ERISA-Seventh Circuit Rules That Companies, Which Were Under Common Control With An Employer That Incurred Withdrawal Liability, Are Jointly and Severally Liable For The Withdrawal Liability

In Central States Southeast and Southwest Area Pension Fund v. CLP Venture LLC, Nos. 13-3010 and 13-3776 (7th Cir. 2014), the Seventh Circuit Court of Appeals (the “Court”) was asked to determine whether the various co-defendants were under common control, and therefore are jointly and severally liable for the withdrawal liability incurred by General Warehouse, Inc. (“General Warehouse”).

In this case, the Central States Pension Fund (the “Fund”) had filed suit to collect withdrawal liability, totaling $1,262,568, against General Warehouse, the employer incurring the liability, as well as against GEOBEO and other businesses under common control. The parties to that litigation entered into a consent judgment, acknowledging that the named defendants were jointly and severally liable. The Fund then initiated this action to add the defendants to the group of business entities from which it can collect.

After reviewing the case, the Court found that ” there is overwhelming evidence that these entities were under common control” with General Warehouse-since the entities had the requisite common ownership and were trades or businesses. The Court therefore ruled that these entities are jointly and severally liable for General Warehouse’s withdrawal liability.

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