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UFCW Local One Pension Fund v. Enivel Props. LLC

United States Court of Appeals, Second Circuit

July 1, 2015

UFCW LOCAL ONE PENSION FUND, AND ITS TRUSTEES: FRANK C. DERISO, JOHN P. BARRETT, ERIC GLATHAR, RAYMOND WARDYNSKI, ROBERT BOEHLERT, AND KRISTINE WYDRO, Plaintiffs-Appellants,
v.
ENIVEL PROPERTIES, LLC, Defendant-Appellee. [*]

Submitted, April 24, 2015

Appeal from the United States District Court for the Northern District of New York (Suddaby, J.). Plaintiffs-Appellants United Food and Commercial Workers Local One Pension Fund and its Trustees brought an action under the Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. § § 1381-1453, against Defendant-Appellee Enivel Properties, LLC, seeking to recover a withdrawal liability assessment of a business under common control with Enivel. After a bench trial, the district court determined that Enivel was not a " trade or business" and that withdrawal liability did not attach, and entered judgment for Enivel. For the reasons that follow, we AFFIRM the district court's judgment.

Jeffrey S. Swyers, Barry S. Slevin, Paul E. Knupp, III, Slevin & Hart, P.C., Washington, D.C., for Plaintiffs-Appellants.

Glenn E. Pezzulo, William S. Levinson, Culley, Marks, Tanenbaum & Pezzulo, LLP, Rochester, NY, for Defendant-Appellee.

Before: WESLEY, LIVINGSTON, AND CHIN, Circuit Judges.

OPINION

Page 370

Wesley, Circuit Judge

The issue in this appeal is whether a separate business organization can be held

Page 371

responsible for the liabilities of another commonly controlled entity under the Employee Retirement Income Security Act of 1974 (" ERISA" ), as amended by the Multiemployer Pension Plan Amendments Act of 1980 (" MPPAA" ), 29 U.S.C. § § 1381-1453.

Steven Levine was the sole shareholder of Empire Beef Co., Inc. (" Empire" ), a food-processing company. Empire was party to a collective bargaining agreement that required it to contribute to the United Food and Commercial Workers Local One Pension Fund (the " Fund" ) for retirement and related benefits for its employees. In November 2007, Empire effected a " complete withdrawal" from the Fund pursuant to 29 U.S.C. § 1383(a) and incurred a withdrawal liability assessment to the Fund of $1,235,644.00. The Fund sued Empire under the MPPAA for the assessment, as well as liquidated damages, interest, costs, and attorneys' fees, and secured a judgment against Empire for $1,790,343.90. Empire has not paid any portion of the judgment.

In addition to Empire, Steven and his wife, Lori, owned an investment company, Enivel Properties, LLC (" Enivel" ).[1] Steven held forty percent of Enivel's stock; Lori owned the remainder and was solely responsible for Enivel's business operations.[2] The Fund sued Enivel to recover on its judgment against Empire, alleging that Enivel is a trade or business under common control with Empire such that it is jointly and severally liable for Empire's withdrawal liability.

To ensure the viability of multiemployer pension plans against the failure of a contributing employer, the MPPAA has broad provisions that disregard the usual legal barriers between affiliated, but legally distinct, businesses. All " trades or businesses" under " common control" are treated as a single employer for the purpose of collecting withdrawal liability, and each is jointly and severally liable for the withdrawal liability of another. See 29 U.S.C. § 1301(b)(1); Corbett v. MacDonald Moving Servs., Inc., 124 F.3d 82, 86 (2d Cir. 1997) (citing 29 U.S.C. § 1301(b)(1) and 26 C.F.R. § § 1.414(c)-1 to -5).

Enivel was formed as a limited liability company, had an Employer Identification Number and a business checking account, and filed New York State tax returns. In its 2007 New York State tax return, Enivel reported a net loss in the amount of $2,275.00. Enivel owned three investment properties. The district court (Glenn T. Suddaby, Judge) found that Enivel was formed for the purpose of shielding the Levines from liability in case someone was injured on one of their properties. In addition, the court found it likely that Lori did not spend more than a few hours per year attempting to sell these properties or ...


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