Money for Nothing—AAA Filing Fees in Multiemployer Pension Withdrawal Liability Arbitrations Leave Employers in Dire Straits

Bloomberg BNA's Pension & Benefits Daily

Mark M. Trapp, Member of the Firm in the Labor and Employment and Litigation practices, in the firm’s Chicago office, authored an article in Bloomberg BNA’s Pension & Benefits Daily, titled “Money for Nothing—AAA Filing Fees in Multiemployer Pension Withdrawal Liability Arbitrations Leave Employers in Dire Straits.”

Following is an excerpt (see below for a PDF of the full article):

The Multiemployer Pension Plan Amendments Act of 1980 (‘‘MPPAA’’) requires ‘‘any dispute’’ between an employer and a multiemployer pension plan concerning a withdrawal liability determination to be ‘‘resolved through arbitration.’’ The MPPAA was enacted into law on September 26, 1980. The law directed the Pension Benefit Guaranty Corporation (‘‘PBGC’’) to ‘‘promulgate” fair and equitable procedures.

In the early years under the MPPAA, because the PBGC had not yet promulgated regulations under which arbitrations were to be conducted, employers faced with withdrawal liability assessments most often used the American Arbitration Association’s (‘‘AAA’’) Multiemployer Pension Plan Arbitration Rules for Withdrawal Liability Disputes (the ‘‘AAA Rules’’). Some pension funds began adopting rules requiring the use of the AAA Rules for arbitrations. Due to the infrequency with which any particular employer faced an assessment, the relatively small amounts charged, and the practical necessity brought about by the AAA Rules being the ‘‘only game in town,’’ whether or not fund rules requiring the use of the AAA were ever legally permissible or could be incorporated into enforceable contractual obligations was of little practical significance to most employers. Accordingly, the common misconception that a fund may dictate the manner of initiating arbitration took hold early on among many plan sponsors, practitioners, employers, arbitrators and eventually a few courts.

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