Manhattan Ford Lincoln, Inc. v. UAW Local 259 Pension Fund (331 F. Supp. 3d 365, 2018)

Kevin McNulty, United States District Judge

The plaintiff, Manhattan Ford Lincoln, Inc. ("Manhattan Ford") brings this action against UAW Local 259 Pension Fund ("Pension Fund") pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. as amended by the Multi-Employer Pension Plan Amendment Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1381 - 1461. This case arises from Manhattan Ford's withdrawal from the Pension Fund, a multiemployer pension plan. The Arbitrator upheld the Pension Fund's calculation of about $2.55 million in withdrawal liability. Manhattan Ford now challenges that decision.

Two essential questions are raised:

(1) As a matter of ERISA law, must a pension plan's actuary use identical actuarial assumptions to calculate the plan's satisfaction of minimum funding requirements and its unfunded vested benefits ("UVB") for withdrawal liability?

2) Assuming the answer to question 1 is "no," did the Arbitrator err in this case when he found that the discount rate applied by the Pension Fund's actuary to determine Manhattan Ford's withdrawal liability, the Segal Blend, did not render the actuarial assumptions "in the aggregate, unreasonable (taking into account the experience of the plan and reasonable expectations)"? See 29 U.S.C. § 1401(a)(3)(B)(i).

Now before this Court are Manhattan Ford's motion for summary judgment and the Pension Fund's cross-motion for summary judgment. For the reasons discussed below, the two questions raised in this case are answered in the negative. Accordingly, Manhattan Ford's motion for summary judgment is denied, and the Pension Fund's cross-motion for summary judgment is granted. I will therefore affirm the Arbitrator's Interim and Final Awards.

I. Background

Manhattan Ford was a contributing employer to the Pension Fund, a multiemployer defined benefit pension plan. (DSMF ¶ 1.) As such, it was required to make contributions to fund the Pension Fund. In 2014, Manhattan Ford's contributions to the Pension Fund ceased. (Id. ) This, everyone agrees, constituted a complete withdrawal from the Pension Fund. That withdrawal triggered Manhattan Ford's withdrawal liability-i.e., its obligation to pay in to the Fund to ensure that any unfunded pension liabilities were covered, and that the employers who remained in the plan would not be unfairly burdened.

Pension funds, through their actuaries, necessarily make assumptions or predictions. These include estimates of future contributions, investment return, and liabilities, all of which depend on a number of actuarial factors. To simplify a bit, the Plan's estimated future liabilities are reduced to a present value using a percentage discount rate (which is itself an actuarial assumption). The resulting figure is used to determine whether the Plan's assets are sufficient to meet its obligations.

A. The 7.5% funding rate and the Segal Blend withdrawal rate

Diane Gleave of the Segal Company, the Pension Fund's actuary, calculated the minimum funding level of the plan and Manhattan Ford's withdrawal liability using the following discount rates:

The Funding Rate (used to calculate minimum required funding). To calculate the minimum required funding of the Pension Fund, Ms. Gleave used a funding discount rate of 7.5%. (Id. at ¶ 4.) That funding rate was developed by "employing the 'building block' method, looking to the asset mix of the [Pension] Fund's investment portfolio and analyzing the likely return for each asset class." (Final Op. at 7. See Gleave Dep. 10:18-11:7, 11:14-:29.) Manhattan Ford does not dispute, and indeed embraces, that 7.5% rate. Based on the 7.5% funding rate, the Segal firm reported that the Pension Fund was "fully funded- i.e. that, 'assuming experience is consistent' with its assumptions, 'the current value of [the Pension Fund's] assets plus future investment earnings and contribution income is projected to exceed benefit payments and administrative expenses." (2014 Actuarial Valuation at 8.) Indeed, the Pension Fund's funded percentage for 2014 was 111.7%. (Final Op. at 7. See 2014 Actuarial Valuation at 7,10.)

The Segal Blend (used to calculate withdrawal liability). To calculate the Pension Fund's UVB at the time of Manhattan Ford's withdrawal, Ms. Gleave used a different discount rate, the Segal Blend. (DSMF ¶ 3.) The Segal Blend has been used by the Pension Fund for purposes of calculating withdrawal liability for more than 25 years. (Id. ¶ 7; Joint Stip. of Facts ¶ 11.) It represents a blend of interest rates prescribed by the Pension Benefit Guaranty Corporation ("PBGC"), and the 7.5% funding rate. More specifically, the Segal Blend "values vested benefit liabilities based on: 1) PBGC, or risk-free rates, to the extent that there are assets on hand that are attributable to the withdrawing employer; and 2) long-term funding assumptions used for minimum funding purposes to the extent such assets are not on hand." (DSMF ¶ 10.) In setting the Segal Blend rate, Ms. Gleave considered two sets of liabilities, and then blended the rates as to those liabilities. (Arb. Hrg. Tr. 92:10-:19.) Gleave first valued a portion of the Pension Fund's liabilities using the long-term funding assumption of 7.5% (i.e. , the same rate as the "funding rate" that was used to value the minimum funding). (DSMF ¶¶ 3, 10.) Gleave then valued another portion of the Pension Fund's liabilities using risk-free interest rates published by the PBGC. (Id. ) "Mathematically, the Segal Blend is the equivalent of using an 'effective' discount rate that falls somewhere between the PBGC rates and the investment return assumption used for funding purposes." (Final Op. at 8.) Using the Segal Blend rate, Ms. Gleave calculated the present value of vested plan benefits for withdrawal liability at about $117.8 million. (2014 Actuarial Valuation at 10). That figure minus the market value of current assets ($86,105,701) yielded a $31,737,875 figure for UVB. (Id. at 8). Of that UVB total, about $2.55 million was allocated to Manhattan Ford. See infra .

B. The Pension Fund's Assessment of $2.55 Million Withdrawal Liability

Based on Manhattan Ford's cessation of contributions in 2014, the Pension Fund found that Manhattan Ford had completely withdrawn from the Fund. On December 10, 2014, the Pension Fund issued a Notice and Assessment of Withdrawal Liability. (Compl. ¶ 25; Ans. ¶ 25.) Two months later, on February 20, 2015, the Pension Fund sent an Amended Notice to Manhattan Ford, assessing a withdrawal liability of $2,553,692 as of the December 31, 2014 withdrawal date. (Compl. ¶ 25, Ans. ¶ 25; DSMF ¶ 2.) Under that amended assessment, the $2,553,692 withdrawal liability was to be paid in quarterly payments of $99,640.50 over eight years, with a final payment of $78,662.04. (DSMF ¶ 2. See W. L. Report at 7.)

