District Court Holds Employer "Expelled" From Plan May Not Have Effected A "Withdrawal"

In Central States v. Wingra, No. 21-cv-3684, 2023 WL 199360 (N.D. Ill. Jan. 17, 2023), the district court held that an employer expelled from a multiemployer pension plan may not owe withdrawal liability because the permanent cessation of the employer's obligation to contribute was not voluntary. While the court subsequently limited the decision as being for discovery purposes only (see Central States v. Wingra, No. 21-cv-3684 (N.D. Ill. Mar. 17, 2023)), the court allowed the employer to assert its challenge in the district court, rather than in arbitration, because the employer plausibly alleged that its expulsion from the plan was in bad faith.

Background

The plan expelled the employer because it was transferring work to non-union workers. The plan assessed the employer over $58 million in withdrawal liability and filed suit to collect when the employer refused to pay. The employer counterclaimed, alleging that its expulsion from the plan was arbitrary and