2011 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-21-2011

William Einhorn v. M L Ruberton ConstrCo

Precedential or Non-Precedential: Precedential

Docket No. 09-4204

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2011

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2011 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"William Einhorn v. M L Ruberton ConstrCo" (2011). 2011 Decisions. Paper 1877.

http://digitalcommons.law.villanova.edu/thirdcircuit_2011/1877
PRECEDENTIAL

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT

 

No. 09-4204

 

WILLIAM J. EINHORN,

Administrator of the 

TEAMSTERS PENSION TRUST FUND

OF PHILADELPHIA & VICINITY 

and the TEAMSTERS HEALTH AND WELFARE 

TRUST FUND OF PHILADELPHIA & VICINITY,

 Appellant

v.

M.L. RUBERTON CONSTRUCTION COMPANY

v.

RONALD L. TOBIA, ESQ.;

TOBIA & SORGER ESQUIRES, LLC;

DAVID M. DECLEMENT, ESQ.

 

On Appeal from the United States District Court

for the District of New Jersey

(D.C. No. 1-06-cv-02511)

District Judge: Honorable Joseph E. Irenas

 

Argued September 15, 2010

Before: SLOVITER, BARRY, and SMITH, Circuit Judges

(Filed: January 21, 2011)

____
2

Jo Bennett

Frank C. Sabatino (Argued)

Stevens & Lee

Philadelphia, PA l9l03

 Attorneys for Appellant

Melissa C. Angeline

Lawren H. Briscoe

Jonathan Landesman (Argued)

George E. Pallas

Cohen, Seglias, Pallas, Greenhall & Furman

Philadelphia, PA 19103

 Attorneys for Appellee M.L. Ruberton Construction Company

David M. Kupfer (Argued)

Carroll, McNulty & Kull

Basking Ridge, NJ 07040

 Attorney for Appellee Ronald L. Tobia, Esq.

 

OPINION OF THE COURT

 

SLOVITER, Circuit Judge.

This appeal asks us to consider the circumstances in

which a purchaser of assets bears liability for delinquent

employee benefit fund contributions under the Employee

Retirement Income Security Act (“ERISA”) as a successor in

interest to the seller of those assets. Appellant William J.

Einhorn, on behalf of employee benefit funds established

pursuant to ERISA, brought suit to recover unpaid contributions

from Appellee M.L. Ruberton Construction Company. 

According to Einhorn, Ruberton was obligated to contribute to

the benefit funds under two collective bargaining agreements as

a successor employer to the original signatory, Statewide Hi-
 We set forth only those facts that are relevant to our 1

holding. As discussed below, because we will remand this case to

the District Court to resolve disputed issues with respect to

Ruberton’s continuation of Statewide’s business, we need not go

into great detail here.

3

Way Safety, Inc. The District Court applied the traditional

common law rule of successorship liability, found that Ruberton

was not a continuation of Statewide, and granted Ruberton’s

motion for summary judgment. Einhorn appeals.1

I.

Einhorn is the Administrator of the Teamsters Pension

Trust Fund and Welfare Fund of Philadelphia and Vicinity

(collectively, “the Funds”). The Funds are multiemployer

benefit plans established pursuant to various provisions of

ERISA, 29 U.S.C. § 1001 et seq., and Section 302(c)(5) of the

Labor Management Relations Act (“LMRA”), 29 U.S.C. §

186(c)(5).

Statewide, a highway construction company with

facilities in New Jersey, plays an integral role in the dispute,

although it is not a party to this lawsuit. Under two collective

bargaining agreements (“CBAs”) with Teamsters Local Union

No. 676, Statewide was required to make contributions to the

Funds.

In 2005, Statewide faced a series of financial hardships

and the prospect of being debarred from public contract work in

New Jersey based on allegations of fraud. Meanwhile, the Funds

began an audit of Statewide’s payroll records, which revealed

delinquencies owed under the aforementioned CBAs. The

delinquencies, including liquidated damages, totaled close to

$600,000.

