Steelcase Case on Recovering Attorneys’ Fees in Withdrawal Liabil

If “withdrawal liability” sounds like the kind of phrase designed by a committee that hates joy, welcome to the world of ERISA. It is a brutally technical corner of employee-benefits law where a single statutory phrase can move millions of dollars, and where even a company that wins the main fight may still lose the battle over legal fees. That is exactly why the Steelcase case on recovering attorneys’ fees in withdrawal liability deserves attention from employers, benefit lawyers, in-house counsel, and anyone who has ever looked at a pension-fund demand letter and muttered, “Well, that escalated quickly.”

In Central States, Southeast and Southwest Areas Pension Fund v. Steelcase Inc., Steelcase and its affiliate succeeded on the core dispute over how their withdrawal liability payment schedule should be calculated. The result materially reduced what they had to pay over time. But when Steelcase tried to recover attorneys’ fees and obtain compound interest on its overpayments, the court said no. That combination makes the ruling unusually useful: it is not just a case about who won, but about what “winning” really means in a withdrawal liability arbitration.

Why the Steelcase Decision Matters

The Steelcase opinion matters because it answers a practical question employers keep asking: If a pension fund overreaches and I beat the assessment, can I make the fund pay my legal bill? The court’s answer was cautious, restrained, and very ERISA: not unless the fund’s conduct crosses the line into bad faith or something similarly improper. In other words, being wrong is not enough. Being very wrong is not enough. Even being wrong in a way that makes business executives want to throw a stapler out the window may still not be enough.

That is a big deal in the modern withdrawal-liability world. Employers often spend significant time and money reviewing actuarial assumptions, bargaining history, rehabilitation-plan language, contribution schedules, and the relationship between pension statutes that were clearly drafted with no concern for ordinary human happiness. Steelcase shows that a favorable ruling on the merits does not automatically unlock fee shifting.

The Statutory Backdrop: MPPAA, PPA, and MPRA

To understand Steelcase, you need the short version of a long statutory saga. Under the Multiemployer Pension Plan Amendments Act of 1980, an employer that withdraws from an underfunded multiemployer pension plan can be assessed withdrawal liability. Later reforms, including the Pension Protection Act of 2006 and the Multiemployer Pension Reform Act of 2014, added rules for plans in critical status and for rehabilitation plans designed to stabilize deeply troubled funds.

In plain English, when a plan is sick, Congress lets the plan take certain steps to try to survive. One recurring issue is whether contribution-rate increases adopted under a rehabilitation plan can later be used to increase an employer’s withdrawal-liability payment schedule. That issue became the center of a multi-case dispute involving the Central States fund and a series of employers, including Event Media, McKesson, Kellanova, Royal Ice Cream, and Steelcase.

What Happened in the Steelcase Case

Steelcase and SC Transport contributed to the Central States multiemployer pension plan. The fund had entered critical status in 2008 and adopted a rehabilitation plan with annual contribution-rate increases. But the plan did not change its preexisting annual benefit-accrual formula. When Steelcase withdrew in 2019, the fund calculated withdrawal liability using a higher weekly contribution rate that included post-2014 increases associated with the rehabilitation plan.

That choice mattered a lot. The fund calculated a withdrawal-liability amount of more than $33.6 million, with monthly payments of about $76,320. In arbitration, Steelcase argued that the correct “highest contribution rate” should exclude the post-2014 rehabilitation-plan increases. The arbitrator largely agreed and held that the proper rate was the highest pre-2015 contribution rate, which reduced the monthly payment to about $64,716.

The arbitrator also ordered a refund of overpayments in a lump sum, with interest at the same annualized rate the fund used for overdue withdrawal-liability payments. But the arbitrator denied Steelcase’s request for compound interest and denied its request for reasonable attorneys’ fees. So Steelcase had a strong merits victory, but only a partial remedy.

Then came the appellate plot twist. While the district-court proceedings were pending, the Seventh Circuit issued its decision in Event Media, holding that post-2014 contribution-rate increases required by a rehabilitation plan had to be disregarded in calculating the payment schedule unless a narrow statutory exception applied. After that ruling, the fund effectively conceded the core payment-rate issue in Steelcase. What remained was the cleanup fight: interest and fees.

