United States District Court, D. New Jersey
matter concerns partial-withdrawal liability under the
Employee Retirement Income Security Act of 1974
("ERISA") and Multiemployer Pension Plan Amendments
Act of 1980 ("MPPAA"). Showboat Atlantic Operating
Company, d/b/a Showboat Atlantic City ("Showboat"),
is associated with several other companies, which are
together referred to as "CEC" or the "CEC
Controlled Group." The employees of the companies in the
CEC Controlled Group, including Showboat, were covered by a
multiemployer plan, the IUOE Local 68 Operating Engineers
Pension Fund ("Local 68 Pension Fund" or "the
Fund"). Pursuant to their respective collective
bargaining agreements ("CBA"), Showboat and the
other employers in the CEC Controlled Group made
contributions to the Fund. Showboat closed on August 31, 2014
and ceased to make contributions to the Fund under its CBA.
The remaining companies in the CEC Controlled Group, and
their CBAs with their represented employees, were unaffected.
As to the employers other than Showboat, then, the
contributions to the Fund continued uninterrupted.
withdrawal provisions of ERISA may impose liability on an
employer who withdraws or partially withdraws from a
multiemployer plan. The intent is to ensure that the
employees' pensions are adequately funded, and to avoid a
race for the exits by other employers in the plan, who would
otherwise fear being left behind with the entire pension
liability. Thus an employer may incur liability when, by
terminating or shifting some of its operations, it partially
withdraws from a multiemployer pension plan.
is one per se rule: A partial withdrawal occurs when the
decline in contributions totals at least 70%, That, as all
agree, did not occur as a result of the Showboat closing.
partial withdrawal may nevertheless be found, however, if
certain alternative conditions are met. The employer (or
group) may be liable to pay into the fund if the
employees' work, or similar work, is still carried on,
but is no longer covered by a plan that requires the employer
to contribute. A common scenario might be a transfer of
previously covered work to a nonunionized plant.
work covered by the Fund, as well as the associated
contributions, surely ceased as a result of the closing of
the Showboat casino. I cannot find, however, that the same
work or similar work was carried on, whether at the Showboat
facility or anywhere else, by noncovered employees. I will
therefore reverse an arbitrator's award holding the CEC
Controlled Group liable for partial withdrawal contributions.
The CBC Controlled Group
formerly operated in Atlantic City. (SMUF ¶ 1). It
closed on August 31, 2014. (SMUF ¶ 1). Showboat was
associated with a group of companies referred to here as the
"CEC Controlled Group." On or about August 31,
2014, Caesars Entertainment Corporation ("CEC")
controlled more than 80 percent of the voting shares of
Caesars Entertainment Resort Properties, Inc.
("CERP") and Caesars Entertainment Operating
Company, Inc. ("CEOC"). (SMUF ¶¶ 4-5,
time, CEOC also owned Bally's Park Place, Inc. d/b/a
Bally's Hotel and Casino ("Bally's AC");
Boardwalk Regency Corporation d/b/a Caesars Atlantic City
("Caesars AC"); and Showboat (SMUF ¶¶
6-8). CEOC controlled more than 80 percent of all voting
stock in those companies. (SMUF ¶ 15).
owned Harrah's Operating Company, Inc. d/b/a Harrah's
Atlantic City Casino and Hotel ("Harrah's AC").
(SMUF ¶ 8). CERP controlled more than 80 percent of all
voting stock in Harrah's AC. (SMUF ¶ 16).
on these relationships, it is undisputed that CEC, CEOC,
Showboat, Bally's AC, Caesars AC, and Harrah's AC
constitute the same "controlled group" (the
"CEC Controlled Group") and are treated as a single
employer under ERISA § 4001(b)(1), 29 U.S.C. §
The Fund and the Collective Bargaining Agreements
member employer of the CEC Controlled Group has a separate
collective bargaining agreement ("CBA") with the
International Union of Operating Engineers. (SMUF ¶ 18).
Each CBA has a separate and distinct term and contribution
rate. (SMUF ¶¶ 24-25). Each CEC Controlled Group
CBA covers a group of pension fund participants. These groups
of pension fund participants are separate and distinct. (SMUF
contributed to the Local 68 Pension Fund, as required by the
Showboat CBA that was in effect from May 1, 2011 through
April 30, 2014. (SMUF ¶ 19). Showboat's
contributions to the Fund continued until August 31, 2014,
when the casino closed and the Showboat CBA terminated. (SMUF
AC, Bally's AC, and Harrah's AC had separate CBAs,
which were effective from May 1, 2014 through April 30, 2017.
