unionized hotel triggered the seller's withdrawal liability from the pension plan leaving behind unfunded vested pension liabilities as defined by a recess and  unpaid withdrawal liabilities put at risk of the hard pensions of the plan's twelve thousand members and it also creates a hardship for the employers who continue to stay in the plan the court having recently affirmed in two thousand and fifteen that successors can and should be held liable for withdrawals should today adopt a notice standard that would prevent sellers and buyers from shirking their risk obligations we asked that the court here today announce a clear standard for notice reversed the trial court's decision and remained with clear instructions do you concede that they did not have actual notice yes we're so this is the first thing question is whether we apply a constructive notice standard and then whether there is sufficient constructive notice in this case correct your honor and i you know i will also say while we can see that there is not actual notice we would contend that there was inferred notice as that standard has been defined by the seventh circuit previously but we believe that the precise and most effective form of notice that is required would be increased notice and we believe that because of the policy because of the practicality and also because of the precedent the policy is very clear we as the court is very familiar both a recess and met are our remedial statutes that should be broadly construed moreover the practicality is very clear the court has the opportunity here to promote fair and healthy business practices and  discourage transactions such as the one here that create an end run around to rescind obligations buyers are already in the best position to perform investigations they're already required to perform due diligence here the buyer knew that there was a pension plan the buyer knew that the seller could be liable for withdrawal liability and all that was left was discovering the basic fact that the pension plan was underfunded now discovering that fact is very easy all the buyer had to do was look up public records that is as simple as going to the internet to looking at one of the pension plan databases or at the plan's website it was as simple as picking up a phone to call the plan or they could have asked the seller for the annual funding notices all of which they failed to do and that failure we consider to be unjustifiable meanwhile requiring the plans to to prove excuse me to prove actual personal knowledge when they are not party to the sales and gauche asian is a steep burden the pension plan did everything that it was required to do it carefully appraise the funding status each year it provided the information to the federal government each year it sent appropriate notices to its members and to the participating employers including the seller in this case yet the court denied the pension plan any recovery because we could not induce the buyer to confess that they knew a well known fact that the plan was underfunded and this fact was well known it is a part of the public record and  judge posner found in full circle group eighty one percent of pension plans were underfunded in two thousand and five after the true thousand eight market crash that number did not get any better by two thousand and ten it was more likely than not that any pension plan was in fact going to be underfunded so the question is not really were was there who was the buyer on notice that the plan was underfunded it was  ruled what the legal standard was in two thousand and ten when they received that bad legal advice and the ninth circuit has made clear that at that time buyers and successors could be held liable for successor liability i guess my broader question is what what role does advice of counsel have in the constructive notice context in constructive notice the availability of counsel could be relevant certainly the fact that the plan had a four person due diligence team and had access to legal counsel shows that they had the opportunity to investigate the fact that this equity plan got bad legal advice we don't  interfere and put at risk the pension of twelve thousand hotel workers they as a sophisticated actor they know better than to rely on bad legal advice especially when the due diligence tasks before them were so that there was potential withdrawal liability so they as part of their due diligence last there are twenty one liability do we have an attorney says you don't have any because there's no provision in the agreement and at mean there's a potential liability for somebody because their contributions have been but don't worry you don't have to pay yet and i so again i think that a sophisticated actor cannot hide behind bad legal advice and the seventh circuit faced a very similar situation in star s the man webb and in that case the buyers actually wrote a contract provision where it said that they would not be held liable for the pension plan fundings and so those those buyers felt that they were protected by the contract but the seventh circuit simply used that contract as evidence that they were on notice of the liabilities so that up ended  in i believe in sorrow and man web those that was an arm's length negotiation the court does not go into detail about how sophisticated the actors were but it did appear that they had knowledge of withdrawal liability and so they had some level of sophistication and what we have here is extensive evidence in this record of how very sophisticated the buyer was in this case so when you have a highly sophisticated buyer when they have all the facts available to them and they get one piece of that legal advice which i in my personal opinion was bad legal advice even at the time given the direction of the seventh circuit given the hand tipping from artistic furniture it was in the form of a written opinion and it is it is in the record your honor so how do you respond to have only his argument that if we adopt a constructive notice standard as you propose that it essentially impose a strict liability on purchasers and i would say that this is not a strict liability standard an increase to standard is just that it is an increase notice standard it's facts that would lead an ordinarily prudent buyer to investigate further and the buyer did definitely raise idea of strict liability of innocence but those aren't questions that are relevant to to withdrawal liability withdrawal liability is a statute is a mediocre provision there is a punitive provision in met both that requires actual knowledge it requires purpose and intent that is not the situation for