Central States Southeast & Southwest Areas Pension Fund v. Messina Products, LLC
706 F.3d 874
7th Cir.2013Background
- ERISA/MPPAA withdrawal liability: multiemployer plan sued related entities under common control for Messina Trucking’s withdrawal.
- Messina Trucking, owned by Stephen and Florence Messina, ceased contributions in Oct 2007, triggering ~$3.1 million liability.
- Messinas and Messina Products challenged liability, asserting they were not “trades or businesses” under §1301(b)(1).
- District court held Messina Messinas (Stephen/Florence) not engaged in a trade or business; Messina Products found to be a trade or business.
- Fund appeals, Messina Products cross-appeals; court affirms in part, reverses in part, and remands.
- The court adopts Groetzinger test for “trade or business” in Groetzinger-based framework; considers ownership, management, and conduct in light of common control.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Messina Messina and Messina Products are engaged in a trade or business. | Fund: they are under common control and conduct activities for profit. | Messinas/Messina Products: activities are passive investments or not continuous. | Yes; both are trades or businesses for §1301(b)(1) liability. |
| Standard of review for the appeals on undisputed subsidiary facts. | Fund: de novo review appropriate for legal interpretation. | Messinas: clear error should apply due to undisputed facts. | De novo review applicable; issues are law-based application to undisputed facts. |
| Whether Messina Products, a formal entity, is a trade or business. | Messina Products maintained a real estate rental activity and operating intent. | Messina Products claims passive investment with minimal activity. | Messina Products affirmed as a trade or business. |
Key Cases Cited
- Groetzinger v. Commissioner of Internal Revenue, 480 U.S. 23 (1987) (test for activity to be a trade or business: primary purpose and continuity)
- Neiman, 285 F.3d 587 (7th Cir. 2002) (common control and trades or businesses framework)
- SCOFBP, LLC, 668 F.3d 873 (7th Cir. 2011) (leasing property to withdrawing employer is a trade or business)
- Ditello, 974 F.2d 887 (7th Cir. 1992) (economic relationship not required for common control; supports SCOFBP reasoning)
- White, 258 F.3d 636 (7th Cir. 2001) (rental activity not a trade or business when not used to dissipate assets; homeowner-appendage context)
- Fulkerson, 238 F.3d 891 (7th Cir. 2001) (leasing activities not automatically a trade or business; Groetzinger test applied)
- Slotky, 956 F.2d 1369 (7th Cir. 1992) (describes control-group membership aims to prevent asset fractionalization)
- Pioneer Ranch, 494 F.3d 571 (7th Cir. 2007) (establishes that intent in forming a business is highly relevant to Groetzinger analysis)