The National Retirement Fund v. Intercontinental Hotels Group Resources, LLC

Background

The National Retirement Fund (NRF) and its Board of Trustees brought an action under the Employee Retirement Income Security Act (ERISA) against InterContinental Hotels Group Resources, LLC (IHG). The NRF sponsors a multiemployer pension plan, and IHG was a contributing employer. The NRF alleged that IHG withdrew completely from the plan and incurred withdrawal liability.

The NRF sent IHG written requests for information under 29 U.S.C. § 1399(a), which requires an employer to provide information that the plan sponsor reasonably determines is necessary to comply with ERISA’s withdrawal-liability provisions. The NRF alleged that IHG did not respond. According to the NRF, its trust agreement treats an employer’s unexplained failure to respond to such a request as a default. The agreement allows the NRF, after a default, to demand immediate payment of all or part of the employer’s outstanding withdrawal liability.

The NRF estimated IHG’s withdrawal liability at $8,332,824, payable in quarterly installments. IHG later demanded arbitration challenging the NRF’s assessment, and that arbitration was still ongoing when the court considered this motion. The NRF’s amended complaint asserted claims concerning unpaid installments, accelerated payment based on the alleged default, and alternative injunctive relief. IHG filed a partial motion to dismiss the acceleration claim.

Arbitration requirement

ERISA requires disputes between an employer and a multiemployer plan sponsor concerning determinations under 29 U.S.C. §§ 1381 through 1399 to be submitted to arbitration. The court held that it could not decide in the first instance whether the NRF’s default provision complied with 29 U.S.C. § 1399(c)(5)(B). That provision permits a plan sponsor to demand immediate payment after an event defined by plan rules indicates a substantial likelihood that the employer will be unable to pay its withdrawal liability.

IHG argued that the NRF’s rule was invalid because a failure to respond to an information request does not itself show a substantial likelihood that the employer cannot pay. The court declined to resolve that statutory-interpretation issue because it concerned a provision subject to ERISA’s arbitration requirement. The court also declined to decide the ultimate merits of the withdrawal-liability dispute before the arbitrator acted.

Pleading standard and acceleration claim

Because this was a motion to dismiss for failure to state a claim, the court accepted the complaint’s factual allegations as true and asked whether they plausibly showed that the NRF was entitled to relief. The court treated the inquiry as narrow: assuming the trust agreement’s insecurity-default provision was valid, had the NRF plausibly alleged a default under that agreement?

The court concluded that it had. The NRF alleged that its trustees adopted the information-request default rule based on their experience that employers who failed to respond were substantially more likely not to pay withdrawal liability. It also alleged that the NRF sent IHG requests after learning of its withdrawal, that the requests were intended to help assess and collect withdrawal liability, and that IHG did not respond. Those allegations were sufficient at the pleading stage.

The court rejected IHG’s argument that the NRF had to provide detailed facts about the trustees’ past experiences. The applicable pleading rules require enough factual matter to make the claim plausible, but they do not require detailed factual allegations of that kind. The court also concluded that IHG’s later production of the requested information during arbitration did not require dismissal. According to the court, the later production did not cure the alleged failure to respond or eliminate the alleged default at this stage.

Disposition

The court did not determine whether the NRF’s default provision ultimately complies with ERISA, whether IHG actually owes the asserted withdrawal liability, or what amount is ultimately due. It denied IHG’s partial motion to dismiss the NRF’s acceleration claim. The Clerk was directed to terminate the motion at docket number 43.