Seventh Circuit Rejects “Big Buyer” Defense to Successor Liability
For a multiemployer pension fund to hold an asset purchaser liable for withdrawal liability as a successor-in-interest, the fund must establish that the purchaser was (i) on notice of the seller’s withdrawal liability, and (ii) the purchaser “substantially continued” the seller’s operations. In Ind. Elec. Workers Pension Benefit Fund v. ManWeb Servs., No. 16-cv-2840, 2018 WL 1250471 (7th Cir. Mar. 12, 2018), the Seventh Circuit rejected the purchaser’s so-called “big buyer” defense that it did not substantially continue the seller’s business because the seller’s operations made up only a small proportion of the purchaser’s operations. In so ruling, the Court explained that the appropriate inquiry was the extent to which the purchaser continues the seller’s business after the asset purchase, which required an evaluation of the totality of the circumstances. Here, the Court observed that the “big buyer” defense would allow a large buyer that continued its predecessor’s business under a different name to escape liability simply because of its size, contrary to the goals of the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”) to protect multiemployer plans from the damaging consequences of employer withdrawals. In rejecting the “big buyer” defense, the Seventh Circuit distinguished as outdated an earlier decision by the Ninth Circuit in Resilient Floor Covering Pension Tr. Fund Bd. of Trustees v. Michael’s Floor Covering, Inc., 801 F.3d 1079, 1098 (9th Cir. 2015), which had held that the appropriate inquiry was whether a majority of the buyer’s workforce consisted of the seller’s former employees.