All seem to agree that if Gleave had used the 7.5% funding rate (rather than the Segal Blend) to value the Pension Fund's liability, Manhattan Ford's withdrawal liability would have been $0 (rather than $2.55 million). (Final Op. at 7.) On April 13, 2015, Manhattan Ford challenged the revised assessment on just that basis. The Pension Fund, said Manhattan Ford, was required to use the 7.5% funding rate, not the Segal Blend, to compute Manhattan Ford's withdrawal liability. (Compl. ¶ 26; Ans. ¶ 26.) See 29 U.S.C. § 1399(b)(2)(A). On May 26, 2015, the Pension Fund rejected Manhattan Ford's challenge. (Compl. ¶ 27; Ans. ¶ 27.) See 29 U.S.C. § 1399(b)(2)(B).

C. Arbitration

On July 20, 2015, Manhattan Ford timely initiated arbitration proceedings pursuant to 29 U.S.C. § 1401(a)(1). (Compl. ¶ 28; Ans. ¶ 28.)

Before the Arbitrator, Michael D. McDowell, Esq., Manhattan Ford disputed the Pension Fund's computation of withdrawal liability. On July 25, 2016, the Arbitrator issued an Interim Award denying both Manhattan Ford's motion for summary judgment and the Pension Fund's cross-motion for summary judgment. (See Interim Op. at 18; Compl. ¶ 29; Ans. ¶ 29.) The matter went to a hearing on December 6, 2016. At that hearing, the Arbitrator heard testimony from three witnesses: 1) Darren French, Manhattan Ford's actuarial expert; 2) Ms. Gleave, the Pension Plan's actuary from The Segal Company; and 3) Thomas Levy, the Pension Plan's actuarial expert from The Segal Company. See (Arb. Hr. Tr.) The parties also presented some seven exhibits. (See Final Op. at 4-5.) On June 14, 2017, the Arbitrator issued a Final Award, rejecting Manhattan Ford's challenge to the Pension Fund's withdrawal liability determination. (Compl. ¶ 30; Ans. ¶ 30; Final Op.)

D. This Action and the Cross-Motions for Summary Judgment

On July 12, 2017, pursuant to 29 U.S.C. § 1401(b)(2), Manhattan Ford filed the present action, asking this Court to vacate the arbitrator's interim and final awards in their entirety. (Compl. 13.) On September 6, 2017, the Pension Fund filed its Answer, Affirmatives Defenses, and Counterclaim. (ECF no. 17.) On September 12, 2017, Manhattan Ford filed an Answer to the Pension Fund's Counterclaim. (ECF no. 19.)

On October 16, 2017, Manhattan Ford filed a motion for summary judgment requesting that this Court vacate the Pension Fund's assessment of withdrawal liability and "the arbitration award that sustained it." (Pl. Brf. at 25.) On November 20, 2017, the Pension Fund filed its opposition and a cross-motion for summary judgment (ECF nos. 23-2, 23-3) asking this Court to affirm the assessment of withdrawal liability against Manhattan Ford and the arbitration award sustaining it. (Def. Brf. at 22.) On December 11, 2017, Manhattan Ford filed a reply in support of its own motion and its opposition to the Pension Fund's cross-motion. (Pl. Reply.) On December 29, 2017, the Pension Fund filed a reply in support of its cross-motion. (Def. Reply.)

On March 27, 2018, Manhattan Ford submitted a letter addressing a recent decision from the Southern District of New York, N.Y. Times Co. v. Newspaper & Mail Deliverers'-Publishers' Pension Fund , 303 F.Supp.3d 236 (S.D.N.Y. 2018). (Pl. Letter.) On March 29, 2018, the Pension filed a responding letter. (Def. Letter.) Briefing is complete, and the motions are poised for decision.

II. Legal Standards Governing Review of Arbitration Award

ERISA "provides the procedure for calculating and assessing withdrawal liability." Concrete Pipe , 508 U.S. at 609, 113 S.Ct. 2264. Disputes regarding withdrawal liability from multiemployer pension plans follow a four-step process:

[1] The plan sponsor has the responsibility of determining this withdrawal liability, notifying the employer, and collecting payment. 29 U.S.C. § 1382.

[2] 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).

[3] In the event the dispute is unresolved, either party may request arbitration. 29 U.S.C. § 1401(a)(1).

[4] The arbitrator's award, in turn, may be challenged in federal court. 29 U.S.C. § 1401(b)(2).

Galgay v. Beaverbrook Coal Co. , 105 F.3d 137, 138-39 (3d Cir. 1997) ( [bracketed] numbers and line breaks added). See also Steelworkers Pension Tr. by Bosh v. Renco Grp., Inc. , 694 F. App'x 69, 73 (3d Cir. 2017). The dispute now before the Court followed that pattern.

A. Presumptions and Burdens of Proof in Arbitration

In reviewing an arbitration award, the court must be mindful of two presumptions that govern an arbitration proceeding under ERISA. See 29 U.S.C. §§ 1401(a)(3)(A)-(B).

The first presumption is that any factual determinations made by a plan sponsor under Sections 1381 through 1399 and 1405 are "presumed correct unless the party contesting the determination shows by a preponderance of the evidence that the determination was unreasonable or clearly erroneous." Id. § 1401(a)(3)(A) ; Concrete Pipe , 508 U.S. at 620-21, 113 S.Ct. 2264. "The Supreme Court has interpreted this language to place the burden of persuasion on the employer during arbitration to 'disprove a challenged factual determination by a preponderance.' " Bd. of Trustees of Trucking Empls. of N. Jersey Welfare Fund, Inc.-Pension Fund v. Kero Leasing Corp. , 377 F.3d 288, 307 (3d Cir. 2004) (quoting Concrete Pipe , 508 U.S. at 629, 113 S.Ct. 2264 ). The presumption's "purpose is to prevent the employer from 'forcing the plan sponsor to prove every element involved in making an actuarial determination.' " Concrete Pipe , 508 U.S. at 628, 113 S.Ct. 2264 (quoting H.R. Rep. No. 96-869, pt. 1, p. 86 (1980) ).

The second presumption applies specifically to challenges to determinations of UVB:

In the case of the determination of a plan's unfunded vested benefits for a plan year, the determination is presumed correct unless a party contesting the determination shows by a preponderance of evidence that-

(i) the actuarial assumptions and methods used in the determination were, in the aggregate, unreasonable (taking into account the experience of the plan and reasonable expectations), or (ii) the plan's actuary made a significant error in applying the actuarial assumptions or methods.

29 U.S.C. § 1401(a)(3)(B)(i)-(ii).

The essential distinction between the two presumptions is that the first is directed to the Plan itself, whereas the second is directed to "the assumptions and methods used in calculating withdrawal liability!, which] are selected in the first instance not by the trustees, but by the plan actuary." Concrete Pipe , 508 U.S. at 632, 113 S.Ct. 2264.

