Summary
The United States Court of Appeals for the Eighth Circuit affirmed a district court decision upholding an arbitrator’s determination that General Electric Company qualified for the building and construction industry exemption from ERISA withdrawal liability. The court held that, among the methods presented for counting employees, the cumulative headcount method was more consistent with the statutory purpose and congressional intent than the monthly headcount method.
Topics
Practice areas
Questions Presented
- Whether the phrase "substantially all" in the MPPAA's building and construction industry exemption is ambiguous as to the method for counting covered employees.
- Whether the cumulative headcount method or the monthly headcount method is the proper method for determining whether substantially all of General Electric's covered employees performed work in the building and construction industry.
- Whether the arbitrator's determination that General Electric qualified for the building and construction industry exemption, and therefore owed no withdrawal liability on either claim, should be upheld.
Holdings
- Section 1383(b)(1)(A) is ambiguous because it does not specify how to count employees in determining whether substantially all of them perform work in the building and construction industry, and multiple reasonable counting methods are consistent with the statutory text.
- Where the parties present only monthly and cumulative headcount methods, the cumulative headcount method is the proper method because it is more consistent with the purpose of the exemption and congressional intent concerning the fluctuating and mobile nature of construction-industry employment.
- The arbitrator's determination that General Electric qualified for the building and construction industry exemption and therefore was not subject to withdrawal liability on the Fund's claims is upheld.
Key quotations
“Because it is susceptible to multiple interpretations on the question before us, § 1383(b)(1)(A) is ambiguous.” (7)
“Nevertheless, we conclude that, of the two options, the cumulative headcount method is more consistent with the purpose of the statute and hews more closely to congressional intent.” (8-9)
“But here, of the two options presented, GE’s preferred method is less arbitrary and more faithful to the statute and the congressional intent behind it.” (9)
Factual background
The Fund assessed General Electric for two alleged partial withdrawals from a multiemployer pension plan: one based on a 70-percent decline in contribution base units and another based on the closure of a manufacturing facility in Chattanooga, Tennessee. General Electric employed field workers who performed boiler construction and repair and shop workers who manufactured boiler components; only the field workers performed work in the building and construction industry. The parties agreed that General Electric qualified for the statutory exemption under a cumulative headcount method but not under a monthly headcount method.
Procedural history
The Boilermaker-Blacksmith National Pension Trust assessed General Electric approximately $205 million for an alleged 70-percent contribution decline and an additional $22 million for a bargaining-out partial withdrawal. General Electric disputed the assessments and initiated arbitration under ERISA. The arbitrator ruled that General Electric qualified for the building and construction industry exemption, and the parties sought review in the United States District Court for the Western District of Missouri, which affirmed the arbitrator's ruling. The Eighth Circuit affirmed.