Around this time Ruberton, a general construction

company, learned of Statewide’s financial difficulties and

entered into negotiations with Statewide for Ruberton’s purchase

of Statewide’s assets. Local 676 learned of the potential

transaction and filed suit for an injunction because it feared that
 The only liability of Statewide’s that Ruberton expressly 2

assumed during the sale was an outstanding balance of $160,000

4

Ruberton, a non-union employer, would not agree to become

party to Statewide’s CBAs. The District Court issued a

temporary restraining order (“TRO”) enjoining consummation of

the sale. Soon after the TRO was issued, negotiations began

among Local 676, Statewide, and Ruberton, this time with the

union’s rights represented.

At the first meeting, Einhorn discussed Statewide’s

delinquent contributions to the Funds with Statewide’s Principal

Officer George Smith Jr. and Ruberton’s President Andrew

Berenato. Berenato testified that at that meeting he heard

Einhorn tell Smith that Statewide owed the Funds “about a half a

million dollars.” App. at 169. Some days later, there was a

second meeting among the same individuals.

According to Berenato, Ruberton’s principal objective

during the second meeting, since they “knew there was a

problem with Statewide and the Funds,” was to ensure that

Ruberton “would not be held the successor to them and liable for

that debt.” App. at 166. For his part, Einhorn aimed to protect

the Funds’ interest in delinquent and future contributions. Local

676 sought to ensure that Ruberton would hire its workers

hitherto employed by Statewide, rather than continuing to use

non-union workers. By the end of this meeting, two agreements

were executed.

The first agreement, between Local 676 and Statewide,

guaranteed that the union would dismiss the injunction suit

without prejudice, and Statewide promised to cooperate fully

with the Funds’ payroll audit and to timely remit all future

contributions. The second agreement, between Local 676 and

Ruberton, provided that Ruberton would hire, subject to its work

needs, the existing workforce of Statewide covered by the

existing CBA, that such employment would be governed by that

CBA on an interim basis, and a newly negotiated CBA would

cover all Ruberton employees. Neither agreement addressed

Ruberton’s potential successor liability to the Funds for the

delinquent contributions.2
that Statewide owed on some heavy equipment.

Such assets included office equipment, furnishings and 3

fixtures, machinery, vehicles, construction equipment, access to all

sales and business records and information, access to Statewide’s

telephone/facsimile numbers, rights under all leases for equipment,

permits, licenses, franchises, etc., and Statewide’s inventory.

Statewide kept its accounts receivable, which amounted to more

than $5 million.

5

Four days after the second meeting, on October 10, 2005,

Statewide sold its assets to Ruberton for $1.6 million in cash.3

Ruberton began making contributions to the Funds in December

that year. Simultaneous with the sale, a real estate holding

company related to Ruberton, RAL Real Estate, L.L.C., leased

Statewide’s facility in Folsom, New Jersey. Under the lease

agreement another entity related to Ruberton, Brianna L.L.C.,

thereafter exercised its option to purchase the facility from

Statewide and leased the facility to Ruberton. Ruberton hired

more than half of Statewide’s former employees in the months

following the sale, including its Vice President and thirty-three

percent shareholder, and took over several of Statewide’s

projects. Approximately two months after the sale, Ruberton

auctioned off many of the assets it had purchased from Statewide

that were not used in the expanded operations, realizing just

more than $600,000.

Statewide remained in business for some time after the

asset sale using subcontractors to provide the necessary

equipment and labor. Ruberton was one such subcontractor,

billing Statewide more than $400,000 for rented employees and

equipment. In January 2006, Statewide ceased all field

operations. A shareholder from Statewide retained an office at

the site now occupied by Ruberton to wind down the business. 

Ruberton’s profits increased as a result of the sale and the

company is still engaged in the highway construction business.

On December 13, 2005, Einhorn filed an action against

Statewide and Ruberton. Einhorn alleged that Statewide owed

the Funds pursuant to the operative CBAs and that Ruberton

owed the Funds as a successor in interest to Statewide. The
 During the proceedings, Ruberton filed a third-party 4

complaint against its former counsel Ronald L. Tobia and David

M. DeClement alleging malpractice. The District Court stayed the

third-party action pending disposition of this appeal.

