Four Ohio trucking companies must pay more than $3.4 million in withdrawal liability to Central States, Southeast and Southwest Areas Pension Fund, the U.S. District Court for the Northern District of Illinois ruled.
In granting the fund's motion for summary judgment, Judge John Blakey ruled April 21 that one of the companies that leased trucking equipment was jointly and severally liable for the withdrawal liability because it was a “trade or business” under common control with the withdrawing employer.
Central States sued Sidney Truck & Storage Inc. and all trades or businesses under its common control to collect — which included Sidney Transports, Sidney Transportation Services and Equipment Leasing of Sidney — to collect $3,459,880 in withdrawal liability.
The court held that Sidney Truck was liable for the withdrawal liability assessed by the fund.
The parties disputed whether Equipment Leasing was jointly and severally liable. The employer argued that Equipment Leasing wasn't a “trade or business” under its common control and thus couldn't be held liable.
The U.S. Court of Appeals for the Seventh Circuit has adopted two general approaches to determining whether an entity qualifies as a trade or business under common control of the withdrawing employer, the court said.
The categorical approach holds that leasing property to a withdrawing employer “categorically” constitutes a trade or business. This approach is based on the underlying purpose of the Multiemployer Pension Plan Amendments Act to prevent the dissipation of assets required to secure vested pension benefits, the court said.
Under the second approach, the court would assess whether the organization's economic activity has been for the primary purpose of income or profit and if that activity was done with continuity and regularity.
In rejecting the companies' request that the court apply the second approach, the court held that the Seventh Circuit had instructed that where property is leased to the withdrawing employer itself, the categorical rule applies.