Why Steelcase Could Not Recover Attorneys’ Fees

Arbitration Fees Are Not Awarded Just Because One Side Prevails

One of the most important lessons from Steelcase is that prevailing in arbitration is not the same thing as proving bad faith. Under the governing PBGC regulation, an arbitrator may require a party to pay the other side’s attorneys’ fees if that party initiates or contests arbitration in bad faith or engages in dilatory, harassing, or other improper conduct. That is a narrow door, not a revolving one.

Steelcase argued that the fund’s statutory interpretation was opportunistic and nonsensical. The company had a fair point. By the time the district court ruled, the fund’s position had taken repeated hits in arbitration and federal court, and the Seventh Circuit in Event Media had rejected the interpretation on textual grounds. Still, Judge Thomas Durkin concluded that the fund’s position, while weak, was not frivolous.

That distinction did the heavy lifting. The court noted that, at the time the fund litigated the issue, the weight of arbitral authority was against it, but there were still two arbitration awards that had adopted the fund’s argument and there was no controlling federal appellate precedent yet. In the court’s view, that meant the issue was still debatable enough to defeat a bad-faith finding.

“Wrong” Is Not the Same as “Sanctionable”

This is the sentence business readers should tape above their desks: a losing legal position is not automatically a sanctionable legal position. The Steelcase court emphasized that the Seventh Circuit itself described the underlying issue in Event Media as a question of first impression for the courts of appeals. That label mattered. Courts are generally reluctant to punish a party for pressing a novel argument before binding precedent exists, even when the argument eventually crashes into the wall of statutory text.

Steelcase also tried a Rule 11 angle, arguing that once the fund kept pushing after multiple losses, fee shifting should follow. The court rejected that too. Until controlling precedent arrived, the fund’s reading remained a weak but arguable position rather than an obviously sanctionable one.

The Court’s Approach Fits the Broader Trend

Steelcase did not appear from nowhere. It fits with other Northern District of Illinois decisions in the same litigation wave, including Royal Ice Cream and McKesson, where employers won important points on the withdrawal-liability calculation but still failed to secure attorneys’ fees. The tone across these cases is consistent: judges are willing to correct a misread statute, but they are not eager to turn every statutory loss into a fee award against a multiemployer pension plan.

That judicial caution reflects a broader reality of ERISA litigation. Courts know these cases sit at the intersection of pension funding, statutory complexity, and high-dollar disputes. They tend to reserve fee awards for truly abusive conduct, not for every hard-fought legal mistake.

Why Steelcase Also Lost on Compound Interest

The compound-interest issue is less flashy but deeply practical. Steelcase argued that because compound prejudgment interest is often the federal norm, the court should require compounded interest on the overpayments it made. The court declined.

The key reason was not vibes, fairness rhetoric, or the cosmic moral order. It was the regulatory text. The PBGC overpayment rule says that if payments under the plan’s schedule result in an overpayment, the plan sponsor must refund the overpayment in a lump sum with interest at the same rate used for overdue withdrawal-liability payments. In Steelcase, the fund’s trust language set an annualized rate tied to prime plus two percent, but it did not provide for compounding on overdue payments. Because the overdue-payment rate was not compounded, the refund rate was not compounded either.

That part of the ruling is a reminder that in ERISA withdrawal liability disputes, remedial questions often turn on the plan document and the specific cross-references in PBGC regulations. A company may feel entitled to the richer economics of compound interest, but the governing framework may still limit it to simple interest.

How Event Media Changed the Playing Field

Steelcase cannot be read in isolation because Event Media changed everything around it. In that 2025 Seventh Circuit decision, the court held that post-2014 contribution-rate increases required by a rehabilitation plan generally must be disregarded when calculating the employer’s payment schedule, unless the increase fits one of the narrow statutory exceptions. The court rejected the fund’s broader purposive theory and said, in substance, that the text means what it says.

That appellate clarification had immediate ripple effects. It strengthened employers’ hands in pending disputes, forced concessions in some cases, and made it harder for plans to continue relying on the same “high contribution rate” theory. For Steelcase, Event Media effectively locked in the merits result. But it did not retroactively transform the fund’s earlier litigation position into bad faith.

That is what makes Steelcase so interesting. It is both an employer-friendly case and a cautionary case. It says employers can win major statutory arguments. It also says they should not assume those wins will reimburse the cost of getting there.

Practical Takeaways for Employers

1. Preserve the Merits Argument Early

The biggest dollars are usually tied to the underlying calculation, not the fee motion. Employers should focus first on identifying whether the fund used the correct contribution rate, the correct actuarial assumptions, and the correct statutory method. Steelcase won where it mattered most: the payment schedule itself.

