Corporate Misconduct Accountability Project
Borden Dairy Company of Ohio, LLC · Multiemployer Pension Withdrawal Liability Collection Suit
Borden Dairy Defaulted on $40M Pension Liability, Left Workers Hanging
After withdrawing from a multiemployer pension plan, Borden entities settled for reduced payments, then filed bankruptcy and stopped paying entirely. The pension fund is now chasing affiliated companies to recover tens of millions owed to retirees.
CRITICAL SEVERITY
TL;DR
When Borden Dairy withdrew from the Central States Pension Fund in 2014, it owed $41.6 million in unfunded pension obligations. After arbitration started, the parties settled for lower monthly payments of $183,225. Borden paid for several years, then filed bankruptcy in January 2020 and ceased payments entirely, leaving the fund with only $128,576 from bankruptcy proceedings. Now the pension fund is suing Borden’s corporate affiliates under joint liability rules, fighting through the courts to recover money that retirees depend on.
See how corporate bankruptcy can leave workers’ pensions in jeopardy.
$41.6M
Original pension withdrawal liability owed by Borden
$199,647
Original monthly payment Borden owed (240 payments)
$183,225
Reduced monthly payment after settlement (2016)
$128,576
Total recovered by pension fund from Borden bankruptcy
The Allegations: A Breakdown
Core Allegations
What they did · 6 points
| 01 | Borden Dairy withdrew from the Central States Pension Fund in November 2014, triggering a $41.6 million liability for unfunded vested pension benefits. The Fund demanded 240 monthly payments of $199,647.14 each to cover its proportional share of the pension shortfall. | high |
| 02 | Borden disputed the calculation and started arbitration in 2015. Before the arbitrator issued a final award, Borden and the Fund settled privately in August 2016, reducing monthly payments to $183,225 and dismissing the arbitration with prejudice. | medium |
| 03 | Borden made the reduced payments for several years, then filed for bankruptcy in January 2020 and stopped paying entirely. The pension fund recovered only $128,576.22 from the bankruptcy, less than one month’s payment. | high |
| 04 | The Fund alleges that multiple corporate affiliates, including Laguna Dairy, LALA Branded Products, Farmland Dairies, and others, were under common control with Borden and are jointly liable for the unpaid pension debt under federal law. | high |
| 05 | The affiliated companies refused to pay, forcing the Fund to sue in federal court to enforce the settlement and collect tens of millions in pension obligations from the corporate group. | high |
| 06 | During Borden’s bankruptcy, two affiliates (Laguna and New Laguna) settled separately with the debtor to be released from indemnifying Borden’s pension liability. The pension fund was not party to that agreement and reserved its rights to pursue the affiliates directly. | medium |
Regulatory Failures
How the system enabled this · 5 points
| 01 | The Multiemployer Pension Plan Amendments Act requires disputes to go through arbitration before court enforcement. Borden started arbitration but settled mid-process, creating a procedural gap that let affiliates argue the Fund had no right to sue. | high |
| 02 | The District Court initially dismissed the Fund’s case, ruling that the statute does not provide a cause of action to enforce private settlement agreements reached during arbitration. This left the pension fund without a clear legal path for two years. | high |
| 03 | Federal pension law allows commonly controlled companies to be held jointly liable, but tracking and enforcing obligations across multi-state corporate groups is complex and time-consuming. By the time the Fund identified the affiliates, Borden had already filed bankruptcy. | medium |
| 04 | The Third Circuit had to interpret whether a settlement functions as a revised withdrawal liability assessment under Section 1401(b)(1). The ambiguity in the statute created years of litigation and uncertainty for retirees waiting for their benefits. | medium |
| 05 | Bankruptcy law allowed Borden to restructure and discharge obligations, effectively shielding most assets from the pension claim. The pension fund was treated as an unsecured creditor and received minimal recovery. | high |
Profit Over People
Corporate priorities exposed · 5 points
| 01 | Borden faced monthly pension obligations approaching $200,000 for 20 years, totaling over $40 million. Corporate decision-makers chose to withdraw from the plan rather than maintain full funding commitments to workers’ retirement security. | high |
