ERISA § 1415(c): “Unfunded Vested Benefits” Means Transferred Liabilities (Not Liabilities Net of Assets), Producing a Net-Transfer Withdrawal-Liability Reduction

1. Introduction

Mar-Can Transp. Co. v. Loc. 854 Pension Fund addresses a technical but consequential question under ERISA’s Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”): when an employer’s employees switch unions (a certified change of bargaining representative), the employer must withdraw from the “old” multiemployer pension plan and contribute to a “new” plan. ERISA then compels the old plan to transfer specified assets and liabilities to the new plan and to reduce the employer’s withdrawal liability under 29 U.S.C. § 1415(c).

The dispute concerned the meaning of “unfunded vested benefits” in § 1415(c), a question that had created a split among district courts in the Second Circuit, with Hoeffner v. D'Amato, No. 09-CV-316, 2016 WL 8711082 (E.D.N.Y. 2016), endorsing a reading that would often yield no reduction at all. Mar-Can’s employees voted to leave a Teamsters local and join the Amalgamated Transit Workers, forcing Mar-Can to exit the Teamsters-affiliated Local 854 Pension Fund (the “Old Plan”) and contribute to an ATW-affiliated plan (the “New Plan”). The Old Plan assessed approximately $1.8 million in withdrawal liability. After the statutorily required transfer, the Old Plan had shifted about $5.5 million in liabilities and $3.7 million in assets to the New Plan—creating a net liability transfer of roughly $1.8 million.

The central issue: whether § 1415(c) required that net transfer to reduce Mar-Can’s withdrawal liability to zero, or whether (under the Old Plan’s approach) the statutory formula “double-counted” transferred assets and eliminated any reduction.

2. Summary of the Opinion

3. Analysis

3.1 Precedents Cited

The opinion relies on a mix of (i) multiemployer-plan and MPPAA background authorities, (ii) Second Circuit ERISA withdrawal-liability precedents, and (iii) general interpretive canons.

A. Multiemployer plans and MPPAA context

• Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Tr. for S. Cal., 508 U.S. 602 (1993) (“Concrete Pipe”): Used for foundational description of multiemployer plans—pooled funding, service credits across employers, and the “presumptive method” contribution-based allocation of unfunded vested benefits. This context matters because the court’s reading of § 1415 must fit the MPPAA’s architecture, where liability allocation is often imperfect but designed to stabilize plans.
• Pension Ben. Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717 (1984) (“Gray”): Supplies the “vicious downward spiral” rationale: Congress feared cascading withdrawals that would destabilize multiemployer plans and threaten PBGC exposure. The Second Circuit uses this purpose to reject interpretations that would create perverse incentives or windfalls.
• T.I.M.E.-DC, Inc. v. Mgmt.-Lab. Welfare & Pension Funds, of Loc. 1730 Int'l Longshoremen's Ass'n, 756 F.2d 939 (2d Cir. 1985): Provides Second Circuit discussion of withdrawal liability’s function and of § 1415 in union-switch situations. The panel treated T.I.M.E.-DC’s statement about avoiding “double payments” as dicta on the precise issue, but found the present holding consistent with that policy framing.
• Trs. of Loc. 138 Pension Tr. Fund v. F.W. Honerkamp Co., 692 F.3d 127 (2d Cir. 2012) (“Honerkamp”): Cited for background on plan sponsor duties and the incentive problems that the MPPAA sought to address (employer “scramble to the exit”). The court uses that policy lens to disfavor readings that would punish involuntary union-switch withdrawals or invite strategic behavior.

B. Withdrawal-liability doctrine in the Second Circuit

• Barbizon Corp. v. ILGWU Nat'l Ret. Fund, 842 F.2d 627 (2d Cir. 1988): Supports the point that withdrawal liability is calculated with reference to the plan’s communal pool liabilities, not only those directly attributable to the withdrawing employer—an important backdrop to why “unfunded vested benefits” can be used differently depending on the statutory part.
• ILGWU Nat'l Ret. Fund v. Levy Bros. Frocks, Inc., 846 F.2d 879 (2d Cir. 1988): Cited for the protective function of withdrawal liability for vested benefits owed to workers.
• Ganton Techs., Inc. v. Nat'l Indus. Grp. Pension Plan, 76 F.3d 462 (2d Cir. 1996): Used to distinguish ordinary, discretionary transfers under § 1414 (where the old plan generally has discretion) from mandatory transfers under § 1415 (union-switch withdrawals). That contrast helps explain why importing Part 1’s definition mechanistically into Part 2 can misfire.

