## In the 

# United States Court of Appeals
For the Seventh Circuit

____________

No. 06-3757

H OWARD M C D OUGALL and C ENTRAL S TATES , S OUTHEAST AND S OUTHWEST AREAS P ENSION F UND , Plaintiffs-Appellees,

v.

P IONEER RANCH L IMITED PARTNERSHIP and R OBERT S. W HITING , Defendants-Appellants.

____________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 05 C 5908— Suzanne B. Conlon

, Judge.

____________ A RGUED M AY 25, 2007—D ECIDED J ULY 12, 2007

____________

Before B AUER , C UDAHY , and F LAUM , Circuit Judges

. F LAUM , Circuit Judge . Elaine and Robert Whiting owned Pioneer Ranch Limited Partnership, a vacation property on which they farmed and raised cattle. The Whitings also owned a trucking company, which, after several years of operation, became bankrupt and ceaseddoing business. The Central States, Southeast and Southwest Areas Pension Fund ( “the Fund”), a multi-employer pension fund, assessed subs tantial withdrawal liability on the trucking company, but could not collect any of2 No. 06-3757

the amount owed. The Fundsued Pioneer Ranch and Robert Whiting for the withdrawal liability. The district court granted the Fund’s mo tion for summary judgment, concluding that Pioneer Ra nch was responsible for the trucking company’s liability under the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C. §§ 1381-1461 (1980). Pioneer Ranch appeals. For the following reasons, we affirm.

I. B ACKGROUND A. Statutory Background
Congress passed the MPPAA as an amendment to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001-1371. Under ERISA, the Pension Benefit Guaranty Corporation (“PBGC ”), a government corporation, protects covered employees by insuring their benefits against fund insolvency or premature termination. Prior to 1980, ERISA’s contingent liability provisions gave employers an incentive to withdraw from financially weak multi-employer plans to avoid liability if the plan terminated in the future. As a result, the PBGC reported to Congress that the premiums pa id to it were insufficient to cover its expected futu re liabilities. Congress then passed the MPPAA, seeking to discourage voluntary withdrawals from multi-empl oyer plans by imposing a mandatory liability on all withdrawing employers. See Cent. States, Se. and Sw. Areas Pension Fund v. Ditello

, 974 F.2d 887, 888 (7th Cir. 1992). The Act holds suchemployers liable for their proportionate share of “unfunded vested benefits.” 29 U.S.C. § 1381.
Upon an employer’s withdrawa l from a plan, the trustees of the fund must promptly determine the amount of an employer’s liability and create a payment schedule. Within 90 days of notification, the employer may request thatNo. 06-3757 3

1 Elaine Whiting died on January 5, 2005, and Robert Whiting died on February 4, 2006. the trustees review thei r determination. 29 U.S.C. § 1399(b)(2)(A). If either party is dissatisfied with the outcome of the review, the MPPAA mandates arbitration proceedings. 29 U.S.C. § 1401(a)(1) (“Any dispute between an employer and the plan sp onsor . . . shall be resolved through arbitration.”). After ar bitration, or if no arbitration proceeding has been in itiated, either party may bring an action in federal dist rict court “to enforce, vacate, or modify the arbitrator’s award.” 28 U.S.C. § 1401(b)(2). Section 1301(b)(1) provides that all “employees of trades or businesses (whether or not incorporated) which are under common control shall be treated as employed by a single employer and all such trades and businesses as a single employer.” 29 U.S.C. § 1301(b)(1). Under this section, each trade or business under common control is jointly and severally liable for the withdrawal liability of the others. See Ditello , 974 F.2d at 889.

B. Facts
In 1970, Robert and Elaine Whiting 1 purchased property located in Cheboygan County, Michigan to use as a vacation home. The Whitings kept a number of cattle and other livestock on the property and conducted some farming and ranching activities. In 1973, the Whitings hired David McCormick to care for the property and assist with the farming and livesto ck. Over the next twenty years, the Whitings used the property as a vacation home and developed a small cattle herd by buying and selling a few cattle each year.