As noted by the District Court, as of October 2008, 5

Statewide had at least fifteen judgments entered against it and less

than $250 in its bank accounts.

 The District Court granted Ruberton’s motion to certify as 6

a final judgment the summary judgment order under Fed. R. Civ.

P. 54(b). In the absence of certification, Ruberton’s unresolved

legal malpractice claims against its former attorneys would have

precluded appealability.

6

parties reached a settlement agreement on March 16, 2006,

wherein Statewide agreed to pay the delinquent contributions in

a series of installments. Statewide breached the settlement

agreement and Einhorn filed the present action against Ruberton

in June 2006. The following week, Einhorn obtained a 4

judgment against Statewide in the prior suit for the breach,

which Einhorn has been unable to enforce.5

II.

The District Court had jurisdiction under 29 U.S.C. §§

1132, 185(a), as well as 28 U.S.C. § 1331. We have appellate

jurisdiction under 28 U.S.C. § 1291.6

We exercise de novo review of the District Court’s

resolution of the parties’ cross motions for summary judgment. 

See Startzell v. City of Phila., 533 F.3d 183, 192 (3d Cir. 2008). 

Similarly, we exercise plenary review over the District Court’s

“choice and interpretation of legal precepts.” Am. Soc’y for

Testing v. Corrpro Cos., Inc., 478 F.3d 557, 566 (3d Cir. 2007)

(citation and quotations omitted).

III.

At issue in this appeal is whether Ruberton may be held

liable for Statewide’s debts to the Funds under a theory of
7

successor liability. It is settled that successor liability may be

imposed for delinquent ERISA fund contributions in the context

of a merger. Teamsters Pension Trust Fund of Phila. & Vicinity

v. Littlejohn, 155 F.3d 206, 208-10 (3d Cir. 1998) (holding that

under the federal common law, the surviving entity in a merger

is liable for the debts of the predecessor regardless of whether

the successor had pre-merger notice of such debts). As the

District Court found and is undisputed by the parties, however,

the transaction between Statewide and Ruberton was not a

merger. Rather, the transaction here was one in which a

corporate entity bought the assets of another corporate entity. 

Liability under that situation is not well settled.

At the District Court, both parties assumed that the

Seventh Circuit’s decision in Upholsterers’ Int’l Union Pension

Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323 (7th Cir.

1990), provided the applicable rule of law in the case. Artistic

Furniture held that a successor purchaser of assets may be liable

for the seller’s delinquent ERISA fund contributions to vindicate

important federal statutory policy where the buyer had notice of

the liability prior to the sale and there was sufficient evidence of

“continuity of operations” between the entities. Id. at 1327-29. 

In so holding, the Seventh Circuit departed from the general

common law rule that an entity that purchases the assets of

another does not assume the seller’s liabilities unless one of the

following exceptions applies: the purchaser expressly or

impliedly assumed liability; the transaction amounted to a de

facto merger; the purchasing corporation is a mere continuation

of the seller; or the transfer of assets was for the fraudulent

purpose of escaping liability for unpaid debts. Id. at 1325-26.

The District Court declined to follow the expanded

successorship doctrine espoused by the Seventh Circuit in

Artistic Furniture. Guided by this court’s precedents, the

District Court distinguished Golden State Bottling Co. v. NLRB,

414 U.S. 168 (1973), upon which the Seventh Circuit relied in

Artistic Furniture. The District Court interpreted our prior

decision in Littlejohn to hold that universal concepts of corporate

law supplied the federal common law rule of successor liability

in the present ERISA case. Because the District Court found

that none of the exceptions permitting liability applied, it granted
8

Ruberton’s motion for summary judgment.

