Partial-Withdrawal Credit Applies After Full § 1381 Calculation, Including the 20-Year Cap

1. Introduction

This decision addresses a narrow but financially consequential sequencing question under the Multiemployer Pension Plan Amendments Act (“MPPAA”): when an employer incurs partial withdrawal liability in one year and later incurs complete withdrawal liability, when is the statutory credit for the earlier partial withdrawal applied?

Consumers Concrete Corp. (“Consumers”) participated in a multiemployer defined-benefit plan administered by Central States Southeast and Southwest Areas Pension Fund (“the Fund”). Consumers partially withdrew in 2017 and completely withdrew in 2019. The parties arbitrated the amount of 2019 complete-withdrawal liability and, specifically, how the 2017 partial-withdrawal credit under 29 U.S.C. § 1386(b) interacts with the four-step withdrawal-liability computation in 29 U.S.C. § 1381(b)(1), including the 20-year payment cap in 29 U.S.C. § 1399(c)(1)(B).

An arbitrator adopted the Fund’s method (apply the credit at “step two”). The district court vacated that award and adopted Consumers’s method (apply the credit only after completing all four steps, including the 20-year cap). The Seventh Circuit affirmed the district court, expressly diverging from the Eleventh and Ninth Circuits.

2. Summary of the Opinion

The Seventh Circuit held that the partial-withdrawal credit in 29 U.S.C. § 1386(b)(1) reduces an employer’s fully calculated “withdrawal liability” (i.e., the end product of the four-step process in 29 U.S.C. § 1381(b)(1)), rather than reducing an intermediate figure at step two. Accordingly, the credit is applied after the statute’s adjustments—including the 20-year cap on payments—are incorporated.

The court relied on statutory text, structure, and usage of defined terms, emphasized § 1386(b)’s forward-looking grammar (“subsequent plan year”), and found persuasive the PBGC’s long-standing guidance (Opinion Letter 85-4) and regulatory statement of purpose (29 C.F.R. § 4206.1(a)).

3. Analysis

3.1 Precedents Cited

• Supervalu, Inc. v. United Food & Com. Workers Unions & Emps. Midwest Pension Fund: Used for background on multiemployer plans’ labor-market function and for the principle that MPPAA disputes are reviewed de novo as questions of law. The court also drew from Supervalu’s emphasis that the MPPAA is an “intricate statutory scheme” whose details reflect legislative compromise—supporting a disciplined, text-and-structure-focused reading rather than an equity-driven re-sequencing.
• Milwaukee Brewery Workers' Pension Plan v. Joseph Schlitz Brewing Co.: Provided the Supreme Court’s explanation of the “unusual” annual-payment methodology and the conceptual frame for the 20-year cap under § 1399(c)(1)(B). This context mattered because the credit’s timing determines whether it can reduce the capped (20-year) obligation.
• M&K Emp. Sols., LLC v. Trs. of IAM Nat'l Pension Fund: Cited for a succinct definition of withdrawal liability as the difference between promised benefits and plan assets, tying the dispute to the MPPAA’s overall allocation of underfunding responsibility.
• Perfection Bakeries, Inc. v. Retail Wholesale & Dep't Store Int'l Union and Indus. Pension Fund: Central as a foil: the Seventh Circuit agreed the issue is “hard,” but adopted reasoning aligned with the dissent (Brasher, J.) rather than the majority, expressly rejecting the Eleventh Circuit’s sequencing.
• GCIU-Emp. Ret. Fund v. Quad/Graphics, Inc.: Identified as the Ninth Circuit’s contrary view; the Seventh Circuit respectfully diverged from it in the same circuit-split discussion as Perfection Bakeries.
• Bd. of Trs. of Int'l Bhd. of Teamsters Loc. 863 Pension Fund v. C&S Wholesale Grocers, Inc.: Supported the court’s insistence that “withdrawal liability” is not synonymous with “allocable amount of unfunded vested benefits,” reinforcing that the term “withdrawal liability” refers to the post-adjustment amount.
• Levin v. United States; FDA v. Brown & Williamson Tobacco Corp.; TRW Inc. v. Andrews; Beeler v. Saul: A cluster of interpretive canons: ordinary meaning, reading statutory terms in context, and avoiding surplusage by giving each provision operative effect.
• Pulsifer v. United States; Servotronics, Inc. v. Rolls-Royce PLC: The “same term, same meaning” presumption within a statute, deployed to treat “withdrawal liability” consistently across §§ 1381 and 1386.
• Castañon-Nava v. U.S. Dep't of Homeland Sec.; United States v. Balint; United States v. Wilson: Used to justify reliance on grammar and verb tense. This underwrote the court’s conclusion that § 1386(b) is forward-looking (credits apply in “subsequent” years), rather than an instruction about how to compute a current complete-withdrawal liability midstream.
• Loper Bright Enters. v. Raimondo; Skidmore v. Swift & Co.: The court treated PBGC’s view as persuasive under Skidmore-type reasoning—valuable “experience and informed judgment”—rather than as binding deference. Post-Loper Bright, this framing is especially salient: agency interpretations may guide without controlling.

3.2 Legal Reasoning

(a) The definitional move: “withdrawal liability” means the post-step amount.
The court anchored its analysis in § 1381(b)(1), which defines “withdrawal liability” as the allocable unfunded vested benefits “adjusted” by steps one through four. Because § 1386(b)(1) says “any withdrawal liability … shall be reduced,” the natural referent is the fully adjusted liability, not an intermediate value. This approach avoids collapsing the distinct statutory concepts of (i) allocable unfunded vested benefits and (ii) withdrawal liability.

