Seventh Circuit Finds Individual Business Owners Liable for Withdrawal Liability
In Central States Southeast and Southwest Areas Pension Fund v. Messina Products, LLC, the 7th Circuit Court of Appeals found that property owners who owned and leased several residential properties were engaged in a “trade or business” and therefore could be held liable for Messina Trucking’s withdrawal liability. Under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), individual owners are generally not liable for the withdrawal liability of an employer they own, absent attempts to “pierce the corporate veil” or in situations where actions were taken to “evade or avoid” withdrawal liability. However, all trades or businesses under common control (even if functionally unrelated to the employer) are jointly and severally liable for the withdrawal liability assessed against an employer. While passive investments are not considered trades or businesses and cannot form the basis for imputing withdrawal liability, the Court found that the owners’ rental property in this case to be more than a passive investment. The Court found that the owners’ leasing activity was for the primary purpose of income or profit, in particular because they rented their property to the withdrawing employer.