United States District Court, D. Nevada
ORDER DENYING DEFENDANT'S MOTION TO DISMISS (ECF
P. GORDON, UNITED STATES DISTRICT JUDGE
JB Viva Vegas, L.P. (JB) sues defendant Nevada Resort
Association-IATSE Local 720 Retirement Plan (the Plan) for a
declaratory judgment that a recent amendment to the Trust
Agreement governing the Plan violates ERISA. The Plan moves
to dismiss the complaint on the grounds that ERISA mandates
arbitration for this kind of dispute.
complaint does not fall within ERISA's mandatory
arbitration provision, which governs challenges to withdrawal
penalties assessed by pension plans to individual employers.
Here, by contrast, JB makes a pre-assessment challenge that
the plan amendment is impermissible under ERISA as to all
employers participating in the plan. I therefore deny the
motion to dismiss.
recently, JB operated a theatrical production of the musical
"Jersey Boys" at Paris Hotel & Casino in Las
Vegas, Nevada. ECF No. 1 at 3. It made monthly contributions
to the Plan based on a collective bargaining agreement with
IATSE Local 720 for work performed by stagehands it employed
on the musical. Id. The Plan is a multi-employer
pension plan primarily covering employees in theater and
related entertainment industries. Id.
ERISA, if an employer either partially or completely
withdraws from an underfunded multi-employer pension plan to
which that employer has been making contributions, the
employer is liable to the plan for its pro rata share of the
plan's underfunding (referred to as "withdrawal
liability"). See 29 U.S.C. § 1381.
Sections 1381 through 1399 detail when withdrawal liability
is incurred and how multi-employer plans should calculate and
assess it. Section 1383(a) states that "complete
withdrawal" occurs when an employer "permanently
ceases to have an obligation to contribute under the
plan" or "permanently ceases all covered operations
under the plan." Section 1383(c), however, offers an
exception that makes it easier for employers in the
entertainment industry (like JB) to avoid a withdrawal
carve-out for the entertainment industry applies by default,
but Section 1383(c)(4) says "[a] plan may be amended to
provide that this subsection shall not apply to a group or
class of employer under the plan." Under this authority,
the trustees of the Plan in this case adopted such an
amendment. JB's complaint challenges the amendment,
contending that it bars nearly all employers from the 1383(c)
exception and categorizes employers impermissibly.
provides a cause of action for an "employer ... who is
adversely affected by the act or omissions of any party under
this subtitle with respect to a multi-employer plan, "
with jurisdiction in federal district courts. 29 U.S.C.
§ 1451(a), (c). Section 1401, however, mandates
arbitration for "[a]ny dispute between an employer and a
plan sponsor of a multi-employer plan concerning a
determination made under sections 1381 through 1399 of
[ERISA] . . . ." 29 U.S.C. § 1401(a)(1). The Plan
bases its motion to dismiss on this arbitration provision.
Plan reasons that the amendment JB challenges was authorized
by Section 1383(c)(4) and will affect the application of
Section 1383 to employers who participate in the Plan, so it
is therefore a "dispute . . . concerning a
determination" made under Section 1383. JB responds that
the word "determination" refers to a fact-specific
penalty assessment against a particular employer, rather than
a statutory challenge to a plan amendment.
triggering mechanism for arbitration under Section 1401
suggests JB is correct. "Either party may initiate . . .
arbitration . . . within a 60-day period after the earlier of
(A) the date of notification to the employer under section
1399(b)(2)(B) ... or (B) 120 days after the date of the
employer's request under section 1399(b)(2)(A) ..."
29 U.S.C. § 1401(a)(1). Section 1399(b) is entitled
"Notification, demand for payment, and review upon
complete or partial withdrawal by employer." It reads,
"[a]s soon as practicable after an employer's
complete or partial withdrawal, the plan sponsor shall-(A)
notify the employer of-(i) the amount of the liability, and
(ii) the schedule for liability payments, and (B) demand
payment in accordance with the schedule." The logical
inference is that Sections 1399 and 1401 are triggered only
by an actual employer withdrawal and liability assessment.
This inference that "determination" in Section 1401
signifies an individualized liability assessment is
strengthened by language in 1399(b) allowing the employer to
review documentation "relating to the determination of
the employer's liability." 29 U.S.C. §
majority of the cases the Plan relies upon relate to
challenges after an individualized withdrawal assessment, and
thus fall squarely within the triggering provisions in
Sections 1399 and 1401. See, e.g., ILGWU Nat. Ret. Fund
v. Levy Bros. Frocks, 846 F.2d 879, 886 (2d Cir. 1988).
One case the Plan discusses in its reply is more nuanced.
See Caesars Entm't Corp. v. Pension Plan of Nat. Ret.
Fund, No. 15-CV-138 LAK JLC, 2015 WL 7254208 (S.D.N.Y.
Nov. 17, 2015). In Caesars, the defendant plan
sought to expel the plaintiff employer from the plan, thereby
triggering an involuntary withdrawal and liability
assessment. The court required the employer to arbitrate its
challenge pursuant to Section 1401. Id. at *5. That
case is distinguishable because it involved an individualized
dispute over a withdrawal and penalty assessment, and thus is
closer to the individualized "determination"
contemplated by Section 1401. Indeed, the court framed the
"primary question" for application of Section 1401
as "whether a complete withdrawal from the plan has
occurred." Id. at *4. Here, by contrast, no
withdrawal has occurred and JB challenges an amendment that
affects all participating employers, rather than an
individualized determination of JB's liability.