In the

United States Court of Appeals

For the Seventh Circuit

No. 14-1618

JAMES TSAREFF, et al.,

Plaintiffs-Appellants,

v.

MANWEB SERVICES, INC., 

Defendant-Appellee.

Appeal from the United States District Court for the 

Southern District of Indiana, Indianapolis Division.

No. 1:10-cv-00980-SEB-DKL — Sarah Evans Barker, Judge.

ARGUED SEPTEMBER 19, 2014 — DECIDED JULY 27, 2015

Before BAUER, ROVNER, and WILLIAMS, Circuit Judges.

BAUER, Circuit Judge. Plaintiff-appellant, Indiana Electrical

Pension Benefit Plan (“Plan”), through its trustee, James

Tsareff, brings this action to collect withdrawal liability from

defendant-appellee, ManWeb Services, Inc. (“ManWeb”), under the Employee Retirement Income Security Act (“ERISA”),

as amended by the Multiemployer Pension Plan Amendments

Act of 1980 (“MPPAA”), 29 U.S.C. §§ 1001–1461. The Plan

argues that ManWeb is responsible for the withdrawal liability
2 No. 14-1618

incurred by Tiernan & Hoover, certain assets of which

ManWeb acquired through an asset sale, under a theory of

successorliability. The Plan appeals the district court’s grant of

judgment as a matter of law to ManWeb and denial of the

Plan’s motion for summary judgment. For the reasons that

follow, we reverse.

I. BACKGROUND

ManWeb is an Indianapolis-based company that performs

engineering, construction, and installation-related services. In

August 2009, ManWeb entered into an asset purchase agreement (“APA”) with Tiernan & Hoover, another Indianapolisbased electrical contractor that performed engineering,

construction, and service for cold storage facilities under the

trade name, “The Freije Company.” Unlike ManWeb, a nonunion employer, Tiernan & Hoover was party to a collective

bargaining agreement (“CBA”) with IBEW Local 481 Union

(“Union”), in accordance with which it made contributions to

the Plan, a multiemployer pension fund. As a result of the asset

purchase, Tiernan & Hoover ceased operations and no longer

had an obligation to contribute to the Plan. Although ManWeb

continued to do the same type of work in the jurisdiction of the

CBA for which contributions were previously required of

Tiernan & Hoover, ManWeb did not make any contributions

to the Planfollowing its purchase of Tiernan & Hoover’s assets. 

On February 24, 2010, counsel for the Plan sent a letter

addressed to “The Freije Company” to Tiernan & Hoover’s

formerIndianapolis address, indicating that it had determined

that the company had effectuated a complete withdrawal from

the Plan in August 2009 and that, pursuant to § 4202 of ERISA,
No. 14-1618 3

the Plan had assessed withdrawal liability against Tiernan &

Hoover. The letter indicated that Tiernan & Hoover owed

$661,978.00 in withdrawal liability, which could be satisfied in

one lump sum payment or in nineteen quarterly payments,

commencing within sixty days of the company’s receipt of the

letter. Pursuant to a mail forwarding instruction, the letter was

forwarded to ManWeb’s address at 9211 Castlegate Drive,

Indianapolis, Indiana 46256, where it was received and signed

for by a ManWeb employee. Nevertheless, no payments were

ever made to satisfy this liability; further, Tiernan & Hoover

never sought review of the withdrawal liability assessment or

initiated arbitration, despite the availability of both options

under the statute. 29 U.S.C. §§ 1399(b)(2)(A) and 1401(a)(1).

Pursuant to the statute, the assessment against Tiernan &

Hoover became due and owing after its failure to request

review and initiate arbitration within the statutory deadline.

29 U.S.C. § 1401(b)(1). 

As a result of Tiernan & Hoover’s failure to make withdrawal payments, the Plan filed a collection action in federal

court against Tiernan & Hoover pursuant to 29 U.S.C.

§§ 1132(e) and (f), and 1451(c). The Plan added ManWeb as a

defendant under a theory of successor liability. At the close of

discovery, the parties filed cross-motions for summary

judgment. The district court granted the Plan’s motion in part,

finding that Tiernan & Hoover had waived its right to dispute

the assessment of withdrawal liability by failing to initiate

arbitration proceedings and, therefore, owed the full amount

of the assessment. However, with respect to the Plan’s claim of

successor liability against ManWeb, the district court held that
4 No. 14-1618

ManWeb was not liable to the Plan and granted ManWeb’s

motion for judgment as a matter of law. This appeal followed. 

II. ANALYSIS

The Plan argues on appeal that the district court erred in

granting ManWeb judgment as a matter of law and denying

the Plan’s motion for summary judgment. We review this

decision de novo. McDougall v. Pioneer Ranch Ltd. P’ship, 494

F.3d 571, 575 (7th Cir. 2007). Summary judgment is proper only

when the record demonstrates that there is no genuine issue as

to any material fact and the moving party is entitled to a

judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp.

v. Catrett, 477 U.S. 317, 322 (1986). Where, as here, the district

court was faced with cross-motions for summary judgment,

our review requires that we construe all facts and inferences in

favor of the party against whom the motion under consideration was made—in this case, the Plan. Hendricks-Robinson v.

Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998). Before we proceed,

however, we must address the district court’s interpretation of

the federal successor liability notice requirement.

A. Notice of Contingent Withdrawal Liability Satisfies

the Successor Liability Notice Requirement

The district court held that the successor liability notice

requirement excludes pre-acquisition notice of contingent

liabilities; thus, because the Plan did not assess the amount of

Tiernan & Hoover’s withdrawal liability until after the asset

purchase, it was impossible for ManWeb to have notice of any

existing withdrawal liability prior to acquisition. The Plan

argues that, in the narrow context of multiemployer pension

fund withdrawal liability, the successorliability notice element
No. 14-1618 5

encompasses both existing and contingent liabilities. Accordingly, the Plan maintains that the notice requirement is

satisfied because the record shows that ManWeb had notice of

Tiernan & Hoover’s potential withdrawal liability. Because this

issue calls for an examination of the correct legal notice

standard for successor liability in the employer withdrawal

liability context, we review it de novo.

The successorship doctrine under federal common law has

developed extensively over the years in an effort to protect

federal rights and effectuate federal policies. See Chicago Truck

Drivers, Helpers & Warehouse Workers Union (Indep.) Pension

Fund v. Tasemkin, Inc., 59 F.3d 48 (7th Cir. 1995); Upholsterers’

Int’l Union Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d

1323 (7th Cir. 1990). The general common law rule of successor

liability holds that, except for certain exceptions, where one

company sells its assets to another company, the latter is not

liable for the debts and liabilities of the seller. See Travis v.

Harris Corp., 565 F.2d 443, 446 (7th Cir. 1977). However, “the

Supreme Court and this Circuit have imposed liability upon

successors beyond the bounds of the common law rule in

a number of different employment-related contexts,” Artistic

Furniture, 920 F.2d at 1326, when “(1) the successor had notice

of the claim before the acquisition; and (2) there was ‘substantial continuity in the operation of the business before and after

the sale,’” Tasemkin, 59 F.3d at 49 (quoting E.E.O.C. v. G-K-G,

Inc., 39 F.3d 740, 748 (7th Cir. 1994)). See, e.g., Golden State

Bottling Co., Inc. v. N.L.R.B., 414 U.S. 168 (1973); Artistic

Furniture, 920 F.2d at 1329; E.E.O.C. v. Vucitech, 842 F.2d 936

(7th Cir. 1988); Wheeler v. Snyder Buick, Inc., 794 F.2d 1228

(7th Cir. 1986). Successor liability is an equitable doctrine,
6 No. 14-1618

Tasemkin, 59 F.3d at 49, and in every instance where we have

found the imposition of federal successor liability to be

appropriate, we have done so after carefully balancing the

need to vindicate important federal statutory policies with

equitable considerations. Thus, determining whether or not

notice of a contingent liability satisfies the successorship notice

requirement in the context of employer withdrawal liability

necessitates a similar analysis of the underlying policy goals.

The MPPAA consists of a series of amendments to ERISA

aimed at minimizing “the adverse consequences that resulted

when individual employers terminate[d] their participation in,

or withdr[e]w from, multiemployer plans.” Pension Benefit

Guarantee Corp. v. R.A. Gray & Co., 467 U.S. 717, 722 (1984). See

also Chicago Truck Drivers v. El Paso CGP Co., 525 F.3d 591, 595

(7th Cir. 2008); Artistic Furniture, 920 F.2d at 1328. To this end,

the MPPAA requires employers who withdraw from multiemployer pension plans to pay their shareof “unfunded vested

benefits,” or withdrawal liability. See 29 U.S.C. § 1381(b)(1). By

enacting provisions that hold withdrawing employers liable for

their share of their plan’s unfunded vested pension benefits,

Congress evinced a desire to (1) “relieve the financial burden

placed upon remaining contributors to a multiemployer fund

when one or more of them withdraws from the plan,” Artistic

Furniture, 920 F.2d at 1328; (2) “avoid creating a severe disincentive to new employers entering the plan,” House Committee on Ways and Means, Multiemployer Pension Plan Amendments Act of 1980, H.R. Rep. No. 96-869, Part I, at 67, reprinted

in 1980 U.S. Code Cong. & Admin. News 2918, 2935 (hereinafter “House Report”); and (3) prevent the creation of funding
No. 14-1618 7

deficiencies, House Report, Part II, at 15, reprinted in 1980

U.S. Code Cong. & Admin. News 2993, 3004. 

Imposing successor liability for unpaid multiemployer

pension fundcontributions andwithdrawalliability effectuates

these congressional policies and goals. See Tasemkin, 59 F.3d at

49; Artistic Furniture, 920 F.2d at 1329; Central States, Se. & Sw.

Areas Pension Fund v. Hayes, 789 F. Supp. 1430, 1435–1436 (N.D.

