Exclusion of Post-2014 Contribution Rate Increases from Withdrawal Liability under 29 U.S.C. §1085(g)(3)

Introduction

This commentary examines the decision in Pack Expo Services, LLC and Event Media Inc. v. Central States, Southeast and Southwest Areas Pension Fund (Nos. 24-1739, 24-1740, 24-1741 & 24-1742), decided April 24, 2025 by the Seventh Circuit. The case centers on the proper computation of withdrawal liability under multiemployer pension plan statutes—specifically the interpretation of 29 U.S.C. § 1085(g)(3). The principal issue is whether post-2014 increases in an employer’s contribution rate, mandated by a rehabilitation plan, must be excluded from the “highest contribution rate” used to calculate periodic withdrawal liability payments.

Parties:

Plaintiffs-Appellants: Central States, Southeast and Southwest Areas Pension Fund and its fiduciary Charles A. Whobrey
Defendant-Appellees: Event Media Inc. (d/b/a Complete Crewing) and Pack Expo Services, LLC

Key Statutory Provision: 29 U.S.C. § 1085(g)(3), enacted in the Multiemployer Pension Reform Act of 2014 to address counter-intuitive increases in withdrawal liability that arose under prior law.

Summary of the Judgment

The Seventh Circuit affirmed the district court’s holding that post-2014 contribution rate increases required by the Fund’s rehabilitation plan must be excluded when determining the “highest contribution rate” under 29 U.S.C. § 1399(c)(1)(C)(i)(II). The court reasoned that:

Section 1085(g)(3)(A) broadly instructs that any contribution increase required to meet a rehabilitation plan shall be disregarded in withdrawal liability calculations.
Section 1085(g)(3)(B) creates only two exceptions to this exclusion; neither applies here.
The Fund’s reading—allowing inclusion of pre-rehabilitation plan increases so long as they were not affirmatively “permitted” by § 1085(f)(1)(B)—is contrary to the statutory text.

Accordingly, the employers’ post-2014 increases are excluded and the court directed use of the 2014 contribution rate in computing withdrawal liability.

Analysis

1. Precedents Cited

Concrete Pipe & Products of California, Inc. v. Construction Laborers Pension Trust for Southern California, 508 U.S. 602 (1993): Establishing ERISA’s goal to protect vested pension benefits for plan participants.
Milwaukee Brewery Workers’ Pension Plan v. Joseph Schlitz Brewing Co., 513 U.S. 414 (1995): Highlighting the unintended “rush to exit” incentive under the original withdrawal-liability statute.
Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp. of California, Inc., 522 U.S. 192 (1997): Explaining withdrawal liability as an employer’s proportionate share of unfunded vested benefits.
Pension Benefit Guaranty Corporation v. R.A. Gray & Co., 467 U.S. 717 (1984): Discussing alignment between withdrawal liability and share of unfunded vested benefits.

These cases frame the statutory context: Congress first imposed withdrawal liability (1980), then remedial measures under the Pension Protection Act (2006), and finally tailored exclusions in the 2014 Reform Act.

2. Legal Reasoning

The court’s statutory analysis follows familiar principles of interpretation:

Plain Meaning: Section 1085(g)(3)(A) states that any contribution increase “required or made in order to enable the plan to meet” a funding improvement or rehabilitation plan “shall be disregarded.”
Limited Exceptions: Section 1085(g)(3)(B) deems all contribution increases “required” except those:

Due to increased work or employment levels;
Used to provide an increase in benefits “permitted by subsection … (f)(1)(B).”

Subsection (f)(1)(B) Scope: That provision only authorizes plan amendments that increase benefits if accompanied by an actuary’s certification of additional contributions post-rehabilitation. No such amendment or certification occurred here.
Rejection of Passive “Not Prohibited” Reading: The Fund’s attempt to construe “permitted” as merely “not prohibited” is inconsistent with the text’s affirmative grant of permission and the placement of exceptions.
Contextual Consistency: The court declined to reweigh policy trade-offs—a role reserved for Congress—emphasizing the detailed ERISA amendments over decades.

3. Impact

The decision clarifies that:

Pension funds must exclude all post-2014 rate increases mandated by rehabilitation plans from withdrawal liability calculations unless they fall within one of the statutory exceptions.
Only affirmative amendments increasing benefits, with actuarial certification under § 1085(f)(1)(B), can render a rate increase included.
Multiemployer pension funds and contributing employers now have guidance on how to determine the “highest contribution rate” and avoid unfair spikes in liability.

Future disputes on withdrawal liability calculations under ERISA will rely on this interpretation of § 1085(g)(3), likely reducing litigation over contribution rates imposed by rehabilitation or funding improvement plans.

Complex Concepts Simplified

Withdrawal Liability: A charge assessed when an employer leaves a multiemployer pension plan, designed to cover its share of unfunded vested benefits.
Funding Improvement/Rehabilitation Plan: A statutory requirement for underfunded plans to adopt a roadmap (plan) to restore financial health, which may include higher employer contributions or reduced future benefits.
“Highest Contribution Rate”: The peak rate an employer paid in the ten years before withdrawal, used to calculate periodic liability installments.
Statutory Exclusion in § 1085(g)(3): A rule enacted in 2014 to prevent rehabilitation-driven contribution hikes from inflating withdrawal liability.

Conclusion

The Seventh Circuit’s ruling in Pack Expo Services and Event Media v. Central States decisively interprets 29 U.S.C. § 1085(g)(3) to exclude post-2014 rehabilitation plan-driven contribution increases from withdrawal liability calculations. By adhering closely to the statutory text and structure, the court reinforces ERISA’s complex framework and the role of Congress in balancing competing interests in multiemployer pension reform. Plan fiduciaries and employers now have a clear rule: only contribution increases explicitly authorized by § 1085(f)(1)(B) amendments (with actuarial certification) can be included in computing withdrawal liability.