Michigan Paving and Materials Co. v. Operating Engineers Local 324 Pension Fund

• Court: District Court, E.D. Michigan
• Decided: October 23, 2025
• Docket: 2:23-cv-12019
• Status: Unknown

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

MICHIGAN PAVING AND MATERIALS CO.,

Plaintiff/Counter-Defendant, Case No. 23-cv-12019

v. Hon. Brandy R. McMillion Mag. Judge Kimberly G. Altman OPERATING ENGINEERS LOCAL 324 PENSION FUND,

Defendant/Counter-Plaintiff. _________________________________________/ ORDER VACATING THE ARBITRATION AWARD, DIRECTING THE PLAN SPONSOR TO RECALCULATE PLAINTIFF’S WITHDRAWAL LIABILITY AND CLOSING THE CASE

This case involves a dispute between Michigan Paving and Materials Co. (“Michigan Paving” or “Plaintiff”) and the Operating Engineers Local 324 Pension Fund (the “Fund”), along with its Trustees (collectively, “Defendants”), regarding the calculation of withdrawal liability for Plaintiff’s partial withdrawal from the Fund’s multiemployer pension plan (the “Plan”). The parties’ filed cross-motions for summary judgment, which ask the Court to determine whether the Arbitrator correctly found that the Fund’s actuary reasonably used the Pension Benefit Guaranty Corporation rate (the “PBGC rate”) to calculate Plaintiff’s withdrawal liability in accordance with the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. See ECF Nos. 19, 20.

On July 31, 2024, the Court issued an Order granting in part Plaintiff/Counter- Defendant’s Motion for Summary Judgment to Vacate the Arbitral Award (ECF No. 19) and denying Defendant/Counter-Plaintiff’s Cross-Motion for Summary

Judgment (ECF No. 20). The Court disagreed with the Arbitrator’s legal conclusion that using the PBGC rate to calculate the withdrawal liability complied with ERISA. See generally ECF No. 28. The Court found that the PBGC rate was overly conservative and did not align with the Plan’s historical investment experience; and

that the actuary’s application of actuarial professional standards to justify risk transfer in the partial withdrawal liability context was erroneous and contrary to ERISA and MPPAA. ECF No. 28, PageID.2764. Falling short of compliance with

the statutory standard, the Court found the Arbitration Award unreasonable and, therefore, unlawful, so it vacated the Award. Id. Both parties appealed. See ECF Nos. 30, 32. On August 27, 2025, the Sixth Circuit issued an Opinion and Judgment affirming the judgment of this Court, in

light of its decision in Ace-Saginaw Paving Co. v. Operating Eng’rs Local 324 Pension Fund, 150 F.4th 502 (6th Cir. 2025). The appellate court instructed that on remand, the Fund’s actuary was to recalculate Michigan Paving Company’s

withdrawal liability using assumptions and methods that are consistent with ERISA’s requirements, as clarified by Ace-Saginaw Paving Co. See ECF No. 34, PageID.2776.

In Ace-Saginaw Paving Co, the Sixth Circuit held that 29 U.S.C. § 1393 requires that “[w]ithdrawal liability must be calculated ‘by a plan actuary . . . on the basis of . . . actuarial assumptions and methods which, in the aggregate, are

reasonable (taking into account the experience of the plan and reasonable expectations) and which, in combination offer the actuary’s best estimate of the anticipated experience under the plan.’” 150 F.4th at 508. The court instructed that “Section 1393 ‘established a two-part test for actuarial assumptions: (1) they must

be reasonable; and (2) they must be the actuary’s best estimate.’” Id. at 510. The withdrawal liability calculation will fail the best estimate test if “‘the chosen assumptions’ represent ‘the dictates of plan administrators or sponsors’ instead of

‘the actuary’s own judgment’” or if “the interest rate is not ‘based on the unique characteristics of the plan.’” Id. at 510-11. The “assumptions and methods” must also offer the actuary’s “best” estimate – not focusing on “whether the actuary’s assumptions and methods in fact lead to the most accurate calculation of withdrawal

liability. [but] [r]ather . . . the actuary [thinks] his assumptions and methods would do so.” Id. at 511. Accordingly, the Arbitration Award is VACATED, and the case is

REMANDED back to the Plan Sponsor to recalculate Plaintiff’s Withdrawal Liability using the principals set forth in Ace-Saginaw Paving Co. v. Operating Eng’rs Local 324 Pension Fund, 150 F.4th 502 (6th Cir. 2025), that reflects “the

actuary’s best estimate of anticipated experience under the plan,” pursuant to 29 U.S.C. § 1391(a)(1). This is a Final Order that closes the case.

IT IS SO ORDERED. Dated: October 23, 2025 s/Brandy R. McMillion HON. BRANDY R. MCMILLION U.S. District Court Judge