The Supreme Court has recognized that “striking a

balance between the conflicting legitimate interests of the bona

fide successor, the public, and the affected employee[s]” to

effectuate national labor policy “is often a difficult and delicate

responsibility.” Golden State, 414 U.S. at 181 (citations and

quotations omitted); see also EEOC v. Vucitech, 842 F.2d 936,

944 (7th Cir. 1988) (noting that successor liability is “dreadfully

tangled, reflecting the difficulty of striking the right balance

between the competing interests at stake”). While this court

appreciates the District Court’s efforts to balance the interests,

like the Seventh Circuit we “feel constrained to disagree with its

ruling that labor law successorship principles cannot support the

imposition of liability upon [Ruberton].” Artistic Furniture, 920

F.2d at 1325.

Federal courts beginning with Golden State have

developed a federal common law successorship doctrine

imposing liability upon successors beyond the confines of the

common law rule when necessary to protect important

employment-related policies. See Brzozowski v. Corr. Physician

Servs., Inc., 360 F.3d 173, 177 (3d Cir. 2004). In Golden State,

the Supreme Court held that the purchaser of a business could be

held liable under the National Labor Relations Act (“NLRA”)

for remedying the seller’s unlawful discharge of an employee

where the successor employer had notice of the unfair practice

and “continued, without interruption or substantial change, the

predecessor’s business operations.” 414 U.S. at 184. The

remedy required that the successor reinstate the employee with

back pay.

The Supreme Court acknowledged in Golden State that

the successor company “was not party to the unfair labor

practices” and now “operate[s] the business without any

connection with his predecessor.” Id. at 171 n.2 (quotations

omitted). Nonetheless, it stated, other factors must be taken into

account when balancing the equities. Among those equities is

that the successor “is generally in the best position to remedy”

the violation and, because notice is required, potential liability

“can be reflected in the price [the successor] pays for the
See, e.g., Steinbach v. Hubbard, 51 F.3d 843 (9th Cir.

7

1995) (Fair Labor Standards Act); Artistic Furniture, 920 F.2d

1323 (ERISA); Criswell v. Delta Air Lines, Inc., 868 F.2d 1093

(9th Cir. 1989) (Age Discrimination in Employment Act); Sec’y of

Labor v. Mullins, 888 F.2d 1448 (D.C. Cir. 1989) (Mine Safety and

Health Act); Vucitech, 842 F.2d 936 (Pregnancy Discrimination

Act); Musikiwamba v. ESSI, Inc., 760 F.2d 740 (7th Cir. 1985) (42

U.S.C. § 1981); Bates v. Pac. Mar. Ass'n, 744 F.2d 705 (9th Cir.

1984) (Title VII).

 Other circuits have extended successor liability to Title VII 8

violations as well. See, e.g., Rojas v. TK Commc’ns, Inc., 87 F.3d

745 (5th Cir. 1996); Wheeler v. Snyder Buick, Inc., 794 F.2d 1228

(7th Cir. 1986); In re Nat’l Airlines, Inc., 700 F.2d 695 (11th Cir.

1983); Trujillo v. Longhorn Mfg. Co., Inc., 694 F.2d 221 (10th Cir.

1982); EEOC v. MacMillan Bloedel Containers, Inc., 503 F.2d

1086 (6th Cir. 1974).

9

business, or [the successor] may secure an indemnity clause in

the sales contract.” Id. (quotations omitted). Moreover,

throughout its analysis, the Supreme Court emphasized the

importance of providing “protection for the victimized

employee” without a remedy against the now defunct

predecessor entity. Id. at 181.

As noted by the Seventh Circuit, Golden State laid the

foundation for a series of cases in this court and others that

expanded successorship liability in the labor field holding that

labor policies have superseded the competing interest of fluidity

of corporate assets reflected in the common law rule. Artistic

Furniture, 920 F.2d at 1326-27. 

7

This court, following Golden State, has extended the

labor law successorship doctrine to employment discrimination

claims under Title VII. See Brzozowski, 360 F.3d 173; Rego v.

