Penske Truck Leasing , Lp v. Central States Southeast

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 25-1738 & 25-1872
P ENSKE T RUCK LEASING , LP,
Plaintiff-Appellant/Cross-Appellee,
v.
C ENTRAL STATES SOUTHEAST AND SOUTHWEST A REAS P ENSION
P LAN and T RUSTEES OF C ENTRAL STATES , SOUTHEAST AND
SOUTHWEST A REAS P ENSION FUND,
Defendants-Appellees/Cross-Appellants.
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:21-cv-05518 — Andrea R. Wood, Judge.
____________________
A RGUED D ECEMBER 9, 2025 — D ECIDED MAY 29, 2026
____________________
Before HAMILTON, ST . EVE , and P RYOR , Circuit Judges.
HAMILTON, Circuit Judge. Multiemployer pension plans
depend on employers making regular contributions to a
single fund. When an employer stops making contributions
and withdraws from a plan, it is assessed withdrawal liability,
which can be expensive. An employer has an incentive to

-- 1 of 30 --

2 Nos. 25-1738 & 25-1872
minimize its total bill, while the plan has an incentive to
maximize the amount owed.
This case arises from such a dispute between an employer,
plaintiff Penske Truck Leasing, L.P., and a multiemployer
plan, defendant Central States, Southeast and Southwest
Areas Pension Plan, which believed Penske was trying to
manipulate its bill for withdrawal liability. During
negotiations, Central States threatened to expel one union of
Penske employees, Local No. 745, from the plan. Penske sued
Central States and its trustees to enjoin the union’s
termination and moved for a temporary restraining order
(TRO), arguing that Central States had no authority to expel
Local 745. Though the TRO was granted, the district court
vacated it some months later. Central States counterclaimed,
seeking a declaration establishing Local 745’s withdrawal
date, a fact crucial for calculating withdrawal liability.
These appeals arise from events later in the litigation. On
summary judgment, the district court held that Central States
had the authority to expel Local 745 and did not do so
arbitrarily or capriciously. Penske challenges those
conclusions. Citing 29 U.S.C. § 1401, the district court
dismissed Central States’ counterclaim, explaining that the
substance of the counterclaim must be arbitrated before it can
proceed in federal court. Central States challenges that
dismissal. We affirm across the board.
Part I of this opinion introduces a few basics of
withdrawal liability and then lays out the relevant facts and
procedural history. Part II concludes that Central States had
the authority to expel Local 745. Part III explains why the
undisputed facts show that Central States’ decision to expel
Local 745 was not arbitrary or capricious. Part IV affirms the

-- 2 of 30 --

Nos. 25-1738 & 25-1872 3
dismissal of Central States’ counterclaim because the dispute
has not yet been submitted to arbitration as required by
§ 1401.
I. Factual Background and Procedural History
A. Withdrawal Liability
In a multiemployer pension plan, employers make
contributions that are pooled in a single fund, which is then
used to pay benefits for the employees covered by the plan.
29 U.S.C. § 1002(37)(A); Concrete Pipe & Products of California,
Inc. v. Construction Laborers Pension Trust for Southern
California, 508 U.S. 602, 605–07 (1993). Under this
arrangement, an employee may change employers without
losing the ability to accumulate pension credit. Concrete Pipe,
508 U.S. at 605–07. These multiemployer plans work
particularly well in industries that rely on short-term or
seasonal workers, such as construction and trucking. Chicago
Truck Drivers, Helpers & Warehouse Workers Union (Independent)
Pension Fund v. CPC Logistics, Inc., 698 F.3d 346, 347 (7th Cir.
2012). Workers in those industries often spend their careers
moving between employers. Multiemployer pension plans
can ensure that their benefits move with them. Id.; accord,
Concrete Pipe, 508 U.S. at 606.
“When a company withdraws, the plan remains
financially liable to the employees with vested pension rights.
Yet the plan ‘no longer can look to the employer to contribute
additional funds to cover these obligations.’” Supervalu, Inc. v.
United Food & Commercial Workers Unions & Employers Midwest
Pension Fund, 155 F.4th 913, 916 (7th Cir. 2025), quoting
Chicago Truck Drivers, 698 F.3d at 347. Before the passage of
the Multiemployer Pension Plan Amendments Act of 1980

-- 3 of 30 --

4 Nos. 25-1738 & 25-1872
(MPPAA), Pub. L. No. 96-364, 94 Stat. 1208, codified at 29
U.S.C. §§ 1381–1461, one employer’s departure could trigger
a plan’s demise. To make up for the shortfall, the plan would
raise costs for everyone else. Supervalu, 155 F.4th at 916. The
higher the costs, the more employers would seek to
withdraw, setting up a kind of death spiral. Milwaukee Brewery
Workers’ Pension Plan v. Joseph Schlitz Brewing Co., 513 U.S. 414,
416–17 (1995). In the worst case, a plan facing a string of
withdrawals could be left unable to pay its members’ benefits.
Artistic Carton Co. v. Paper Industry Union–Management Pension
Fund, 971 F.2d 1346, 1348 (7th Cir. 1992).
The MPPAA shifted more of the burden of unfunded or
underfunded benefits to a withdrawing employer. Supervalu,
155 F.4th at 916. Upon withdrawal, an employer is assessed a
charge, called “withdrawal liability,” that is intended to
require the employer to cover its share of pension benefits that
would otherwise be underfunded upon its departure. Id. at
916–17; accord, M & K Employee Solutions, LLC v. Trustees of the
IAM Nat’l Pension Fund, 608 U.S. —, 146 S. Ct. — (May 21,
2026); Chicago Truck Drivers, 698 F.3d at 347.
The rules surrounding withdrawal liability calculations
are complicated. See, e.g., M & K Employee Solutions, 608 U.S.
at — (slip op. at 1) (calculations of withdrawal liability do not
require using actuarial assumptions chosen before
measurement date); Milwaukee Brewery, 513 U.S. at 417;
Supervalu, 155 F.4th at 916–18. Only a few of those rules are
relevant for this appeal, and we cover them in broad strokes.
For starters, the MPPAA charts out two types of withdrawal
liability: partial and complete. Partial withdrawal liability can
be triggered when there is “a partial cessation of the
employer’s contribution obligation.” 29 U.S.C. § 1385(a).