In addition to applying those two presumptions, an Arbitrator must of course "follow applicable law, as embodied in statutes, regulations, court decisions, interpretations of the agencies charged with the enforcement of ERISA, and other pertinent authorities" in reaching his or her decision. 29 C.F.R. § 4221.5(a)(1).

B. Standard of Review of ERISA Arbitration Awards

Where, as here, an arbitrator has issued a final decision, ERISA provides that a party may bring suit in federal district court to "enforce, vacate, or modify an arbitrator's award." 29 U.S.C. § 1401(b)(2). A district court reviewing such an award must apply distinct standards of review to legal conclusions, factual findings, or mixed questions of law and fact.

As to an arbitrator's factual findings, ERISA mandates a deferential standard of review. An arbitrator's findings of fact are presumed correct, and that presumption is "rebuttable only by a clear preponderance of the evidence." 29 U.S.C. § 1401(c). Thus, factual findings will be reversed only if "clearly erroneous." Crown Cork & Seal Co. v. Cent. States Se. & Sw. Areas Pension Fund , 982 F.2d 857, 860 (3d Cir. 1992). "A factual finding is clearly erroneous 'when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.' " See United States v. Murray , 821 F.3d 386, 391 (3d Cir.), cert. denied , --- U.S. ----, 137 S.Ct. 244, 196 L.Ed.2d 185 (2016) (quoting United States v. U.S. Gypsum Co. , 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948) ). "Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous." Anderson v. City of Bessemer , 470 U.S. 564, 574, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985).

As to an arbitrator's legal conclusions, ERISA does not specify the applicable standard of review. The United States Court of Appeals for the Third Circuit, however, has held that legal conclusions must be reviewed de novo. Crown Cork & Seal Co. , 982 F.2d at 860.

As to mixed questions of fact and law, ERISA does not expressly state a standard of review. Under Third Circuit precedent, however, a district court must apply "a clearly erroneous standard to findings of fact and conduct plenary review of conclusions of law, applying the appropriate standard to each component." Crown Cork & Seal Co. , 982 F.2d at 861 (citing Crown Cork & Seal Co. Inc. v. Central States Se. & Sw. Areas Pension Fund , 881 F.2d 11, 18 n. 19 (3d Cir. 1989) ; In re Sharon Steel Corp. , 871 F.2d 1217, 1222 (3d Cir. 1989) ).

[Mixed questions of law and fact are] questions in which the historical facts are admitted or established, the rule of law is undisputed, and the issue is whether the facts satisfy the statutory standard, or to put it another way, whether the rule of law as applied to the established facts is or is not violated.

Pullman-Standard v. Swint , 456 U.S. 273, 289 n.19, 102 S.Ct. 1781, 72 L.Ed.2d 66 (1982).

The Arbitrator's determination that ERISA and Concrete Pipe do not always require the use of the same discount rate for funding and withdrawal liability calculations presents a pure conclusion of law. I will therefore review that determination de novo.

The Arbitrator's determination that the use of the Segal Blend rate was reasonable, when considered "in the aggregate" with the other actuarial methods and assumptions, presents a mixed question of law and fact. I will review the Arbitrator's interpretations of the law embedded within that determination de novo, but will apply a "clearly erroneous" standard to the Arbitrator's application of that legal standard to reach his findings of fact. See Crown Cork & Seal Co. , 982 F.2d at 861 ; N.Y. Times , 303 F.Supp.3d at 247-48, 255 (in the context of mixed question review, applying clear error standard to the sub-issue of "[t]he Arbitrator's decision that the Segal Blend's use was reasonable in the aggregate").

C. Summary Judgment Standard

The parties' contentions are presented in the form of cross-motions for summary judgment. Federal Rule of Civil Procedure 56(a) provides that the court should grant summary judgment "if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Kreschollek v. S. Stevedoring Co. , 223 F.3d 202, 204 (3d Cir. 2000). In deciding a motion for summary judgment, a court must construe all facts and inferences in the light most favorable to the nonmoving party. See Hayes v. Harvey , 874 F.3d 98, 103 (3d Cir. 2017). The moving party bears the burden of establishing that no genuine issue of material fact remains. See Celotex Corp. v. Catrett , 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "[W]ith respect to an issue on which the nonmoving party bears the burden of proof ... the burden on the moving party may be discharged by 'showing'-that is, pointing out to the district court-that there is an absence of evidence supporting the non-moving party's case." Id. at 325, 106 S.Ct. 2548.

Once the moving party has met that threshold burden, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The opposing party must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson , 477 U.S. at 248, 106 S.Ct. 2505 ; see also Fed. R. Civ. P. 56(c) (setting forth types of evidence on which nonmoving party must rely to support its assertion that genuine issues of material fact exist). "[U]nsupported allegations ... and pleadings are insufficient to repel summary judgment." Schoch v. First Fid. Bancorp. , 912 F.2d 654, 657 (3d Cir. 1990) ; see also Gleason v. Norwest Mortg., Inc. , 243 F.3d 130, 138 (3d Cir. 2001) ("A nonmoving party has created a genuine issue of material fact if it has provided sufficient evidence to allow a jury to find in its favor at trial."). If the nonmoving party has failed "to make a showing sufficient to establish the existence of an element essential to that party's cases, and on which that party will bear the burden of proof at trial, ... there can be 'no genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Katz v. Aetna Cas. & Sur. Co. , 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex , 477 U.S. at 322-23, 106 S.Ct. 2548 ).

In deciding a motion for summary judgment, the court's role is not to evaluate the evidence and decide the truth of the matter but to determine whether there is a genuine issue for trial. Anderson , 477 U.S. at 249, 106 S.Ct. 2505. Credibility determinations are the province of the fact finder. Big Apple BMW, Inc. v. BMW of N. Am., Inc. , 974 F.2d 1358, 1363 (3d Cir. 1992).

When the parties file cross-motions for summary judgment, the governing standard "does not change." Auto-Owners Ins. Co. v. Stevens & Ricci, Inc. , 835 F.3d 388, 401 (3d Cir. 2016) (citing Appelmans v. City of Phila. , 826 F.2d 214, 216 (3d Cir. 1987) ). The court must consider the motions independently, in accordance with the principles outlined above. Goldwell of N.J., Inc. v. KPSS, Inc. , 622 F.Supp.2d 168, 184 (D.N.J. 2009) ; Williams v. Phila. Housing Auth. , 834 F.Supp. 794, 797 (E.D. Pa. 1993), aff'd , 27 F.3d 560 (3d Cir. 1994). That one of the cross-motions is denied does not necessarily imply that the other must be granted. For each motion, "the court construes the facts and draws inferences in favor of the party against whom the motion under consideration is made" but does not "weigh the evidence or make credibility determination" because "these tasks are left for the fact-Tinder." Pichler v. UNITE , 542 F.3d 380, 386 (3d Cir. 2008) (internal quotation and citations omitted).

