Tsareff v. ManWeb Servs., Inc.
| Decision Date | 27 July 2015 |
| Docket Number | No. 14–1618.,14–1618. |
| Citation | 794 F.3d 841 |
| Parties | James TSAREFF, et al., Plaintiffs–Appellants, v. MANWEB SERVICES, INC., Defendant–Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Rachel Renee Parisi, Ledbetter Parisi Sollars, LLC, Miamisburg, OH, for Plaintiffs–Appellants.
James Harold Hanson, James T. Spolyar, Scopelitis, Garvin, Light, Hanson & Feary, P.C., Indianapolis, IN, for Defendant–Appellee.
Before BAUER, ROVNER, and WILLIAMS, Circuit Judges.
Plaintiff-appellant, Indiana Electrical Pension Benefit Plan (“Plan”), through its trustee, James Tsareff, brings this action to collect withdrawal liability from defendant-appellee, ManWeb Services, Inc. (“ManWeb”), under the Employee Retirement Income Security Act (“ERISA”), as amended by the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C. §§ 1001 –1461. The Plan argues that ManWeb is responsible for the withdrawal liability incurred by Tiernan & Hoover, certain assets of which ManWeb acquired through an asset sale, under a theory of successor liability. The Plan appeals the district court's grant of judgment as a matter of law to ManWeb and denial of the Plan's motion for summary judgment. For the reasons that follow, we reverse.
ManWeb is an Indianapolis-based company that performs engineering, construction, and installation-related services. In August 2009, ManWeb entered into an asset purchase agreement (“APA”) with Tiernan & Hoover, another Indianapolis-based electrical contractor that performed engineering, construction, and service for cold storage facilities under the trade name, “The Freije Company.” Unlike ManWeb, a nonunion employer, Tiernan & Hoover was party to a collective bargaining agreement (“CBA”) with IBEW Local 481 Union (“Union”), in accordance with which it made contributions to the Plan, a multiemployer pension fund. As a result of the asset purchase, Tiernan & Hoover ceased operations and no longer had an obligation to contribute to the Plan. Although ManWeb continued to do the same type of work in the jurisdiction of the CBA for which contributions were previously required of Tiernan & Hoover, ManWeb did not make any contributions to the Plan following its purchase of Tiernan & Hoover's assets.
On February 24, 2010, counsel for the Plan sent a letter addressed to “The Freije Company” to Tiernan & Hoover's former Indianapolis address, indicating that it had determined that the company had effectuated a complete withdrawal from the Plan in August 2009 and that, pursuant to § 4202 of ERISA, the Plan had assessed withdrawal liability against Tiernan & Hoover. The letter indicated that Tiernan & Hoover owed $661,978.00 in withdrawal liability, which could be satisfied in one lump sum payment or in nineteen quarterly payments, commencing within sixty days of the company's receipt of the letter. Pursuant to a mail forwarding instruction, the letter was forwarded to ManWeb's address at 9211 Castlegate Drive, Indianapolis, Indiana 46256, where it was received and signed for by a ManWeb employee. Nevertheless, no payments were ever made to satisfy this liability; further, Tiernan & Hoover never sought review of the withdrawal liability assessment or initiated arbitration, despite the availability of both options under the statute. 29 U.S.C. §§ 1399(b)(2)(A) and 1401(a)(1). Pursuant to the statute, the assessment against Tiernan & Hoover became due and owing after its failure to request review and initiate arbitration within the statutory deadline. 29 U.S.C. § 1401(b)(1).
As a result of Tiernan & Hoover's failure to make withdrawal payments, the Plan filed a collection action in federal court against Tiernan & Hoover pursuant to 29 U.S.C. §§ 1132(e) and (f), and 1451(c). The Plan added ManWeb as a defendant under a theory of successor liability. At the close of discovery, the parties filed cross-motions for summary judgment. The district court granted the Plan's motion in part, finding that Tiernan & Hoover had waived its right to dispute the assessment of withdrawal liability by failing to initiate arbitration proceedings and, therefore, owed the full amount of the assessment. However, with respect to the Plan's claim of successor liability against ManWeb, the district court held that ManWeb was not liable to the Plan and granted ManWeb's motion for judgment as a matter of law. This appeal followed.
