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ARTICLE · 27 AUGUST 2013

Ninth Circuit Issues Decision On Multiemployer Plan Obligations

Littler Mendelson
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The U.S. Court of Appeals for the Ninth Circuit recently issued a decision in Carpenters Pension Trust Fund v. Moxley, No. 11-16133, holding that withdrawal liability is a debt that can be discharged in bankruptcy.

United StatesEmployment and HR
Littler Mendelson, P.C.
Littler Mendelson, P.C.
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Yesterday, the U.S. Court of Appeals for the Ninth Circuit issued a decision in Carpenters Pension Trust Fund v. Moxley, No. 11-16133 (9th Cir., Aug. 20, 2013), holding that withdrawal liability is a debt that can be discharged in bankruptcy. The Court rejected the pension fund's assertion that because its trust agreement defined delinquent contributions as plan assets, the employer was a fiduciary who could not discharge the withdrawal liability obligation because of a "defalcation" exception in the Bankruptcy Code. The case is noteworthy because it addresses a number of important issues relating to multiemployer plan obligations.

The defendant was a sole proprietor of a carpentry business who terminated his union agreement but continued to perform carpentry work. Under the construction industry rules of ERISA, this constituted a withdrawal, and he was assessed about $175,000 in withdrawal liability. He then filed a bankruptcy petition and sought to discharge the

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