The Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA") ordinarily requires employers who withdraw from multi-employer pension plans to pay "withdrawal liability" if the plan from which the employer withdraws is underfunded. Employers can satisfy their obligation to pay for their withdrawal liability by making installment payments pursuant to a schedule set up by the plan trustees. Upon an employer's failure to pay pursuant to that schedule, the trustees may invoke a statutory acceleration procedure. Moreover, plan fiduciaries may sue to collect the unpaid debt within the longer of "6 years after the date on which the cause of action arose" or "3 years after the earliest date on which the plaintiff acquired or should have acquired actual knowledge of the existence of such cause of action."
Bay Area Laundry and Dry Cleaning Pension Trust Fund, a multiemployer pension fund, sued Ferbar Corporation to recover withdrawal liability payments. Ferbar withdrew from the Fund in March, 1985. The Fund demanded payment on December 12, 1986, and set a monthly payment schedule to commence on February 1, 1987. Ferbar never made any payments pursuant to the schedule. Accordingly, the Fund filed suit to recover the full amount of Ferbar's withdrawal liability on February 9, 1993 more than eight years after Ferbar withdrew from the Fund, more than six years after the Fund first demanded payment, more than six years after the first payment was due, but less than six years after each subsequent payment came due.
The District Court granted Ferbar's Motion For Summary Judgment, holding that, under the MPPAA's six-year statute of limitations, the Fund had commenced suit eight days too late, because its cause of action accrued when Ferbar missed its first payment on February 1, 1987. The Ninth Circuit affirmed, but held that the cause of action accrued in March 1985, when Ferbar withdrew from the Fund.
A unanimous Supreme Court reversed, holding that (1) the six-year statute of limitations did not begin to run until Ferbar missed its first payment pursuant to the schedule set by the Fund; and (2) each missed payment gave rise to a separate cause of action, with its own, separate limitations period, and therefore the Fund's action was time-barred only as to the first payment. The Court rejected the Ninth Circuit's holding that the statute of limitations began to run when the employer withdraws from the Fund because, although it is designed to discourage employer withdrawal, the MPPAA does not prohibit it. Therefore, the Fund had no cause of action against Ferbar when it withdrew from the Fund; its cause of action arose only when Ferbar failed to make required withdrawal liability payments. The Court's decision also resolved a conflict between the Third and Seventh Circuits as to whether the statute of limitations runs as to all payments when the employer fails to make the first required payment: the Court held that the MPPAA statutory scheme creates an installment obligation, and that each failure to pay creates a separate cause of action with its own, independent statute of limitations period.