the employer and granted the motion to dismiss.
The Court of Appeals agreed with the district court. The Court noted that ERISA’s withdrawal liability provisions explicitly allow accelerating debt under certain circumstances, but are silent on deceleration. The trustees asked the Court to create federal common law to fill this “gap,” but the Court said that it is reticent to create common law remedies or implied causes of action. The Court also noted that deceleration, when allowed, is permitted by a contractual or statutory authorization. The Court said that Congress could have authorized — but did not authorize — a deceleration provision.
The key takeaway from Bauwens is that courts tend to interpret the ERISA statute consistent with its plain language. This means that they are reluctant to read into the statute what is not there to create expedient remedies that ameliorate statutory missteps.