pure withdrawal liability and what we all you need for withdrawal liability is to withdraw and similarly this successor liability as it's been explained in resilient should be broadly construed to ensure that buyers and purchasers and sellers do not have an end run around their wrists obligations now furthermore i would also say that it does not take away the plans obligations in any way the plan is still obliged to annually appraise the health of their funding there is still blood to annually publish they their underfunding if any they are still obliged to provide that actual notice to their employers including their sellers so that should be sufficient for any ordinary prudent buyer to investigate further two hours or some time yes if i m counsel for am star i'd first like to start out with the fact that the standard of review and how that plays into this particular case and that we are post a bench trial with a magistrate judge who and its decision detailed very specifically the factual analysis that he engaged in with the reaching both questions first and finding that there was no evidence of actual notice in this case as my friend on the other side conceded in that in that obviously say no we don't believe that a constructive notice standard is the correct standard in this case or any case for that matter regarding the successor liability when you look back to the forty five years following the united states supreme court's decision in golden state bottling repeatedly the courts have demonstrated that they are able to work with and do in fact work with the notice requirement as announced and as this court brazilian floor holding at ten ninety five when it went ahead and extended successor liability in the withdraw liability context it said that it will extend it so long as the buyer takes notice of the liability and that is something fundamentally different than simply knowing that there were unionized workers or that there was a pension plan in play and i think it's very important to recognize that the magistrate court judge here did his job in that regard he went ahead and said even if there is or the ninth circuit decided to impose a due diligence requirement that puts a duty  an obligation for the buyer to engage in more questioning that under the specific facts of this case and start did in fact engage in that due diligence i would correct the position that was said that am star didn't ask both of p s a had the warrants and reps that said any notice of underfunding of the plans to have been given and the facts show that there were no notices of underfunding given from ohana to am star similarly on the record there is the fact that i am starting to do diligence team did in fact ask the buyer if it knew if their if the pension plan was underfunded and it said to its knowledge it was not third am star hear did in fact have a meeting with the pension plan trustee and that those conversations at no point was am star made aware that the plan in this position particular case was underfunded and i'd like to address the question of the legal advice because i think the magistrate judge looked at the fact of the march tenth attorney letter as yet another fact in evaluating whether or not there was an indication that i am starr had notice and here it found that first the attorney's letter talked about withdrawal liability generally and the state of the law at that time there's nothing in that letter to indicate that there was any knowledge that the plan in this particular case was underfunded and specifically that letter in march two thousand and ten the resilient floor complaint then turned into this two thousand and fifteen case wasn't even filed until april of two thousand and eleven at that point in time the state of the law had no district court or circuit court of appeal panel imposing withdrawal liability in this context and so taking all of those facts together the magistrate judge looked and said that am star did in fact behaved diligently and reasonable under those factual circumstances which brings me to my big concern on why this court shouldn't impose a constructive liabilities or constructive notice standard essentially you hear from the argument on the other side that a buyer should engage in due diligence which we did but that they should do more and do more to ultimately discover the underlying fact for the withdrawal liability and somehow if they don't discover it they're still placed on notice and the fact an argument goes that if they engage in due diligence but they  it was in the march to may two thousand and ten while the trustee of the plan was also the president of the union and so the plan and the union were very aware that amp star was involved and there was a due diligence sale negotiation plan taking place  well your honor i think if you look to the supplemental expert of the record where we put in the deposition testimony of mr gill who is the plan's trustee you'll find that through the supplemental expert of the record pages two seventy six also through three thirteen through three forty seven not his full deposition testimony that he that i'm sorry i just referenced stebbings who was our general manager  seventy six and to eighty one and to eighty two that there were discussions to some mix and they're trying to keep the union in play trying to convince am start to continue to  have the obligations that ohana had but at no point in time was there any mention of in fact gil makes the point that he says it didn't occur to him to even put amp star on notice correct well no we don't know what we do know is that there was discussions regarding everything with the ohana as union obligations and those relationships but that there was no notice and no statement made to alert am star that the pension fund was underfunded and that becomes really the trigger point of the factual basis to know whether there would be even contingent liability which i think is an important distinction when you look at the man web case that it star the facts for and start that point was it had the legal advice that it wasn't going to be on the hook for it it had asked already the seller if the plan was underfunded and it had received that to its knowledge it was not it also asked for the financial document this was a relatively quick you know you're looking at about a three to four month negotiation period evaluation due diligence before the sale in may of two thousand and ten and again when we look at the magistrate judge i think this what's quite important the magistrate judge here fully understood the balancing of the equities that takes place in a successor liability context and walked