The 7th Circuit Court of Appeals has remanded a ruling in favor of Indianapolis-based ManWeb Services, Inc., which is being sued by the Indiana Electrical Workers Pension Benefit Fund for not fulfilling the pension fund obligations of its predecessor.
The plaintiff is arguing that due to successor liability, ManWeb is responsible for the pension liabilities owed by The Freije Company, which withdrew from the pension fund and owes a liability of $661,978. Successor liability allows a creditor to seek recovery from the purchaser of assets for liabilities that were not assumed as part of an acquisition.
According to court documents, ManWeb paid $259,360 for the assets of Tiernan & Hoover,, which conducted business under the name The Freije Company, in August 2009. Freije signed a collective bargaining agreement with the International Brotherhood of Electrical Workers Local 481, however, ManWeb was non‐union.
As a union employer, Freije contributed to the Fund, and under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) was required to pay withdrawal liability of $661,978 when it ceased operations. But ManWeb did not make any contributions to the fund after its purchase of Freije.
Neither Freije nor ManWeb made withdrawal liability payments, and Freije never took advantage of its right to seek review of the assessment amount or to challenge the assessment in arbitration, said the Court of Appeals. The assessment therefore became due when the statutory deadline for contesting the liability passed. The fund then sued Freije and added ManWeb as a defendant based on successor liability.
The district court granted summary judgment for ManWeb in 2013, finding it lacked notice of Freije’s withdrawal liability. In the first appeal, the 7th Circuit Court remanded the case, finding that the company “had sufficient pre‐acquisition notice of [Freije’s] contingent withdrawal liability to satisfy the federal successor liability notice requirement.”
However, the district court granted summary judgment again in favor of ManWeb, concluding that the fund had not shown sufficient continuity of business operations to support successor liability. The Electrical Workers Pension Benefit Fund appealed again.
“ManWeb’s purchase of and use of Freije’s intangible assets—its name, goodwill, trademarks, supplier and customer data, trade secrets, telephone numbers, and website … weigh more heavily in favor of successor liability than the district court recognized,” said the Court of Appeals in its ruling.
The Court of Appeals vacated the district court’s decision, and remanded the case for further consideration.