ARC Water Treatment Co. of Pa., 181 F.3d 396 (3d Cir. 1999).8

In Brzozowski, the plaintiff brought an action against her former

employer alleging gender discrimination that resulted in

$150,000 of damages. 360 F.3d at 175-76. When the plaintiff

realized that the company was insolvent, she asserted a claim

against the successor who had purchased the company’s assets. 
 We realize that here the liability lies close to $1 million. 9

While this is greater than the successor liability imposed in the

cases relied upon, this fact alone does not dictate whether liability

is fair. In Golden State, the successor was required to pay four

years of backpay for one employee. 414 U.S. at 187 n.9. If

multiple employees had been implicated in unfair labor practices,

multi-year salaries could have imposed a hefty sum and nothing in

the Supreme Court’s analysis would have precluded successor

liability for multiple employees so long as there was notice. In

Brzozowski, the plaintiff claimed $150,000 in damages for just one

employee. Here, there are a number of plan beneficiaries who

stand to be harmed. The record demonstrates that the asset sale has

been lucrative for Ruberton’s business. Ruberton’s business

acumen serves not as a basis for punishment as it asserts, but rather

a factor to be taken into account when balancing the equities.

10

Id. 

Taking into consideration the three principal factors

applicable to successor liability in the employment

discrimination context, we found that imposition of successor

liability was appropriate because the successor was on notice,

there was sufficient continuity of operations and workforce, and

the predecessor was unable to provide adequate relief. Id. at

178. We considered the balance of equities and “the prime

consideration” of fairness. Id. The successor-employer had

ample opportunity to insulate itself from liability during the

negotiations. Indeed, the sales agreement included an indemnity

clause disclaiming the successor’s liability for certain law suits

and EEOC claims. Id. at 175.

Our cases extending successorship liability from the

NLRA to the Title VII context suggest important principles. 

First, we have not confined the theory of successor liability after

an asset sale to the NLRA context, but have extended it to other

contexts based on the balance of equities. Second, the

imposition of a financial burden on the successor employer has

not restricted imposition of liability. See Artistic Furniture, 920 9

F.2d at 1327 (“There is, of course, no relevant economic

difference between the award of backpay or compensatory

damages at issue in our previous successor liability cases and the
11

delinquent contribution liability at issue here.”). The

requirement of notice and the ability of the successor to shield

itself during negotiations temper concerns that imposing

successor liability might discourage corporate transactions.

We agree with the Seventh Circuit that the federal

policies underlying ERISA and the Multiemployer Pension Plan

Amendments Act of 1980 (“MPPAA”), Pub.L. 96-364, 94 Stat.

1208, “are no less important, and no less compel the imposition

of successor liability than do the policies animating the NLRA,

Title VII,” or the other statutes to which the doctrine has been

extended. Id. In light of the Seventh Circuit’s comprehensive

analysis, we need not reinvent the wheel. Rather, we will

address some of the concerns raised by the District Court and

summarize the principal considerations that provide our ratio

decidendi.

A central policy goal underlying ERISA’s enactment

“was to protect plan participants and their beneficiaries.” 

Littlejohn, 155 F.3d at 208; see also Shaw v. Delta Air Lines,

Inc., 463 U.S. 85, 90 (1983) (“ERISA is a comprehensive statute

designed to promote the interests of employees and their

beneficiaries in employee benefit plans.”); Pittsburgh Mack

Sales & Serv., Inc. v. Int’l Union of Operating Eng’rs, 580 F.3d

185, 194 (3d Cir. 2009) (ERISA was enacted to ensure “that

pension funds will be adequately funded, even when employers

withdraw from them, and that employees who are relying on

those funds will be protected.”); Becker v. Mack Trucks, Inc.,

281 F.3d 372, 381 (3d Cir. 2002) (“ERISA is designed to protect

benefits promised to an employee arising from a pre-existing

employment relationship.”). Congress evinced a strong desire to

further protect participants when it enacted the MPPAA, which

amended ERISA to prevent “the adverse consequences that

result when individual employers terminate their participation or

withdraw” from multiemployer pension plans. Supervalu, Inc. v.

Bd. of Trs., 500 F.3d 334, 336 (3d Cir. 2007) (quotations

omitted).

