Appeals Court: Multiemployer Pension Fund Cannot ‘Double Count’ Transferred Assets

The U.S. 2nd Circuit Court of Appeals ruled that a multiemployer pension fund cannot “double count” transferred assets when calculating an employer’s withdrawal liability, wiping out approximately $1.8 million in assessed liability against the Mar-Can Transportation Co.

In a decision issued on Wednesday in Mar-Can Transportation Co. Inc. v. Loc. 854 Pension Fund, the 2nd Circuit held that the Employee Retirement Income Security Act requires withdrawal liability to be reduced by the net amount of liabilities transferred to a new pension plan following a certified change in collective bargaining representative—not by a formula that effectively subtracts transferred assets twice. The ruling affirmed a Southern District of New York judgment in favor of Mar-Can Transportation Co. and clarified how Section 1415(c) of ERISA’s Multiemployer Pension Plan Amendments Act applies when employees change unions.

The dispute arose after Mar-Can’s employees voted in 2020 to change union representation, triggering the company’s withdrawal from a Teamsters-affiliated pension fund and requiring the transfer of employee-related assets and liabilities to a new union’s plan. The original plan transferred roughly $5.5 million in liabilities and $3.7 million in assets, then assessed about $1.8 million in withdrawal liability.

The key legal question was how to interpret ERISA’s requirement that withdrawal liability be reduced by the value of “unfunded vested benefits” transferred, minus transferred assets. The pension fund argued that “unfunded vested benefits” already excluded transferred assets—meaning the statute required subtracting those assets again. The court rejected that interpretation, finding it would produce a windfall by allowing the first fund to both shed liabilities and collect the same amount in withdrawal liability.

Instead, the appellate court concluded that the statute requires a straightforward net calculation—transferred liabilities minus transferred assets—meaning that any unfunded liabilities transfer to the new plan. Because the transferred liabilities exceeded transferred assets by approximately $1.8 million—the same amount as the assessed withdrawal liability—the statutory reduction eliminated the liability entirely.

The court also emphasized that ERISA’s structure aims to keep pension plans financially neutral when workers change unions, not to allow double recovery.