Central States, Southeast and Southwest Areas Pension Fund v. SCOFBP, LLC
- Citation:
- Case No. 10-3633 (7th Cir., Dec. 27, 2011)
- Tag(s):
-
- Ruling:
- In Central States, the Seventh Circuit affirmed the district court's ruling that held that two solvent business entities were under "common control" with an insolvent company and thus liable for withdrawal liability under the Multiemployer Pension Plan Amendments Act of 1990 (the "MPPAA") because (1) the two solvent business entities were "trades or businesses" within the meaning of the MPPAA, and not personal investments, and (2) the two solvent business entities and the insolvent company were all under the "common control" of a businessman, despite both the businessman's personal bankruptcy and the "rather elaborate web of ownership interests" of the companies. Under the MPPAA, all "trades or businesses" under "common control" are treated as constituting a single employer for purposes of determining withdrawal liability.
- Procedural context:
- Appeal denied; district court ruling affirmed.
- Facts:
- Two solvent affiliates, MCRI and MCOF, were "part of a complex set of business entitites" with an insolvent company, SCOFBP, LLC--all owned directly or indirectly by Michael Cappy, who filed for bankruptcy in 1999, and whose bankruptcy was not finally adjudicated until 2004. In 2001, SCOFBP quit operating and stopped paying into a union's pension fund, thus incurring withdrawal liability for unfunded pension benefits under the MPPAA. The district court found that MCRI and MCOF were "trades or businesses" within the meaning of the MPPAA because, among other things, they were for-profit companies, were governed by operating agreements, elected officers, and maintained offices and formal records. The district court also found that MCRI, MCOF and SCOFBP were under "common control" of Cappy in 2001, when SCOFBP incurred withdrawal liability, due to Cappy's direct and indirect ownership interests in the companies. The district court did not accept the appellants' argument that the bankruptcy of Cappy negated common control since the bankruptcy court ultimately determined that MCRI, MCOF and SCOFBP were part of Cappy's bankruptcy estate.
- Judge(s):
- Easterbrook, Tinder, and Hamilton
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