Statewide’s failure to pay contributions caused harm to

plan beneficiaries and changed the nature of the employment

relationship. As the District Court noted during the settlement
12

hearing in January 2006, the Health and Welfare Fund

suspended benefits after the sale, leaving fifty-three union

workers and, in some cases, their families without health

insurance. Absent imposition of successor liability on Ruberton,

other employers will be forced to make up the difference to

ensure that workers receive their entitled benefits. If these

outcomes were permitted, it would contravene congressional

policy for multiemployer pension funds. See Artistic Furniture,

920 F.2d at 1328 (providing an in depth discussion of the

legislative history).

The rule promulgated in Artistic Furniture comports with

our opinion in Littlejohn. As noted above, we held in Littlejohn

that successor liability for delinquent ERISA fund contributions

could be imposed after a merger without notice. In so doing, we

relied in part on the “almost universally accepted state law

principle that when two corporations merge, the surviving

corporation assumes the liabilities of the extinct corporation.” 

Littlejohn, 155 F.3d at 209. Because the present case involves

an asset sale rather than a merger, the “universally accepted”

principle adopted in Littlejohn does not directly apply here.

However, Littlejohn established a framework by which to

determine successor liability under ERISA. As we stated in

Littlejohn, “where the statute does not provide explicit

instructions, it is well settled that Congress intended that the

federal courts would fill in the gaps by developing, in light of

reason, experience, and common sense, a federal common law of

rights and obligations imposed by the statute.” Id. at 208. “Of

course, [we continued,] the federal common law must be

developed with ERISA’s policy goals in mind.” Id. Although

we relied in Littlejohn on the state common law rule of successor

liability for delinquent contributions in a merger, we did so

stressing that following state law in that context furthered

Congress’ goals in enacting ERISA. See id. at 210 (adopting a

general rule of successor liability for mergers “demonstrates not

only its basis in reason but also that adopting it in this context

will further ERISA’s policy goal of protecting employee pension

plan participants and their beneficiaries”). We are satisfied that

the Seventh Circuit gave proper weight to the policy

considerations that we held in Littlejohn govern the federal
13

common law of ERISA.

The District Court, and Ruberton on appeal, dwell on

language from Littlejohn to support a departure from Artistic

Furniture and the Golden State line of cases. In Littlejohn, we

said that Golden State and its progeny were “somewhat

distinguishable because they dealt with the application of labor

law concepts and the terms of a collective bargaining agreement

to a corporation other than the signatory to the agreement,”

whereas, in Littlejohn the issue involved “the transfer of a valid

and ordinary debt . . . which just happens to have its genesis in

the terms of a collective bargaining agreement.” Id. at 209. The

District Court found that the balance of equities is different in a

suit to recover an “ordinary debt” because the unique employeremployee relationship governed by federal labor law and policy

is not implicated as it is in an unfair labor practice suit. Einhorn

v. M.L. Ruberton Const. Co., 665 F. Supp. 2d 463, 474 (D.N.J.

2009).

We are unpersuaded. Littlejohn is weak precedent for the

notion that an ERISA debt is merely “ordinary.” In that case,

“the parties agree[d] that only the transfer of a valid and

ordinary debt [was] at issue.” 155 F.3d at 209 (emphasis added). 

Thus, the court did not decide that an ERISA debt is ordinary;

the point was conceded and the court assumed it. Neither the

Littlejohn court nor the District Court offered any further

justification for concluding that such a debt is merely

contractual.

There is more than a contractual arrangement at stake

here. As the Artistic Furniture court observed, contribution

duties under ERISA are mandated by statute, with a special

federal cause of action for their enforcement. 920 F.2d at 1328

(citing 29 U.S.C. §§ 1145, 1132). Congress has thus adopted a

policy of protecting ERISA funds against delinquent

contributors to a degree that is greater than that afforded by the

common law of contracts. This policy judgment alters the preexisting balance of considerations that led to the adoption of the

common law rule, which counsels in favor of expanding

successor liability.
14

Moreover, the considerations in Littlejohn are

distinguishable from the present case. The issue in Littlejohn

focused on the requirement of notice. This court was concerned

that requiring notice before a debt follows in the context of a

merger “would result in perverse incentives, encouraging the

survivor to not examine records and hide its head in the sand,”

and allow the disappearing entity to “unilaterally extinguish a

debt” by hiding it from the survivor. Id. at 210 (emphasis in

original). In the context of an asset sale, requiring notice would

have the opposite effect. The successor-purchaser would have

incentive to inquire about the seller’s previous liabilities to

negotiate for a lower purchase price. The predecessor-seller

would have incentive to disclose debts and find workable

solutions during the sale to release itself from liability and avoid

protracted dispute.

