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Shelter Distribution Inc. v. General Drivers, Warehousemen & Helpers Local Union No. 89, No. 11-5450 (6th Cir. Mar. 16, 2012)

Articles Discussing Case:

Requiring Union to Indemnify Employer for Withdrawal Liability Does Not Violate Public Policy Under ERISA

Ogletree Deakins • April 04, 2012
The Sixth Circuit Court of Appeals recently held that a collective bargaining agreement (CBA) provision, which obligated a union to indemnify an employer for withdrawal liability did not violate public policy under the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA). This issue was undecided in the Sixth Circuit, and the decision provides some much-needed guidance for employers. Shelter Distribution, Inc. v. Gen’l Drivers, Warehousemen & Helpers Local Union No. 89, No. 11-5450, Sixth Circuit Court of Appeals (March 16, 2012).

Contract Language on Pension Withdrawal Liability Does Not Violate Public Policy

Franczek Radelet P.C • April 02, 2012
In the case of Shelter Distribution, Inc. v. General Drivers, Warehousemen & Helpers Local Union No. 89, No. 11-5450 (6th Cir. Mar. 16, 2012), a court considered whether a collective bargaining agreement shifted employer withdrawal liability to a union. In Shelter Distribution, a multi-employer pension fund assessed withdrawal liability against an employer. In response, the employer attempted to enforce language contained in its collective bargaining agreement in which the union agreed to indemnify the employer if withdrawal liability was assessed by the pension fund. At arbitration, the union argued that the indemnification language violated the policy expressed in the Multiemployer Pension Plan Amendments Act which prohibits the shifting of withdrawal liability through collective bargaining agreements. The arbitrator rejected the Union’s argument, and ordered the union to pay the employer the withdrawal liability that was assessed by the pension fund. A district court upheld the arbitration award and the union appealed to the U.S. Court of Appeals for the Sixth Circuit.