2. Do Not Build Your Budget Around Fee Recovery

If the business plan assumes, “We’ll win and then the fund will pay our lawyers,” that plan needs a rewrite. Steelcase shows that courts may deny fees even when the employer clearly prevails on the central dispute.

3. Read the Interest Provisions Like a Hawk

Overpayment relief sounds simple until it is not. Employers should examine the plan’s trust agreement, collection policy, and governing PBGC provisions to understand whether any refund will carry simple interest, compound interest, or something else entirely.

4. Track the Appellate Calendar

In this area, one appellate decision can suddenly turn a patchwork of arbitral wins into a decisive regional rule. Event Media did exactly that. When a circuit court speaks on a recurring withdrawal-liability issue, settlement leverage can change overnight.

Practical Experiences From the Withdrawal Liability Front Lines

In real-world terms, disputes like Steelcase tend to feel less like elegant statutory debates and more like a slow-motion financial emergency. A company receives a withdrawal-liability demand, the numbers look eye-popping, and the first internal reaction is usually not legal analysis. It is disbelief. Finance teams want to know whether the amount is real. Operations teams want to know whether the company somehow triggered the problem years earlier without realizing it. Executives want to know why they are paying for a plan they are leaving. Then outside counsel shows up with flowcharts, deadlines, and the deeply ERISA-flavored reassurance that yes, this is complicated, but no, missing the arbitration deadline is not a good idea.

One common experience is the emotional whiplash of partial victory. Employers often spend months, sometimes years, developing a strong challenge to a pension fund’s calculation. They win on the statutory issue, reduce the payment schedule, and recover overpayments. Everyone exhales. Then comes the second question: “Great, so we get our legal fees back too, right?” Steelcase is a reminder that the answer is often no. That can be a frustrating moment because from the company’s perspective the fund was not merely mistaken; it was expensive. Yet courts frequently separate the merits from the fee issue with almost surgical precision.

Another recurring experience is that withdrawal-liability cases are won or lost on documents that did not look exciting when they were created. Collective bargaining agreements. rehabilitation-plan schedules. trust-language provisions. contribution histories. actuarial certifications. old notices. payment records. That stack of “boring” records can become the star witness. In many companies, the people who understand the commercial history are not the same people who maintain the legal files, so part of the challenge is simply rebuilding the story before the arbitration clock runs out.

Employers also learn quickly that not every strong argument feels strong on day one. Before Event Media, many companies challenging Central States’ “high contribution rate” theory probably felt they had the better text but not yet the better precedent. That is a familiar experience in ERISA litigation: the law may favor you, but until an appellate court says so out loud, settlement discussions can still feel like trench warfare in business attire.

There is also a cash-flow lesson buried in these cases. Even when an employer expects to win eventually, interim payments and litigation costs can create real pressure. Boards and lenders do not always find “We are right on statutory interpretation” to be a complete treasury strategy. That is why experienced employers increasingly treat withdrawal-liability disputes as both legal and financial events. They set reserves, coordinate finance and legal teams early, and model multiple outcomes instead of assuming a clean courtroom victory will solve everything.

Most of all, cases like Steelcase teach patience. The law in this space rarely moves with cinematic speed. It moves through arbitration awards, district-court opinions, appellate clarification, and then the practical follow-up fights over refunds, interest, and fees. The companies that handle these disputes best are usually the ones that stay disciplined, document-heavy, deadline-conscious, and realistic about remedies. That may not be glamorous, but in withdrawal-liability litigation, glamorous is usually not on the menu anyway.

Conclusion

The Steelcase case on recovering attorneys’ fees in withdrawal liability is valuable because it tells the truth about modern ERISA disputes: a company can absolutely win a major statutory argument and still walk away without fee reimbursement. Steelcase succeeded in cutting down its withdrawal-liability payment schedule and confirming that the fund could not rely on the wrong post-2014 contribution rates after Event Media. But when it came to attorneys’ fees and compound interest, the court drew a much tighter circle.

For employers, the message is clear. Challenge flawed assessments aggressively, preserve every statutory argument, and pay close attention to interest language and arbitration rules. But do not confuse a strong merits case with a guaranteed path to cost shifting. In this corner of benefits litigation, the best result may be a corrected number rather than a fully reimbursed fight. That may not be as satisfying as a victory lap with confetti, but when millions are at stake, a smaller legally correct bill is still a very good day.

Note: This article is for general informational and publishing purposes only and does not constitute legal advice.