In 1993, the Whitings established the Pioneer Ranch Limited Partnership. Elaine and Robert were both general4 No. 06-3757

and limited partners, and their four children, R. Scott Whiting, Daniel Whiting, Jo Ann Skandalaris, and JaneWhiting were limited partners. Pioneer Ranch’s partnership agreement stated that the partnership’s purpose was as follows: a) acquiring and holding certain real property located in the Township of Aloha, Cheboygan County, Michigan, heretofore owned and managed as a cattle farm by the General Partners. (b) acquiring additional real and personal property to be used in operating, ma naging, and expanding the Property, and to engage inthe business of farming,ranching, and any agricultural pursuit or undertaking; and (c) doing any and all things and carrying on any andall other activities necessary, convenient, or incidental to accomplish any of the preceding purposes and powers or to protect and benefit the Partnership. After the Whitings established the partnership, they handled the livestock on the ranch the same way they handled it before 1993. From 1994 through 2003, Pioneer Ranch filed tax returns that contained a schedule listing profits and losses from farming. The sche dule indicated that PioneerRanch lost money every year after the Whitings established the partnership. On it s tax returns, the partnership listed “cattle farm” as it s principal business activity, claimed farm expenses, and ce rtified that it was entitled to an agricultural production exemption.
The Whitings also owned a trucking company called Whiting Distribution Servic es (“WDS”), which operated in Detroit, Michigan. In 2003, WDS, which had been experiencing financial difficulties, entered bankruptcyNo. 06-3757 5

and wound up its operations. WDS was subject to a series of collective bargaining agr eements requiring pension contributions to the Fund. On December 6, 2003, WDS withdrew from the Fund. On January 30, 2004, the Fund demanded that the Whiting Controlled Group pay $3,708,184.81 worth of withdrawal liability pursuant to ERISA, 29 U.S.C. §§ 1382(2) and 1399(b). On August 23, 2005, the Fund issued another notice and demand to the Whiting Controlled Group that was served on Pioneer Ranch and Robert Whiting. On February 15, 2006, the Whiting Controlled Group, through Pioneer Ranch, received a notice that the withdrawal liability payments were past due. When the Wh iting Controlled Group failed to pay the withdrawal liability, the Fund filed suit in federal district court, arguing that it could collect the withdrawal liability from Pioneer Ranch and Robert Whiting because Pioneer Ranch was a “trade or business” under § 1301(b)(1).
On June 15, 2006, the parties filed cross-motions for summary judgment. On July 20, 2006, the district court granted the plaintiffs’ motion for summary judgment and denied the defendants’ motion, holding that Pioneer Ranch was a trade or business under § 1301(b)(1).

II

. D ISCUSSION
A. Standard of Review
The initial question presented in this case is the standard by which we review the district court’s decision. We ordinarily review a district court’s grant of summary judgment in an ERISA case de novo. Santaella v. Metro. Life Ins. Co. , 123 F.3d 456, 460 (7th Cir. 1997). However, in Central States, Southeast and Southwest Areas Pension Fund v. Slotky , 956 F.2d 1369, 1373-74 (7th Cir. 1992), this Court held that the clearly erroneous standard of6 No. 06-3757

2 The appellants stated that they were entitled to a jury trial while the appellees contended that they were not entitled to one, but neither party explained why the appellants were or were not entitled to a jury trial. Indeed, both parties presented deficient arguments for their pr eferred standard of review. Accordingly, it falls to us to reach the merits of the jury trial issue in order to determine the appropriate standard of review. review applies when the onlyissue before the district court is the characterizati on of undisputed subsidiary facts and where a party does not have the right to a jury trial. In Slotky , the Court stated that although the fact of whether or not an enterprise is a trade or business is not ordinarily resolved on summary judgment, “[delaying judgment] does not make sense in a case in which the only factual issue is one of char acterization, . . . and the opponent of summary judgment claims no right to a jury trial.” Id. at 1374. In that scenario, “both the record and the fact-finder are the same in the summary judgment proceeding as they would be in a trial. There is no more evidence to put in and no different trier to evaluate it.” Id.As we explain below, there is no dispute over the underlying facts in this case. T hus, to determine the appropriate standard of review, we must analyze whether the defendants are entitled to a jury trial. 2

The Seventh Amendment provides that “[in] Suits at common law, where the value in controversy shall exceedtwenty dollars, the right of trial by jury shall be preserved.” U.S. Const. amend. VII. The Supreme Court has long understood “ ‘suits at common law’ to refer not merely to suits that the common la w recognized among its old and settled proceedings, but to suits in which legal rights were to be ascertained and determined, in contrast tothose where equitable rights and remedies were recognized.” Feltner v. Columbia Pi ctures Television, Inc. , 523 U.S. 340, 348 (1998) (quoting Parsons v. Bedford , 28 U.S.No. 06-3757 7

