Court Rules Pension Fund’s Position Was Not ‘So Baseless’ as to Mandate an Award of Attorneys’ Fees

Takeaways

• Employers who are pursued by multiemployer pension plans for withdrawal liability often face an uphill battle to recoup the attorneys’ fees for defending such claims.
• Steelcase is a good reminder of the judicial reluctance to award attorneys’ fees against a multiemployer pension plan.

Related link

• Central States, Southeast and Southwest Areas Pension Fund v. Steelcase Inc.

Article

ERISA is widely regarded as a remedial statute. As a result, employers who are pursued by multiemployer pension plans for withdrawal liability face an uphill battle when trying to recoup attorneys’ fees (often substantial) incurred in defending such claims. A recent case aptly illustrates this.

Central States, Southeast and Southwest Areas Pension Fund v. Steelcase Inc., No. 24-cv-663 (N.D. Ill. July 31, 2025), is the most recent case in a multiyear saga involving Central States’ practice of calculating withdrawal liability payments using (despite seemingly incontrovertible statutory language to the contrary) post-2014 contribution rate increases. Numerous employers (including several represented by the author) have successfully argued that this practice unlawfully inflated their withdrawal liability payments. Steelcase was one such employer. After prevailing in arbitration over the unlawful practice, Steelcase filed an action in federal district court seeking to enforce the victorious arbitration award.

After Central States suffered a nearly unanimous string of arbitration and district court defeats on this “high contribution rate” issue and while Steelcase’s federal action was pending, the U.S. Court of Appeals for the Seventh Circuit conclusively resolved the issue in Event Media v. Central States, Southeast and Southwest Areas Pension Fund, 135 F. 4th 529 (7th Cir. 2025). In Event Media, the Seventh Circuit held that Central States’ interpretation “ignores the language of the statute.”

After Event Media was issued, Central States conceded that it should have excluded the post-2014 contribution rate increases when calculating Steelcase’s withdrawal liability payments. This resulted in a substantial reduction in Steelcase’s withdrawal liability payments (approximately $2.8 million over the 20-year payment period). Steelcase then filed a motion seeking an award of attorneys’ fees.

Under the applicable standard governing an award of fees in the underlying arbitration, an arbitrator may require a party who contests an arbitration in bad faith to pay the reasonable attorneys’ fees of the other party. Steelcase asserted bad faith on what it described as the Fund’s “opportunistic” and “nonsensical” statutory interpretation. District Court Judge Thomas Durkin disagreed.

While describing the Fund’s position as “undoubtedly weak,” Judge Durkin noted the two arbitration awards in the Fund’s favor (subsequently rejected in federal court) as well as a lack of controlling precedent. Judge Durkin concluded that the legal positions taken by the Fund were not “so baseless that they call out for an award of attorneys’ fees.”

Steelcase further argued that legal fees were recoupable under Federal Rule of Civil Procedure 11. Judge Durkin again sided with the Fund, citing the absence of binding precedent and an issue that the Seventh Circuit described in Event Media as one of first impression. Judge Durkin concluded, “[T]he fact that several arbitrators and district court judges had agreed that the Fund’s statutory interpretation was wrong did not render the Fund’s argument frivolous.” He accordingly denied the employer’s motion for attorneys’ fees.

Steelcase clearly illustrates the obstacles faced by an employer (even one who by any measure was the prevailing party) seeking to recoup attorneys’ fees from a multiemployer pension plan. Numerous arbitrations and district court opinions (including several involving employers represented by the author) had found Central States’ interpretation “simply contrary to the plain language of the statute” prior to the Seventh Circuit ultimately confirming this overwhelming body of case law against Central States. Nonetheless, the district court in Steelcase denied the motion for attorneys’ fees. One could argue that Steelcase principally turned on the absence of binding precedent, and that Steelcase would likely have been decided differently if the underlying events had taken place post-Event Media. One could further surmise that Central States may well change their “high contribution rate” policy at some point. At the end of the day, Steelcase is a good reminder of the judicial reluctance to award attorneys’ fees against a multiemployer pension plan.

Please contact the author with any questions regarding withdrawal liability.