| 02 | After negotiating a reduced settlement, Borden made payments until financial pressure mounted, then filed bankruptcy and ceased all pension contributions. The timing suggests pension obligations were seen as expendable when profits tightened. | high |
| 03 | Multiple profitable affiliates remained in operation under the same corporate control structure. None stepped forward voluntarily to cover the pension shortfall, forcing the Fund to pursue costly litigation to enforce joint liability. | high |
| 04 | The settlement agreement referenced the broader controlled group but was signed only by Borden entities. This corporate structure created ambiguity that affiliates later exploited to argue they were not bound, prioritizing legal defenses over worker welfare. | medium |
| 05 | The bankruptcy distributed minimal funds to the pension creditor while allowing other corporate restructuring. This demonstrates how bankruptcy can be used strategically to shed long-term worker obligations while preserving business operations. | high |
Economic Fallout
The ripple effects · 5 points
| 01 | Thousands of retirees depend on the Central States Pension Fund for retirement income. When Borden defaulted on tens of millions in obligations, it threatened the fund’s ability to pay full benefits to workers who spent decades contributing. | high |
| 02 | The Fund recovered only $128,576 from bankruptcy, a fraction of the monthly payment Borden originally owed. This massive shortfall forces the pension plan to either reduce benefits, increase contributions from remaining employers, or face insolvency. | critical |
| 03 | Retirees facing reduced pension checks must tighten household budgets, harming local economies where they spend money on groceries, healthcare, and services. The economic pain radiates beyond the workers themselves. | medium |
| 04 | The multi-year legal battle to enforce payment drains resources from the pension fund, diverting dollars that could pay benefits into attorney fees and court costs. Every year of delay compounds the financial strain on retirees. | medium |
| 05 | If the Fund cannot collect from the affiliates, it may need emergency intervention from the Pension Benefit Guaranty Corporation, which would shift the burden to taxpayers and other pension plans nationwide. | high |
Worker Exploitation
Who paid the price · 5 points
| 01 | Multiemployer pension plans like Central States are formed through collective bargaining between unions and employers. Workers negotiated these benefits in lieu of higher wages, trusting that employers would honor long-term commitments. | high |
| 02 | When Borden withdrew and then defaulted, it broke that trust. Workers who spent careers in physically demanding dairy industry jobs now face uncertainty about whether they will receive the retirement security they earned. | high |
| 03 | The typical participants in multiemployer plans are truck drivers, warehouse workers, and plant employees who lack executive compensation or stock options. They depend entirely on promised pensions for retirement dignity. | medium |
| 04 | Corporate bankruptcy and legal maneuvering mean workers wait years for resolution while executives and shareholders often restructure and move on. The power imbalance leaves the most vulnerable bearing the heaviest burden. | high |
| 05 | Even if the court ultimately orders the affiliates to pay, the delay and litigation risk mean workers live with anxiety about their financial future. Many retirees cannot afford to wait for legal processes that can take a decade. | medium |
Community Impact
Local lives undermined · 5 points
| 01 | When pension benefits are cut or delayed, retirees reduce spending in their communities. Local businesses, from pharmacies to restaurants, lose customers as seniors tighten their budgets to make ends meet. | medium |
| 02 | Municipalities lose sales tax revenue when retirees have less disposable income. This can force cuts to public services, libraries, and infrastructure that affect everyone in the community. | medium |
| 03 | Communities with large numbers of pension-dependent retirees face strain on social services. When corporate defaults leave seniors short, local food banks, heating assistance programs, and healthcare subsidies must fill the gap. | medium |