through the factual dynamic of whether in fact in this particular factual situation whether for holding am star liable as a successor was equitable and when we look at this court's nine hundred ninety five steinbeck versus hubbard decision we've always looked to the fact that the principle of the due diligence team of wolf and manning both spoke and asked of of ohana whether they will whether there was the plan was underfunded and both repeatedly and with the question of actual notice your honor the magistrate judge also specifically noted that there are no facts in the record to support or suggest that anyone on am stars due diligence team accessed or even one knew that they were there or to even access that they were there this is not one of these cases where the court you're correct your honor and i think you come back to the factual way in here that says what was also consistent is receiving no notices of underfunding was consistent with the seller saying that to their knowledge it wasn't under funded right but i think that the question is are we talking about constructive use another context the fact that there is a public disclosure somewhere is important and here you do have a public web site that was notices correct well in you're on a crack and i think what you also though look at and this goes into the you know the specific facts and and balancing that takes place in every successor liability case that whether it's a title seven case we look and say out and continue to look for and i think that's where it becomes incredibly slippery slope and dangerous proposition i mean the fact that the premise is that if there was a student to do more and they still didn't discover but they could have discovered that we're going to stop go ahead and impose even though they don't have notice and that actually strips out of the successor liability doctrine the principle of fairness and equity that we find as the pivot point of notice and that if we take that out we have taken out the very balance of the equities that there are fairness considerations to am star just as there are considerations that are weight and balance on the other side and that the courts for the forty five years since golden state bottling have had no trouble applying that and in fact you look to the seventh circuit that was invited in i believe it's nine hundred eighty six in the wheeler decision that nine hundred eighty six in the wheel decision when it was invited to make this due diligence requirement it declined to do so and the courts have still since been able to successfully equitably and fairly manage and apply the successor liability doctrine without creating an additional affirmative burden i would invite this court to continue with and follow the result one i believe resilient floor actually answered this as an as an actual notice that the holding  ninety five of its decision to have notice of the liability is in fact an actual notice standard and is consistent with the notice standards in the title seven cases in the f l i say cases r cases and with that i would ask this court to affirm the did find that actual notice is the standard but even if it created a diligent standard find that the magistrate judge here considered that standard did his job evaluated the facts weighed them and still found that successor liability was not appropriate and that that was a those facts were not clearly erroneous and that that was not an abuse of discretion and therefore as a claims leaving aside interest was about seven or fifty seven thousand correct so that's the difference between those to be the principal amount in dispute in dispute independent of the of the interest payments on both sides in that regard i'd first like to address a couple facts that were raised by the argument first the district court did find affirmatively that the funding notices were provided by mail and that is in the record  and the district court did more the magistrate judge did make these findings again this is in the decision it's at the excerpts of records twenty six and it's paragraph forty five in put in paragraph forty six and what these paragraphs show is the purchase sale agreement and it says right here pension plan notices to sellers knowledge seller has provided buyer with copies of all notices of default or notices regarding planned funding deficiency that sounds on its face acceptable until you look at the definition of seller's knowledge looking at seller's knowledge that section one point one or paragraph forty six of the decision seller knowledge means quote current actual not imputed or constructive knowledge and quote without independent inquiry and of three individual people then if you  to that end sentence you see that sellers of knowledge excludes quote information or material which may be in the possession of the seller generally or incidentally but of which the sellers representative is not actually aware and quote so what the buyer actually asked the seller in these two paragraphs is hey don't look in your mailbox don't look in your files don't look at your papers simply do you recall whether the pension fund is underfunded this specifically discourages any inquiry it discourages due diligence and that's not good enough when two thousand and twelve thousand members pensions are on the line and moreover when looking at where the burden should lie no court has ever found it appropriate to rely on the sellers to disclose liabilities that would reduce the selling price also i would quickly like to address the trustee meeting it's unclear exactly when that meeting occurred mr gill the union president was not aware of when the sale actually took place so he could not tell whether or not the meaning was before or after the sale  mr gill was there as george ryan hart suggested to discuss representation of the unit members and it willie was another opportunity for the buyer to ask a trustee is there an underfund so we can add that to the list they could have looked at the public record they could have gone on the internet they could have picked up the phone they could have asked the trustee who was there before them now the court has already found in which the met but withdraw liability cases for control groups that constructive notice is appropriate in allen transportation company the ninth circuit found that constructive notice was fair to prevent businesses from shirking their risk obligations and now we ask what's at stake if it is the whole amount of seven hundred fifty thousand plus interest to pay out which way it goes but for them it's three hundred thousand for you it's about four hundred thousand yen at approximately thank you