A recent district court decision offers a win for employers facing withdrawal liability arbitrations with multiemployer pension plans. The case, Nevada Resorts Ass’n–Int’l All. of Theatrical Stage Emps. and Moving Picture Mach. Operators of the U.S. and Canada Local 720 Pension Trust v. JB Viva Vegas, L.P. (D. Nev. Mar. 29, 2024), throws a wrench into the ability of pension plans to automatically recover attorney fees through provisions in trust agreements.
The case involved an employer challenging a withdrawal liability assessment from a pension plan. The plan’s trust agreement included a clause requiring the employer to pay the plan’s attorney fees incurred during the arbitration, regardless of the outcome. However, the court ruled that this provision was unenforceable.
The judge cited federal regulations governing withdrawal liability arbitrations, which only allow arbitrators to award attorney fees if a party engages in bad faith or other misconduct. Since the trust agreement provision conflicted with these regulations, it was deemed invalid. In this specific case, the employer wasn’t found to have acted improperly, so the plan wasn’t entitled to attorney fees.
This decision highlights the importance of understanding the nuances of trust agreements and how they must be in line with existing law. In this case, unlike some other scenarios where prevailing parties can expect automatic fee awards, employers facing arbitration now have a clearer picture: they only have to worry about attorney fees if they act in bad faith.
Here at Lord & Lindley we have experience in litigation involving trust agreements that can help you determine how to utilize and enforce these important legal instruments. Contact us at 704-457-1010 to find out how we may be able to assist you. For more information regarding our firm, attorneys, and practice areas, please visit our website at www.lordlindley.com.