Solar roofing company Petersen-Dean Inc. failed to convince a California federal judge to adopt an employer-friendly exception to the “pay now, dispute later” framework of pension plan withdrawal liability disputes.
Petersen-Dean can’t avoid paying the $5.3 million in withdrawal liability requested by the Pacific Coast Roofers Pension Plan by arguing that it’s in “financial distress” and can’t afford the payment, Judge Nathanael M. Cousins of the U.S. District Court for the Northern District of California held Tuesday.
The dispute centered on the Employee Retirement Income Security Act’s withdrawal liability regime, which requires employers that withdraw from multiemployer pension funds to make a payment toward the future pensions of its workers who are still covered by the fund. The law requires employers to make these payments before disputing them through arbitration.
Petersen-Dean urged Cousins to apply an exception to this “pay now” framework that’s been recognized by the Seventh and Fifth circuits. Those courts allow financially troubled employers to avoid the “pay now” requirement when the pension fund’s claim is “frivolous.”
Cousins declined to apply this exception, saying that Petersen-Dean never argued that the pension fund’s claim was frivolous. He also noted that the U.S. Court of Appeals for the Ninth Circuit—the appeals court with authority over his courtroom—hasn’t considered the exception, while the Sixth Circuit has explicitly rejected it.
Saltzman & Johnson Law Corp. represents the pension fund. Fox Rothschild LLP represents Petersen-Dean.
The case is Bd. of Trs. of Pac. Coast Roofers Pension Plan v. Petersen-Dean, Inc., 2020 BL 177517, N.D. Cal., No. 5:18-cv-06824, 5/12/20.