Court Allows Claim for Multiemployer Pension Default Based Upon Failure to Provide Information

A relatively novel decision today from the U.S. District Court for the Southern District of New York could significantly expand the power of multiemployer pension plans to demand information from participating employers. In Nat’l Ret. Fund v. Intercontinental Hotels Grp. Res., LLC, 2020 U.S. Dist. LEXIS 69991 (S.D.N.Y. Apr. 20, 2020), the court refused to summarily dismiss a lawsuit by trustees of a multiemployer pension plan seeking to declare a participating employer in default for failure to respond to an information request. The plan sought information to determine whether the employer was at risk of not being able to make withdraw liability payment.

The court refused to dismiss the claim because the plan’s trust documents allegedly gave the trustee the right to seek information if there was reason to believe that the employer could not make a full withdrawal liability payment. The court held that, for the purposes of the early motion, the plaintiff had sufficiently alleged that this clause was valid and that the plan had a legitimate reason for the request.

Notably, if the claim is ultimately successful, the consequences for the defendant could be serious. If the employer is declared in default, the plan can immediately require the employer to pay its full withdrawal liability (at least on an interim basis) while related arbitration proceeding are ongoing. Fees and costs are also recoverable.