-- 4 of 30 --

Nos. 25-1738 & 25-1872 5
Governed by 29 U.S.C. § 1383(a), complete withdrawal
liability is assessed when an employer “permanently ceases
to have an obligation to contribute under the plan.”
The MPPAA provides several methods for plan sponsors
to calculate withdrawal liability. See 29 U.S.C. § 1391. The
effective date of withdrawal plays a role, at least in the
background, in determining the ultimate withdrawal liability.
Section 1391 instructs the plan sponsor to calculate liability
“not as of the day of withdrawal, but as of the last day of the plan
year preceding the year during which the employer withdrew—a
day that could be up to a year earlier.” Milwaukee Brewery, 513
U.S. at 417–18 (emphasis in original); accord, M & K Employee
Solutions, 608 U.S. at —, slip op. at 2–3. To illustrate how this
works, in a variation of the Supreme Court’s example in
Milwaukee Brewery, suppose that a plan operates on a
calendar-year basis. Id. at 418. If an employer withdrew from
the plan in 2025, its withdrawal liability calculation should be
the same, based on the plan’s status as of December 31, 2024,
regardless of whether the actual withdrawal occurred on
January 1, 2025, or December 31, 2025.
For now, one final background detail. The MPPAA
requires a withdrawing employer to pay up once the plan
calculates and demands payment of the employer’s
withdrawal liability. See 29 U.S.C. § 1382. In case of a dispute
over the bill, the MPPAA provides for arbitration. See
§ 1401(a). Until the arbitrator’s final decision, the employer
has no choice but to make the demanded payments. Central
States, Southeast & Southwest Areas Pension Fund v. Safeway,
Inc., 229 F.3d 605, 608 (7th Cir. 2000). The statute imposes this
obligation. § 1401(d).

-- 5 of 30 --

6 Nos. 25-1738 & 25-1872
B. Facts on Summary Judgment
The Central States, Southeast and Southwest Areas
Pension Fund is a multiemployer pension plan that serves
union members of the International Brotherhood of Teamsters
who work in the midwestern United States. See Safeway, 229
F.3d at 607. The pension plan is established and governed by
its Trust Agreement, the Labor Management Relations Act
(LMRA), 29 U.S.C. § 186(c)(5), and the Employee Retirement
Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. The plan
is administered by eight Trustees—four appointed by the
union and four appointed by employers.1
Penske was one of the plan’s participating employers.
Penske operates a fleet of trucks nationwide for leasing and
rental. For years, Penske made contributions to Central States
pursuant to ten separate collective-bargaining agreements on
behalf of ten bargaining units, including, as relevant here,
Local 745, which represents Penske’s employees in Dallas,
Texas.
The most recent collective-bargaining agreement between
Local 745 and Penske was set to expire on March 1, 2021.
Penske and Local 745 negotiated for a one-year extension of
the agreement so that it would instead expire on March 1,
2022. Under the Trust Agreement, an agreement like the
extension was contingent upon Central States’ approval. But
in December 2020, not long after the extension was submitted
for approval, Central States rejected the extension, forcing
Penske and Local 745 to renegotiate a new collective-
bargaining agreement. At that point, approximately six other
1 The Trust Agreement appears in this record in Central States’
Separate Appendix at pages 1–41.

-- 6 of 30 --

Nos. 25-1738 & 25-1872 7
Penske bargaining units had collective-bargaining
agreements that would expire in 2022.
In the fall of 2021, Central States became troubled by what
it could see looming on the horizon. If Penske succeeded in
lining up all ten collective-bargaining agreements to expire in
2022, it could withdraw all the bargaining units that same
year, effecting a complete withdrawal. If the agreements
expired on their initial expiration dates, staggered over
several years, Penske would be on the hook for at least one
partial withdrawal liability assessment on top of an eventual
complete withdrawal. The difference, as both Penske and
Central States agree, amounts to tens of millions of dollars.
In October 2021, ahead of a Trustees meeting, Central
States notified Penske of its concerns. Central States also
offered a proposal: Central States would agree to extend the
agreement between Local 745 and Penske to 2022, but only if
Penske accepted that any withdrawal of Local 745 in 2022
would be treated as a 2021 withdrawal. During an
investigation into Penske’s actions, Penske insisted that the
lining up of the expiration dates was “not the result of any ill
intent or grand design” but was due to the COVID-19
pandemic “and all the uncertainty that came with it.”
C. District Court Proceedings
Sensing its position was getting little traction before the
Trustees, Penske brought the dispute to federal court. In
October 2021, Penske filed this lawsuit in the Northern
District of Illinois. Penske sought a TRO to prohibit any
expulsion of Local 745 from the plan. It also sought
preliminary and permanent injunctive relief, as well as a

-- 7 of 30 --

8 Nos. 25-1738 & 25-1872
declaratory judgment that Central States had no authority
under the Trust Agreement to expel Local 745.
The timing of the lawsuit meant that federal court
proceedings were underway before the Trustees had made a
final decision on Local 745. On December 14, 2021, two
months after this lawsuit was filed, the Trustees ultimately
and unanimously decided to terminate the participation of
Local 745, effective December 25, 2021, unless Penske agreed
by December 22, 2021 “that a 2022 withdrawal of the Local 745
group will be treated as a 2021 withdrawal.” Penske did not
accept that proposal.
On December 24, 2021, however, the district court entered
a TRO for Penske, preliminarily finding that the Trustees
might have exceeded their authority under a potentially
applicable version of the Trust Agreement. Critically, the
district court reasoned that the balance of harms weighed
heavily in Penske’s favor, given its finding that Penske
sufficiently showed that any injury from the expulsion would
be irreparable. In February 2022, Central States filed amended
counterclaims. In addition to attorney fees, Central States
sought a declaratory judgment that the Trustees’ termination
of Penske was effective on December 25, 2021. On April 6,
2022, the district court denied Penske’s motion for a
preliminary injunction and vacated the TRO. The month
before, Penske had withdrawn all its other bargaining units
from Central States’ plan.
This appeal reviews a district court decision from later in
the litigation. After discovery, in March 2025, the district court
granted Central States summary judgment on Penske’s claim,
concluding that Central States had the authority to expel
Local 745 under the Trust Agreement and that Central States

