Fennemore’s ERISA Team Scores Ninth Circuit Victory Clarifying the Withdrawal Liability Building and Construction Exception

Ryan Curtis and David Sieck in Fennemore’s ERISA/Employee Benefits Practice Group scored an important victory for Walker Specialty Construction with a unanimous opinion from the Ninth Circuit Court of Appeals regarding the building and construction industry exception to “withdrawal liability” under the Employee Retirement Income Security Act (ERISA). The victory established clarifying precedent in this area of ERISA case law.

The published opinion is Walker Specialty Constr., Inc. v. Bd. of Trs. of Constr. Indus. & Laborers Joint Pension Tr. For S. Nevada, No. 24-1560, 2026 WL 21743 (9th Cir. Jan. 5, 2026) and is available at https://cdn.ca9.uscourts.gov/datastore/opinions/2026/01/05/24-1560.pdf.

Background – Congress Creates Withdrawal Liability

In 1980, congress passed the Multiemployer Pension Plan Amendments Act (MPPAA), which amended ERISA to impose significant financial obligations on union employers who cease participating in multiemployer pension plans for its union employees. This “withdrawal liability” requires employers to pay a portion of the pension plan’s unfunded liability caused when a plan’s vested retirement benefit obligations are greater than its assets. However, Congress also created an exception to withdrawal liability for withdrawing employers when substantially all their employees work in the “building and construction industry” in the union’s jurisdiction and the employer does not resume such work for five years. When that happens, the employer qualifies for the exception and has no withdrawal liability. 

Employer Is Assessed Liability

In 2021, Walker Specialty Construction was assessed withdrawal liability after it ceased performing work the jurisdiction of a construction laborers union in Southern Nevada. The withdrawal liability assessment required Walker to pay $2.8 million to the union pension plan payable in quarterly payments for 20 years with interest that would have resulted in over $5 million in total payments. Having to make all those payments would have been devastating for the small family-owned company. Nevertheless, ERISA required Walker to make ongoing withdrawal liability payments even while it contested the assessment in arbitration and federal court.

Walker engaged Fennemore’s ERISA team to oppose the withdrawal liability assessment. At issue in this case was whether Walker was entitled to the “building and construction industry” exception and in particular, whether its asbestos abatement and demolition work qualified as being in the building and construction industry. 

Victory at the Federal District Court

Fennemore’s team first won a court victory for Walker in 2024 when the Federal District Court of Nevada agreed Walker qualified for the exception despite the union pension plan’s argument that asbestos abatement and demolition work are the “opposite” of the building and construction industry. The union plan further argued that the building and construction industry only includes making, forming, or building structures, but not other work that alters, modifies, or repairs existing structures. Fennemore’s attorneys argued, based on Congressional intent and other federal circuit court rulings, that the term “building and construction industry” should be given the same meaning that has developed in the administration of the Taft-Hartley Act, which allows pre-hire labor agreements for work in the building and construction industry before a formal collective bargaining agreement (CBA) can be negotiated. The reason for such pre-hire agreements under the Taft-Hartley Act and the building and construction industry exception to withdrawal liability is the same. They both exist due to the transitory nature of the construction industry. That is, union pre-hire agreements are allowed because construction projects often need union labor quickly and before a CBA is in place. Similarly, Congress created the building and construction industry exception to withdrawal liability because union construction employers come and go, and other union employers pick up work when a union employer leaves the union’s jurisdiction. The pension plan’s contribution base is not affected when one employer ceases doing work in a union’s jurisdiction. It is only affected when a former union employer continues such work in the union’s jurisdiction and competes with union contractors.

Based on this reasoning, Fennemore’s attorneys argued that courts should consider how the “building and construction industry” has been interpreted in federal cases and by the National Labor Relations Board interpreting the Taft-Hartley exception for pre-hire agreements in the industry. The District Court agreed with Fennemore’s team and considered case law and NLRB rulings holding that the building and construction industry includes more than making, forming, and building new structures. It also includes Walker’s demolition and asbestos abatement work because it altered, modified, or repaired existing structures. The District Court ruled in Walker’s favor. This meant Walker could stop making quarterly withdrawal liability payments. 

Unanimous Win at the Ninth Circuit Court of Appeal

After Walker prevailed at the District Court, the union pension plan appealed to the Ninth Circuit Court of Appeals. While the appeal was pending, the union pension plan could continue to hold withdrawal liability payments Walker had already made.

After extensive briefing and oral argument, the Ninth Circuit issued its unanimous opinion on January 5, 2026, upholding the District Court’s ruling and clarifying that the building and construction industry not only includes erecting new structures, but also includes structural alterations and repairs to existing structures including asbestos abatement and demolition. Based on this win, Walker has no withdrawal liability and is entitled to a return of withdrawal liability payments it made while the case was pending. Walker is also entitled to 14% annual interest that has been accruing, which is the rate the union pension plan applies for any late withdrawal liability payments. In total, Walker is entitled to over $800,000 from the union pension plan and is entitled to seek attorneys’ fees for the appeal.

Impact of the Ninth Circuit’s Walker Decision

This was a case of first impression for the Ninth Circuit. The ruling establishes and clarifies the rule in the Ninth Circuit regarding the scope of what work is included in the building and construction industry for purposes of the exception. Work that makes, forms, or builds a structure is included, but also work that alters, modifies, or improves a structure.

As there are few circuit court cases on this topic nationwide, this ruling is certain to influence other courts considering how to determine whether an employer facing withdrawal liability qualifies for the building and construction industry. The victory after more than four years of legal battles not only saves a family company, but it clarifies this issue for other construction companies facing withdrawal liability.

Meet Fennemore’s ERISA/Employee Benefits Team

Fennemore’s ERISA and Employee Benefits professionals are available to assist if you have questions regarding withdrawal liability or other employee benefits matters.

• Ryan Curtis is a Director and Chair of Fennemore’s ERISA/Employee Benefits practice group, counseling employers on the administration of their benefit plans and helping trustees and administrators comply with federal laws, including ERISA, the Affordable Care Act, COBRA, and HIPAA. He can be reached at rcurtis@fennemorelaw.com.

• David Sieck is an Associate Attorney in Fennemore’s Labor & Employment and ERISA practice groups, advising employers on a wide range of workplace employment matters, and counseling plan sponsors and fiduciaries on plan governance and administration under ERISA, including related litigation. He can be reached at dsieck@fennemorelaw.com.

• Jenny Zhang is Of Counsel at Fennemore, focusing her practice on employee benefits and executive compensation, and the overlap between those areas and tax, labor, employment, and corporate law. She can be reached at jzhang@fennemorelaw.com.