132 F. Supp. 3d 1175
N.D. Cal.2015Background
- Pension Fund seeks $1,660,266 withdrawal liability under ERISA for Piedmont Lumber's withdrawal from the Fund in 2010.
- Piedmont, Myer, and Oliver are alleged to be jointly and severally liable for the withdrawal liability.
- Notice and demand letters were sent in 2010–2011; Piedmont did not pay or initiate review/arbitration.
- Piedmont was jointly owned by Myer (President/CEO) and Oliver (trustee of the Oliver Family Trust).
- Lakeport Property, owned by Myer and Oliver as trustee, was leased to Piedmont; rent totaled over $120,000 (2005–2010).
- Rent from Lakeport Property was paid in part by Piedmont; the leasing arrangement is central to common control and trade/business arguments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Piedmont and Lakeport Property were under common control. | Board asserts common control via Myer and Oliver over both entities. | Oliver contends no common control over Lakeport Property and Piedmont. | Piedmont and Lakeport Property are under common control. |
| Whether Lakeport Property leasing constitutes a trade or business. | Leasing to the withdrawing employer constitutes a trade or business under §1301(b)(1). | Groetzinger test or similar standard should apply to define trade or business. | Lakeport leasing constitutes a trade or business under §1301(b)(1). |
| Whether Oliver is individually liable for the withdrawal assessment. | Oliver, as trustee/grantor of revocable trust, is liable absent veil-piercing needs. | Oliver argues revocable trust cannot be a legal entity; no alter-ego claim needed. | Oliver is personally liable for the withdrawal assessment. |
| What damages are recoverable by the Board if it prevails. | Unpaid withdrawal, interest, liquidated damages, and attorneys' fees are recoverable. | No material opposition; damages should be awarded as requested. | Board entitled to unpaid amount, prejudgment interest, liquidated damages, and fees/costs. |
Key Cases Cited
- Carpenters Pension Trust Fund for N. California v. Underground Const. Co., Inc., 31 F.3d 776 (9th Cir. 1994) (priority of withdrawal liability under ERISA limits protection against unfair cost shifting)
- Lafrenz v. Bd. of Trustees of W. Conference of Teamsters Pension Trust Fund, 837 F.2d 892 (9th Cir. 1988) (common control and trade or business analyses under §1301(b)(1))
- Lindquist v. Carpenters Pension Trust Fund for N. California, 2011 WL 2884850 (N.D. Cal. 2011) (leasing property between commonly controlled entities can be a trade or business)
- Messina Products, LLC v. Central States, Southeast & Southwest Areas Pension Fund, 706 F.3d 874 (7th Cir. 2013) (leasing to a withdrawing employer treated as trade or business)
- Vaughn v. Sexton, 975 F.2d 498 (8th Cir. 1992) (grantor of revocable trust may bear personal liability for certain obligations)
- United Food & Commercial Workers Union Local 1360 v. Progressive Supermarkets, 644 F.Supp.633 (D.N.J. 1986) (economic relationships in related entities impact withdrawal liability)