NEW YORK and WASHINGTON, D.C., February 23, 2024 – Proskauer, a leading international law firm, announced today that it obtained a significant victory before the D.C. Circuit on behalf of the IAM National Pension Fund (“IAM" or “the Fund”), thereby preserving the Fund’s rights to collect over $6.7 million in withdrawal liability owed to it. The Fund provides pension benefits to over 250,000 retired machinists and their dependents.

In 2018, four of the Fund’s contributing employers permanently ceased to have an obligation to contribute to the Fund. IAM demanded that the employers pay a cumulative total of $9.94 million in withdrawal liability, representing their proportionate share of the Fund’s unfunded vested benefits.

As a result, the employers commenced arbitration to challenge the assessments, arguing that the Fund should have calculated their withdrawal liability using the assumptions in effect at the end of the year prior to their withdrawals rather than the assumptions subsequently adopted.

In 2021, arbitrators agreed with all four employers and ordered the Fund to recalculate their withdrawal liability using the prior assumptions, as a result of which, the employers’ liability was reduced by approximately two-thirds. However, in September 2022, a federal district court judge in Washington, D.C., vacated the first of those arbitration decisions, and less than six months later, another vacated the other three arbitration decisions. The courts held that there was nothing in the governing statutes, regulations or case law that prevented the Fund from using assumptions adopted after the original “measurement date” to calculate the employers’ withdrawal liability, so long as the assumptions were based on information available to the actuary as of the measurement date.

On February 9, 2024, the D.C. Circuit affirmed the district courts’ decisions. The D.C. Circuit rejected the Second Circuit’s decision in National Retirement Fund v. Metz Culinary Management, 946 F.3d 146 (2d Cir. 2020), which had concluded that an actuary fund could not calculate withdrawal liability using assumptions it adopted after the measurement date. The D.C. Circuit held there was no support for the Second Circuit’s ruling that there was a deadline by which an actuary must adopt its assumptions, and that the Second Circuit’s reasons for imposing a strict deadline were unsound. In so ruling, the D.C. Circuit created a Circuit split on the issue.

The appeal was argued by partner John Roberts (Commercial Litigation), with associates Neil Shah (ERISA) and Lucas Kowalczyk (Commercial Litigation) on the brief. The Proskauer team also included partners Myron Rumeld and Anthony Cacace and associate Anastasia Gellman (ERISA).

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