A $1 house sale and a web of leasing companies sent key questions back for another round
A federal appeals court trimmed a $13 million union pension ruling against a dealership network - and reopened whether the owners must pay personally.
For employers that pay into a union pension plan, withdrawal liability is one of the biggest financial risks on the books. Walk away from the plan, and it can bill you for your slice of the retirement benefits it still owes. The number can climb into the millions. And as the US Court of Appeals for the District of Columbia Circuit made clear on July 7, 2026, the bill does not always stop at the company that signed the union contract.
The court handed down a split decision in a years-long dispute between the IAM National Pension Fund and a Midwest truck-dealership network known as M&K Truck Centers. It upheld parts of a $13 million judgment, reversed others, and sent the case back to the trial court for another look.
The structure at the center of the case will look familiar to anyone who manages a unionized workforce. At each dealership, M&K ran two companies - a sales company that owned the assets, and a staffing company that hired the workers and leased them back. Three of those staffing companies signed collective-bargaining agreements with a machinists' union local and paid into its pension fund. When they ended those agreements and stopped paying in, one exit - at the Alsip, Illinois location at the end of 2018 - triggered withdrawal liability. The fund assessed roughly $6.1 million.
Two findings went the fund's way. The court agreed that each staffing company and its partner sales company counted as a single employer, and it backed the fund's move to apply a $1.8 million partial payment to unpaid interest rather than to the principal.
The fund lost on three others. The court threw out a $1.6 million delinquent-contribution award, ruling that the fund's complaint alleged only shared ownership - one of four factors needed to treat two separate companies as one - and never claimed the rest. It also rejected the trustees' move to apply an 18 percent interest rate, adopted in April 2021 and backdated to 2014, to a company that had already left the plan.
The sharpest question was personal liability. The married couple who owned the departing company also flipped houses on the side. The fund argued the house-flipping was a "trade or business under common control" with the company - a label that, under the pension statute, can drag an owner's separate venture into the debt. The court found the facts genuinely in dispute. Three days before the withdrawal, the couple had sold a house to a related company for $1. The court said one reasonable reading of that sale was "suspiciously close to the withdrawal date for a suspiciously small $1 amount" - but it added that a jury could just as reasonably conclude the couple had wound down any house-flipping business before the withdrawal.
The decision turns on machinery that reaches well beyond truck dealerships. Under the federal pension statute, withdrawal liability can follow common control across an entire corporate family - and, as the reversed $1.6 million award shows, how a fund pleads single-employer status can decide whether that liability holds.
Because the court returned several issues to the trial court, the biggest questions - including whether the owners will pay out of their own pockets - are still open. No court has made a final call on them.