| 04 | The closure or reorganization of dairy operations can devastate rural and working-class towns where these facilities serve as economic anchors. Job losses and pension defaults create a downward spiral that is hard to reverse. | high |
| 05 | Trust in employer promises erodes when cases like Borden’s become public. Younger workers see that decades of contributions can evaporate through corporate maneuvers, undermining confidence in the retirement system itself. | medium |
Corporate Accountability Failures
Who is responsible · 5 points
| 01 | Despite federal law making commonly controlled entities jointly liable, the pension fund faced years of procedural obstacles to enforce that liability. The District Court dismissed the case, requiring appellate intervention to establish the Fund’s right to sue. | high |
| 02 | Corporate affiliates argued they were not bound by the settlement because they did not sign it, even though federal law treats the entire controlled group as a single employer. This legal maneuvering delayed justice and drained fund resources. | high |
| 03 | The Third Circuit ultimately ruled in favor of the pension fund in March 2025, but by then more than a decade had passed since Borden’s withdrawal. The pace of legal accountability fails to match the urgency of retirees’ needs. | high |
| 04 | No executives faced personal liability for the default. The corporate veil and bankruptcy protections shielded individual decision-makers from consequences, even as thousands of workers suffered financial harm. | high |
| 05 | The case reveals that current pension enforcement mechanisms are inadequate. Even when the law is clear, employers can exploit procedural complexities to delay or avoid payment for years or permanently. | critical |
The PR Machine
Spin and deflection · 4 points
| 01 | Corporate defendants portrayed the dispute as a technical disagreement over legal procedure rather than a moral failure to honor worker pensions. This framing obscures the human cost of their actions. | medium |
| 02 | The complexity of multiemployer pension law allows corporations to hide behind legal jargon and procedural arguments. Media coverage often focuses on the legal technicalities rather than the retirees facing benefit cuts. | medium |
| 03 | Multiple name changes and corporate restructurings, such as Laguna Dairy’s conversion from S.A. de C.V. to S. de R.L. de C.V., make it harder for the public and regulators to track responsibility and ownership. | low |
| 04 | During bankruptcy, companies issue reassuring statements about their commitment to stakeholders while simultaneously seeking court approval to discharge pension obligations. The disconnect between rhetoric and action is stark. | medium |
Wealth Disparity
Who wins, who loses · 4 points
| 01 | Corporate executives and shareholders can restructure, reorganize, or sell assets to protect their wealth while pension obligations are discharged in bankruptcy. The wealth gap between owners and workers becomes painfully visible. | high |
| 02 | Retirees who depend on pension checks of a few thousand dollars per month face catastrophic harm when payments are cut or delayed. Meanwhile, corporate entities with millions in annual revenue litigate for years to avoid paying. | high |
| 03 | The pension fund’s pursuit of affiliated companies reveals a corporate structure designed to diffuse liability. Profitable entities operate behind layers of corporate separation, insulating wealth from the obligations of bankrupt affiliates. | medium |
| 04 | Legal fees and court costs drain pension assets that could pay retiree benefits. Every dollar spent fighting corporate defendants is a dollar not going to workers, widening the wealth disparity further. | medium |
Exploiting Delay
Time as a weapon · 5 points
| 01 | Borden started arbitration in 2015 but settled in 2016 without a final award, creating procedural ambiguity. This delay tactic forced the Fund to restart legal processes years later when payments stopped. | medium |
| 02 | The District Court dismissed the case in 2023, requiring the Fund to appeal. The appellate process took until March 2025 for resolution, adding more than two years of delay during which retirees received no relief. | high |
| 03 | Corporate defendants argued extensively that the settlement did not meet statutory notice requirements, forcing the court to parse technical provisions of Section 1399(b). Each procedural argument buys time and drains fund resources. | medium |