III. Withdrawal Liability and the ERISA/MPPAA Scheme

A. The Statutory Rationale

Under ERISA, as amended by the MPPAA, "if an employer withdraws from a multiemployer pension plan, it incurs 'withdrawal liability' in the form of 'a fixed and certain debt to the pension plan.' " Concrete Pipe , 508 U.S. at 609, 113 S.Ct. 2264 (quoting Pension Ben. Guar. Corp. v. R.A. Gray & Co. , 467 U.S. 717, 725, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984) ). The MPPAA was enacted "out of a concern that ERISA did not adequately protect multiemployer pension plans from the adverse consequences that result when individual employers terminate their participation or withdraw."

SUPERVALU, Inc. v. Bd. of Trustees of Sw. Pa. & W. Md. Area Teamsters & Emp'rs. Pension Fund , 500 F.3d 334, 336 (3d Cir. 2007) (quoting Warner-Lambert Co. v. United Retail & Wholesale Emp's. Teamster Local No. 115 Pension Plan , 791 F.2d 283, 284 (3d Cir. 1986) (internal citation omitted) ). It was " 'designed to prevent employers from withdrawing from a multiemployer pension plan without paying their share of unfunded, vested benefit liability, thereby threatening the solvency of such plans.' " Id. (quoting Mfrs. Indus. Relations Ass'n v. E. Akron Casting Co. , 58 F.3d 204, 205-06 (6th Cir. 1995) ). Accordingly, to "insure[ ] that the financial burden will not be shifted to the remaining employers," a withdrawing employer must pay its fair share of the plan's unfunded liability. Id. at 337.

B. Calculation of Liability for UVB Upon Withdrawal

"When an employer withdraws from a multiemployer pension plan, ... it incurs withdrawal liability corresponding to its pro rata share of the [UVB] due to the pension fund at the time of its withdrawal." Renco Grp., Inc. , 694 F. App'x at 73. When an employer has completely withdrawn from a multiemployer pension plan, the employer "incurs withdrawal liability that corresponds to the value of the benefits in the plan that have vested and are attributable to its employees." C & S Wholesale Grocers , 802 F.3d at 537 (footnote omitted).

In particular, a withdrawing employer is liable to the plan for its allocable share of the plan's UVB, which is " 'calculated as the difference between the present value of vested benefits and the current value of the plan's assets,' " as of a specific date. In re Marcal Paper Mills, Inc. , 650 F.3d 311, 316 (3d Cir. 2011) (quoting Gray , 467 U.S. at 725, 104 S.Ct. 2709 ). That means that the plan actuary must first determine the present value of the plan's future liability for vested benefits. 29 U.S.C. § 1393(c)(A). From that present value, the actuary must subtract the actual value of the plan's assets. 29 U.S.C. § 1393(c). The resulting figure is the UVB.

That determination of UVB for purposes of withdrawal liability is a forward-looking one. Future investment returns, life expectancies of employees, and so forth, cannot be known for certain. Thus in calculating the plan's UVB, the actuary must choose appropriate actuarial assumptions and methods. The statute requires selection 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 anticipated experience under the plan." 29 U.S.C. § 1393(a)(1). Those actuarial assumptions "must cover such matters as mortality of covered employees, likelihood of benefits vesting, and, importantly, future interest rates." Concrete Pipe , 508 U.S. at 610, 113 S.Ct. 2264. See also CPC Logistics , 698 F.3d at 353 ("[E]stimating the interest rate at which the pension fund's assets are likely to grow is required for determining withdrawal liability.").

Judge Richard Posner (ret.) of the United States Court of Appeals for the Seventh Circuit has defined a plan's UVB in terms of a "shortfall," i.e., "the difference between the present value of the pension fund's assets and the present value of its future obligations to employees covered by the pension plan." It follows that "[i]f the present value of the assets exceeds the present value of the plan's future obligations, there is no shortfall." CPC Logistics , 698 F.3d at 347-48 (citing 29 U.S.C. §§ 1381, 1391 ).

Once the plan actuary has estimated the plan's UVB, the actuary must calculate the employer's withdrawal liability. "In essence, the withdrawal liability imposes on the withdrawing employer a share of the unfunded vested liability proportional to the employer's share of contributions to the plan during the years of its participation." Concrete Pipe , 508 U.S. at 610, 113 S.Ct. 2264. "The employer's allocable share depends on the value of the plan's assets and benefits, which, in turn, depends on the date the assets and benefits are valued, the actuarial assumptions and methods used to value the assets and benefits, and the withdrawal liability allocation formula chosen by the plan." Employee Benefits Law at 17-4.

C. The Role of Discount Rates

The parties agree that a key actuarial assumption, whether for withdrawal liability or minimum funding levels, is the interest rate or discount rate. That rate is used to reduce the fund's future obligations to a present dollar value. I therefore review some basic concepts as developed before the arbitrator and in the case law.

The long-term investment-return assumption is the interest rate that the pension plan uses to predict how much its current assets will grow through investments. (See Levy Dep. 7:8-:12) (describing the assumption as an estimate of "the expected long-term return on the invested assets, both present and future invested assets of the fund"). Based on such assumptions, an actuary will apply a rate to discount the projected benefits stream to a present value of plan liabilities as of the valuation date. (See Arb. Hrg. Tr.

80:19-:22, Gleave Dep. 14:22-15:7 (explaining that the terms "discount rate" and "investment-return assumption" are used interchangeably); Levy Dep. 9:9-:25 (explaining that a discount rate is a rate used "to take expected future events and bring them back to a present value" and is "necessary for an actuary to determine the value of plan benefits today that will be paid in the future").) See also Kathryn L. Moore, Understanding Employee Benefits Law (2015) at 36 (explaining that "a dollar promised in the future must be discounted to its 'present value' today" and "[t]he present value is the amount that would have to be invested today at a specified interest rate in order to have a specified amount at some specified future date."); id. at n.42 (noting that the discounted present value is calculated by "discounting the future payment by the interest rate over the relevant period.").

The most important assumption underlying such a discounting calculation is usually the interest rate:

'The present value of a series of future contingent payments is a function of the rate of investment return or of interest at which the payments are discounted-the higher the interest assumption, the smaller the present value. Pension plan costs and liabilities are extremely sensitive to the interest assumption in the valuation formula because of the long time-lapse between the accrual of a benefit credit and its payment...'

