The U.S. Court of Appeals for the Seventh Circuit has thrown its weight behind a Teamsters multiemployer pension fund, clearing trustees to expel a Penske Truck Leasing bargaining unit in Dallas and potentially speed up a chase for what staff projected as "tens of millions of dollars" in withdrawal payments if Penske units pull out in quick succession. The published decision caps a years-long fight over whether a fund can kick out a single bargaining group without ending an employer's participation across the entire plan.
In its opinion, the Seventh Circuit said the trust agreement "contemplates the expulsion of a single bargaining unit" and indicates the plan "need not formally terminate an entire agreement" to remove one group, according to Bloomberg Law. That reading bolsters trustees' discretion under the plan language and improves the fund's chances of collecting additional withdrawal liability from Penske.
Penske had argued that targeting one unit for expulsion would be unfair to employers that operate multiple bargaining units under the plan. The court was not persuaded, and it noted that neutral plan rules can still have different real-world effects on different employers, as reported by Law360. The company has been challenging the trustees' vote since late 2021, in a dispute that has bounced between federal court and questions reserved for arbitration.
How the Case Reached the Appellate Court
Penske filed suit in October 2021 in the U.S. District Court for the Northern District of Illinois, seeking to block the Central States pension fund from expelling the Dallas-based Local 745 bargaining unit. The lower court then spent years wrestling with whether the trustees' actions should be reviewed from scratch or given deference, according to Justia.
That procedural tug-of-war left open key questions about when arbitration over withdrawal liability must begin and which forum gets to decide the timing and effectiveness of any expulsion. The district court opinion walks through trustees' meeting minutes, staff analyses, and the parties' competing legal theories in detail before the case landed in front of the Seventh Circuit.
Why the Fund Moved to Expel
Central States' staff warned trustees that if clustered Penske withdrawals were treated as separate partial withdrawals instead of a single complete withdrawal, the plan could lose out in a big way. The difference "would amount to tens of millions of dollars," according to the court record summarized by Justia.
In December 2021, trustees voted to expel Local 745 unless Penske agreed to a staff proposal spelling out how a 2022 withdrawal would be treated for liability purposes. The fund has maintained that the move was meant to protect plan beneficiaries and assets, not to single out the employer for punishment.
What the Ruling Means for Employers and Unions
The Seventh Circuit's reading confirms that trustees can remove a single bargaining group from a multiemployer plan. That is a powerful tool, one that can shift bargaining leverage and expose employers to hefty, plan-calculated withdrawal bills.
As Bloomberg Law notes, the ruling strengthens Central States' path to pursue additional withdrawal liability from Penske. Still, fights over how much is owed and when a withdrawal occurred do not get decided in open court right away. Under the Employee Retirement Income Security Act, Legal Information Institute materials on 29 U.S.C. § 1401 explain that disputes over determinations under sections 1381 through 1399 must be channeled into arbitration, and plan determinations start out with a presumption of correctness that employers have to overcome.
What’s Next
The next likely step is arbitration over when the expulsion of the Penske unit actually took effect and how any withdrawal liability should be calculated. The Seventh Circuit's decision clears several procedural obstacles, but it does not put a dollar figure on the table.
According to Law360, the appeals docket shows multiple entries for the dispute (case numbers 25-1738 and 25-1872), and the litigation could stretch on if Penske seeks more review or if the fund issues a formal withdrawal demand that Penske then contests in arbitration.
Local 745, the Dallas general drivers, warehousemen and helpers unit at the center of the dispute, represents thousands of workers who could feel the immediate impact if the fund's expulsion decision sticks. For more on the bargaining unit, see Teamsters Local 745.