(b) Rejecting the “step two” theory as a misread of “in the case of a partial withdrawal.”
The Fund’s main argument was structural: step two instructs adjustment “in accordance with section 1386,” and § 1386 contains the credit, so the credit must occur at step two. The Seventh Circuit countered that step two is expressly conditioned: it applies “in the case of a partial withdrawal.” A complete withdrawal is not “a case of a partial withdrawal.” Thus, step two’s cross-reference most naturally concerns the computation of the current partial withdrawal under § 1386(a), while § 1386(b) operates as a forward-looking bookkeeping/offset rule for subsequent plan years.

(c) Grammar and temporality: § 1386(b) looks forward.
The court emphasized § 1386(b)(1)’s phrasing (“in a subsequent plan year shall be reduced”) and § 1386(b)(2)’s regulatory mandate keyed to “any … withdrawal in any subsequent year.” That language fits a regime where the plan records partial-withdrawal liability when incurred and applies it later—after later-year liability is otherwise computed.

(d) The “no fifth step” objection answered by statutory structure.
The Fund argued that Consumers’s approach creates an extra-statutory “fifth step” after § 1381’s four steps. The court rejected that premise by pointing out other provisions that modify or reduce withdrawal liability after computation (e.g., § 1387(a), § 1388). Thus, applying § 1386(b) after the § 1381(b)(1) process is not anomalous.

(e) PBGC guidance as persuasive confirmation.
The PBGC has consistently stated (Opinion Letter 85-4) that the credit is “a further adjustment to the [§ 1381] amount” and therefore must be made after subsequent withdrawal liability is calculated under § 1381. The court also cited 29 C.F.R. § 4206.1(a) describing the credit’s purpose: preventing double-charging for the same unfunded vested benefits. The Seventh Circuit treated PBGC’s view as persuasive “experience and informed judgment” under Loper Bright Enters. v. Raimondo and Skidmore v. Swift & Co..

3.3 Impact

• Direct financial consequence: In some cases, applying the credit after the 20-year cap can reduce complete-withdrawal liability dramatically—potentially to zero—if the credited partial-withdrawal liability exceeds the present value of capped payments. Under the Fund’s approach, the employer would still owe the capped amount.
• Doctrinal consequence: The Seventh Circuit deepens a circuit split with the Eleventh Circuit (Perfection Bakeries) and Ninth Circuit (GCIU-Emp. Ret. Fund v. Quad/Graphics, Inc.), increasing the likelihood of further appellate development and possible Supreme Court review, especially given the recurring nature of MPPAA disputes.
• Arbitration and litigation strategy: Parties will focus more heavily on the sequencing of statutory adjustments (and on present-value/discount-rate assumptions) because the order of operations can control whether the credit has practical effect once the 20-year cap is in play.
• Plan funding and bargaining dynamics: Funds may view the decision as limiting recoveries from employers with prior partial-withdrawal payments, potentially affecting negotiations over withdrawal timing and the economic calculus of bargaining out of participation.
• Administrative-law implication: By explicitly using Skidmore-style persuasiveness (rather than deference) to PBGC guidance, the decision illustrates how ERISA/MPPAA cases may incorporate agency expertise after Loper Bright without treating it as controlling.

4. Complex Concepts Simplified

• Multiemployer defined-benefit plan: Multiple employers contribute to one pension plan under collective bargaining; workers can move among employers without losing pension credit.
• Unfunded vested benefits: Benefits already earned (vested) by participants minus the plan’s assets set aside to pay them; essentially the plan’s shortfall.
• Withdrawal liability: The statutory bill an employer pays when it leaves an underfunded multiemployer plan, intended to cover its “fair share” of the shortfall.
• Complete vs. partial withdrawal: Complete withdrawal is exiting the plan entirely; partial withdrawal is a substantial contribution decline or partial cessation under statutory triggers.
• The four “steps” in § 1381(b)(1): A required order of adjustments to the base allocation (including de minimis reductions, special rules for partial withdrawals, the 20-year payment limitation mechanics, and other reductions).
• The 20-year cap (29 U.S.C. § 1399(c)(1)(B)): Even if the employer’s computed liability is large, installment payments are capped at the first 20 annual payments; remaining balance may be effectively forgiven.
• Present value and discount rate: A way of translating future payments into today’s dollars; critical when comparing a credit amount to the value of capped installment streams.
• Skidmore persuasiveness: Courts may find an agency’s interpretation convincing based on expertise and consistency, even when not binding.

5. Conclusion

Consumers Concrete Corp. v. Central States, Southeast and Southwest Areas Pension Fund establishes (in the Seventh Circuit) that the prior partial-withdrawal credit in § 1386(b)(1) reduces the employer’s fully adjusted “withdrawal liability” computed under § 1381(b)(1)—meaning the credit is applied only after the statutory four-step process, including the 20-year cap mechanism in § 1399(c)(1)(B).

The opinion is a text-and-structure-driven reading of a complex benefits statute, uses grammar and definitional consistency to resolve sequencing, treats PBGC guidance as persuasive under post-Loper Bright principles, and sharpens an acknowledged circuit split on a high-stakes withdrawal-liability accounting issue.