C. The competing district-court view and the split

• Hoeffner v. D'Amato, No. 09-CV-316, 2016 WL 8711082 (E.D.N.Y. 2016): The Old Plan relied on Hoeffner, which had endorsed an approach akin to the Old Plan’s “assets counted twice” reading. The Second Circuit explicitly recognized Hoeffner as a “thoughtful” decision but rejected its interpretive outcome by emphasizing the ambiguity of § 1415(c) and the structural anomalies produced by the Old Plan’s reading.

D. Interpretive standards and canons

• Kasiotis v. N.Y. Black Car Operators' Inj. Comp. Fund, Inc., 90 F.4th 95 (2d Cir. 2024): Cited for de novo review of statutory interpretation.
• King v. Time Warner Cable Inc., 894 F.3d 473 (2d Cir. 2018): Provides the framework for resolving ambiguity by testing interpretations against statutory structure and legislative purpose/history.
• Deutsche Bank Nat'l Tr. Co. v. Quicken Loans, Inc., 810 F.3d 861 (2d Cir. 2015), and Springfield Hosp., Inc. v. Guzman, 28 F.4th 403 (2d Cir. 2022): Supply the “ordinary meaning in context” approach.
• Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993): The Old Plan invoked the “same words, same meaning” canon; the court limited its force because § 1393(c) defines “unfunded vested benefits” only “for purposes of this part” (Part 1), while § 1415 sits in Part 2 and uses the longer phrase “unfunded vested benefits allocable to the employer.”
• Grajales v. Comm'r of Internal Revenue, 47 F.4th 58 (2d Cir. 2022), United States v. Rosario, 7 F.4th 65 (2d Cir. 2021), Pettus v. Morgenthau, 554 F.3d 293 (2d Cir. 2009), Comm'r v. Engle, 464 U.S. 206 (1984), Marvel Characters, Inc. v. Simon, 310 F.3d 280 (2d Cir. 2002), and In re Soussis, 136 F.4th 415 (2d Cir. 2025): Together reinforce that (i) different wording across sections can be intentional, (ii) identical words can mean different things in different contexts, (iii) provisions must be read as part of an integrated scheme, and (iv) ambiguity should be resolved to avoid unreasonable or anomalous outcomes.

E. Other procedural anchors

• Beck v. Manhattan College, 136 F.4th 19 (2d Cir. 2025): summary-judgment standard on appeal.
• Ahmed v. Holder, 624 F.3d 150 (2d Cir. 2010): issues not briefed are abandoned (applied to the Old Plan’s failure to argue against the transfer order).
• McDonald v. Pension Plan of NYSA-ILA Pension Tr. Fund, 320 F.3d 151 (2d Cir. 2003): meaning of vested benefits under ERISA.

3.2 Legal Reasoning

A. The interpretive problem: two competing “formulas”

The court framed the dispute as competing ways to parse § 1415(c):

B. Ambiguity acknowledged, then resolved by structure and purpose

The Second Circuit first held the phrase “unfunded vested benefits allocable to the employer” in § 1415(c) to be ambiguous. That conclusion was critical: once ambiguity is found, the court could (and did) lean heavily on statutory structure and legislative purpose/history (per King v. Time Warner Cable Inc.).

C. Why Part 1’s definition does not control Part 2

The Old Plan’s main textual move was to import Part 1’s definition of “unfunded vested benefits” from § 1393(c). The court rejected this for several connected reasons:

• Express limitation: § 1393(c) applies “[f]or purposes of this part” (Part 1), while § 1415 is in Part 2.
• Different phrase: § 1415(c) uses “unfunded vested benefits allocable to the employer,” a phrase not defined in § 1393 and which, in Part 1 usage, is closely tied to withdrawal-liability allocation concepts rather than to what is actually “transferred.”
• Context shift: Part 1 focuses on plan-wide funding and allocates slices of plan-wide underfunding; Part 2 governs transfers/mergers where liabilities and assets become inputs to a different plan’s communal pool, making “funding” context-dependent on the receiving plan’s overall condition.

D. Structural “fit” within § 1415: symmetry with § 1415(g)(1) and preserving § 1415(f)(2)

The opinion’s most forceful reasoning is structural: Mar-Can’s reading makes the subsections of § 1415 work coherently together, while the Old Plan’s reading creates distortions.