-- 8 of 30 --

Nos. 25-1738 & 25-1872 9
did not make the decision arbitrarily or capriciously. In the
same opinion, on a motion to dismiss under Federal Rule of
Civil Procedure 12(b)(6), the district court dismissed Central
States’ counterclaim over Local 745’s effective withdrawal
date. Relying on 29 U.S.C. § 1401, the district court held that
the parties must first proceed to arbitration on the dispute.
The district court entered judgment for Central States and
permitted Central States to seek attorney fees. Penske Truck
Leasing Co. v. Central States, Southeast & Southwest Areas
Pension Plan, 2025 WL 964539 (N.D. Ill. March 31, 2025). The
parties have cross-appealed. Central States’ fee petition is
pending in the district court, so we need not address any fee
issues now.2
We have federal-question jurisdiction over Penske’s
declaratory-judgment action under § 301(a) of the LMRA, 29
U.S.C. § 185(a), which authorizes suit for “violation[s] of
contracts between an employer and a labor organization
representing employees,” see Samuel C. Johnson 1988 Trust v.
Bayfield County, 520 F.3d 822, 828 (7th Cir. 2008) (jurisdiction
over a declaratory-judgment action exists when action arises
under federal law); GNB Battery Technologies, Inc. v. Gould, Inc.,
65 F.3d 615, 619 (7th Cir. 1995) (same). We review a district
court’s summary judgment ruling de novo, giving the non-
2 Because the final judgment order did not address defendants’
counterclaim for declaratory relief, we previously suspended briefing and
ordered the parties to address whether we had jurisdiction over the
appeals. The district court’s memorandum opinion dismissed the
counterclaim due to a mandatory exhaustion requirement, see Part IV,
and made sufficiently clear that it “was finished with the case.” Calumet
River Fleeting, Inc. v. Int’l Union of Operating Engineers, Local 150, AFL-CIO,
824 F.3d 645, 651 (7th Cir. 2016). We are satisfied we have appellate
jurisdiction.

-- 9 of 30 --

10 Nos. 25-1738 & 25-1872
moving party the benefit of reasonable inferences from the
evidence and resolving conflicting evidence in its favor. Vesey
v. Envoy Air, Inc., 999 F.3d 456, 461 (7th Cir. 2021). 3
II. The Scope of Expulsion Authority
Central States asserts that its authority to expel Local 745
stems from the following provision in the Trust Agreement,
which we call the Expulsion Provision:
The Trustees are authorized to reject any
collective bargaining agreement, participation
agreement and/or terminate the participation of
an Employer (and all Employer Contributions
from the Employer) whenever they determine
that the agreement is unlawful and/or
inconsistent with any rule or requirement for
participation by Employers in the Fund and/or
that the Employer is engaged in one or more
practices or arrangements that threaten to cause
economic harm to, and/or impairment of the
actuarial soundness of, the Fund (including but
not limited to any arrangement in which the
Employer is obligated to make Employer
Contributions to the Trust Fund on behalf of
some but not all of the Employer’s bargaining
unit employees, and any arrangement in which
the Employer is obligated to make Employer
3 In its complaint and briefing, Penske cited ERISA as another basis
for federal-question jurisdiction, but it pleaded no specific cause of action
under ERISA. During oral argument, Penske conceded that it was not
proceeding under ERISA, so we need not decide here whether ERISA may
supply a separate cause of action or basis for jurisdiction.

-- 10 of 30 --

Nos. 25-1738 & 25-1872 11
Contributions to the Trust Fund at different
contribution rates for different groups of the
Employer’s bargaining unit employees) and/or
they determine that continued participation by
the Employer is not in the best interest of the
Fund. Any such rejection and/or termination by
the Trustees of a collective bargaining
agreement, participation agreement or other
agreement shall be effective as of the date
determined by the Trustees (which effective
date may be retroactive to the initial date of the
term of the rejected agreement) and shall result
in the termination of the affected group and all
Employees of the Employer in the affected
group from further participation in the Fund on
and after such effective date. The
rejection/termination of one or more of the
Employer’s groups that participate in the Fund
under this provision shall not affect the
continued participation of any other group of
the Employer that participates in the Fund.
Trust Agreement, art. IV, § 20 (“Expulsion Provision”).
Our first task on appeal is not to determine the meaning of
the Expulsion Provision but to answer a logically prior issue:
the proper standard of review for interpreting the Trust
Agreement. Penske insists we must review the Trust
Agreement de novo and should hold that Central States was
not permitted to expel Local 745. On this theory, Central
States was allowed to expel an employer only as a whole and
only after the plan had formally terminated certain
agreements with the employer. Central States argues,

-- 11 of 30 --

12 Nos. 25-1738 & 25-1872
however, that we should defer to the Trustees’ interpretation
of the Trust Agreement—which permits Central States to
expel Local 745—given that the Trust Agreement grants the
Trustees power to interpret the Agreement. We agree with
Central States. On deferential review, we adopt the Trustees’
reasonable interpretation of the Trust Agreement.4
A. Standard of Review
The Supreme Court addressed the proper standard of
review for interpreting ERISA-governed plans in Firestone
Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). “If the trust
documents give the trustee ‘power to construe disputed or
doubtful terms, the trustee’s interpretation will not be
disturbed if reasonable.’” Conkright v. Frommert, 559 U.S. 506,
512 (2010) (cleaned up), quoting Firestone, 489 U.S. at 111. But
“[i]f the plan did not give the employer or administrator
discretionary or final authority to construe uncertain terms,”
the plan is reviewed de novo. Firestone, 489 U.S. at 112–13; see
id. at 112 (explaining that, without the grant of discretionary
authority to interpret an instrument, classic principles of
contract interpretation apply).
4 An earlier version of the Expulsion Provision did not seem to
contemplate the expulsion of just a single bargaining unit. The Expulsion
Provision was amended in September 2021, shortly before the
investigation into Penske was underway. Penske, however, relied
primarily on the earlier version in its arguments before the Trustees.
Central States now says that Penske has waived any argument based on
the current version of the Expulsion Provision. Relying on art. IV, § 2 of
its Trust Agreement, Central States argues that Penske was required to
submit all “questions or controversies … as to the construction of the
language or meaning” to the Trustees. Because we affirm summary
judgment on the merits, we decline to reach the waiver issue now.