433, 447 (1830)). The general rule in ERISA cases is thatthere is no right to a jury trial because “ERISA’s antecedents are equitable,” not legal. Matthews v. Sears Pension Plan , 144 F.3d 461, 468 (7th Cir. 1998). However,§ 4301(a)(1) permits plan fiduciaries, employers, participants, or beneficiaries to bring civil suits under Title IV of ERISA and seek appropriate legal or equitable relief with respect to a multi-employer plan. 29 U.S.C. § 1451(a)(1). Though § 4301(a)(1) provides for both legal and equitable remedies in the case of multi-employer pension plan disputes, the few courts thathave considered the question have determined that the Seventh Amendment does not guarantee a jury in these types of cases. See Connors v. Ryan’s Coal Co. , 923 F.2d 1461 (11th Cir. 1991); Bd. of Trs. of W. Conference of T eamsters Pension Trust Fund v. Thompson Bldg. Materials, Inc. , 749 F.2d 1396 (9th Cir. 1984).

In Thompson Building Materials, Inc. , the Ninth Circuit held that Congress did not violate the Seventh Amendment by requiring employers and plan sponsors to resolve disputes about withdrawal liability through arbitration. 749 F.2d at 1405. The court held that the MPPAA’s statutory scheme was not kn own to the common law, andthat Congress may delegate fact-finding functions to nonjury bodies in cases involving newly created statutory rights. Id. Likewise, in Connors , the Eleventh Circuit heldthat the defendant was not entitled to a jury in a withdrawal liability collection action brought by multi-employer plan trustees. 923 F.2d at 1465. The court stated that the MPPAA’s mandatary arbitration provisions did not unconstitutionally deprive the liable employer of its right to a jury trial. Id.

We agree with the reasoning of our sister circuits. If Pioneer Ranch had proceeded to arbitration to challenge its status as an employer it would not have been entitled8 No. 06-3757

to a jury. It is anomalous then to allow the defendants to have a jury trial simply because they avoided the dispute resolution scheme that Congress contemplated in the statute. Because the defendants are not entitled to a jury trial, the Court must review the district court’s grant of summary judgment for clear error.

B. Trade or Business
To impose withdrawal liability on an organization other than the one obligated to th e Fund, two conditions must be satisfied: 1) the organization must be under “common control” with the obligatedorganization, and 2) the organization must be a trade or business. Cent. States, Se. and Sw. Areas Pension Fund v. Fulkerson , 238 F.3d 891, 895 (7th Cir. 2001). The defendants do not dispute that the Whitings controlled both WDS and Pioneer Ranch. The only question, therefore, is whether Pioneer Ranch constitutes a trade or business.

Although the MPPAA does not define “trade or business,” this Court has adopted the test established in Commissioner v. Groetzinger , 480 U.S. 23, 35 (1987), to determine whether an enterpri se constitutes a trade or business. See Cent. States, Se. and Sw. Areas Pension Fund v. White , 258 F.3d 636, 642 (7th Cir. 2001); Fulkerson , 238 F.3d at 895. Under Groetzinger , the Court must consider whether the person engaged in an activity 1) for the primary purpose of income or profit and 2) with continuity and regularity. 480 U.S. at 35. The phrase “trade or business” “does no t encompass purely personal activities no matter how continuous or extended the activity may be nor how profitable . . . .” White , 258 F.3d at 642 (internal quotation omitted). Additionally, “a sporadic activity, a hobby, or an amusement diversion does not qualify.” Groetzinger , 480 U.S. at 35.No. 06-3757 9