Langbein et al., supra , at 167 (quoting Dan M. McGill, Kyle N. Brown, John J. Haley, & Sylvester J. Scheiber, Fundamentals of Private Pensions 611-12 (8th ed. 2005) ).

It is elementary that a higher interest rate assumption requires a lower present investment to produce the necessary return, and a lower interest rate requires a higher present investment:

In computing an employer's withdrawal liability, a plan sponsor must calculate the present value of the vested benefits that are to be paid out in the future. An interest rate, or rate of return, is applied in order to determine what present amount of investment will yield the future amounts required to satisfy those vested benefits. In other words, the future benefits are 'discounted' to present value. The higher the assumed rate of return, then the less present investment is needed to pay out the future benefits. After the present value of the vested benefits is determined, the asset value of the plan is deducted to come up with the amount of unfunded vested benefits, of which a withdrawing employer is assessed a share. Thus, a higher interest rate applied to discount future benefits will result in a lesser amount of withdrawal liability for the employer.

Masters, Mates & Pilots Pension Plan v. USX Corp. , 900 F.2d 727, 733 (4th Cir. 1990). Those principles, as applied to withdrawal liability, mean that "[i]ncreasing the interest rate assumption decreases the employer's withdrawal liability," and vice versa. Bd. of Trustees, Mich. United Food & Commercial Workers Union v. Eberhard Foods, Inc. , 831 F.2d 1258, 1260 (6th Cir. 1987). Because of compounding over time, even "[a] small adjustment in the interest rate assumption can lead to a major change in the withdrawal liability calculation." Id. See Employee Benefits Law at 17-8 (stating that "[a] small change in the interest rate used to discount the plan's future benefit obligations can have a significant impact on the value of vested benefits, especially because the UVB are based on the difference between liabilities and assets.").

Manhattan Ford argues that the court must construe withdrawal liability in parallel with minimum funding requirements, which I will touch on briefly here. Discount rates and other actuarial assumptions, of course, do not become relevant only at the stage of withdrawal: "Estimating the growth of the fund's assets is required not only for determining withdrawal liability but also for determining whether employers are contributing to the fund the minimum amount required by ERISA in order to reduce the probability that the [PBGC] may have to make up for the fund's not being able to pay vested benefits ...." CPC Logistics , 698 F.3d at 353. Just as in the case of withdrawal liability, then, "[t]he minimum required contributions to multiemployer defined benefit pension plans are based on long-term [actuarial] assumptions." Fundamentals of Private Pensions 638. To set funding levels, actuaries for multiemployer plans will select "an interest rate that reflects the long-term expectation of investment earnings given the plan's investment structure." Id. at 638-39. Actuaries perform such calculations to ensure that the employers' contributions are sufficient to fund the future promised level of benefits to employees, and to satisfy the minimum funding standards of ERISA and the Internal Revenue Code.

IV. Discussion

This case presents two interrelated issues regarding withdrawal liability.

The first issue, which I review de novo, is whether, as a matter of law, ERISA requires actuaries to use identical actuarial assumptions for purposes of calculating minimum funding and withdrawal liability. If so, then the actuary's use of a 7.5% rate for purposes of minimum funding and the lower Segal Blend rate for purposes of withdrawal liability would be erroneous on its face. If not, however, I must address a second issue.

The second issue is whether application of the Segal Blend in this case satisfied ERISA's requirement that the rate reflect the actuary's "best estimate of anticipated experience under the plan." That requires review of the Arbitrator's decision that Manhattan Ford did not meet its burden of proving by a preponderance of the evidence that the actuarial assumptions and methods used in the Pension Fund actuary's determination of UVB "were, in the aggregate, unreasonable (taking into account the experience of the plan and reasonable expectations)." 29 U.S.C. § 1401(a)(3)(B)(i). The second issue has both a legal and a factual component.

I agree with the Arbitrator that an actuary's use of distinct rates to calculate minimum contribution and withdrawal liability is not prohibited as a matter of law. Additionally, after reviewing the Arbitrator's Final Award and the record as a whole, I uphold the Arbitrator's finding that Manhattan Ford failed to discharge its burden of demonstrating that the actuary's selection of the Segal Blend rate for purposes of withdrawal liability was unreasonable.

A. Must the Actuarial Assumptions Underlying Minimum Funding and Withdrawal Liability be Identical?

In the arbitration, Manhattan Ford challenged the Pension Fund actuary's use of the Segal Blend rate to calculate the present value of the Pension Fund's UVB. (Interim Op. at 14.) According to Manhattan Ford, a pension plan, through its actuary, must use the same assumptions for calculating minimum funding requirements and withdrawal liability. (Id. ) The minimum funding requirements had been calculated on the basis of a 7.5% rate. The use of the lower Segal Blend rate solely for the purpose of calculating withdrawal liability, it claimed, was therefore facially impermissible. (Id. ) The Arbitrator rejected Manhattan Ford's arguments and determined that an actuary is not required to use the same assumptions for minimum funding and withdrawal liability calculations. (Id. at 17.)

I conclude that the Arbitrator was correct as to that narrow issue. The use of disparate rates is not precluded as a matter of statutory law.

1. Comparison of statutory language

By statute, actuarial assumptions that are used to determine adequacy of funding and withdrawal liability must satisfy certain requirements. Those requirements are phrased fairly generically in terms of reasonableness and the actuary's best estimate. They are similar, but not identical.

Section 1084(c)(3) addresses actuarial assumptions in the context of minimum funding, and Section 1393(a) addresses actuarial assumptions in the context of withdrawal liability. See 29 U.S.C. §§ 1084(c)(3), 1393(a).

Regarding actuarial assumptions in the context of minimum funding, Section 1084(c)(3) of ERISA, entitled "[a]ctuarial assumptions must be reasonable," provides as follows:

[f]or purposes of this section, all costs, liabilities, rates of interest, and other factors under the plan shall be determined on the basis of actuarial assumptions and methods-

(A) each of which is reasonable (taking into account the experience of the plan and reasonable expectations), and (B) which, in combination, offer the actuary's best estimate of anticipated experience under the plan.

Id. § 1084(c)(3). See also 26 U.S.C. §§ 412(a)(2)(C), 431(c)(3) (using similar language regarding actuarial assumptions and minimum funding standards for multiemployer plans under the Internal Revenue Code).

Regarding actuarial assumptions in the context of withdrawal liability, Section 1393(a) of ERISA, entitled "[u]se by plan actuary in determining unfunded vested benefits of a plan for computing withdrawal liability of employer," provides as follows:

Withdrawal liability under this part shall be determined by each plan on the basis of-

(1) 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 anticipated experience under the plan ....

Id. § 1393(a)(1).

