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Central States, Southeast v. Clp Venture

December 21, 2012

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, AND ARTHUR H. BUNTE, JR., TRUSTEE, PLAINTIFFS,
v.
CLP VENTURE, LLC, JM VENTURE LLC,
LATHROP STAR, LLC, NEW CONCORD OHIO INC.,
PLAIN JAR LLC, RMP-1 VENTURE LLC, GJC, LLC,
MAIN STREET LAUNDRY LLC, HAGAR 67, LLC, DEFENDANTS.



The opinion of the court was delivered by: Judge Ronald A. Guzman

MEMORANDUM OPINION AND ORDER

Plaintiffs Central States, Southeast and Southwest Area Pension Fund ("Central States") and Arthur H. Bunte, Jr. seek to hold the defendants jointly and severally liable for withdrawal liability as a "single employer" under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1301(b)(1). The parties have filed cross-motions for summary judgment. For the reasons stated below, the plaintiffs' motion is granted and the defendants' motion is denied.

I. Background

Central States is a multiemployer pension fund. (Defs.' Resp. Pls.' LR 56.1(a) Stmt., Dkt. # 54, ¶ 3.) During all relevant times, GWT 2005 Inc. f/k/a General Warehouse & Transportation Company ("General Warehouse") was bound by collective bargaining agreements with a local union under which it was required to make contributions to Central States on behalf of certain of its employees. (Id. ¶ 5.) Central States determined that on or about June 3, 2005, General Warehouse permanently ceased: (1) all covered operations under the pension fund; and/or (2) to have an obligation to contribute to the fund. (Id. ¶ 6.) As a result of this complete withdrawal, General Warehouse incurred withdrawal liability of over $1.2 million. (Id. ¶ 7.) Thus, in a case brought by Central States against General Warehouse and its affiliated entities, captioned Central States, Southeast and Southwest Areas Pension Fund, et al. v. GWT 2005, Inc., et al. (N.D. Ill. 06 C 1205) ("the "General Warehouse Lawsuit"), the court entered a consent judgment against the defendants in the amount of $1,715,046.26 for their withdrawal liability, including interest and costs, in favor of Central States. (Pls.' Resp. Defs.' LR 56.1(a) Stmt., Dkt. # 52, ¶¶ 18, 21.) The consent judgment also states that General Warehouse, C&L, Inc. ("C&L"), Geobeo, Inc. ("Geobeo"), and CLP Transportation, Inc. ("CLP") (collectively, the "General Warehouse Group") constitute a single employer by virtue of being part of a group of trades or businesses under common control as defined by 29 U.S.C. § 1301(b)(1). (Id. ¶ 18.)

As of June 3, 2005, the date of General Warehouse's withdrawal, C&L owned at least 80% of the total combined voting power of all classes of stock of General Warehouse entitled to vote and/or at least 80% of the total value of shares of all classes of stock of General Warehouse. (Defs.' Resp. Pls.' LR 56.1(a) Stmt., Dkt. # 54, ¶ 8.) As of June 3, 2005, Geobeo owned at least 80% of the total combined voting power of all classes of stock of C&L entitled to vote and/or at least 80% of the total value of shares of all classes of stock of C&L. (Id. ¶ 9.) As of June 3, 2005, Geobeo owned at least 80% of the total combined voting power of all classes of stock of CLP entitled to vote and/or at least 80% of the total value of shares of all classes of stock of CLP. (Id. ¶ 10.)

The defendants in this case, CLP Venture LLC, JM Venture LLC, Lathrop Star, Ltd., New Concord Ohio, Inc., Plain Jar LLC, RMP-1 Venture LLC, GLC LLC, Main Street Laundry, LLC, and Hagar 67, LLC, are all Illinois limited liability companies or corporations. (Id. ¶¶ 12-20.) As of June 3, 2005, George J. Cibula ("Cibula") directly or indirectly owned at least 80% of the ownership interest in each of the defendants. (Id. ¶ 20.)

Prior to January 1, 1998, 650 shares of Geobeo stock were held by Cibula and 350 shares were held by Robert Pieranunzi. (Id. ¶ 21.) On January 1, 1998, Pieranunzi executed a Stock Redemption Agreement with Geobeo. (Id. ¶ 22.) Pursuant to the Stock Redemption Agreement, the stock certificate containing Pieranunzi's shares was canceled and new stock certificates totaling 350 shares were issued to Patrick Moran, the Treasurer and Chief Financial Officer of Geobeo, as escrowee. (Pls.' Resp. Defs.' LR 56.1(a) Stmt., Dkt. # 52, ¶¶ 24, 26.) The shares were to be held in escrow by Moran until certain installment payments were made by Geobeo to Pieranunzi. (Id. ¶ 26.) At the time that Geobeo made an installment payment to Pieranunzi as required by the Stock Redemption Agreement, a stock certificate representing a certain number of Geobeo shares would be transferred from escrow to Geoebeo. (Id. ¶¶ 27-29.)

The Stock Redemption Agreement provided that shares in escrow shall be voted as follows:

(v) In the event the Escrowee receives a written Notice of an alleged default under this Agreement claimed by either Seller or Buyer, Escrowee shall hold any Certificates then in its possession until it receives either (a) a court order directing it to comply with this Agreement of (b) a written direction executed by both Seller and Buyer directing it to comply with this Agreement;

(vi) So long as there is no alleged default in existence, the Escrowee shall vote any shares in his possession in accordance with the written instructions of the Buyer. If Notice of an alleged default is received by Escrowee, then Escrowee shall abstain from voting any shares in its possession. (Defs.' Resp. Pls.' LR 56.1(a) Stmt., Dkt. # 54, ¶ 23.)

An amendment to the Stock Redemption Agreement was made on January 1, 1998. (Pls.' Resp. Defs.' LR 56.1(a) Stmt., Dkt. # 52, ¶ 31). One more payment was made to Pieranunzi in April 2001, but, by letter dated April 8, 2002, Geoebeo received notice of default from Pieranunzi's attorney. (Id.¶ ¶ 32-33.) On July 19, 2004, Pieranunzi and Cibula executed an Assignment of Promissory Note pursuant to which Cibula purchased all of Pieranunzi's rights to Geobeo's stock. (Defs.' Resp. Pls.' LR 56.1(a) Stmt., Dkt. # 54, ¶ 27.)

Additional facts will be discussed as necessary in the Analysis section of this order.

II. Analysis

A. General Statutory Background

The Multiemployer Pension Plan Amendments to the Employee Retirement Income Security Act (MPPAA) provide that "[i]f an employer withdraws from a multiemployer plan in a complete withdrawal or a partial withdrawal, then the employer is liable to the plan in the amount determined under this part to be the withdrawal liability." 29 U.S.C. § 1381(a). The statute imposes withdrawal liability to a withdrawing employer "so that the financial burden of his employees' vested pension benefits will not be shifted to the other employers in the plan and, ultimately, to the Pension Benefit Guaranty Corporation, which insures such benefits." Cent. States, Se. & Sw. Areas Pension Fund v. Slotky, 956 F.2d 1369, 1371 (7th Cir. 1992). Under the MPPAA, "all trades or businesses under common control are treated as constituting a single employer for purposes of determining withdrawal liability." Cent. States, Se. & Sw. Areas Pension Fund v. SCOFBP, LLC, 668 F.3d 873, 876 (7th Cir. 2011); 29 U.S.C. § 1301(b)(1).

Thus, two entities will be considered a single employer if they are (1) trades or businesses and (2) under common control. McDougall v. Pioneer Ranch Ltd. ...


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