YELLOW CORPORATION V. MFN PARTNERS LP et al.

Summarized by Jonathan Batiste , Rensselaer Polytechnic Institute
5 months 4 days ago

Case Type:

Business

Case Status:

Affirmed

Citation:

No. 25-1421 (3rd Circuit, Sep 16,2025) Published

Tag(s):

Ruling:

The circuit court found that the Pension Benefit Guaranty Corporation’s (“PBGC”) regulations are valid exercises of its power under the American Rescue Plan Act of 2021. The PBGC’s decision-making fell within the requisite zone of reasonableness, and its regulations are directed at pension plans. The major question doctrine did not apply because the PBGC acted under congressional authorization. Alternate methods of calculating employer withdrawal liability that waive limitations on such liability do not require PBGC approval. Contracts requiring the use of such methods are enforceable.

Procedural context:

Debtor filed for bankruptcy in 2023. Creditors filed claims against the bankruptcy estate based on liabilities Debtor incurred through its withdrawal from pension plans. Debtor later filed a direct appeal to the circuit court after the bankruptcy court disagreed with Debtor’s challenges to the claims and the regulations that the claims were based on. The circuit court granted Debtor’s petition for direct appeal of the bankruptcy court’s findings.

Facts:

Yellow Corporation (“Debtor”) had been one of the largest trucking companies in the nation; however, it filed for bankruptcy in 2023 and began the wind-down process after being unable to resolve a protracted labor dispute with the Teamsters union. Debtor withdrew from several multiemployer pension plans as part of the wind-down process. The Multiemployer Pension Plan Amendments Act of 1980 imposes liabilities on employers who withdraw from such plans. Debtor had also contracted with two plans to pay withdrawal liabilities based on a higher rate than its actual contributions. Congress enacted the American Rescue Plan Act of 2021 ("ARPA") to support pension plans and appropriated funds for that purpose. The funds would enable pension plans to pay full pension benefits, and Congress gave the PBGC authority over those funds. In short, the PBGC insures pension plans against shortfalls caused by employer withdrawals. Congress also tasked the PBGC to pass regulations surrounding multiemployer plans that receive special financial assistance under ARPA. The PBGC passed the Phase-In Regulation, which requires plans to incrementally phase in any special financial assistance funds that they receive. The PBGC also passed the No-Receivables Regulation, which prevents plans from recognizing funds as assets before they are paid to the plans. The plans in this case applied for special financial assistance under ARPA between 2021 and 2022, and they were awarded $41.1 billion. The plans filed claims in the bankruptcy case, seeking a combined $6.5 billion in withdrawal liability. Debtor disputed the claims, arguing that the regulations that the plans considered when calculating the withdrawal liability violate the PBGC’s statutory authority. The bankruptcy court disagreed with Debtor’s arguments, and Debtor appealed to the circuit court. The circuit court granted Debtor’s petition, but it affirmed the bankruptcy court’s findings. The circuit court found that the PBGC regulations were reasonable and permissible under the authority that Congress granted to the PBGC. The alternate calculation methods did not require the PBGC’s approval because they served to improve the solvency of the pension plans and did not constitute completely different calculation methods for the plans as a whole. The court also found that, since Debtor contracted with the two to pay a higher withdrawal rate, Debtor had to uphold its end of the agreement.

Judge(s):

Shwartz, Montgomery-Reeves, and Ambro

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