Manhattan Ford urges that under "ordinary principles of statutory interpretation," Congress's use of the same language in both Sections leads to the conclusion that a plan actuary must use identical assumptions and interest rates in the context of withdrawal liability and minimum funding. (Pl. Br. at 17 (citing Smith v. City of Jackson, Miss. , 544 U.S. 228, 233, 125 S.Ct. 1536, 161 L.Ed.2d 410 (2005) (citing the canon of construction that "identical words used in different parts of the same act are intended to have the same meaning.") ). To be sure, a comparison of the language in the withdrawal liability Section ( § 1393 ) and the minimum funding Section ( § 1084 ) reveals significant commonalities. Specifically, both Sections require actuaries to use assumptions that are "reasonable (taking into account the experience of the plan and reasonable expectations)" and which, "in combination, offer the actuary's best estimate of anticipated experience under the plan." 29 U.S.C. §§ 1393(a)(1), 1084(c)(3). However, there is also a difference: While the withdrawal liability Section requires that the assumptions be reasonable "in the aggregate," § 1393(a)(1), the minimum funding Section requires that "each" assumption be reasonable, § 1084(c)(3)(A).

The minimum funding Section, then, requires actuarial assumptions and methods each of which is reasonable. The withdrawal liability Section differs in requiring that actuarial assumptions and methods be found reasonable in the aggregate . The former standard is tighter, more granular; it invites item-by-item comparison in a way the latter does not. Requiring that all assumptions, taken in the aggregate, be reasonable would seem to grant the actuary (and the Arbitrator) more latitude to craft a solution that is reasonable and fair overall , in light of the Plan's experience and expectations. And that is what the Arbitrator found that the actuary did. By focusing solely on the (admittedly important) discount rate number, to the exclusion of the differing contexts of the two calculations, Manhattan Ford fails to give sufficient scope to that standard.

Manhattan Ford recognizes of course that the statute has been amended. See Section IV.A.3 (discussing the amendment). It argues, however, that at least one aspect of its argument is untouched by the amendment. The reasonableness requirements, it says, are "on top of the mandate that both sets of assumptions must 'offer the actuary's best estimate of anticipated experience.' " (Pl. Reply at 13)(emphasis in original). It argues that the actuary's calculation here flunks that discrete test: "Two divergent assumptions may both be 'reasonable,' but they cannot both be the same actuary 's 'best estimate' of the same thing ." (Id. ) (emphasis in original).

As discussed below in Sections IV.A.4 and IV.B.1, these two statutory sections operate in distinct arenas: one in the context of ongoing funding and the other in the context of withdrawal. To adopt Manhattan Ford's terminology, those distinct contexts imply that these actuarial projections are not necessarily estimates of precisely "the same thing." The context of withdrawal liability differs from that of funding in ways that do justify, or at least may permissibly justify, a different approach. Whether that disparity is justified in a particular case may raise a factual question; for present purposes, however, it is sufficient that the statute does not rule out such a disparity in all cases, as a matter of law.

2. Legislative history

Manhattan Ford also offers arguments that are to some degree anachronistic. One is its citation of the legislative history of Section 1082(c)(3), the predecessor of Section 1084(c)(3), the minimum funding provision.

A relevant legislative report states, as to the "best estimate" language, that " '[t]he conferees intend that under this provision a single set of actuarial assumptions will be required for all purposes (e.g., for the minimum funding standard, reporting to the Department of Labor and to participants and beneficiaries, financial reporting to stockholders, etc.) ." (Def. Br. at 17) (quoting H.R. Rep. No. 93-1280, at 284-85 (1974), reprinted in 1974 U.S.C.C.A.N. 5038, 5065) (emphasis added) ).

That funding Section of ERISA, however, was enacted in 1974, six years prior to the enactment of the withdrawal liability section of MPPAA in 1980. "Congress enacted the MPPAA in particular because it found that existing legislation 'did not adequately protect plans from the adverse consequences that resulted when individual employers terminate[d] their participation in, or withdr[e]w from, multiemployer plans.' " Flying Tiger Line v. Teamsters Pension Tr. Fund of Phil. , 830 F.2d 1241, 1243 (3d Cir. 1987) (footnote omitted) (quoting Gray , 467 U.S. at 722, 104 S.Ct. 2709 ). The legislature, stating in 1974 that actuarial assumptions should be uniform for all purposes, could not have been contemplating a withdrawal liability scheme whose enactment lay years in the future. In short, the Section 1082 funding formulation might just as plausibly be regarded as part of the problem that MPPAA was attempting to remedy.

I note also that the list of "purposes" requiring a single set of actuarial assumptions, though not presented as exclusive, does not include withdrawal liability. See H.R. Rep. No. 93-1280, quoted supra ("the minimum funding standard, reporting to the Department of Labor and to participants and beneficiaries, financial reporting to stockholders, etc."). This, too, may reflect nothing more than Congress's failure to comprehensively address withdrawal liability until the passage of the MPPAA in 1980.

3. Concrete Pipe

For the proposition that actuarial standards must be uniform, Manhattan Ford relies primarily on the 1993 case of Concrete Pipe & Prod. of Cal., Inc. v. Constr. Laborers Pension Tr. for S. Cal. , 508 U.S. 602, 113 S.Ct. 2264. Indeed, Manhattan Ford asserts that in Concrete Pipe , the Supreme Court "squarely" adopted the proposition that actuaries must employ the same actuarial assumptions in calculating withdrawal liability and in calculating minimum funding. Not quite. While this argument has anachronism problems of its own, I also find that the Concrete Pipe case does not go as far as Manhattan Ford would wish.

The anachronism is this. The language that Manhattan Ford has quoted from Concrete Pipe rested on the proposition that ERISA used entirely "identical language" to describe the actuarial assumptions and methods that must be used in the "different contexts" of withdrawal liability and minimum funding:

The statutory requirement (of 'actuarial assumptions and methods-which, in the aggregate, are reasonable ...') is not unique to the withdrawal liability context, for the statute employs identical language in 29 U.S.C. § 1082(c)(3) to describe the actuarial assumptions and methods to be used in determining whether a plan has satisfied the minimum funding requirements contained in the statute.

Concrete Pipe , 508 U.S. at 632-33, 113 S.Ct. 2264 (emphasis added). In 1993, when Concrete Pipe was decided, that was true. It was only thirteen years later, in 2006, that the old funding provision was replaced by one which required that "each" actuarial assumption (not the assumptions "in the aggregate") be reasonable. It was only then, in 2006, that the formerly identical language of these provisions first diverged as described in Section IV.A.1, supra . So Concrete Pipe's discussion of the "identical" statutes must now, post-2006, be taken with a grain of salt.