| 04 | The bankruptcy filing in 2020 imposed an automatic stay on collection efforts, freezing the Fund’s ability to pursue payment during the restructuring. This is a common corporate tactic to pause obligations indefinitely. | high |
| 05 | Even with the Third Circuit’s favorable ruling, the case now returns to the District Court for further proceedings. Full collection of the pension debt could take additional years, leaving retirees in limbo. | high |
The Bottom Line
What this means for workers everywhere · 5 points
| 01 | The Borden case is not an isolated incident. It exemplifies how corporate bankruptcy and legal complexity can let employers escape pension obligations while workers and communities pay the price. | critical |
| 02 | Current pension law, even with good intentions, allows employers to delay and dilute enforcement for years. Regulatory reform is urgently needed to close loopholes and accelerate accountability. | high |
| 03 | Multiemployer pension plans are critical for millions of American workers, especially in blue-collar industries. When employers can walk away from these obligations, the entire retirement system is destabilized. | high |
| 04 | Workers negotiated pension benefits in good faith, often accepting lower wages in exchange for retirement security. Corporate defaults on these promises represent a breach of the social contract. | high |
| 05 | The Third Circuit’s ruling gives the pension fund a path forward, but the broader lesson is clear: without stronger enforcement mechanisms and faster legal processes, corporate misconduct will continue to harm vulnerable retirees. | critical |
Timeline of Events
November 2014
Borden Dairy Company of Ohio and Borden Transport Company of Ohio withdraw from the Central States Pension Fund, triggering withdrawal liability.
January 2015
The Fund notifies Borden of $41.6 million in withdrawal liability, demanding 240 monthly payments of $199,647.14.
March 2015
Borden requests review of the assessment, disputing a computational error in the Fund’s calculation.
2015
Borden initiates arbitration under the Multiemployer Pension Plan Amendments Act to contest the liability amount.
August 2016
Borden and the Fund enter a settlement agreement reducing monthly payments to $183,225. Borden waives further arbitration rights and agrees to dismiss the arbitration with prejudice.
2016-2019
Borden makes the agreed monthly payments of $183,225 to the pension fund under the settlement terms.
January 2020
Borden Dairy Company of Ohio and Borden Transport Company of Ohio file for Chapter 11 bankruptcy in the District of Delaware and cease making pension payments.
2020
During bankruptcy proceedings, Laguna Dairy and New Laguna settle separately with the debtors to be released from indemnification obligations for the pension liability. The Fund is not party to this agreement.
Bankruptcy Conclusion
The Fund recovers only $128,576.22 toward the withdrawal liability from bankruptcy distributions, a fraction of the amount owed.
August 2022
The Fund files suit in the U.S. District Court for the District of Delaware against commonly controlled affiliates of Borden, seeking to enforce the pension liability.
November 2023
The District Court grants the Related Employers’ motion to dismiss under Rule 12(b)(6), ruling the Fund lacks a statutory cause of action to enforce the settlement agreement.
December 2023
The Fund appeals the dismissal to the U.S. Court of Appeals for the Third Circuit.
September 2024
Oral arguments are held before the Third Circuit on the Fund’s appeal.
March 27, 2025
The Third Circuit issues a precedential opinion reversing the District Court’s dismissal, holding that the settlement is a revised withdrawal liability assessment and the Fund has a cause of action under Section 1401(b)(1).
March 2025
The case is remanded to the District Court for further proceedings, allowing the Fund to pursue collection from the affiliates.
Direct Quotes from the Legal Record
QUOTE 1
Original withdrawal liability amount
allegations
“the Fund, pursuant to 29 U.S.C. §§ 1382(2) and 1399(b)(1), sent them a notice and demand for payment of withdrawal liability in January 2015 for approximately $41.6 million, or 240 monthly payments of $199,647.14.”
💡 This shows the massive scale of pension obligations that Borden owed to retirees after withdrawing from the fund.
QUOTE 2
Settlement reduced liability
allegations
“the Borden Ohio entities and the Fund entered a settlement agreement in August 2016. It reduced the monthly payment to $183,225.00.”
