PBGC v. Findlay Industries, Inc.: Sixth Circuit Expands Controlled Group and Successor Liability -

In Pension Benefit Guaranty Corporation v. Findlay Industries, Inc. et al., the Sixth Circuit ruled that a family trust which leased land to a commonly-controlled plan sponsor was a “trade or business,” and therefore jointly and severally liable for the controlled group’s pension plan termination liability. The court further held that the buyer who purchased the plan sponsor’s assets was a successor employer and therefore liable for the plan sponsor’s pension plan termination liability. In so doing, the court adopted the position taken by several other circuit courts in cases involving multi-employer plans, and extended its application to single-employer plans.

Facts of the Case -

Findlay Industries, Inc. (“Findlay”) sponsored a single-employer defined benefit pension plan until it went out of business in 2009. At the end of 1986, Findlay transferred two pieces of property to its founder and owner, Philip D. Gardner (“Philip”). Less than a month later, Phillip transferred the property to an irrevocable trust (“Trust”). The Trust was to provide for Philip’s sisters for their lives, at which point the Trust was to be distributed to Philip’s two sons, Philip J. (“Phillip J.”) and Michael (“Michael”). Phillip J. was the trustee of the Trust, and Michael was the successor trustee. Michael was Findlay’s CEO and a director until March 2009 and owned almost 45% of Findlay’s stock.