• Symmetry with § 1415(g)(1): Section 1415(g)(1) sets how much “appropriate” assets must be transferred when transferred liabilities exceed the employer’s withdrawal liability. Mar-Can’s reading of 1415(c) keeps the accounting balanced: if assets are transferred out, the withdrawal-liability reduction is correspondingly decreased by that asset amount, neutralizing the asset transfer’s effect on the old plan.
• Avoiding “two-for-one” asset counting: The Old Plan’s reading makes every $1 of transferred assets effectively increase the employer’s ultimate payable amount by $2 (because assets are subtracted inside (c)(1) and again in (c)(2)), which the court found incongruous with § 1415’s design.
• Preserving the floor function of § 1415(f)(2): Section 1415(f)(2) creates a withdrawal-liability floor if the employer switches plans again within twenty years. Under the Old Plan’s approach, many employers would receive no reduction under 1415(c), undermining the floor and potentially creating a loophole inconsistent with the MPPAA’s anti-evasion aims.

E. Purpose and history: union-switch withdrawals should not be punished more harshly

The court emphasized that the MPPAA’s overarching purpose is to stabilize multiemployer plans and prevent destabilizing exits. It found it “odd” and unsupported that Congress would impose a harsher outcome (less reduction; more payment) on employers forced to withdraw due to employees’ union choice than on employers who voluntarily withdraw—especially given legislative concerns that withdrawal liability in union-switch contexts could distort employee choice and collective bargaining.

3.3 Impact

• Second Circuit rule settling an intra-circuit split: The decision resolves the tension between the SDNY’s Mar-Can approach and the E.D.N.Y. approach in Hoeffner v. D'Amato, establishing a governing interpretation for § 1415(c) in the Second Circuit.
• Practical accounting consequence: In union-switch withdrawals, old plans must compute the § 1415(c) reduction as net transfer (liabilities transferred minus assets transferred), not as “liabilities minus twice assets.” This can materially reduce (or eliminate) assessed withdrawal liability where the old plan offloads more liabilities than assets.
• Reduced risk of windfalls/double recovery: The ruling limits old plans’ ability to both (i) shed net liabilities to the new plan and (ii) also collect full withdrawal liability as if the liabilities remained—an outcome the court viewed as inconsistent with MPPAA objectives.
• Likely downstream effect on pending related appeals: The opinion notes related SDNY cases—Jofaz Transp., Inc. v. Loc. 854 Pension Fund and Allied Transit Corp. v. Loc. 854 Pension Fund—with appeals held pending this decision; the interpretive rule here will likely control those matters insofar as they raise the same § 1415(c) question.
• Litigation posture: By treating § 1415(c) as ambiguous and relying on structure/purpose, the decision may shift future disputes toward arguments about statutory coherence and plan-transfer mechanics rather than purely definitional cross-references to Part 1.

4. Complex Concepts Simplified

4.1 Multiemployer plan

A pension plan to which many employers contribute under CBAs; the money is pooled, and benefits are paid from the shared pool (not employer-specific accounts).

4.2 Vested (nonforfeitable) benefits / liabilities

A worker’s pension rights that are legally locked in (nonforfeitable). For the plan, those promised payments are liabilities.

4.3 “Unfunded vested benefits” (two different contexts)

• Part 1 (withdrawal liability calculations): “Unfunded vested benefits” is defined in § 1393(c) as plan-wide liabilities minus plan-wide assets—i.e., the plan’s underfunding.
• Part 2 / § 1415(c) (union-switch transfer and reduction): The Second Circuit held the phrase is used differently: for computing the reduction, “unfunded vested benefits allocable to the employer” means the transferred liabilities (and then assets transferred are subtracted in the next step).

4.4 Withdrawal liability

A statutorily calculated amount a withdrawing employer pays to help cover the old plan’s underfunded vested benefits, designed to prevent employers from leaving a plan and sticking remaining employers (and ultimately PBGC) with the bill.

4.5 Certified change of bargaining representative and § 1415 transfers

When employees choose a new union, the employer may be required to stop contributing to the old union’s plan and start contributing to the new union’s plan. ERISA then compels the old plan to transfer liabilities (and sometimes assets) associated with active employees who switch plans, and to reduce withdrawal liability so the employer doesn’t effectively pay twice for the same liabilities.

5. Conclusion

Mar-Can Transp. Co. v. Loc. 854 Pension Fund establishes a clear Second Circuit rule for union-switch withdrawals under ERISA § 1415(c): the old plan’s withdrawal-liability assessment must be reduced by the net amount of liabilities transferred—computed as transferred liabilities minus transferred assets. The court reached this result by (i) recognizing ambiguity in the statutory phrase “unfunded vested benefits allocable to the employer,” (ii) refusing to transplant Part 1’s definition mechanically into Part 2, and (iii) grounding its interpretation in the structure of § 1415 (especially § 1415(g)(1) and § 1415(f)(2)) and the MPPAA’s stabilizing purposes. The decision curbs windfalls and aligns mandatory transfer rules with the anti-double-payment logic that underlies the MPPAA’s treatment of multiemployer plan withdrawals.