Key Takeaways
- • The D.C. Circuit's July 2026 ruling in Trustees of the IAM National Pension Fund v. M&K Employee Solutions affirmed most of an $11.4 million withdrawal liability judgment against affiliated employee-leasing entities while reversing a $1.6 million delinquent contributions judgment.
- • The appellate court reversed the $1.6 million delinquent contributions judgment against ES Summit because the pension fund alleged only common ownership with ES Northern Illinois and did not establish the other three factors of the NLRB single-employer test.
- • Under MPPAA's controlled group rule, commonly controlled entities are treated as a single employer for withdrawal liability, and common ownership alone is sufficient; the court found the ES entities jointly and severally liable for ES Alsip's withdrawal liability.
- • Withdrawing employers may lock in interest rates at termination: the court held that later trust amendments raising rates could not apply to the employer's withdrawal liability absent express authorization in the original agreement.
- • Successor entities Laborforce, LLC and Employee Services, Inc. (ESI) were held vicariously liable, and the 'United States Rule' means partial payments typically apply to interest first unless the parties agree otherwise.
Summary
The D.C. Circuit issued its ruling in July 2026 in Trustees of the IAM National Pension Fund v. M&K Employee Solutions, according to Ogletree Deakins, which published an analysis of the decision. The case arose from M&K Truck Centers, which operates twenty-eight truck dealerships through affiliated companies. Each dealership was structured with a "Sales" entity that ran the dealership and a separate "Employee Solutions" (ES) entity that hired workers and leased them back to the sales company. Three ES entities were party to collective-bargaining agreements requiring contributions to the IAM National Pension Fund.
When ES Alsip withdrew from the fund at the end of 2018, the pension fund assessed approximately $6.1 million in withdrawal liability. ES Alsip disputed the assessment and did not make interim payments, contrary to the MPPAA's "pay first, dispute later" rule, prompting the fund to accelerate the payment schedule and sue. The fund also claimed ES Summit owed approximately $1.6 million in delinquent contributions for work at a separate Northern Illinois dealership. The district court granted summary judgment on all claims, entering a $13 million judgment ($11.4 million tied to ES Alsip's withdrawal liability, including interest and liquidated damages, and $1.6 million for ES Summit's contributions) and holding multiple affiliated entities and individuals jointly and severally liable.
On appeal, the D.C. Circuit affirmed in part and reversed in part. It upheld the ES Alsip withdrawal liability, finding overwhelming evidence that each employee-leasing entity was a single employer with its operating company. It reversed the $1.6 million delinquent contributions judgment because the fund's complaint alleged only common ownership, without establishing interrelated operations, common management, or centralized control of labor relations. The court also held that subsequent trust amendments raising interest rates could not apply to a withdrawing employer absent express authorization in the original agreement, and imposed vicarious liability on Laborforce, LLC and Employee Services, Inc. (ESI) as successors to the ES entities.
The analysis highlights several practical implications. Owners of businesses participating in multiemployer plans may face personal liability under the controlled group provisions, though casual investment activity, such as occasional house-flipping reported as personal transactions, may not qualify as a "trade or business." Employers should also note that, absent an explicit agreement, partial payments are typically applied first to accrued interest under the "United States Rule," which can raise total costs. Ogletree recommends seeking express written allocation agreements and documenting applicable interest rates at withdrawal. The firm's advice centers on maintaining genuine operational separateness among affiliated entities and conducting pension due diligence in acquisitions and reorganizations.
The matter is unrelated to the Supreme Court's decision in M&K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund, which addressed whether an actuary may use post-measurement-date assumptions in calculating withdrawal liability.
When ES Alsip withdrew from the fund at the end of 2018, the pension fund assessed approximately $6.1 million in withdrawal liability. ES Alsip disputed the assessment and did not make interim payments, contrary to the MPPAA's "pay first, dispute later" rule, prompting the fund to accelerate the payment schedule and sue. The fund also claimed ES Summit owed approximately $1.6 million in delinquent contributions for work at a separate Northern Illinois dealership. The district court granted summary judgment on all claims, entering a $13 million judgment ($11.4 million tied to ES Alsip's withdrawal liability, including interest and liquidated damages, and $1.6 million for ES Summit's contributions) and holding multiple affiliated entities and individuals jointly and severally liable.
On appeal, the D.C. Circuit affirmed in part and reversed in part. It upheld the ES Alsip withdrawal liability, finding overwhelming evidence that each employee-leasing entity was a single employer with its operating company. It reversed the $1.6 million delinquent contributions judgment because the fund's complaint alleged only common ownership, without establishing interrelated operations, common management, or centralized control of labor relations. The court also held that subsequent trust amendments raising interest rates could not apply to a withdrawing employer absent express authorization in the original agreement, and imposed vicarious liability on Laborforce, LLC and Employee Services, Inc. (ESI) as successors to the ES entities.
The analysis highlights several practical implications. Owners of businesses participating in multiemployer plans may face personal liability under the controlled group provisions, though casual investment activity, such as occasional house-flipping reported as personal transactions, may not qualify as a "trade or business." Employers should also note that, absent an explicit agreement, partial payments are typically applied first to accrued interest under the "United States Rule," which can raise total costs. Ogletree recommends seeking express written allocation agreements and documenting applicable interest rates at withdrawal. The firm's advice centers on maintaining genuine operational separateness among affiliated entities and conducting pension due diligence in acquisitions and reorganizations.
The matter is unrelated to the Supreme Court's decision in M&K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund, which addressed whether an actuary may use post-measurement-date assumptions in calculating withdrawal liability.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.