Summary
This Third Circuit opinion addresses the validity of two Pension Benefit Guaranty Corporation (PBGC) regulations governing how multiemployer pension plans must account for special financial assistance funds granted under the American Rescue Plan Act (ARPA). The court upheld the Phase-In and No-Receivables Regulations, ruling that they constitute reasonable conditions within the PBGC’s delegated authority and do not arbitrarily inflate the withdrawal liability owed by Yellow Corporation upon its bankruptcy exit. Additionally, the court affirmed that statutory withdrawal-liability calculations set a floor rather than a ceiling, allowing Yellow to be bound by its prior agreement to pay at a higher contribution rate.
Topics
Practice areas
Questions Presented
- Whether PBGC's Phase-In and No-Receivables Regulations were within the agency's delegated statutory authority under the American Rescue Plan Act and the Employee Retirement Income Security Act.
- Whether the Phase-In and No-Receivables Regulations were arbitrary or capricious.
- Whether the challenged regulations imposed impermissible conditions on employers or implicated the major questions doctrine.
- Whether the Multiemployer Pension Plan Amendments Act prohibited the New York Teamsters Fund and Western Pennsylvania Teamsters Fund from enforcing contractual provisions requiring Yellow's withdrawal liability to be calculated at a 100% contribution rate without separate PBGC approval.
Holdings
- PBGC's Phase-In and No-Receivables Regulations were valid exercises of the agency's delegated authority under ARPA, ERISA, and the MPPAA. ARPA expressly authorized PBGC to impose reasonable conditions concerning allocation of plan assets and withdrawal liability on plans receiving special financial assistance.
- The regulations were not arbitrary or capricious because PBGC reasonably explained its decision, relied on a comprehensive notice-and-comment process, and rationally sought to prevent a withdrawal-liability subsidy and a cascading withdrawal spiral.
- The MPPAA establishes a floor, not a ceiling, for withdrawal liability, and Yellow could contractually waive limitations on its liability by agreeing that its withdrawal liability would be calculated at the full 100% contribution rate. The agreements did not constitute a completely different alternative calculation method requiring PBGC approval.
Key quotations
“Congress, instead, left it to the PBGC to fill that gap and effect the statute’s goals.” (16-18)
“We follow the principle of statutory construction offered in Brown & Williamson and conclude that, for calculating withdrawal liability, the more specific provisions of ARPA control over the general provisions of the MPPAA.” (17-18)
“So, bottom line, “employers may waive limitations on their withdrawal liability . . . without approval as an alternative method.”” (26)
Factual background
Yellow Corporation shut down in July 2023 and filed bankruptcy the following month after a labor dispute with the Teamsters. It had withdrawn from several multiemployer pension plans, which filed proofs of claim for withdrawal liability. The plans had received or been awarded billions of dollars in special financial assistance under the American Rescue Plan Act, but PBGC regulations limited when and how those funds could be counted as plan assets for withdrawal-liability calculations. Yellow also had agreements with two pension funds permitting reduced contribution rates during its reentry while requiring withdrawal liability to be calculated using a 100% contribution rate.
Procedural history
Yellow Corporation filed bankruptcy in 2023 after withdrawing from multiple multiemployer pension plans. Eleven plans filed 174 proofs of claim totaling approximately $6.5 billion in withdrawal liability. The Bankruptcy Court upheld PBGC's Phase-In and No-Receivables Regulations and held that two pension funds could enforce contractual provisions requiring calculation of Yellow's withdrawal liability at a 100% contribution rate. The Bankruptcy Court certified its order for direct appeal, and the Third Circuit granted the petition under 28 U.S.C. § 158(d)(2).