Mitchel Whitehead and Scott Page Win Important Arbitration under PPA Quoted in BNA’s Pension and Benefits Daily
“Arbitrator Decides Two Multiemployer Plans Cannot Elect the WRERA Zone Status Freeze”

Mitchel Whitehead and Scott Page were mentioned in the July 27, 2009 issue of BNA’s Pension and Benefits Daily article, “Arbitrator Decides Two Multiemployer Plans Cannot Elect the WRERA Zone Status Freeze.” According to the article, in one of the first rulings as to whether multiemployer pension plans can elect to freeze their zone status under the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), an arbitrator decided on June 30, 2009 that two multiemployer pension plans could not elect to freeze their funding status for 2009 at their 2008 levels. Mitchel and Scott represented the employer-appointed trustees in this case. (Employer Appointed Trustees of the Rocky Mountain UFCW and Employers Pension Plan and the Denver Area Meat Cutters and Employers Pension Plan v. Union Appointed Trustees of the Rocky Mountain UFCW and Employers Pension Plan and the Denver Area Meat Cutters and Employers Pension Plan.)

According to the article, the union-appointed trustees wanted to elect the freeze because it would give the plans time to see if investments would recover from the steep losses suffered in 2008. The employer-appointed trustees argued against the freeze election contending that “delaying the application of the critical status (known as ‘red’ zone, which includes plans that are less than 65 percent funded) would remove the tools they needed to improve the plan’s funding status.” The arbitrator, Ira Jaffe, who ruled against the freeze, commented, “If the plans were not certified as being red zone plans they would lose the ability to reduce or eliminate adjustable benefits.” The arbitrator thought it was important for the plans to deal with their funding problems quickly.

Scott noted, “Jaffe's opinion will be read with extreme interest by everyone who practices in this area, especially trustees, lawyers who advise them, fund actuaries and consultants, and of course the bargainers themselves.” He continued, “The arbitrator reached the correct conclusion by examining in a 36-page decision the issues faced by pension funds when deciding whether to elect the WRERA freeze and in particular the factors that are relevant to any trustee faced with whether to vote in favor of or against such a freeze against a backdrop of collective bargaining negotiations.”

The article further noted that Seyfarth stressed the fact that Jaffe was compelled by the employer trustees’ argument that electing the WRERA freeze would only make matters worse later on. Scott commented, “To correct the underfunding of many pension plans, prompt action is key. And voting for the WRERA freeze delays needed, remedial actions.”