The Ninth Circuit Court of Appeals has sided with a specialty construction company, ruling that its asbestos abatement work falls under the “building and construction industry” exception, thereby shielding the company from significant withdrawal liability under federal pension laws. This decision clarifies a key ambiguity in the Multiemployer Pension Plan Amendments Act (MPPAA) by adopting a broad, long-standing definition of construction work.
The case pitted Walker Specialty Construction, Inc. (“Walker”) against the Board of Trustees of the Construction Industry and Laborers Joint Pension Trust for Southern Nevada (the “Trust”). Walker sued after the Trust demanded over $2.8 million in withdrawal liability when Walker ceased contributing to the pension plan in 2019.
The Core Dispute: Defining Construction
The MPPAA, an amendment to the Employee Retirement Income Security Act (ERISA), imposes liability on employers who withdraw from multiemployer pension plans, forcing them to cover a share of the plan’s unfunded benefits. However, the statute offers an exception for employers substantially engaged in the “building and construction industry.”
The sticking point was that Congress never defined this crucial term within the MPPAA itself. The Trust argued for a narrow interpretation, suggesting the term only covered the literal erection of new structures—work that asbestos abatement, which involves removing hazardous materials, does not fit. Walker, conversely, contended that the definition should be expansive enough to include necessary repairs and alterations, such as remediation.
The district court initially agreed with Walker, granting summary judgment in its favor and ordering the Trust to return Walker’s interim payments. The Trust appealed this decision to the Ninth Circuit.
Adopting the NLRB’s Definition
In an opinion penned by Circuit Judge Desai, the Ninth Circuit panel affirmed the lower court’s ruling, establishing a precedent for interpreting the ambiguous term.
The court began by noting that when a statute uses a term without defining it, courts should look for a “settled meaning” established elsewhere. Crucially, the Ninth Circuit found that before the MPPAA was passed in 1980, Congress had used the exact phrase “building and construction industry” in only one other major federal law: the Labor Management Relations Act (Taft-Hartley Act).
The National Labor Relations Board (NLRB), the agency enforcing Taft-Hartley, had already developed a comprehensive administrative definition for this term. Based on its review of industry sources, the NLRB defined construction to include not just the erection of new structures, but also the “maintenance and repair… of immobile structures and utilities… which become integral parts of structures and are essential to their use.” Furthermore, the NLRB had specifically included alterations and demolition in its definition.
The Ninth Circuit panel found Congress’s intent to adopt this existing definition “plain” due to the identical language used in both statutes. The court noted that the legislative history of the MPPAA even supported this, stating the term was intended to have the same meaning as developed under the Taft-Hartley Act.
Why the Trust’s Arguments Failed
The Trust presented several arguments against importing the NLRB’s definition, but the court found them unpersuasive:
1. Narrow Construction: The Trust urged a narrow reading because the term is part of a statutory *exception*. The court countered that incorporating the NLRB’s established, comprehensive definition precluded defining it more narrowly than Congress originally intended.
2. Different Statutory Contexts: The Trust argued that since Taft-Hartley deals with labor practices and MPPAA deals with pensions, the definitions should differ. The court disagreed, noting that both exceptions were rooted in the “uniquely transient nature of contracts and employment in the building and construction industry,” justifying a consistent definition.
3. Post-Loper Bright Landscape: The Trust cited the recent Supreme Court decision in *Loper Bright Enterprises v. Raimondo*, which limited judicial deference to agency interpretations (overturning *Chevron* deference). The Ninth Circuit clarified that this ruling did not affect its analysis here, as the court was not deferring to the NLRB’s current interpretation but rather inferring Congress’s original intent based on the NLRB’s *settled pre-existing* definition.
Asbestos Abatement as Essential Repair
With the broad definition established—one that includes maintenance, repair, and alterations essential to usability—the court turned to Walker’s work.
Walker’s employees performed asbestos abatement, which involves removing or encapsulating hazardous materials like insulation, roofing, and piping by scraping, grinding, or demolishing them. The court found this work squarely within the accepted definition.
“By removing asbestos from building walls, roofs, and floors, Walker repairs integral parts of buildings and ensures that the buildings are usable without any hazard to occupants’ health,” the opinion stated. The court emphasized that this work required substantial alterations, pointing out that the demolition aspect was virtually indistinguishable from demolition work the NLRB had previously found to be part of the construction industry.
Because substantially all of Walker’s employees performed this qualifying work, the company met the statutory requirements for the exception and was correctly shielded from the withdrawal liability assessed by the pension Trust.
Case Information