-- 12 of 30 --

Nos. 25-1738 & 25-1872 13
The Central States Trust Agreement falls within that first
category. It grants discretion to its Trustees to interpret
disputed terms in the Trust Agreement and other plan
documents. By its terms, “[t]he Trustees … have the power to
construe the provisions of [the Trust Agreement],” and “any
construction adopted by the Trustees in good faith shall be
binding upon the Union, Employees, and Employers.” Trust
Agreement, art. IV, § 17; see id. (“The Trustees are vested with
discretionary and final authority in construing plan
documents of the Pension Fund and any other agreement.”).
So under Firestone, we review the Trustees’ interpretation
with deference, setting their interpretation aside only if it is
unreasonable. 489 U.S. at 111.
In reaching this conclusion, we are not writing on a blank
slate. Central States and related Teamster employee benefit
plans are old and large and appear often in this court and
others. In our case law, we have repeatedly recognized that
the Central States Trust Agreement gives deference to the
Trustees’ reasonable interpretations of plan documents. E.g.,
Manny v. Central States, Southeast & Southwest Areas Pension &
Health & Welfare Funds, 388 F.3d 241, 242 (7th Cir. 2004); Exbom
v. Central States, Southeast & Southwest Areas Health & Welfare
Fund, 900 F.2d 1138, 1141–42 (7th Cir. 1990). Nor are we an
outlier. The Supreme Court and other circuits have also
understood these same plan documents to require deference
to the Trustees’ reasonable interpretations. E.g., Schneider
Moving & Storage Co. v. Robbins, 466 U.S. 364, 374 n.18 (1984);
Central States, Southeast & Southwest Areas Pension Fund v.
Central Transport, Inc., 472 U.S. 559, 568 (1985); Oldenburger v.
Central States Southeast & Southwest Areas Teamster Pension
Fund, 934 F.2d 171, 173 (8th Cir. 1991); Bagsby v. Central States,

-- 13 of 30 --

14 Nos. 25-1738 & 25-1872
Southeast & Southwest Areas Pension Fund, 162 F.3d 424, 428
(6th Cir. 1998).
The Eighth Circuit’s decision in Borntrager v. Central States
Southeast & Southwest Areas Pension Fund, 577 F.3d 913 (8th
Cir. 2009), is particularly instructive. There, the court
reviewed Central States’ decision to expel an employer under
the Trust Agreement’s “adverse selection rule,” a provision
strikingly similar to the Expulsion Provision. Id. at 915–16.
Central States expelled the employer because the employer
decided to use independent contractors rather than hire new
employees, lowering the employer’s contribution rate to the
plan. Id. at 916–17. The employer sued under LMRA § 301,
arguing that the Trust Agreement did not allow the expulsion
based on the use of independent contractors. Id. at 918; see
Borntrager v. Central States, Southeast & Southwest Areas Pension
Fund, 425 F.3d 1087, 1092 n.1 (8th Cir. 2005) (discussing
subject-matter jurisdiction). The Eighth Circuit disagreed. The
court recognized that Central States’ interpretation required
“significant weight,” and under its interpretation, Central
States’ authority was not limited to “certain forms of
employment practices.” Borntrager, 577 F.3d at 920, quoting
Central Transport, 472 U.S. at 568; see also Central Hardware Co.
v. Central States, Southeast & Southwest Areas Pension Fund, 770
F.2d 106, 110 (8th Cir. 1985) (upholding Central States’
decision to reject payments from an employer, in part because
the “trustees’ determination … is not only supportable by a
construction of the governing documents but is entitled to
significant weight”).
Penske sees our standard differently. Penske concedes that
courts may give significant weight to trustees’
interpretations—but only after a court on de novo review has

-- 14 of 30 --

Nos. 25-1738 & 25-1872 15
deemed the contractual language to be ambiguous. Penske
relies primarily on our decision in Central States, Southeast &
Southwest Areas Pension Fund v. Waste Management of Michigan,
Inc., where we explained that a court’s “first task” in
interpreting an ERISA-governed plan “is to determine
whether the contract at issue is ambiguous or unambiguous.”
674 F.3d 630, 634 (7th Cir. 2012), citing Neuma, Inc. v. AMP,
Inc., 259 F.3d 864, 873 (7th Cir. 2001). We were not, however,
weighing in on the appropriate standard of review, and for
good reason. There the focus was the employer’s
interpretation, not the trustees’, and it was so unreasonable
and so contrary to the plan’s text that it would not survive
either de novo or deferential review. See id. at 635–37; see also
Michels Corp. v. Central States, Southeast, & Southwest Areas
Pension Fund, 800 F.3d 411, 417 (7th Cir. 2015) (“[A] plan
administrator’s ‘interpretation may not controvert the plain
language of the document.’”), quoting Cottillion v. United
Refining Co., 781 F.3d 47, 55 (3d Cir. 2015). “[G]eneral
language in judicial opinions,” as we have here, “should be
read ‘as referring in context to circumstances similar to the
circumstances then before the Court and not referring to quite
different circumstances that the Court was not then
considering.’” Turkiye Halk Bankasi A.S. v. United States, 598
U.S. 264, 278 (2023), quoting Illinois v. Lidster, 540 U.S. 419, 424
(2004).5
5 Waste Management, in turn, cited our decision in Neuma, Inc. v. AMP,
Inc., 259 F.3d at 873, for this standard. In Neuma and the cases it cited,
however, we did not confront a clause that granted interpretive authority
to a plan’s trustees or administrator. See id., citing Grun v. Pneumo Abex
Corp., 163 F.3d 411, 419–20 (7th Cir. 1998), and Ryan v. Chromalloy American
Corp., 877 F.2d 598, 602 (7th Cir. 1989).