That is not to say, however, that the case should be disregarded, and I do analyze it here. I conclude, however, that Concrete Pipe does not impose a statutory bar; it leaves open the possibility of separate actuarial assumptions being permissibly applied to funding and withdrawal liability.

In Concrete Pipe , the Court was not considering the issue presented here. Rather it was hearing a due process challenge to the presumption of correctness that an arbitrator must apply to the plan sponsor's calculation of a plan's UVB. 508 U.S. at 631, 113 S.Ct. 2264. Then, as now, a plan sponsor's calculation of a plan's UVB for a plan year was "presumed correct" unless proven to be unreasonable by a preponderance of evidence. 29 U.S.C. § 1401(a)(3)(B)(i). (See pp. 376-78, supra .) The withdrawing employer claimed, however, that the presumption of reasonableness violated its procedural due process rights because the plan trustees were institutionally biased to impose the greatest possible withdrawal liability. The Court, however, upheld the presumption.

One key to the Court's analysis was the moderating effect of professional actuarial standards. Under the statute, the Court noted, "the assumptions and methods used in calculating withdrawal liability are selected in the first instance not by the trustees, but by the plan actuary." 508 U.S. at 632, 113 S.Ct. 2264.

For a variety of reasons, this actuary is not, like the trustees, vulnerable to suggestions of bias or its appearance. Although plan sponsors employ them, actuaries are trained professionals subject to regulatory standards. The technical nature of an actuary's assumptions and methods, and the necessity for applying the same assumptions and methods in more than one context, as a practical matter limit the opportunity an actuary might otherwise have to act unfairly toward the withdrawing employer.

Id. (internal citations omitted).

In support of its conclusion, the Court made a second observation, heavily relied on by Manhattan Ford here. Pointing out the (then) "identical language" in ERISA regarding actuarial assumptions for withdrawal liability and minimum funding, the Court found that these matched provisions would "tend[ ]to check the actuary's discretion in each of them":

Using different assumptions [for different purposes] could very well be attacked as presumptively unreasonable both in arbitration and on judicial review.

[This] view that the trustees are required to act in a reasonably consistent manner greatly limits their discretion, because the use of assumptions overly favorable to the fund in one context will tend to have offsetting unfavorable consequences in other contexts. For example, the use of assumptions (such as low interest rates) that would tend to increase the fund's unfunded vested liability for withdrawal liability purposes would also make it more difficult for the plan to meet the minimum funding requirements of § 1082.

508 U.S. at 632-33, 113 S.Ct. 2264 (alterations in original; internal quotation marks omitted)

The Court concluded that actuarial standards and consistency were sufficient to stave off a due process challenge to the statutory presumption:

[The withdrawing employer] has not shown that any method or assumption unique to the calculation of withdrawal liability is so manipulable as to create a significant opportunity for bias to operate, and arguably the most important assumption (in fact, the only actuarial assumption or method that [the employer] attacks in terms ...) is the critical interest rate assumption that must be used for other purposes as well.

Id. at 633, 113 S.Ct. 2264 (footnote omitted). The Court did not lay down a requirement of strict uniformity, or deny that certain actuarial considerations might have particular application to withdrawal liability alone. Indeed, the Court pointed out that its point was "not significantly blunted by the fact that the assumptions used by the Plan in its other calculations may be 'supplemented by several actuarial assumptions unique to withdrawal liability .' " 508 U.S. at 633, 113 S.Ct. 2264 (emphasis added).

There are, then, two answers to Manhattan Ford's argument that Concrete Pipe held that there was a statutory ban on divergent discount rates.

The more straightforward (if not quite dispositive) answer is that, as pointed out above, the two sections are no longer "identical," as they were in 1993. Intervening amendments have weakened the notion that today, the funding rate must be used for all "other purposes," including withdrawal liability.

The second, more complex answer is that the Supreme Court's comments were general, were not made in relation to the issue now before this Court, and did not in fact rule out non-identical actuarial assumptions.

At most, the Court suggested that, under unspecified circumstances, the use of inconsistent assumptions "could very well be attacked as presumptively unreasonable," id. at 633, 113 S.Ct. 2264 -not that it was prohibited per se.

On that point, the sparse interpretive case law is in accord. In CPC Logistics , Judge Posner, writing for the Seventh Circuit, seemingly endorsed the Fund's view of Concrete Pipe , and rejected that of Manhattan Ford:

[ Concrete Pipe ] could be read to suggest that having two different interest-rate assumptions-one for withdrawal liability and one for avoiding the tax penalty-might make a plan vulnerable to claims that either or both were 'unreasonable' within the meaning of 29 U.S.C. § 1393(a)(1). The danger was remote; the Court had indicated that "supplemental" assumptions that might cause the rates to diverge were permissible. 508 U.S. at 633, 113 S.Ct. 2264.

698 F.3d at 354-55. "Vulnerability" to a charge of "unreasonableness" is a far cry from "prohibited." And indeed, CPC upheld the arbitrator's disallowance of the plan's "questionable" decision to adopt the funding rate for withdrawal liability purposes, because it appeared that in fact the Segal Blend, not the funding rate, embodied the actuary's "best estimate." 698 F.3d at 356. That, of course, is the opposite of the result sought by Manhattan Ford here.

In N.Y. Times, supra , District Judge Robert W. Sweet of the Southern District of New York acknowledged Concrete Pipe's description of the funding rate assumption as one that "must be used for other purposes as well." 303 F.Supp.3d at 254-55 (citing 508 U.S. at 633, 113 S.Ct. 2264 ). "In the same breath, however," he wrote, "the [ Concrete Pipe ] Court stated that the 'assumptions used by [a] Plan in its other calculations may be supplemented by several actuarial assumptions unique to withdrawal liability.' " Id. (quoting 508 U.S. at 633, 113 S.Ct. 2264 ) (emphasis added, internal quotation marks omitted). Thus Judge Sweet, like Judge Posner, rejected the interpretation that Concrete Pipe had imposed a per se ban on using different discount rates for purposes of funding and withdrawal liability:

The expectation is that a standard, uniform interest rate is applied in all contexts, and any deviation 'could very well be attacked as presumptively unreasonable both in arbitration and on judicial review.' ... That does not mean, however, that deviation is, at all times, impermissible by law-were that the case, the Court would not have included the open-ended 'could very well be' language rather than something more definitive.

Id. (internal citations omitted).

Concrete Pipe , the main authority cited by Manhattan Ford, therefore does not require adoption of the per se rule for which Manhattan Ford advocates. And the case law interpreting Concrete Pipe is in accord.

4. Miscellaneous differences in context

Finally, the differing contexts of funding and withdrawal support the idea that Congress did not mean to categorically rule out any divergence between them as to the actuarial assumptions used.