In its brief, Ruberton opines that “it would make little

sense for courts . . . to apply a narrow standard for determining

successor liability in ERISA cases involving mergers and an

expanded standard in cases involving assets sales – unless the

goal is to place a ‘thumb on the scales’ of justice to obtain a

particular result.” Appellee’s Br. at 24. Although we have

referred to the Artistic Furniture standard as the “expanded”

successorship doctrine, this is not entirely accurate. On one

hand, the Artistic Furniture standard is more expansive than the

common law rule of successor liability because it does not

require commonality of ownership between the seller and buyer

for the continuance analysis (discussed infra). On the other, the

Artistic Furniture standard is narrower than the common law

because it requires that a successor be put on notice before the

assumption of debt follows. And, as Littlejohn instructs,

balancing the equities in light of federal labor policy is precisely

what we are supposed to do in successorship cases under

ERISA. This may, as here, require that different standards apply

in different contexts.

The Artistic Furniture opinion comports with other

precedents of this court. We have recognized that because

ERISA and the MPPAA are remedial statutes, they “should be

liberally construed in favor of protecting the participants in

employee benefit plans.” IUE AFL-CIO Pension Fund v. Barker
15

& Williamson, Inc., 788 F.2d 118, 127 (3d Cir. 1986). 

Moreover, as argued by Einhorn, in Cent. Pa. Teamsters Pension

Fund v. McCormick Dray Line, Inc., 85 F.3d 1098 (3d Cir.

1996), this court recognized that ERISA displaces traditional

common law principles in litigation brought to recover

delinquent contributions to multiemployer plans. We held in

McCormick Dray that the defense of mutual mistake, valid under

the traditional common law, was not available in an ERISA suit

in order to effectuate federal labor policy as intended by

Congress. Id. at 1106-07. The principles set forth in

McCormick Dray support a departure from the common law rule

in the present case as well.

The District Court’s reliance on our decision in Polius v.

Clark Equip. Co., 802 F.2d 75 (3d Cir. 1986), was misplaced. 

Polius involved a state products liability suit and does not

govern our analysis in the labor context. Moreover, the notice

requirement obviates the concern we expressed in Polius, and

echoed by the District Court, that expanded liability would be

unforeseen and is likely to discourage corporate transactions. As

we noted above, we do not agree that imposing liability will

negatively affect the liquidity of corporate assets. As the

Supreme Court reasoned in Golden State, the seller’s

outstanding liabilities can be reflected in the purchase price, or

the successor may secure an indemnity clause in the sales

contract. 414 U.S. at 172 n.2.

A number of other circuit and district courts have

extended the Golden State rationale in actions seeking recovery

of delinquent pension fund contributions under ERISA after an

asset sale. See Mass. Carpenters Cent. Collection Agency v.

Belmont Concrete Corp., 139 F.3d 304, 308 (1st Cir. 1998)

(citing Artistic Furniture, the court recognized that “[a]lthough

developed in the labor law context, alter ego or successor

liability analysis has been applied to claims involving employee

benefit funds brought under ERISA and the LMRA”); Stotter

Div. of Graduate Plastics Co., Inc. v. Dist. 65, United Auto

Workers, 991 F.2d 997, 1002 (2d Cir. 1993) (citing Artistic

Furniture, the court found that the arbitrator did not exceed his

authority by imposing liability on the successor-employer for

delinquent contributions owed under the predecessor’s CBA
 Ruberton cites to cases from the Fifth and Eighth circuits 10

as inconsistent with expanded successorship liability under ERISA.

However, neither case provides persuasive or relevant authority.

See Greater Kan. City Laborers Pension Fund v. Superior Gen.

