A Pyrrhic Victory? Prevailing Employer Fee Awards in Withdrawal Liability Cases

A recent decision from a federal district court in New Jersey confirms a difficult reality for employers that prevail in withdrawal liability litigation: more often than not, success on the merits does not result in recovery of attorneys’ fees. In Allied Painting & Decorating, Inc. v. International Painters & Allied Trades Industry Pension Fund, 2026 U.S. Dist. LEXIS 228343 (D.N.J. October 5, 2026), District Judge Robert Kirsch adopted the magistrate judge’s recommendation and rejected Allied’s effort to recover approximately $420,000 in fees and costs, despite Allied’s successful challenge to a withdrawal liability arbitration award and affirmance in the Third Circuit.

Allied Painting is another case illustrating the too-high bar some courts impose on prevailing employers to recover fees incurred defending against an assessment of withdrawal liability. In fact, over the years multiple courts, particularly the Third Circuit, have held prevailing employers to a materially different standard unwarranted by the neutral wording of the statute. In practice, this sometimes precludes employers from pursuing meritorious defenses and prevents employers who do successfully defend themselves from recovering any portion of their fees.

Allied’s Merits Victory

The case arose from the pension fund’s assessment of $427,195 in withdrawal liability associated with Allied’s alleged 2005 withdrawal. The fund waited roughly twelve years to notify Allied of the asserted liability. The dispute proceeded to arbitration, where the arbitrator upheld the assessment, finding that although the fund had not issued the assessment “as soon as practicable” after the withdrawal as required by the Multiemployer Pension Plan Amendments Act (MPPAA), Allied was not prejudiced by the 12-year delay.

The MPPAA allows “any party” to bring an action in a district court “in accordance with section 1451” of the statute “to enforce, vacate, or modify the arbitrator’s award,” 29 U.S.C. § 1401(b)(2), and Allied did so. The district court upheld Allied’s challenge and vacated the arbitration award, disagreeing with the arbitrator on the prejudice issue. On appeal, the Third Circuit affirmed, finding the fund had failed to comply with the MPPAA’s independent requirement that a plan assess its withdrawal liability claim “as soon as practicable,” whether or not prejudice results.

The Fee Dispute

After its victory, Allied sought its attorney’s fees under 29 U.S.C. § 1451(e), which permits a court to award reasonable fees and costs “to the prevailing party.” That statute draws no distinction between employers or funds, and gives no indication that prevailing employers should be held to a higher standard; instead, it states simply:

In any action under this section, the court may award all or a portion of the costs and expenses incurred in connection with such action, including reasonable attorney’s fees, to the prevailing party.

Despite the statute’s neutral language, forty years ago the Third Circuit construed section 1451 as establishing a materially higher standard for prevailing employers to recover attorney’s fees. Dorn Transportation, Inc. v. Teamsters Pension Trust Fund of Philadelphia & Vicinity, 799 F.2d 45 (3d Cir. 1986). Under Dorn, an employer may recover fees only if the pension fund’s position was “frivolous, unreasonable, or without foundation.” The Court based its troubling non-textual standard on its stated “belie[f] that Congress intended that attorneys’ fees only rarely should be awarded to prevailing employers under MPPAA, but that they should be awarded quite freely to prevailing plans[.]” Dorn, 799 F.2d at 50, n. 7.

Judge Kirsch properly held that Dorn controlled, but the more interesting question is whether Dorn’s policy-driven outcome can override the plain text of the statute. Dorn declares that “even a neutrally-worded fee statute does not necessarily have an identical application to every prevailing party,” which led the Third Circuit to examine “equitable considerations” before adopting a higher standard for prevailing employers. Id. at 49. The Court’s analysis of those considerations all but ignored the statutory text and instead focused on policy reasons one might assume Congress considered before drafting the statutory language.

For example, Dorn asserted that because “[t]he policy underlying the MPPAA is… the protection and strengthening of pension plans,” a “liberal attorneys’ fees policy for plans would thus be understandable.” Dorn, 799 F.2d at 49. On the other hand, the Court opined that employers “are not acting as instruments for carrying out the congressional policy of strengthening plans,” and so did not need the “encourage[ment]” of attorneys’ fees “to resist withdrawal liability,” because the huge amount usually at stake “is sufficient incentive in itself.” Id. The Court further asserted that because a losing plan was merely “an entity that was attempting, however misguidedly, to enforce federal law,” a “liberal standard for awarding fees to prevailing employers may in fact undermine the purpose of MPPAA” as it “could deter pension plans from bringing suits to recover withdrawal liability.” Id.

Of course, one might suppose that by affording a court the discretion to award “all or a portion” of the costs and fees to any prevailing party, including employers, Congress meant to deter pension funds from bringing, and to protect employers forced to defend against, non-meritorious claims for withdrawal liability. In any event, Dorn’s purpose-driven rationale begs the question and places a huge thumb on the scale against employers not warranted by the statutory text.

Conclusion

That a plan can force an employer to spend $420,000 defending against a fund’s 12-years-too-late claim of $427,195 with virtually no chance of recovering even a portion of its costs and fees recalls the famous quote of Pyrrhus after the Battle of Asculum: “If we are victorious in one more battle with the Romans, we shall be utterly ruined!” The result in Allied Painting may have been foreordained by Dorn, but that merely demonstrates that Dorn itself is due for a meaningful second look.