3 The four Whiting children each testified that their parents told them that they established Pioneer Ranch Limited Partnership on the advice of their accountants and lawyers. Though the children’s testimony is inadmissible hearsay, there is admissible evidence that the Whitings established Pioneer Ranch for estate planning purposes. Each year the Whitings gave their children un-taxable gifts of land, which is consistent with estate planning. The parties focus their disp ute on whether the Whitings engaged in ranching an d farming primarily for the purpose of income or profit. The defendants contend that the Whitings operated PioneerRanch for purely personal reasons, as a vacation home and retreat, and created the partnership for estate planning purposes. 3 Additionally, they point out that the Wh itings owned the land that became Pioneer Ranch for twenty-two years prior to establishing the partnership and that the manner in which they handled the lives tock and farming on the ranch did not change in any way from the manner in which it was handled before 1993. They also emphasize that the Whitings suffered significant losses for nine straight years after they est ablished the partnership, and that the property’s tennis cour ts, shuffleboard court, and trout pond all demonstrate that the Whitings intended Pioneer Ranch to be a vacation home because those things have nothing to do with ranching or farming. Finally, they allege that the Whitings acqu ired land that was largely unsuitable for either ranchingor farming because Pioneer Ranch was an investment, not a trade or business.
By contrast, the Fund emphasizes the partnership agreement, which stated th at the business purpose of Pioneer Ranch was “to engage in the business of farming,ranching, and any agricultural pursuit or undertaking . . . .” Courts have held that “a defendant’s stated intention of forming a business is highly relevant, because10 No. 06-3757

4 We note that parties are responsible for whatever legal consequences attach to their own choice of business organization. See Connors , 995 F.2d at 254. it constitutes a declaration against interest.” See, e.g.

, Connors , 995 F.2d at 254. The Fund also points out that the Whitings constructed fences to hold cattle, sold livestock and grains, employedone full-time employee and two part-time employees, and provided the employees with health, retirement, and workers’ compensation benefits. They also highlight the fact that the Whitings’ tax returns claimed business exemptions and deductions for farming expenses each year. Moreover, from 1994through 2003, Pioneer Ranch represented that its principal business activity was cattle farming and that it generated an annual income of $20,000. On these undisputed underlying facts, the district court held that Pioneer Ranch is a trade or business. Even if this Court might have interpre ted the facts differently, a fact finder could reasonably consider the documentary evidence of the Whitings’ in tent and conclude that theyengaged in the activities on Pioneer Ranch for the primary purpose of income or profit and simply derived incidental personal benefit from Pioneer Ranch.

The defendants maintain thatit would be fundamentally unfair to impose withdrawal liability on Pioneer Ranch. 4 They argue that, as in Fulkersonand White , this Court should reverse summary judgment. Fulkerson and White are readily distinguishable fr om this case because they addressed legal errors about whether the activities in those cases were sufficientl y regular and continuous, an issue that is undisputed in this case. Because there are no disputed facts and the defendants are not entitled to a jury trial, if the Court remands theNo. 06-3757 11

case for a trial, the same tr ier of fact will consider the same evidence on which it al ready concluded that no factfinder could reasonably find that Pioneer Ranch was not a trade or business. Because the district court committedno errors of law, and a reasonable fact finder could conclude that Pioneer Ranch was a trade or business, the district court did not commit clear error.

III. C ONCLUSION For the above reasons, we A FFIRM the district court’s grant of summary judgment to the plaintiffs.

C UDAHY , Circuit Judge , concurring in the judgment. It is somewhat doubtful whether Congress’s intent as to the legitimate purposes of withdrawal liability under the Multiemployer Pension Plan Amendments Act is being properly served here. The majority correctly states that a “trade or business,” as defined in Commissioner of Internal Revenue v. Groetzinger , requires as its “primary purpose” the realization of “income or profit.” 480 U.S. 23, 35 (1987). There is no clear errorin the district court’s conclusion that Pioneer Ranc h was primarily intended to make a profit, but the continued existence of the “ranch” in the face of relentless losses suggests otherwise, its founding agreement and tax f ilings notwiths tanding. A reasonable jury could conclude that Pioneer Ranch was a vacation home enhanced by a few livestock and inflated to the status of a “ranch” for tax purposes.12 No. 06-3757

As the majority notes, th is makes the case turn on whether Pioneer Ranch is entitled to a jury trial on the fund’s claim for withdrawal li ability. (Op. at 6-8.) The centrality of this issue entitles it to a degree of rigorous attention to which neither the majority nor, it should be noted, the parties have subjected it. (Although Central States has asserted that Pioneer Ranch is not entitled toa jury trial, and Pioneer Ranch has asserted the contrary, neither has done much to explain why such a right should or should not exist.)