💡 The settlement lowered Borden’s obligation by about $16,000 per month, demonstrating how negotiation can reduce corporate liabilities even when workers depend on full funding.
QUOTE 3
Bankruptcy and payment cessation
allegations
“The Borden Ohio entities made the agreed monthly payments until they petitioned for bankruptcy in the United States Bankruptcy Court for the District of Delaware in January 2020.”
💡 Borden paid for several years, then filed bankruptcy and stopped, leaving retirees without the pension funding they were promised.
QUOTE 4
Minimal recovery from bankruptcy
economic
“The Fund received $128,576.22 toward the withdrawal liability from the bankruptcy distributions.”
💡 The fund recovered barely more than a half month’s payment from bankruptcy, showing how bankruptcy shields corporations from pension obligations.
QUOTE 5
Joint liability of affiliates
allegations
“all the Related Employers allegedly were under common control with them. … Companies under common control can be held jointly and severally liable for withdrawal payments under the MPPAA. 29 U.S.C. § 1301(b)(1)”
💡 Federal law makes all commonly controlled companies responsible for pension debts, but enforcement is complex and often requires years of litigation.
QUOTE 6
Affiliates refused payment
accountability
“It then sent past-due notices to the non-bankrupt entities under common control with the Borden Ohio entities (namely the Related Employers) who did not make any payments.”
💡 The affiliated companies refused to step up voluntarily, forcing the pension fund to sue and drain resources on legal fees.
QUOTE 7
District Court dismissal
regulatory
“The District Court granted the Related Employers’ motion to dismiss under Rule 12(b)(6) in November 2023. It ruled that ‘the MPPAA does not provide a statutory cause of action to enforce a private settlement agreement.'”
💡 The initial dismissal left the pension fund with no legal remedy for two years, showing how procedural technicalities can block justice for workers.
QUOTE 8
Third Circuit reversal
accountability
“We therefore reverse the District Court’s order dismissing the Fund’s suit under Federal Rule of Civil Procedure 12(b)(6) and remand the case for further proceedings.”
💡 The appellate court reversed the dismissal in 2025, finally giving the pension fund a path to enforce the debt after more than a decade of dispute.
QUOTE 9
Settlement as revised assessment
regulatory
“the settlement agreement is properly understood under the MPPAA as a revision to the withdrawal liability assessment.”
💡 This legal determination allows the fund to sue under the statute, but the years of ambiguity show how unclear pension law creates enforcement gaps.
QUOTE 10
Statute’s purpose to protect solvency
regulatory
“Congress enacted the MPPAA in 1980 to amend the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., increasing the protection of plans ‘when individual employers terminate their participation in, or withdraw from, multiemployer plans’ with unfunded liabilities to pensioners.”
💡 Congress created this law specifically to protect workers from employer defaults, yet cases like Borden show the law is inadequate to prevent harm.
QUOTE 11
Statutory goal of timely collection
regulatory
“Given the strong preference the MPPAA establishes for the collection of withdrawal liability in a manner that protects the solvency of multiemployer plans, a fund must be able to revise an assessment of withdrawal liability, within a reasonable period of time, if it discovers that it has undercharged an employer.”
💡 Courts recognize the law intends quick collection to keep pension plans solvent, but in practice enforcement takes many years and drains plan assets.
QUOTE 12
Arbitration requirement creates delays
regulatory
“Any dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under sections 1381 to 1399 of this title shall be resolved through arbitration.”
💡 Mandatory arbitration can delay resolution when parties settle mid-process without an award, as happened here, leaving enforcement unclear.
QUOTE 13
Settlement waived arbitration rights
delay_tactics
“The Borden Ohio entities waived any right to request review or to initiate arbitration and agreed to dismiss the existing arbitration with prejudice.”
💡 Borden gave up arbitration rights in the settlement, but this created procedural confusion that later let affiliates argue the fund had no right to sue.