-- 15 of 30 --

16 Nos. 25-1738 & 25-1872
We have exercised Firestone deference most often in
disputes over benefit denials, as in Firestone itself. 489 U.S. at
106; see also Bator v. District Council 4, 972 F.3d 924, 929 (7th
Cir. 2020) (where union members alleged plan trustees had
breached fiduciary duties, deferring to plan trustees’
interpretation of plan unless arbitrary and capricious, citing
benefit-denial case). Though our dispute in this case arises
from the LMRA’s breach-of-contract provision, that
difference provides no reason to change tack. The Supreme
Court has instructed that we must look to “‘principles of trust
law’ for guidance” in reviewing the decisions of ERISA plan
administrators. Conkright, 559 U.S. at 512, quoting Firestone,
489 U.S. at 111. Under trust law, it is well settled that a trust
may confer discretionary powers on a trustee, including the
“power to construe the trust instrument in case of dispute or
doubt.” A. Hess, G. Bogert & G. Bogert, Bogert’s The Law of
Trusts and Trustees § 559 (2025 ed.); see also Restatement
(Third) of Trusts § 71 cmt. f (A.L.I. 2007) (a settlor may
“expressly grant[] a trustee the power to interpret the trust
instrument (or to make a ‘binding’ determination of its
meaning and effect) in cases of doubt or controversy”).
Further, when a trustee exercises a discretionary power, trust
law instructs that courts review the trustee’s decision
deferentially. See Bogert, The Law of Trusts § 559 (“the
trustee’s decision will be subject to review by the court as to
its reasonableness”); Restatement (Third) of Trusts § 71 cmt. f
(“the trustee’s discretion is nevertheless subject to judicial
review for abuse”).
Two Supreme Court decisions help inform our deference
here, although they both predate Firestone. In those cases, the
Supreme Court afforded significant weight to trustees’
interpretations of ERISA plan documents beyond the context

-- 16 of 30 --

Nos. 25-1738 & 25-1872 17
of denied benefits. In Schneider Moving & Storage Co. v.
Robbins, Central States’ trustees brought a suit in federal court
to seek an audit of two employers’ payroll records. 466 U.S.
364, 366 (1984). The trustees argued that they could proceed
in federal court, instead of in arbitration, based on their
interpretation of their authority in the Trust Agreement. The
Supreme Court agreed. Id. at 373–74. The Trust Agreement—
in particular, the same provision relevant in this case—gave
the trustees discretionary authority to interpret the Trust
Agreement. Id. at 374 n.18, quoting Trust Agreement, art. IV,
§ 17. Likewise, in Central Transport, Central States sought to
audit the records of a company’s employees who were not
participating in the plan. 472 U.S. at 561–64. Central States
rooted its audit power in the Trust Agreement, and the
Supreme Court again deferred to the trustees’ reasonable
interpretation. Id. at 568, quoting Trust Agreement, art. IV,
§ 17.
With these principles in mind, and given the Trust
Agreement’s grant of interpretative authority, deferential
review applies. We see no reason to disturb the Trustees’
reasonable interpretation finding that they had authority to
expel Local 745 without expelling all other Penske’s
bargaining units. The Trust Agreement contemplates the
expulsion of a single bargaining unit and suggests that
Central States need not formally terminate an entire
agreement to expel just one bargaining unit. For example, the
Expulsion Provision provides in part: “The
rejection/termination of one or more of the Employer’s groups
that participate in the Fund under this provision shall not
affect the continued participation of any other group of the
Employer that participates in the Fund.” The provision
further refers to the “termination of the affected group” and

-- 17 of 30 --

18 Nos. 25-1738 & 25-1872
authorizes the Trustees to “reject any collective bargaining
agreement, participation agreement and/or terminate the
participation of an Employer.”
To be sure, the Expulsion Provision is not a model of
clarity on this point. Penske has rightly pointed out parts of
the text that lend support to its interpretation. E.g., Trust
Agreement, art. IV, § 20 (“The Trustees are authorized
to … terminate the participation of an Employer[.]”) (emphasis
added); id. (“Any such rejection and/or termination by the
Trustees of a collective bargaining agreement, participation
agreement or other agreement … shall result in the
termination of the affected group[.]”). Applying deferential
review, however, we need not dig deeper once we find the
Trustees’ interpretation reasonable.
B. Counterarguments
Before moving on, we address Penske’s two remaining
counterarguments, both of which we find unpersuasive.
First, Penske argues that Central States’ interpretation
would violate 29 U.S.C. § 1394(b), which requires that certain
plan rules and amendments “operate and be applied
uniformly with respect to each employer.” Central States’
interpretation of the Trust Agreement, Penske insists, would
apply differently (not “uniformly”) to an employer with a
single bargaining unit than to an employer with multiple
bargaining units. On this theory, expelling one bargaining
unit would effect a complete withdrawal for an employer
with one bargaining unit but a partial withdrawal for an
employer with multiple bargaining units. Section 1394(b)
applies only to “plan rules and amendments authorized
under [29 U.S.C. §§ 1381–1405],” which concern the methods

-- 18 of 30 --

Nos. 25-1738 & 25-1872 19
for calculating withdrawal liability. Section 1394(b) has not
often been interpreted, but other courts have understood
§ 1394(b) to be so limited. See Keith Fulton & Sons, Inc. v. New
England Teamsters & Trucking Industry Pension Fund, Inc., 762
F.2d 1137, 1141 (1st Cir. 1985) (dicta); United Retail & Wholesale
Employees Teamsters Union Local No. 115 Pension Plan v. Yahn &
Mc Donnell, Inc., 787 F.2d 128, 131 (3d Cir. 1986), aff’d by an
equally divided court, Pension Benefit Guaranty Corp. v. Yahn &
McDonnell, Inc., 481 U.S. 735 (1987), and abrogated on other
grounds by Concrete Pipe, 508 U.S. 602 (1993). Section 1394(b)
does not apply to the situation here, which is squarely about
expulsion, not the calculation of withdrawal liability.
It is not unfair, as Penske suggests, that an expulsion of
one bargaining unit affects Penske differently than it would
other employers. Rules often affect people differently. That
does not mean the rules do not “operate … uniformly.”
Suppose that a state imposes a gas tax. The consequences of
that tax are easily foreseeable: not everyone pays. People who
own cars do; people without cars do not. Nor does everyone
pay equally (some buy more gas than others). But there is
nothing unfair or inherently discriminatory about such a
system.
Second, Penske argues that Central States’ interpretation
would force Penske to violate the National Labor Relations
Act (NLRA). Under the NLRA, an employer must “maintain
the status quo after the expiration of a collective bargaining
agreement until a new agreement is reached or until the
parties bargain in good faith to impasse.” General Service
Employees Union, Local No. 73 v. NLRB, 230 F.3d 909, 913 (7th
Cir. 2000), quoting NLRB v. Emsing’s Supermarket, Inc., 872
F.2d 1279, 1285 (7th Cir. 1989); see also 29 U.S.C. § 158(a)(5)