The majority concludes that Pioneer Ranch is notentitled to a jury because it “avoided the dispute resolution scheme that Congress contemplated in the statute,” that is, private arbitration described in 29 U.S.C. § 1401(a)(1). (Op. at 8.) But, whatever it would mean for Congress to “contemplate” arbitration, this court has determined that Congress has not always required that every issue in a dispute between a fund and an employer be arbitrated. In Central States, Se. & Sw. Areas Pension Fund v. Slotky , we held that “the issue of membership in a controlled group,” the very issue that Pioneer Ranch disputes in this case , “cannot be within exclusivearbitral jurisdiction. For then people who had absolutely no reason to believe that they might be deemed members of a controlled group would be foreclosed from litigating the issue in any forum.” 956 F.2d 1369, 1373 (7th Cir. 1992). We suggested that some defendants might still be required to arbitrate the issue, for instance “if the pension plan explicitly notifies the personof his potential liability,” dispelling any notice concerns, but the issue is sometimes properly decided by courts in the first instance. Id. ; cf. Central States, Se. & Sw. Pe nsion Fund v. Personnel, Inc.

, 974 F.2d 789, 792 n.1 (7th Cir. 1992) (suggesting that a defendant is never required to arbitrate employer status).No. 06-3757 13

If Pioneer Ranch has not evaded any congressionallyrequired arbitration, it is not clear why its failure to pursue arbitration barred it fr om jury trial; Pioneer Ranch could have plausibly argued that it has a Seventh Amendment right to a jury trial inthe federal courts, and the availability of a jury trial often depends on the litigants’ choice of the forum in which their dispute will be resolved. See, e.g., Langenkamp v. Culp

, 498 U.S. 42, 44-45 (1990) (per curiam); Statland v. United States , 178 F.3d 465, 472-73 (7th Cir. 1999). When Congress “provides for enforcement of statutory rights in an ordinary civil action in the district courts,” the Seventh Amendment applies and “a jury trial must be avail able if the action involves rights and remedies of the sort typically enforced in an action at law.” Curtis v. Loether , 415 U.S. 189, 195 (1974); cf. Granfinanceria, S.A. v. Norderg , 492 U.S. 33, 52-53 (1989) (explaining that the Seventh Amendment does not apply to disputes that Co ngress assigns “to a forum in which jury trials are unavail able”). While it may not be entirely clear whether an action for MPPAA withdrawal liability involves such rights and remedies, it is certainly a respectable candidate for them. Money damages are a typically legal remedy, and we have previously held that the Seventh Amendment provides a jury right when a union trust fund seeks cont ractually required contributions from an employer. See Bugher v. Feightner , 722 F.2d 1356, 1357-60 (7th Cir. 1983).

This is not to say that the majority’s reasoning is incorrect. It might be that Central States’ suit is not an

“ ordinary civil action,” even thou gh it is heard in the district courts, Curtis , 415 U.S. at 195 (emphasis added), or it might be that the Seventh Amendment does not ensure a jury trial even if it applies. But I think theissue remains somewhat obscure and need not be resolved in the present case. Pioneer Ranch seems to have forfeited the jury trial issue on appeal by failing to support14 No. 06-3757

it with any sort of citationto authority or argument. Central States, Se. & Sw. Areas Pension Fund v. Schilli Corp. , 420 F.3d 663, 670 (7th Cir. 2005); Pelfresne v. Village of Williams Bay , 917 F.2d 1017, 1023 (7th Cir. 1990). (The Fund has done almost as little to explain its assertion that Pioneer Ranch had no right to a jury trial, but it has at least cited to Central States, Se. & Sw. Pension Fund v. Personnel, Inc. , which by omitting any discussion of the jury issue from its determination of the standard of review arguably suggests that a jury right does not exist. 974 F.2d 789, 792 (7th Cir. 1992).) Even if it had not waived the issue on appe al, Central States “explicitly notifie[d] [Pioneer Ranch] of [its] potential liability” under the MPPAA, which suggests that it might have been required to arbitrate its control group membership. Central States, Se. & Sw. Areas Pension Fund vs. Slotky

, 956 F.2d 1369, 1373 (7th Cir. 1992). If so, the majority is correct and it has no right to a jury trial. I would therefore not reach the general issue of whether there is a right to a jury trial in lawsuits to recover MPPAA withdrawal liability under 29 U.S.C. § 1401(b)(1). I otherwise agree with the majority opinion.

A true Copy:

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________________________________ Clerk of the United States Court of

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USCA-02-C-0072—7-12-07