Central States, Southeast & Southwest Areas Pension Fund v. Nagy
714 F.3d 545
7th Cir.2013Background
- Central States assessed Ready Mix with a withdrawal liability of $3,656,058.59 after it stopped employing Teamsters in June 2007.
- Nagy owned Ready Mix and two related firms under common control; Nagy Trucking and Nagy Concrete were held jointly liable with Ready Mix.
- Central States sought to impose Nagy’s personal liability under ERISA/MPPAA § 1301(b)(1) if Nagy engaged in an unincorporated trade or business under common control with Ready Mix.
- Two Nagy-owned arrangements were scrutinized: Nagy’s ownership and lease of property to Ready Mix, and Nagy’s management services for Wells Venture (a country club) billed as an independent contractor.
- District court held leasing as passive investment and no liability from the lease, but found Nagy’s independent-contractor work for the country club constituted a trade or business and thus personal liability.
- The Seventh Circuit affirmed, clarifying that both the property-lease and the independent-contractor activities can independently trigger personal liability under § 1301(b)(1).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Nagy’s lease of property to Ready Mix constitute an unincorporated trade or business? | Nagy’s ownership and lease to Ready Mix qualifies as a trade or business. | Lease is a passive investment, not a trade or business. | Yes; leasing categorically constitutes a trade or business under § 1301(b)(1). |
| Does Nagy’s management work for Wells Venture as an independent contractor constitute a trade or business? | Independent-contractor work constitutes an unincorporated trade or business. | If Nagy was an employee, not an independent contractor, this would not trigger liability. | Yes; independent-contractor status qualifies as a trade or business under § 1301(b)(1). |
Key Cases Cited
- Messina Prods., LLC v. Cent. States, Se. & Sw. Areas Pension Fund, 706 F.3d 874 (7th Cir. 2013) (categorical leasing rule; leasing to withdrawing employer under common control triggers liability)
- Cent. States, Se. & Sw. Areas Pension Fund v. SCOFBP, LLC, 668 F.3d 873 (7th Cir. 2011) (leasing property to withdrawing employer under common control is categorically a trade or business)
- Central States, Se. & Sw. Areas Pension Fund v. Ditello, 974 F.2d 887 (7th Cir. 1992) (leasing to withdrawing employer under common control constitutes a trade or business)
- Cent. States, Se. & Sw. Areas Pension Fund v. Slotky, 956 F.2d 1369 (7th Cir. 1992) (no-bailouts principle; withdrawal liabilities remain with employers)
- Cent. States, Se. & Sw. Areas Pension Fund v. Personnel, Inc., 974 F.2d 789 (7th Cir. 1992) (treating related trades or businesses as a single employer for liability purposes)
- Cent. States, Se. & Sw. Areas Pension Fund v. Neiman, 285 F.3d 587 (7th Cir. 2002) (discusses standard of review and context for mixed questions of law and fact)
- Cent. States, Se. & Sw. Areas Pension Fund v. White, 258 F.3d 636 (7th Cir. 2001) (addressed employer-employee considerations in related contexts)
- Cent. States, Se. & Sw. Areas Pension Fund v. Fulkerson, 238 F.3d 891 (7th Cir. 2001) (discusses Groetzinger framework and status of property-related activities)
- Cent. States, Se. & Sw. Areas Pension Fund v. Koder, 969 F.2d 451 (7th Cir. 1992) (early application of single-employer concept under common control)