Ninth Circuit Court of Appeals Notes That Review of Arbitration Awards Under the MPPAA is “Notably Less Deferential” than under the FAA

The Ninth Circuit Court of Appeals recently affirmed in part and reversed in part a district court’s order confirming an arbitration award under the Multiemployer Pension Plan Amendments Act of 1980, noting in the process that judicial review of such awards is “notably less deferential” than review of awards pursuant to the Federal Arbitration Act.

The MPPAA imposes liability on employers who withdraw — partially or completely — from multiemployer pension funds. MNG Enterprises, Inc. withdrew in 2014 from GCIU-Employer Retirement Fund, a multiemployer pension plan. The MPPAA imposes “withdrawal liability” on employers that withdraw from pension plans to cover the employer’s proportionate share of the plan’s unfunded vested benefits and to ensure that such pension plans remain viable.  After MNG’s withdrawal from the fund, GCIU’s actuary calculated its withdrawal liability. MNG disputed the actuary’s calculation and initiated arbitration pursuant to the dispute resolution requirements of the MPPAA.

The arbitrator agreed with MNG on two points but ruled for GCIU on the third. Both parties sought judicial review in the federal court for the Central District of California. The district court affirmed the arbitration award except for the interest rate it utilized, because the judge believed the arbitrator made a typographical error. Both parties appealed again, this time to the Ninth Circuit Court of Appeals.

The Ninth Circuit stated that “the standard of review for MPPAA arbitrations is notably less deferential than under the Federal Arbitration Act.” The court presumed that findings of fact made by the arbitrator were correct unless rebutted by a clear preponderance of the evidence, and further, reviewed the arbitrator’s conclusions of law de novo and applications of equitable relief for an abuse of discretion. Applying these standards of review, the Ninth Circuit affirmed in part and vacated in part the district court’s rulings. The court remanded for further consideration as to whether MNG, as a purchaser of earlier withdrawn participants in the GCIU, could have been liable as a successor as a matter of equity, and whether GCIU correctly applied the contribution histories at the time of the relevant asset sales.

GCIU-Employer Retirement Fund v. MNG Enterprises, Inc, Nos. 21-55864, 21-55923 (9th Cir. Oct. 28, 2022).