Civil action appropriate avenue to contest arbitrator’s award, not Arbitration Act rules

Settling a “narrow procedural question,” the U.S. Court of Appeals in Richmond (CA-4) has determined that a pension fund seeking to vacate or modify an arbitration award regarding a withdrawal liability dispute must file a complaint in district court as provided under ERISA §4221(b)(2) and ERISA §4301, rather than follow procedures for judicial review under the Federal Arbitration Act. Thus, a district court erred when it dismissed the fund’s timely-filed complaint.


Due a restructure, an entity associated with Penske Truck Leasing and Penske Logistics (“Penske companies”) took the position it was no longer under “common control” with the Penske companies and stopped contributing to a multiemployer pension fund. The fund responded by assessing withdrawal liability against the Penske companies. An arbitrator subsequently found the companies not liable for withdrawal payments because the fund was exempt as a “trucking industry” fund under ERISA §4203.

Civil action

The pension fund filed suit in district court to vacate or modify the arbitrator’s award under ERISA §4221(b)(2). The fund then filed an amended complaint to correct a procedural defect. The Penske companies moved to dismiss, arguing that under ERISA §4221(b)(3), a party challenging an arbitration award must do so by filing an “application by motion” under the Federal Arbitration Act (FAA). The companies further asserted that the district court could not simply choose to treat the amended complaint as the FAA-required motion because it was not filed within 30 days of the issuance of the arbitration award. The district court sided with the Penske companies on this basis.

Reversing the district court, the Fourth Circuit found in favor of the pension fund. The fund’s filing of a complaint was the proper method by which to obtain review of a withdrawal liability arbitration order under ERISA. With respect to the Penske companies’ reliance on ERISA §4221(b)(3), the appeals court pointed out that if there were any tension between subsection (b)(3) (providing for use of FAA procedures for arbitration proceedings) and subsection (b)(2) (providing for civil actions to review arbitration awards), subsection (b)(3) requires that subsection (b)(2) govern, as subsection (b)(3) expressly limits applicability of the FAA “to the extent consistent with this subchapter.” In other words, the mechanisms for conducting arbitration proceedings about withdrawal liability are provided by the FAA, but the mechanisms for review of those proceedings are provided by ERISA and the rules governing civil actions in district courts.

Finally, the appeals court determined that the fund’s amended complaint properly “related back” to the original complaint for purposes of Federal Rule of Civil Procedure No. 15(c) and thus was timely filed.

Source: Freight Drivers and Helpers Local Union No. 557 Pension Fund v. Penske Logistics LLC (CA-4).

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