Cases & Deals

Withdrawing employer successfully challenges "Segal Blend"

Client(s) ConvergeOne Dedicated Services, LLC

Jones Day won a complete victory for our client ConvergeOne Dedicated Services, LLC in an ERISA withdrawal liability dispute in the Southern District of New York.

ConvergeOne was a participant in the Pension Hospitalization & Benefit Plan of the Electrical Industry before withdrawing in 2021. The Pension Plan used a withdrawal liability calculation method known as the Segal Blend, an actuarial artifice that tripled the amount of withdrawal liability ConvergeOne supposedly owed -- from shy of $2.5 million to more than $7.8 million. Jones Day challenged that withdrawal liability calculation as contrary to ERISA and prevailed before the arbitrator. On appeal, Judge Koeltl agreed with Jones Day's interpretation of ERISA's withdrawal liability provision, namely, that ERISA requires an actuary to use interest rates that are based on a pension plan's actual investments. Because it was undisputed that the Pension Plan here did not do so, Judge Koeltl held that the Plan violated ERISA and affirmed the arbitrator's award.

This is the latest victory for Jones Day in challenging the Segal Blend and other similar actuarial assumptions used by pension plans in calculating withdrawal liability. Jones Day prevailed in the first federal case to challenge the Segal Blend, N.Y. Times Co. v. Newspaper & Mail Deliverers'-Publishers' Pension Fund, 303 F. Supp. 3d 236 (S.D.N.Y. 2018), and has since secured victories on this recurring issue in numerous federal district and circuit courts.

Pension, Hospitalization & Benefit Plan of the Electrical Industry v. ConvergeOne Dedicated Services, LLC, No. 1:23-cv-08938-JGK (S.D.N.Y.)