Both funding and withdrawal require actuarial predictions as to the fund's future; to that extent their concerns are parallel. And to be sure, Manhattan Ford is not wrong to cite the canon of construction that "identical words used in different parts of the same act are intended to have the same meaning." It is perhaps a bit facile to refer to "different parts of the same act" when we are actually talking about ERISA and MPAAA, statutory enactments separated by years, the latter of which was intended to remedy gaps and deficiencies in the former. In any event, however, the presumption may be overcome when "there is such variation in the connection in which the words are used as reasonably to warrant the conclusion that they were employed in different parts of the act with different intent." Official Comm. of Unsecured Creditors of Cybergenics Corp. ex rel. Cybergenics Corp. v. Chinery , 330 F.3d 548, 559 (3d Cir. 2003) (en banc) (quoting Atl. Cleaners & Dyers v. United States , 286 U.S. 427, 433, 52 S.Ct. 607, 76 L.Ed. 1204 (1932) ).

Minimum funding and withdrawal liability are different concepts under ERISA with different, although related, policy concerns. Moreover, one cannot ignore the limiting language in each Section. The withdrawal liability Section is prefaced with the language "[w]ithdrawal liability... under this part," 29 U.S.C. § 1393(a) (emphasis added), while the minimum funding Section is prefaced with the phrase "[f]or purposes of this section," id. § 1084(c)(3) (emphasis added). This suggests that Congress viewed minimum funding and withdrawal liability as distinct calculations warranting the use of different assumptions by actuaries. If total parallelism were mandated, a cross-reference or a common definition would have been a more natural way to draft the statutes.

Furthermore, the Pension Fund correctly points out that in Section 1393(a)(2), the PBGC was given the authority to provide actuarial assumptions to be used in the calculation of withdrawal liability only. Such a delegation would have been unwarranted if Section 1393 wholly precluded the use of assumptions that were not the minimum funding assumptions.

I consider also that funding and withdrawal invoke some disparate concerns, which I discuss further in section IV.B.2, infra . Funding is an ongoing process, subject to adjustment for an employer that is remaining in the plan. The Plan's needs and actuarial projections are reassessed annually, and a participating employer may be required to make additional contributions to make up for any shortfall. Withdrawal liability, however, is calculated once, as of the time of withdrawal. Should the unexpected occur after that employer's departure, the burden may unfairly fall on other plan employers (or ultimately the taxpayer, through PBGC). As discussed in more detail below, a responsible actuary might therefore opt to calculate that withdrawal liability on a more risk-averse or conservative basis. And it must always be remembered, of course, that ERISA is a remedial statute, which must be liberally construed to ensure that workers who were promised pension benefits will actually receive them.

For all of these reasons, I conclude that ERISA imposes no per se ban on the use of different actuarial assumptions for purposes of funding and withdrawal liability. I therefore move to the question of whether the Arbitrator erred in permitting application of the Segal Blend under the circumstances of this case.

B. Did the Arbitrator Err in Upholding the Application of the Segal Blend?

Manhattan Ford argues that the Pension Fund's actuary violated Section 1393(a)(1) of ERISA by not using the 7.5% funding rate, which represented her "best estimate of anticipated experience under the plan," and instead using the Segal Blend, which did not. (Pl. Br. at 9-13.) The Segal Blend, recall, represents a combination of the 7.5% funding rate and the PBGC risk-free rate. The PBGC component of the Segal Blend does not satisfy the applicable standard, says Manhattan Ford, because "the Fund is not principally invested in risk-free assets" and "does not intend to use Manhattan's withdrawal liability payments to buy such assets." (Pl. Br. at 11.) Rather, an average annual investment return of 7.5% would be the "best estimate of anticipated experience under the plan." (Id. at 12.) As a result, says Manhattan Ford, the actuarial assumptions used in the withdrawal liability determination were unreasonable "in the aggregate." (Id. at 24.) See 29 U.S.C. § 1401(a)(3)(B)(i).

Manhattan Ford seeks to present this issue as a pure question of ERISA law. As I have already held, there is no legal mandate that funding and withdrawal be calculated on identical actuarial assumptions, which disposes of much of the legal issue. What remains is a mixed question of the application of the law to the facts. Because, as I find, the Arbitrator did not err as a matter of law, the issue here is not what another actuary would have done, or whether the court would have favored another approach, but rather whether the Arbitrator committed clear error.

In Section IV.B.1, I find that the Arbitrator did not err in his interpretation of the governing legal standard. In Section IV.B.2, I summarize the evidentiary record, and in Section IV.B.3, I conclude that the Arbitrator did not commit clear error in finding that Manhattan Ford failed to overcome the presumption of correctness of the actuary's best estimate.

1. "Best estimate" as a procedural standard that defers to actuarial expertise

ERISA does not define the phrase "best estimate of anticipated experience under the plan." See 29 U.S.C. § 1393(a)(1) ; § 1084(c)(3)(B). However, case law provides some guidance. Even in the context of minimum funding, "courts have generally accepted the view that the 'best estimate' standard is procedural only and that actuarial assumptions may properly err on the side of conservatism and overfunding." Jay Conison, Employee Benefit Plans in a Nutshell 441 (3d ed. 2003) (citing Citrus Valley Estates, Inc. v. C.I.R. , 49 F.3d 1410 (9th Cir. 1995) ; Rhoades, McKee & Boer v. United States , 43 F.3d 1071 (6th Cir. 1995) ). See also Langbein, et al., supra , at 166 (stating that "[t]he courts have interpreted the 'best estimate' requirement (previously contained in IRC § 412(c)(3) ) in a fashion that gives actuaries tremendous leeway in selecting assumptions").

In Citrus Valley Estates , for example, the United States Court of Appeals for the Ninth Circuit considered an appeal from the Tax Court regarding the then-current "best estimate" provision of section 412(c)(3) of the Internal Revenue Code. Following the Second and Fifth Circuits, it rejected the Commissioner of Internal Revenue's argument that "by endorsing the use of conservative actuarial assumptions, the Tax Court effectively read the 'best estimate' provision out of section 412(c)(3)." 49 F.3d at 1414. In other words, the Commissioner's position was that "an assumption cannot be an actuary's 'best estimate' if it reflects a more conservative view of an anticipated plan experience than the actuary believes is likely." Id.

The Tax Court's review was too intrusive, said the Court of Appeals in Citrus Valley . Actually, the actuary retained great leeway:

This statutory scheme serves the dual but sometimes conflicting goals of guaranteeing adequate plan funding while preventing taxpayer abuse. Within the range of reasonableness, Congress assigned the task of balancing these goals to actuaries. We will not narrow the statutory gap between the Scylla of underfunding and the Charybdis of tax penalties.'... So long as the actuary's funding decisions fall within the range of reasonableness, the substantive