-- 19 of 30 --

20 Nos. 25-1738 & 25-1872
(making it an “unfair labor practice for an employer” “to
refuse to bargain collectively with the representatives of his
employees”); NLRB v. Katz, 369 U.S. 736, 743 (1962) (“We hold
that an employer’s unilateral change in conditions of
employment under negotiation is similarly a violation of [29
U.S.C. § 158(a)(5)], for it is a circumvention of the duty to
negotiate[.]”). Penske contends that if it cannot contribute to
the pension plan on Local 745’s behalf, it cannot “maintain the
status quo.”
Penske’s premise is flawed. Expelling Local 745’s
participation is as close a guarantee as Penske can get that
there has been an “impasse” in negotiations. See RiverStone
Group v. Midwest Operating Engineers Fringe Benefit Funds, 33
F.4th 424, 426 n.2 (7th Cir. 2022) (defining “impasse” under
federal labor law as “that point at which the parties have
exhausted the prospects of concluding an agreement and
further discussions would be fruitless”), quoting Laborers
Health & Welfare Trust Fund for Northern Calif. v. Advanced
Lightweight Concrete Co., 484 U.S. 539, 543 n.5 (1988). Central
States ended negotiations with Penske altogether. True, the
National Labor Relations Board “has the exclusive authority
to determine whether the employer has violated” its duty,
and the Board could prove our prediction wrong. Id. at 430–
31. Under these circumstances, however, we are satisfied that
Local 745’s expulsion will not force Penske into violating the
law.6
6 Penske finds support in Staffco of Brooklyn, LLC & New York State
Nurses Ass’n, 364 NLRB 1500 (2016), pet. denied & pet. granted, 888 F.3d
1297 (D.C. Cir. 2018). But that case provides no help. A collective-
bargaining agreement had expired, and the employer terminated any
further contributions to the pension plan. 364 NLRB at 1501. The National

-- 20 of 30 --

Nos. 25-1738 & 25-1872 21
III. The Decision to Expel Local 745
Assuming, as we have found, that the Trust Agreement
permitted Local 745’s expulsion, Penske contends in the
alternative that Central States’ decision was arbitrary and
capricious. Penske argues, in essence, that the Trustees should
have explained themselves better, should have conducted
their investigation more thoroughly, and should have
exercised better judgment. On deferential review, these
arguments fail.7
Both sides invoke arbitrary-and-capricious review, so we
assume without deciding that it is the proper standard. In
general, when applying arbitrary-and-capricious review, we
will uphold a reasonable decision even if we might not have
made the same decision in the first instance. Cf. Van Boxel v.
Journal Co. Employees’ Pension Trust, 836 F.2d 1048, 1049–53
(7th Cir. 1987) (ERISA benefits denial; examining arbitrary-
and-capricious standard). We take care, however, not to
import wholesale the standard that appears in the district
court’s opinion and the appellate briefs. That standard comes
from our ERISA benefits-denial cases, which are governed by
considerations, including fiduciary duties, that have no place
here. E.g., Cerentano v. UMWA Health & Retirement Funds, 735
Labor Relations Board “assum[ed]” that the plan “would no longer accept
the [employer’s] contributions” and found that the parties had not
“bargained to an impasse.” Id. at 1517. Those facts appear to be
meaningfully different from the facts here. Local 745 was expelled only
after negotiations failed.
7 Penske frames its arguments in much stronger language; Central
States adopted that framing in its responsive brief. We need not adopt
Penske’s characterizations to resolve this appeal.

-- 21 of 30 --

22 Nos. 25-1738 & 25-1872
F.3d 976, 978, 981 (7th Cir. 2013); Speciale v. Blue Cross & Blue
Shield Ass’n, 538 F.3d 615, 620–21 (7th Cir. 2008).8
To start, ERISA demands, as a matter of statute and
regulation, “certain minimum requirements … when a plan
administrator denies a claim for benefits”—for example, a
“full and fair review” and “adequate notice in writing” for the
denial. Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 688–89 (7th
Cir. 1992), quoting 29 U.S.C. § 1133; see also 29 C.F.R.
§ 2560.503-1(g) (in a benefits determination, requiring certain
notice to claimant). The standard in benefits-denial cases has
hard edges by design; it is an ill fit for the Trustees’ expulsion
decision.
On arbitrary-and-capricious review, we conclude that
Central States did not err in expelling Local 745. Penske’s
arguments amount to minor quibbles with Central States’
investigation and findings. Penske complains, for example,
that Central States did not ask Penske specific follow-up
questions and overlooked important factors for decision-
making. Penske, however, identifies no basis for imposing
such requirements on what the Trustees must consider or
how the Trustees must explain their decision to expel
8 Under the version of arbitrary-and-capricious review used in
benefits-denial cases, courts will uphold a benefits denial if:
(1) it is possible to offer a reasoned explanation, based on
the evidence, for a particular outcome, (2) the decision is
based on a reasonable explanation of relevant plan
documents, or (3) the administrator has based its decision
on a consideration of the relevant factors that encompass
the important aspects of the problem.
Cerentano, 735 F.3d at 981, quoting Tompkins v. Central Laborers’ Pension
Fund, 712 F.3d 995, 999 (7th Cir. 2013).

