Food Employers Labor Relations Assoc. v. The Great Atlantic & Pacific Tea Co.

Citation:
14-3349-bk; 2d. Cir. July 2, 2015 (Summary Order - No precedential effect)
Tag(s):
Ruling:
The United States Court of Appeals for the Second Circuit affirmed the United States District Court for the Southern District of New York's judgment affirming the Bankruptcy Court's holding that the claimant pensioners were not entitled to administrative expense priority for their "withdrawal liability" claim. Due to the peculiarities of ERISA’s calculation methodology, the amount claimed had little if any relation to the actual amount of unfunded benefits that vested in 2011 (the post-petition period). The calculation of the claim had no causal relationship to the post-petition consideration actually provided by the covered employees — either in terms of hours worked or in terms of the employees’ willingness to work at all. The amount of unfunded vested benefits allocated to 2011 by the ERISA presumptive method is "a fiction," bearing no relationship to the amount by which the pension plan’s unfunded benefits or A&P’s withdrawal liability actually increased or decreased during the 2011 plan year. In this case, the claimants failed to meet their burden to show that A&P received consideration “after the commencement of bankruptcy proceedings."
Procedural context:
Appeal from the United States District Court for the Southern District of New York.
Facts:
Appellant Food Employers Labor Relations Association and United Food and Commercial Workers Pension Fund (“FELRA”) sought administrative expense treatment under 11 U.S.C. § 503(b)(1)(A) for a portion of its "withdrawal liability" claim (on account of vested but unfunded benefits) against the bankruptcy estate of Appellee Great Atlantic & Pacific Tea Company (“A&P”) arising out of A&P’s withdrawal from participation in the FELRA pension plan. Specifically, FELRA sought administrative expense treatment for an amount that it claimed was the portion properly attributable to A&P’s post-petition operations (after December 12, 2010), and thus to the post-petition labor of FELRA’s members. FELRA based its calculation of withdrawal liability on ERISA’s "presumptive method."
Judge(s):
Guido Calabresi, Circuit Judge Debra Ann Livingston, Circuit Judge William K. Sessions III, United States District Court for the District of Vermont, sitting by designation

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