James Tsareff v. Manweb Services
2015 U.S. App. LEXIS 12924
7th Cir.2015Background
- ManWeb purchased substantially all assets of Tiernan & Hoover (a union contractor that contributed to a multiemployer pension Plan) by an asset purchase agreement in August 2009; Tiernan ceased operations and ManWeb continued similar work but did not make Plan contributions.
- The Plan later assessed Tiernan & Hoover with withdrawal liability of $661,978 after concluding Tiernan effectuated a complete withdrawal; the assessment letter was forwarded to and received at ManWeb’s address but Tiernan did not seek arbitration within the statutory window.
- The Plan sued to collect withdrawal liability, naming ManWeb as a successor under successor-liability principles; district court found Tiernan liable (failure to arbitrate) but granted judgment as a matter of law to ManWeb on successor liability.
- The district court held successor-notice requires pre-acquisition notice of an existing (not merely contingent) withdrawal liability and also adjudicated the underlying withdrawal question on the merits.
- The Seventh Circuit reversed: it held notice of contingent withdrawal liability can satisfy the successor-notice requirement; found sufficient pre-acquisition notice here (due diligence, contract provisions, executives’ knowledge); and held the district court erred by deciding the merits of withdrawal (arbitration rule) and by misapplying notice/equity principles.
Issues
| Issue | Plan's Argument | ManWeb's Argument | Held |
|---|---|---|---|
| Whether successor-notice requires knowledge of a pre-existing, precisely-assessed withdrawal debt | Notice of contingent withdrawal liability suffices | Notice must be of an existing, ascertainable liability pre-acquisition | Contingent pre-acquisition notice suffices for successor-notice requirement |
| Whether ManWeb had adequate pre-acquisition notice of Tiernan's potential withdrawal liability | Yes — due diligence, financials, APA language, executives’ testimony | No — precise assessment occurred post-closing so buyer lacked actual notice | Yes — record shows both implied and direct notice before closing |
| Whether imposing successor liability is inequitable because Tiernan waived arbitration after sale | Successor could protect itself; indemnities and contract terms available | Waiver occurred post-closing and successor lacked notice of waiver events | Imposition is not inequitable here; district court abused discretion in excusing successor liability |
| Whether district court could decide the merits of Tiernan's withdrawal despite failure to arbitrate | Arbitrability bars district-court merits review; waiver makes assessment conclusive | District court may examine underlying withdrawal facts | District court erred: MPPAA requires arbitration; merits were for arbitration and the waiver made the assessment conclusive |
Key Cases Cited
- Artistic Furniture of Pontiac v. Upholsterers’ Int’l Union Pension Fund, 920 F.2d 1323 (7th Cir. 1990) (successor-liability framework balancing notice and continuity)
- Tasemkin v. Chicago Truck Drivers, 59 F.3d 48 (7th Cir. 1995) (articulating notice + substantial continuity test for successors)
- Golden State Bottling Co. v. NLRB, 414 U.S. 168 (U.S. 1973) (permitting successor liability in labor contexts to vindicate federal policies)
- Milwaukee Brewery Workers’ Pension Plan v. Joseph Schlitz Brewing Co., 513 U.S. 414 (U.S. 1995) (withdrawal liability cannot be paid until plan calculates amount)
- Central States, Se. & Sw. Areas Pension Fund v. Nitehawk Express, 223 F.3d 483 (7th Cir. 2000) (discussing plans left “holding the bag” absent successor liability)
- Musikiwamba v. ESSI, Inc., 760 F.2d 740 (7th Cir. 1985) (equitable concerns counsel against imposing successor liability on innocents without chance to protect via contract)