-- 22 of 30 --

Nos. 25-1738 & 25-1872 23
Local 745. We have already discussed at length that the only
source for authority to expel Local 745 comes from the Trust
Agreement. In turn, the Trust Agreement provides few
constraints on how the Trustees should exercise their
expulsion authority and certainly none as demanding as
Penske contends. We do not see how these arguments could
meet the high bar required for reversal on deferential review.9
One further observation informs our skepticism. A plan
sponsor like Central States has no fiduciary duty to an
employer participating in its plan, even if it has such duties
toward plan participants and beneficiaries. 29 U.S.C.
§§ 1002(7), (8) & 1104(a)(1); accord, Board of Trustees of
Watsonville Frozen Food Welfare Trust Fund v. California
Cooperative Creamery, 877 F.2d 1415, 1418, 1422 (9th Cir. 1989)
(in a multiemployer plan, “no fiduciary duty” is owed to an
employer). A fiduciary may well be expected to put its
principal’s interests first and to make decisions with
reasonable diligence. See In re Marchiando, 13 F.3d 1111, 1115
(7th Cir. 1994). Without such a fiduciary relationship, Central
States has no obligation to let an employer minimize its
withdrawal liability, let alone at the expense of plan
participants and beneficiaries.
Central States and Penske are nothing more to each other
than two parties to a contract, each looking out for its own
best interests, and each entitled to do so. Their rights and
duties regarding each other are fixed by contracts. In those
9 At most, Penske cites an interrogatory response and a deposition
that each describe relevant factors that the Trustees may consider before
expelling an employer or a bargaining unit. Descriptions, however, are not
prescriptions, and they provide us little reason to reverse the Trustees’
decision on deferential review.

-- 23 of 30 --

24 Nos. 25-1738 & 25-1872
circumstances, Central States was not obliged to turn over
every stone before deciding to expel Local 745. Original Great
American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd.,
970 F.2d 273, 280 (7th Cir. 1992) (“Contract law does not
require parties to behave altruistically toward each other. …
That philosophy may animate the law of fiduciary obligations
but parties to a contract are not each other’s fiduciaries.”).
Penske also claims that Central States conducted a “sham”
investigation. How to tell? Because, from Penske’s
perspective, Central States had misrepresented the status of
its investigation before the district court. In a status
conference on November 29, 2021, Central States’ counsel said
that “staff of the pension fund is sort of still investigating and
looking into some facts surrounding the matter.” According
to Penske, this representation was false because the Trustees’
November 2021 board minutes did not indicate that Central
States was still collecting facts. The record suggests otherwise.
By the time of its December board meeting, Central States had
facts that it did not have in November. That, of course, says
little about any fact-gathering or investigative work that
Central States may have done internally.
We single out this argument, however, for a different
reason. Penske’s argument is, in essence, that Central States
lied to a court. An accusation of attorney wrongdoing—that
counsel had made a knowingly false statement in open
court—is a serious charge. Model Rules of Professional
Conduct r. 3.3 (ABA 2023). It is an accusation about someone’s
professional reputation, but here Penske has made the
accusation seemingly and only to aid its merits argument
without supporting evidence. Making this charge is not a play
to be called when a party is on its back foot. Penske and other

-- 24 of 30 --

Nos. 25-1738 & 25-1872 25
parties tempted by this approach should think twice before
making these kinds of arguments. See Malin v. Hospira, Inc.,
762 F.3d 552, 564–65 (7th Cir. 2014) (cautioning parties on
summary judgment to avoid misrepresenting the record and
opponent’s legal arguments).
IV. The Effective Withdrawal Date
We turn now to the final issue on appeal. In the district
court, Central States sought a declaration that the effective
withdrawal date of Local 745 was 2021, not 2022. The district
court dismissed Central States’ counterclaim, concluding that
the claim must first be arbitrated under 29 U.S.C. § 1401(a).
The counterclaim arises from this case’s unusual procedural
posture and Central States’ efforts to seek clarity. Though we
sympathize with Central States and see how immediate
consideration of the question might be more efficient, we
affirm the dismissal.
To understand Central States’ predicament, remember the
basic facts of this case. Central States sought to prevent Penske
from lining up the expiration dates of its ten collective-
bargaining agreements to enable a one-time complete
withdrawal from the plan in 2022. When negotiations failed,
Central States sought to terminate Local 745’s participation in
the plan in 2021. Before the termination was effective, the
district court issued a TRO that enjoined the termination.
Although the district court later vacated the TRO, it did so in
2022, the year in which Central States hoped there would not
be a withdrawal. Now, Central States wants the district court
to turn back the clock and set Local 745’s effective withdrawal
date as 2021.

-- 25 of 30 --

26 Nos. 25-1738 & 25-1872
The threshold problem with Central States’ strategy here
is that it comes too soon. 29 U.S.C. § 1401 requires the issue to
be arbitrated before it goes to a federal court: “Any dispute
between an employer and the plan sponsor of a
multiemployer plan concerning a determination made under
sections 1381 through 1399 [withdrawal liability] shall be
resolved through arbitration.”
Section 1401 is a mandatory exhaustion requirement.
Banner Industries, Inc. v. Central States, Southeast & Southwest
Areas Pension Fund, 875 F.2d 1285, 1288 n.2 (7th Cir. 1989);
Robbins v. Admiral Merchants Motor Freight, Inc., 846 F.2d 1054,
1056 (7th Cir. 1988) (“The arbitration requirement is not
viewed as a jurisdictional prerequisite but rather as an
administrative remedy exhaustion requirement.”). When a
statute requires exhaustion, we cannot consider claims that
have not yet traveled Congress’ approved path—which is,
here, arbitration. See Ross v. Blake, 578 U.S. 632, 639 (2016)
(“Congress sets the rules—and courts have a role in creating
exceptions only if Congress wants them to.”).10
10 Before the Supreme Court’s instructions in Ross, some courts
recognized exceptions to Section 1401’s mandate. E.g., Central States,
Southeast & Southwest Areas Pension Fund v. Slotky, 956 F.2d 1369, 1371–73
(7th Cir. 1992); I.A.M. Nat'l Pension Fund Benefit Plan C v. Stockton Tri
Industries, 727 F.2d 1204, 1210 (D.C. Cir. 1984); Republic Industries, Inc. v.
Central Pennsylvania Teamsters Pension Fund, 693 F.2d 290, 297–98 (3d Cir.
1982). Those other circuits have since characterized many of those
exceptions as “narrowly cabined.” Flying Tiger Line v. Teamsters Pension
Trust Fund of Philadelphia, 830 F.2d 1241, 1252 (3d Cir. 1987), quoting Grand
Union Co. v. Food Employers Labor Relations Ass'n, 808 F.2d 66, 68 (D.C. Cir.
1987). The Third Circuit has recently reaffirmed its view that Section 1401
is subject to “rare” exceptions. RTI Restoration Technologies, Inc. v. Int’l
Painters & Allied Trades Industry Pension Fund, 169 F.4th 140 (3d Cir. 2026).