The Plan argues on appeal that the district court erred in granting ManWeb judgment as a matter of law and denying the Plan's motion for summary judgment. We review this decision de novo. McDougall v. Pioneer Ranch Ltd. P'ship, 494 F.3d 571, 575 (7th Cir.2007). Summary judgment is proper only when the record demonstrates that there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c) ; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where, as here, the district court was faced with cross-motions for summary judgment, our review requires that we construe all facts and inferences in favor of the party against whom the motion under consideration was made—in this case, the Plan. Hendricks–Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir.1998). Before we proceed, however, we must address the district court's interpretation of the federal successor liability notice requirement.
The district court held that the successor liability notice requirement excludes pre-acquisition notice of contingent liabilities; thus, because the Plan did not assess the amount of Tiernan & Hoover's withdrawal liability until after the asset purchase, it was impossible for ManWeb to have notice of any existing withdrawal liability prior to acquisition. The Plan argues that, in the narrow context of multiemployer pension fund withdrawal liability, the successor liability notice element encompasses both existing and contingent liabilities. Accordingly, the Plan maintains that the notice requirement is satisfied because the record shows that ManWeb had notice of Tiernan & Hoover's potential withdrawal liability. Because this issue calls for an examination of the correct legal notice standard for successor liability in the employer withdrawal liability context, we review it de novo.
The successorship doctrine under federal common law has developed extensively over the years in an effort to protect federal rights and effectuate federal policies. See Chicago Truck Drivers, Helpers & Warehouse Workers Union (Indep.) Pension Fund v. Tasemkin, Inc., 59 F.3d 48 (7th Cir.1995) ; Upholsterers' Int'l Union Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323 (7th Cir.1990). The general common law rule of successor liability holds that, except for certain exceptions, where one company sells its assets to another company, the latter is not liable for the debts and liabilities of the seller. See Travis v. Harris Corp., 565 F.2d 443, 446 (7th Cir.1977). However, “the Supreme Court and this Circuit have imposed liability upon successors beyond the bounds of the common law rule in a number of different employment-related contexts,” Artistic Furniture, 920 F.2d at 1326, when “(1) the successor had notice of the claim before the acquisition; and (2) there was ‘substantial continuity in the operation of the business before and after the sale,’ ” Tasemkin, 59 F.3d at 49 (quoting E.E.O.C. v. G–K–G, Inc., 39 F.3d 740, 748 (7th Cir.1994) ). See, e.g., Golden State Bottling Co., Inc. v. N.L.R.B., 414 U.S. 168, 94 S.Ct. 414, 38 L.Ed.2d 388 (1973) ; Artistic Furniture, 920 F.2d at 1329 ; E.E.O.C. v. Vucitech, 842 F.2d 936 (7th Cir.1988) ; Wheeler v. Snyder Buick, Inc., 794 F.2d 1228 (7th Cir.1986). Successor liability is an equitable doctrine, Tasemkin, 59 F.3d at 49, and in every instance where we have found the imposition of federal successor liability to be appropriate, we have done so after carefully balancing the need to vindicate important federal statutory policies with equitable considerations. Thus, determining whether or not notice of a contingent liability satisfies the successorship notice requirement in the context of employer withdrawal liability necessitates a similar analysis of the underlying policy goals.
The MPPAA consists of a series of amendments to ERISA aimed at minimizing “the adverse consequences that resulted when individual employers terminate[d] their participation in, or withdr[e]w from, multiemployer plans.” Pension Benefit Guarantee Corp. v. R.A. Gray & Co., 467 U.S. 717, 722, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984). See also Chicago Truck Drivers v. El Paso CGP Co., 525 F.3d 591, 595 (7th Cir.2008) ; Artistic Furniture, 920 F.2d at 1328. To this end, the MPPAA requires employers who withdraw from multi-employer pension plans to pay their share of “unfunded vested benefits,” or withdrawal liability. See 29 U.S.C. § 1381(b)(1). By enacting provisions that hold withdrawing employers liable for their share of their plan's unfunded vested pension benefits, Congress evinced a desire to (1) “relieve the financial burden placed upon remaining contributors to a multiemployer fund when one or more of them withdraws from the plan,” Artistic Furniture, 920 F.2d at 1328 ; (2) “avoid creating a severe disincentive to new employers entering the plan,” House Committee on Ways and Means, Multiemployer Pension Plan Amendments Act of 1980, H.R.Rep. No. 96–869, Part I, at 67, reprinted in 1980 U.S.Code Cong. & Admin. News 2918, 2935 (hereinafter “House Report”); and (3) prevent the creation of funding deficiencies, House Report, Part II, at 15, reprinted in 1980 U.S.Code Cong. & Admin. News 2993, 3004.
Imposing successor liability for unpaid multiemployer pension fund contributions and withdrawal liability effectuates these...
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