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

Introduction

This commentary examines the Seventh Circuit’s decision in Event Media Inc. v. Central States Southeast and Southwest Areas Pension Fund, 24‐1739 et al. (7th Cir. Apr. 24, 2025). The dispute concerned the proper method for calculating withdrawal liability under ERISA’s multiemployer pension framework, specifically 29 U.S.C. §1085(g)(3). Event Media Inc. and Pack Expo Services, LLC (“the Employers”) had contributed to the Central States Pension Fund, which later entered critical status and adopted a rehabilitation plan. The Employers withdrew in 2019 and the Fund calculated their periodic withdrawal liability using their highest contribution rate over the preceding ten years (the 2019 rate of $424). The Employers argued that post-2014 increases mandated by the rehabilitation plan must be disregarded, leaving the 2014 rate ($328) as the highest rate.

The key issue was the meaning and scope of the exception in §1085(g)(3)(B) for “additional contributions … used to provide an increase in benefits … permitted by subsection … (f)(1)(B).” The district court sided with the Employers, and the Seventh Circuit affirmed.

Summary of the Judgment

The Seventh Circuit held unanimously that:

Under 29 U.S.C. §1085(g)(3)(A), any post-2014 contribution rate increases required by a funding improvement or rehabilitation plan must be disregarded in determining the “highest contribution rate” used to calculate an employer’s periodic withdrawal liability.
Section 1085(g)(3)(B) deems all contribution‐rate increases to be “required” by the rehabilitation plan unless one of two exceptions applies: (1) increases due to higher levels of work or compensation; or (2) increases used to provide benefit enhancements “permitted by subsection … (f)(1)(B).”
The Employers’ post-2014 rate increases did not fall within either exception: the first exception was inapplicable because the rate hikes were not tied to increased hours or wages, and the second exception did not apply because there was no post-rehabilitation amendment increasing benefits accompanied by an actuarial certification as required by §1085(f)(1)(B).
Consequently, the Fund erred by using the 2019 rate; the correct highest rate is the 2014 level.

The court rejected the Fund’s argument that “permitted” should be read as “not prohibited,” emphasizing the statutory text’s affirmative requirement of post-plan amendments and actuary certification under §1085(f)(1)(B).

Analysis

1. Precedents Cited

Concrete Pipe & Products of California v. Construction Laborers Pension Trust, 508 U.S. 602 (1993): Interpreted ERISA’s overall objectives—protecting vested benefits and preventing premature plan terminations.
Milwaukee Brewery Workers’ Pension Plan v. Joseph Schlitz Brewing Co., 513 U.S. 414 (1995): Held withdrawing employers responsible for a fair share of plan underfunding, but noted this rule incentivized withdrawals.
Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp., 522 U.S. 192 (1997): Explained 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): Reinforced the alignment between withdrawal liability and a withdrawing employer’s share of underfunding.

2. Legal Reasoning

The court’s analysis focused on three statutory provisions:

29 U.S.C. §1085(g)(3)(A): Provides that any contribution‐rate increase required by a funding improvement or rehabilitation plan is to be disregarded in calculating the highest rate for withdrawal liability.
29 U.S.C. §1085(g)(3)(B): Establishes two exceptions to that general rule: (1) rate hikes due to increased hours or compensation, and (2) rate hikes funding benefit increases “permitted by subsection … (f)(1)(B).”
29 U.S.C. §1085(f)(1)(B): Authorizes post-rehabilitation amendments that increase benefits only if an actuary certifies they are paid for by new contributions not contemplated by the original rehabilitation plan.

The Employers’ contribution‐rate increases were plainly required by the rehabilitation plan and did not correspond to additional hours or new benefits. Further, no plan amendment or actuary certification under §1085(f)(1)(B) existed. The court thus treated those increases as “required” and subject to disregard under §1085(g)(3)(A). The Fund’s textual argument—that “permitted” should be read as “not prohibited”—was rejected because Congress chose affirmative language requiring an amendment and certification.

3. Impact

This decision is the first circuit‐court interpretation of §1085(g)(3) and provides clarity on a recurrent area of employer–fund disputes: withdrawal liability calculations. Key consequences include:

Predictability: Pension funds and withdrawing employers now have a clear rule for excluding post-2014 rehabilitation‐plan required increases.
Employer Relief: Employers benefit by avoiding artificially inflated withdrawal liabilities that incorporate contribution hikes aimed at plan rescue.
Pension Fund Planning: Funds can structure rehabilitation plans without fear that required increases will automatically raise withdrawal liabilities.
Legislative Significance: Confirms that Congress’s post-2014 amendments to ERISA effectively neutralize counterproductive incentives to withdraw.

Complex Concepts Simplified

Multiemployer Pension Plan: A retirement plan in which multiple employers (often in the same industry) pool contributions and benefits under a single plan.
Unfunded Vested Benefits: Benefits already earned by employees but not fully backed by plan assets.
Withdrawal Liability: A withdrawing employer’s share of a multiemployer plan’s unfunded vested benefits, payable either in a lump sum or installments.
Rehabilitation Plan: A remedial program adopted under the Pension Protection Act of 2006 when a plan is in critical status, requiring contribution increases or benefit cuts.
Highest Contribution Rate: Under ERISA §1399(c)(1)(C)(i)(II), the maximum rate an employer paid during the ten years before withdrawal, used to calculate installment liability.

Conclusion

The Seventh Circuit’s decision in Event Media Inc. v. Central States Pension Fund upholds the plain text of 29 U.S.C. §1085(g)(3): post-2014 contribution increases required by a rehabilitation plan must be disregarded in withdrawal liability calculations unless they either stem from increased hours/compensation or fund post-plan benefit enhancements authorized and certified under §1085(f)(1)(B). This ruling restores the congruence between an employer’s share of unfunded vested benefits and its withdrawal liability and provides much-needed certainty to participants, employers, and plan trustees in the multiemployer pension arena.