Plaintiff Unite National Retirement Fund, a multiemployer employee pension plan (the Plan), brought an action for withdrawal liability, pursuant to Sections 4201 through 4225 and 4301 of the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multiemployer Pension Plan Amendments Act of 198 (MPPAA), against Ariela USA, Inc. (Ariela) and several other business under the common control of defendant Lee Ades (Ades).
ERISA, as amended by the MPPAA, requires an employer who withdraws from a multiemployer defined benefit pension plan to contribute “withdrawal liability” to the plan, representing that employer’s proportionate share of the plan’s unfunded vested benefits. Plaintiff claims that Ariela, a former garment manufacturer, withdrew from the Plan, but failed to pay the withdrawal liability it incurred. Plaintiff moved for summary judgment, seeking the withdrawal liability jointly and severally from all defendants, because, plaintiff argued, they are all trades or businesses that are, with Ariela, under Ades’ common control.
In granting plaintiff’s motion for summary judgment, the United States District Court for the Southern District of New York began by finding that Ariela had permanently withdrawn from the Plan, and thus was responsible for the withdrawal liability. In addressing plaintiff’s argument for joint and several liability among the defendants, the court began by recognizing that ERISA classifies all trades or businesses that are under “common control” as a single employer for purposes of withdrawal liability. Thus, when withdrawal liability is imposed on an employer, all other commonly controlled trades or businesses are liable as well. In the instant case, the court found the various defendant entities constituted a “brother-sister” group of businesses, because Ades was the sole owner and proprietor of each. Accordingly, the defendants were found to be jointly and severally liable for Ariela’s withdrawal liability. (Unite National Retirement Fund v. Veranda, Nos. 04 Civ. 9869 (BSJ), 06 Civ. 0055 (BSJ), 2009 WL 2025163 (S.D.N.Y. July 13, 2009)).