Contractors, Inc., 104 F.3d 1050 (8th Cir. 1997) (case did not

involve an asset sale and issue was whether defendant was an alter

ego); Cen. States, Se. & Sw. Areas Pension Funds v. PYA/Monarch

of Tex., Inc., 851 F.2d 780 (5th Cir. 1988) (plaintiff sued on narrow

grounds under the common law).

16

with a union); Haw. Carpenters Trust Funds v. Waiola

Carpenter Shop, Inc., 823 F.2d 289 (9th Cir. 1987) (in wake of

an asset sale, the court followed the substantial continuity test

for determining successor liability for delinquent contributions);

Bd. of Trs. of Unite Here Local 25 v. MR Watergate LLC, 677 F.

Supp. 2d 229, 231-32 (D.D.C. 2010) (recognizing Artistic

Furniture); Cent. Pa. Teamsters Pension Fund v. Bear Distrib.

Co. Inc., No. 07-CV-3554, 2009 WL 812224, at *8 (E.D. Pa.

Mar. 26, 2009) (adopting the Artistic Furniture standard in an

analogous case); Trs. of the Utah Carpenters & Cement Masons

Pension Trust v. DAW, Inc., No. 2:07-CV-87 TC, 2009 WL

77856, at *3 (D. Utah Jan. 7, 2009) (following Artistic Furniture

finding buyer liable for seller’s withdrawal liability under

ERISA); see also 14 Fletcher, Cyc. Corp. § 6755 (“federal courts

in the labor law field have taken a far more liberal approach

[than the common law] in imposing the obligations of a seller of

assets on the purchaser . . . [including] where the predecessor

had failed to meet its payment obligations under a

multiemployer plan”) (citations omitted). No court of appeals,

to our knowledge, has rejected the holding in Artistic

Furniture.

10

In sum, we hold that a purchaser of assets may be liable

for a seller’s delinquent ERISA fund contributions to vindicate

important federal statutory policy where the buyer had notice of

the liability prior to the sale and there exists sufficient evidence

of continuity of operations between the buyer and seller. The

inquiry should be effectuated on a case by case basis balancing

the equities presently before the court. 

We will remand this case to the District Court to apply
17

the Golden State successorship doctrine to determine whether

Ruberton is liable for Statewide’s delinquencies to the Funds. 

At oral argument the parties did not dispute that the notice

requirement has been satisfied. Artistic Furniture, 920 F.2d at

1329 (the notice inquiry centers on whether the buyer knows

about the debts, not whether the buyer knows that the funds

intend to seek recovery from it). As such, the only issue on

remand will be whether Ruberton substantially continued

Statewide’s operations.

Under the substantial continuity test courts look to, inter

alia, the following factors: continuity of the workforce,

management, equipment and location; completion of work

orders begun by the predecessor; and constancy of customers. 

See Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27,

43 (1987); Artistic Furniture, 920 F.2d at 1329. This analysis

differs from the traditional common law de facto merger and

mere continuation exceptions because commonality of

ownership is not required. See Berg Chilling Sys., Inc. v. Hull

Corp., 435 F.3d 455, 467-69 (3d Cir. 2006) (discussing the

factors for determining whether a transaction is a de facto

merger or continuation, including continuity of shareholders);

Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d

1074, 1084 (7th Cir. 1997) (“a purchaser of assets will not be

liable under the theory of de facto merger or mere continuation

in the absence of continuity of ownership”) (quotations omitted).

The parties dispute whether Ruberton continued

Statewide’s business and, if so, to what extent. For example,

Ruberton argues that “even if Ruberton were deemed to have

continued Statewide’s business, that continuation would be

limited to the guide rail, fencing and signage business” covered

by the Local 676 CBA and it could not be liable for

contributions owed in connection with Statewide’s other CBAs. 

Appellee’s Br. at 9 n.4. The presence of a factual dispute

renders summary judgment at this juncture for either party

inappropriate and this question is best resolved by the District

Court.

IV.
For the reasons set forth, we will vacate the District

Court’s grant of summary judgment in favor of Ruberton, and

remand for further proceedings consistent with this opinion.

18