QUOTE 14
Bankruptcy settlement excluded fund
accountability
“Laguna and New Laguna ultimately released and waived their claims in a settlement relating to that account in exchange for their release from the obligation to indemnify the debtors for their withdrawal liability to the Fund. Although the Fund participated in other aspects of the bankruptcy cases, it was not a party to that agreement.”
💡 Affiliates cut side deals during bankruptcy to shield themselves from pension liability without the fund’s consent, showing how corporate insiders protect each other.
QUOTE 15
Fund reserved collection rights
allegations
“In fact, it explicitly reserved its rights to seek payment for the withdrawal liability from non-bankrupt entities.”
💡 The fund tried to preserve its legal rights during bankruptcy, but even explicit reservations require years of litigation to enforce.
Frequently Asked Questions
What did Borden Dairy do wrong?
Borden withdrew from a multiemployer pension plan in 2014, triggering a $41.6 million obligation to fund retiree benefits. After settling for reduced payments in 2016, Borden paid for a few years, then filed bankruptcy in 2020 and stopped paying entirely. The pension fund recovered only $128,576 from bankruptcy, leaving tens of millions unpaid.
How much money did Borden owe the pension fund?
Borden originally owed approximately $41.6 million, to be paid in 240 monthly installments of $199,647.14. After a 2016 settlement, the monthly payment dropped to $183,225, but Borden still owed roughly $40 million over the life of the agreement.
Why is the pension fund suing other companies?
Federal pension law treats commonly controlled companies as a single employer. The fund alleges that Laguna Dairy, LALA Branded Products, Farmland Dairies, and other affiliates were under the same corporate control as Borden, making them jointly and severally liable for the unpaid pension debt.
What happened in the bankruptcy?
Borden filed for Chapter 11 bankruptcy in January 2020. The pension fund was treated as an unsecured creditor and recovered only $128,576.22 from the bankruptcy estate, less than a single month’s payment. Meanwhile, some affiliates made separate deals to release themselves from indemnification obligations.
Did the court rule in favor of the pension fund?
Yes, eventually. The District Court initially dismissed the case in 2023, but the Third Circuit Court of Appeals reversed that decision in March 2025. The appellate court held that the settlement is a revised withdrawal liability assessment and the fund can sue the affiliates under federal pension law. The case now returns to the District Court for further proceedings.
How does this affect retirees?
When employers default on pension obligations, the pension fund has less money to pay benefits. Retirees who depend on these checks for basic living expenses face the risk of reduced payments or plan insolvency. Even if the fund eventually collects from the affiliates, years of delay cause financial uncertainty and hardship for seniors.
Why did it take so long to resolve this case?
Borden withdrew in 2014, settled in 2016, and filed bankruptcy in 2020. The fund sued in 2022, the District Court dismissed in 2023, and the Third Circuit reversed in March 2025. Complex federal pension law, procedural disputes about arbitration and settlement enforcement, and multiple parties all contributed to the decade-long timeline.
Can corporations use bankruptcy to avoid pension obligations?
Yes, bankruptcy law allows companies to reorganize or discharge debts, including pension liabilities. Pension funds are often unsecured creditors and recover little or nothing. This case shows how corporate bankruptcy can leave workers and retirees bearing the financial loss while business operations continue under restructured ownership.
What are the loopholes that let this happen?
Federal pension law is complex and relies on arbitration and procedural steps that can be exploited. When Borden settled mid-arbitration without a final award, it created ambiguity about enforcement. Corporate structures with multiple affiliates spread across states make it hard for pension funds to quickly identify and hold responsible parties accountable.
What can workers and retirees do?
Workers and retirees can support legislative reforms to strengthen pension enforcement, close bankruptcy loopholes, and impose faster timelines for liability collection. They can also organize through unions and advocacy groups to demand transparency in corporate structures and hold companies publicly accountable for pension defaults. Contacting elected representatives about pension protection is critical.
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