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The Third Circuit upheld a lower court's decision to vacate an arbitration award exceeding $427,000 against Allied Painting & Decorating Inc. over a union pension fund's withdrawal liability claims. The ruling, made on Thursday, determined that the International Painters and Allied Trades Industry Pension Fund waited too long to request payment under federal benefits law.

 $427K Painting Company Arbitration : District Court's Decision

A three-judge panel for the Third Circuit supported the district court's decision to vacate the arbitration award, albeit on different grounds. The arbitration dispute centered on Allied Painting's alleged withdrawal liability to the pension fund. Notably, the company had not contested the fund's calculation for the liability amount.

U.S. Circuit Judge Paul B. Matey, writing for the panel, highlighted that the pension fund delayed 12 years before seeking withdrawal liability from Allied Painting. He emphasized the importance of timeliness under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), which requires funds to request payment "as soon as practicable" after a company's withdrawal.

 $427K Painting Company Arbitration :The Complaint and Delay

In 2021, Allied Painting filed a complaint to overturn the arbitration award that held the company liable for about $427,000 in withdrawal liability. Court filings revealed that during litigation, Allied had been making monthly payments of approximately $17,900. The union fund initially demanded payment in 2017, alleging Allied's withdrawal occurred in 2005.

The district court, in March 2023, found that the arbitrator had applied "inconsistent standards" to assess whether Allied Painting experienced prejudice due to the fund's delayed payment request. The court determined these standards differed from those established by the Third Circuit, leading to the conclusion that no prejudice was consistent with case law.

Third Circuit's Analysis

Affirming the district court's ruling, the Third Circuit underscored the MPPAA's requirement for timely requests. Judge Matey outlined the steps under the law when a fund makes a withdrawal liability claim: a company withdraws, and the fund must then notify and demand payment "as soon as practicable." This requirement means within a reasonable time frame, not necessarily "as soon as possible."

Judge Matey clarified that a company doesn't need to show prejudice at this stage. The arbitrator had already determined that the fund did not act "as soon as practicable," and neither party disputed this finding. Therefore, the arbitrator's error in requiring a demonstration of prejudice, which the MPPAA does not mandate, justified vacating the award.

Conclusion

Representatives of the involved parties did not immediately respond to requests for comment.