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PENN CENT. CORP. v. WESTERN CONF.

September 6, 1994

THE PENN CENTRAL CORP., Plaintiff (s)
v.
THE WESTERN CONFERENCE OF TEAMSTERS PENSION TRUST FUND, Defendant (s).


SMITH


The opinion of the court was delivered by: FERN M. SMITH

ISSUE

 This case involves employer withdrawal liability under the Employee Retirement Income Security Act ("ERISA") as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"). ERISA §§ 4201-4402, 29 U.S.C. §§ 1381-1461. The issue the Court must decide here is whether employer withdrawal liability can be assessed against a control group for the previous withdrawal of two subsidiary corporations when the control group sells its remaining subsidiary corporation to a group that continues the required contributions to a pension fund on behalf of the remaining subsidiary corporation. The Court finds that liability can be assessed against the control group in this situation, and therefore denies plaintiff's motion for summary judgment and grants defendant's countermotion for summary judgment.

 BACKGROUND

 The Western Conference of Teamsters Pension Trust Fund ("Fund") is a multiemployer pension fund which administers The Western Conference of Teamsters Pension Plan ("Plan"), a multiemployer plan described in ERISA § 4001(a)(3), 29 U.S.C. § 1301(a)(3). G.K. Trucking Corporation ("G.K. Trucking"), Marathon Steel Company ("Marathon Steel"), and Buckeye Gas Products Company ("Buckeye Gas") were corporations under the common control of Penn Central and participated in the Plan pursuant to various collective bargaining agreements from at least 1981 through December of 1986. In February of 1982, G.K. Trucking ceased operations under the Plan. Marathon Steel ceased operations under the Plan in March of 1986. Buckeye Gas continued to make contributions under the Plan until December of 1986 when Penn Central sold its interest in Buckeye Gas to Ferrell Companies, Inc., and Ferrellgas, Inc. ("Ferrell Group"). Ferrell Group has continued to make the required contributions to the Fund.

 In September of 1989, the Fund made a demand for payment of a complete withdrawal liability assessment in the amount of $ 60,618 against Marathon Steel and G.K. Trucking for their share of the Plan's vested benefit shortfall. The assessment did not include any vested benefit shortfall attributable to Buckeye Gas. Penn Central paid the assessed amount to the Fund and requested an arbitration proceeding to decide whether the withdrawal liability was properly assessed. The arbitration was conducted in 1993 and a decision in favor of the Fund was made. Penn Central instituted this action to vacate the arbitration award upholding the assessment against Penn Central.

 DISCUSSION

 I. Legal Standard

 In order to withstand a motion for summary judgment, the opposing party must set forth specific facts showing that there is a genuine issue of material fact in dispute. Fed. R. Civ. P. 56(e) (West 1994). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In the absence of such facts, "the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Since the parties here have stipulated to the material facts the sole issue before the Court is whether the arbitrator's award was correct as a matter of law.

 II. Complete Withdrawal Liability Was Properly Assessed Against Penn Central Upon its Sale of Buckeye Gas to Ferrell Group

 
A. Withdrawal Liability Was not Assessable Against Penn Central When Marathon Steel and G.K. Trucking Ceased Operations Under the Plan

 A complete withdrawal from a multiemployer pension plan generally occurs when an employer "permanently ceases all covered operations under the plan." ERISA § 4203(a), 29 U.S.C. § 1383 (a) (1994). An employer that withdraws from a multiemployer pension plan is liable to the plan for its proportionate share of the fund's "unfunded vested benefits." ERISA § 4201, 29 U.S.C. § 1381 (1994). See, e.g., Woodward Sand Co. v. Western Conference of Teamsters Pension Trust Fund, 789 F.2d 691, 694-95 (9th Cir. 1986). A withdrawing employer is thus required to compensate a pension plan for the difference between that employer's proportionate share of the present value of benefits that have already vested with a corporation's employees and the current value of the plan's assets attributable to that corporation. Pension Benefit Guaranty Corp. v. R. A. Gray & Co., 467 U.S. 717, 725, 104 S. Ct. 2709, 81 L. Ed. 2d 601 (1984). For purposes of determining whether a complete withdrawal has occurred under a plan, however, all trades or businesses under "common control" are treated as a single employer. ERISA § 4001(b)(1), 29 U.S.C. § 1301(b)(1) (1994).

 Here, it is undisputed that G.K. Trucking, Marathon Steel, and Buckeye Gas were under the common control of Penn Central until the sale by Penn Central of Buckeye Gas to the Ferrell Group. Prior to that sale, the cessation of operations under the Plan by G.K. Trucking and Marathon Steel generated a withdrawal liability of $ 60,618 to the Plan. This sum was G.K. Trucking and Marathon Steel's proportional share of the Fund's vested benefit shortfall attributable to their employees and operations. Complete withdrawal liability was not assessable, however, at the time these two subsidiary corporations permanently ceased operations under the Plan because Penn Central, their parent and the "employer" under ERISA § 4001(b)(1), continued to ...


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