As required by their CBAs, these three employers separately
contributed to the Fund during the same period that Showboat
was contributing (i.e., before August 31, 2014). (SMUF
¶¶ 21-23). Their obligations were not affected by
the Showboat closure; after August 31, 2014, each of them
continued to contribute to the Fund. (SMUF ¶¶
Showboat's closure, CEC's remaining constituents
(Caesars AC, Bally's AC, and Harrah's AC) have
continued to contribute substantial amounts to the Local 68
Pension Fund. Those contributions were as follows:
• $390, 683.17 from September 1, 2014 through December
• $ 1, 065, 493.01 from January 1, 2015 through December
• $794, 826.12 from January 1, 2016 through September
30, 2016 - $286, 285.37 from October 1, 2016 through December
• $740, 532.14 from January 1, 2017 through August 31,
(SMUF ¶ 27). Adding these post-Showboat-closure
contributions by CEC yields a total of $3, 277, 819.81.
closure did not cause a decline in the CEC Controlled
Group's contributions to the Fund that amounted to 70% (a
threshold of statutory significance, see infra).
(SMUF ¶ 28). Rather, Showboat's closure resulted in
a much smedler decline in CEC contributions, amounting to
approximately 17%. (SMUF ¶ 28).
Dispute, Arbitration, and Appeal to this Court
Disputes regarding withdrawal liability from multiemployer
pension plans follow a four-step process:
 The plan sponsor has the responsibility of determining
this withdrawal liability, notifying the employer, and
collecting payment. 29 U.S.C. § 1382.  If the
employer disputes the amount set, it may ask the plan sponsor
to conduct a reasonable review of the computed liability. 29
U.S.C. § 1399(b)(2)(A).  In the event the dispute is
unresolved, either party may request arbitration. 29 U.S.C.
§ 1401(a)(1).  The arbitrator's award, in turn,
may be challenged in federal court. 29 U.S.C. §
Galgay v. Beaverbrook Coal Co., 105 F.3d 137, 138-39
(3d Cir. 1997) ([bracketed] numbers added). The dispute now
before the Court followed that pattern.
March 11, 2016, Local 68 Pension Fund assessed CEC for
complete withdrawal liability. (SMUF ¶ 29). The Fund
initially asserted that CEC and its members were jointly and
severally liable for complete withdrawal. CEC disagreed.
(SMUF ¶ 30).
letter dated July 13, 2016, CEC submitted its demand for
arbitration. (SMUF ¶ 31). CEC argued that it was not
liable for complete withdrawal liability because its members
continued to contribute to the Fund. (SMUF ¶ 31).
the arbitration, the Fund raised an alternative argument that
partial-rather than complete-withdrawal liability should be
assessed against CEC. (SMUF ¶ 32). The arbitrator, the
Fund, and CEC agreed that the issue of partial withdrawal
liability could be reviewed in the arbitration. (SMUF ¶
December 23, 2016, CEC submitted its memorandum to the
arbitrator, moving for the equivalent of summary judgment.
The memo addressed both complete and partial withdrawal
liability. (SMUF ¶ 34). On January 19, 2017, Local 68
Pension Fund submitted a brief in opposition. (SMUF ¶
35). At this time, the Fund abandoned its argument for
complete withdrawal liability, and argued solely for partial
withdrawal liability. (SMUF ¶ 35). On January 27, 2017,
CEC submitted a reply in support of its motion for summary
judgment. (SUMF ¶ 36).
February 27, 2017, arbitrator Norman Brand submitted an
interim award and opinion upholding the Fund's partial
withdrawal liability assessment against CEC. (SUMF ¶
37). The arbitrator found that CEC "permanently cease[d]
to have an obligation to contribute [to the Fund] under ....
Fewer than all collective bargaining agreements under which
... [it] ... has been obligated to contribute...." (ECF
No. 17-2, p. 13). The arbitrator also found that CEC
continued to perform "work in the jurisdiction of the
collective bargaining agreement of the type for which
contributions were previously required ...." (ECF No.
17-2, p. 13). Thus, the arbitrator held that not a total but
a "partial cessation'* occurred under ERISA §
4205(b)(2)(A)(i), 29 U.S.C. § 1385(b)(2)(A)(i).
March 7, 2017, CEC requested that the arbitrator reconsider
or amend the interim award and opinion. (SUMF ¶ 38). The
arbitrator largely rejected the request for reconsideration;
he slightly modified the award but ...