-- 26 of 30 --

Nos. 25-1738 & 25-1872 27
The circumstances in this case pose no exception. The date
when withdrawal liability accrues is a quintessential question
for arbitration under Section 1401. E.g., Central States,
Southeast & Southwest Areas Pension Fund v. Bomar Nat’l, Inc.,
253 F.3d 1011, 1014 (7th Cir. 2001) (“The merits of the dispute
regarding withdrawal liability, including the date of its
incurrence, must be referred to arbitration.”); Robbins v. Lady
Baltimore Foods, Inc., 868 F.2d 258, 264 (7th Cir. 1989) (“[T]he
question of an employer’s withdrawal date from a pension
fund is one which is subject to mandatory arbitration under
29 U.S.C. § 1401(a)(1).”); Admiral Merchants, 846 F.2d at 1055
(“Congress clearly intended all withdrawal liability disputes,
including withdrawal date disputes, to be arbitrated.”);
Warner-Lambert Co. v. United Retail & Wholesale Employee's
Teamster Local No. 115 Pension Plan, 791 F.2d 283, 287–88 (3d
Cir. 1986) (affirming judgment that withdrawal-date dispute
must proceed to arbitration).
Getting to arbitration, as prescribed by Section 1401, and
later to federal court can be a lengthy process, not least
because it requires a plan sponsor to have made complicated
withdrawal liability calculations beforehand. The plan
sponsor (here, Central States, see 29 U.S.C. § 1002(16)(B))
must take the first crack at the withdrawal liability
assessment. See § 1382. Once it does so, the plan sponsor must
issue a notice and demand for payment of withdrawal
liability to the employer (here, Penske) “[a]s soon as
practicable” after the employer’s withdrawal. § 1399(b)(1). If
the employer wishes to contest the assessment, it must first
complain to the plan sponsor within 90 days. § 1399(b)(2)(A).
Given the strong language in Ross, however, we decline to find the case
before us is subject to such an exception.

-- 27 of 30 --

28 Nos. 25-1738 & 25-1872
If the disagreement still cannot be sorted out, either the plan
sponsor or the employer may initiate arbitration under
Section 1401(a)(1). Meanwhile, the employer is expected to
pay its installments of withdrawal liability based on the plan
sponsor’s calculations until the final decision of the arbitrator.
§ 1401(d). If arbitration is not helpful, then either party can
ask a federal court to weigh in on the dispute, reviewing
questions of law de novo and conclusions of fact deferentially.
§ 1401(b)(2); see Artistic Carton Co., 971 F.2d at 1348.
Central States has asserted this counterclaim before any of
this process has happened. Since April 2022, when the TRO
was vacated, there has been no withdrawal liability
assessment by Central States, no payment of withdrawal
liability, and no other discernible trigger that would begin
arbitration. The district court did not err by declining to take
up Central States’ question now.
To escape Section 1401’s mandatory exhaustion
requirement, Central States argues that because there has
been no “determination made” of withdrawal liability,
Section 1401 is not in play. We decline to interpret
Section 1401 to require a determination to have been finalized
for it to apply. This reading of the statute’s text would
threaten to hollow out the arbitration requirement altogether.
It is difficult to see why Congress would have built such an
easy loophole. If we were to adopt Central States’ position, the
result would be troubling. Employers would have an
incentive to race to enjoin plan sponsors before they assess
withdrawal liability, and plan sponsors would hang back
from making any assessment at all to keep the federal
courthouse doors open. That scenario is quite different from
what Section 1401 contemplates.

-- 28 of 30 --

Nos. 25-1738 & 25-1872 29
Nor can Central States avoid arbitration by characterizing
its claim as having to do with contributions and not
withdrawal liability. Central States received money from
Penske between December 25, 2021 (when Central States
planned for Local 745’s termination) and March 26, 2022
(before the TRO was vacated). Now, Central States says that
it wants to know how to treat that money and “to what extent
Penske’s employees are entitled to pension credit” in that
post–December 25 period. But Central States’ request for
declaratory relief here can be rephrased in a much simpler
way: It wishes to know when Penske’s obligation to
contribute ended. That is a withdrawal question. See 29 U.S.C.
§ 1385(a)(2) (defining partial withdrawal as “a partial
cessation of the employer’s contribution obligation”).11
Central States’ strongest argument is rooted in the
unusual procedural posture of this case. Because the
expulsion was put on hold by a now-vacated court order,
Central States believes the district court, rather than an
arbitrator, is better positioned to interpret its own order. On a
blank slate, this argument might have more force. As we have
described, however, the parties and we are hemmed in by
Section 1401’s mandate of arbitration. Arbitration has not
11 Central States criticizes the district court for relying on Central
States, Southeast & Southwest Areas Pension Fund v. Rail Terminal Services
LLC, No.18-cv-2372, 2019 WL 2326002, at *2 (N.D. Ill. May 31, 2019). We
find no error in the district court’s use of Rail Terminal as persuasive
authority. In that case, the district court similarly found that Central
States’ claim would, in essence, require the court to determine an
employer’s withdrawal date, even if Central States had styled the claim
differently. Rail Terminal, 2019 WL 2326002, at *3.

-- 29 of 30 --

30 Nos. 25-1738 & 25-1872
happened, so no court can hear Central States’ counterclaim
now.
That is enough to end our analysis. We may be tempted
under these circumstances to take into account equitable
considerations (as we may in judge-made exhaustion
doctrines, Ross, 578 U.S. at 639), but they would not be of
much help. The MPPAA promises Central States and Penske
their day in court—they will simply have to follow the
winding path through arbitration before going to court.
In sum, the district court was correct to dismiss Central
States’ counterclaim as not yet ripe. Before we can hear the
dispute over the date of withdrawal in federal court, the
parties must proceed to arbitration. Central States must
naturally take all the steps necessary to do so.
* * *
We AFFIRM the district court’s grant of summary
judgment for Central States and its dismissal without
prejudice of Central States’ counterclaim for arbitration. We
REMAND this case for further proceedings on attorney fee
issues and any other appropriate matters consistent with this
opinion. We DENY Central States’ request that we instruct the
district judge to retain its jurisdiction for a later case.

-- 30 of 30 --