Ill. 1992) (relying on Artistic Furniture’s analysis in holding

successor liable for predecessor’s delinquent withdrawal

liability). However, although contribution liability and withdrawal liability are animated by similar congressional motives,

there is an important distinction between the two that is

relevant to our analysis. While contribution costs are calculated

per the terms of an existing collective bargaining agreement to

which an employer is party, withdrawal liability cannot be

assessed until the plan sponsors have determined that the

employer has withdrawn under the statute. The MPPAA

provides that when an employer withdraws from a

multiemployer plan, the plan sponsor calculates the amount of

liability owed by the employer and, as soon as practicable,

notifies the employer of the amount due and demands payment. 29 U.S.C. § 1382. Consequently, unlike contribution

costs, “the withdrawing employer cannot determine, or pay,

the amount of its debt until the plan has calculated that

amount ... .” Milwaukee Brewery Workers’ Pension Plan v. Joseph

Schlitz Brewing Co., 513 U.S. 414, 423 (1995).

Because the assessment of withdrawal liability is triggered

by an employer’s withdrawal from a multiemployer plan,

whether or not the precise amount of withdrawal liability is
8 No. 14-1618

ascertainable prior to the employer’s asset sale depends on

whether withdrawal occurs before or after the asset sale takes

place. The precise amount of withdrawal liability is not

ascertainable pre-acquisition if, as here, the employer is found

to have withdrawn after it has sold its assets. However, if the

employer withdraws fromthe plan before selling its assets (e.g.,

ceases operations due to bankruptcy) and the plan assesses

withdrawal liability in the interim period between the withdrawal and subsequent asset sale, the precise amount of

withdrawal liability may be known prior to the asset sale. See,

e.g., McDougall, 494 F.3d at 571; Tasemkin, 59 F.3d at 48.

Consequently, were the successor liability notice requirement

to exclude notice of contingent liabilities in this narrow

context—as the district court held below, and as ManWeb

argues here—a liability loophole would exist: multiemployer

plan sponsors would be foreclosed in some situations (but not

others) from seeking withdrawalliabilityfromasset purchasers

who would otherwise qualify as successors, and the plans

would be left “holding the bag,” Central States, Se. & Sw. Areas

Pension Fund v. Nitehawk Express, Inc., 223 F.3d 483, 487 (7th

Cir. 2000).

We do not believe that this result would further Congress’s

goal of ensuring that the responsibility for a withdrawing

employer’s share of unfunded vested pension benefits is not

shifted to remaining employers. See Central States, Se. & Sw.

Pension Fund v. Bomar Nat’l, Inc., 253 F.3d 1011, 1014 (7th Cir.

2001). Nor do we believe that notice of contingent withdrawal

liability is inconsistent with this court’s opinion in Artistic

Furniture, which, contrary to what ManWeb argues, did not

hold that successor liability arises only when the purported
No. 14-1618 9

successor “knows the precise extent” of the liability. Artistic 1

Furniturerequires that we strike a balance between the need to

effectuate federal labor policies with “the social interest in

facilitating the market in [the transfer of] corporate and other

productive assets.” Artistic Furniture, 920 F.2d at 1325. Surely

it would be inequitable “to impose successor liability on an

innocent purchaser when ... the successor did not have the

opportunity to protect itself by an indemnification clause in the

acquisitionagreement or a lower purchase price.” Musikiwamba

v. ESSI, Inc., 760 F.2d 740, 750 (7th Cir. 1985). However, such

measures are still available in an asset sale where the buyer has

notice that the seller may be contingently liable for withdrawal

liability. For these reasons, we disagree with the district court

and hold that notice of contingent withdrawal liability satisfies

the successor liability notice requirement.

ManWeb cherry-picks this language, which originally appeared in this 1

court’s opinion in Vucitech, 842 F.2d at 945, twisting the court’s holding

and ignoring the context in which that language appears. In Vucitech, the

court noted that, where a successor “knows about its predecessor’s liability,

knows the precise extent of that liability, and knows that the predecessor

itself would not be able to pay a judgment against it, the presumption should

be in favor of successor liability.” Id. at 945 (emphasis added). However, the

court did not hold that the notice element requiresthe existence of a precise

debt. In fact, just the opposite, as Vucitech imposed successor liability on an

asset purchaser where a number of employment discrimination suits had

been filed against the predecessor prior to acquisition, but where the court

had not yet determined the precise extent of the liability stemming from

those suits. Id. at 946.
10 No. 14-1618

B. ManWeb Had Notice of Tiernan & Hoover’s Withdrawal Liability

Applying this rule to the present case, it is clear that

ManWeb had notice of Tiernan & Hoover’s contingent withdrawal liability. “Notice can be proven not only by pointing to

the facts that conclusively demonstrate actual knowledge, but

also by presenting evidence that allows the fact finder to imply

knowledge fromthe circumstances.” Artistic Furniture, 920 F.2d

at 1329. Here, ManWeb’s notice of Tiernan & Hoover’s contingent withdrawal liability can be both reasonably inferred and

directly proven by evidence in the record.

To begin with, prior to finalizing the purchase of Tiernan &

Hoover’s assets, ManWeb conducted pre-purchase negotiations and performed the due diligence necessary to evaluate

the asset sale. Going into this process, ManWeb’s owners,

Charles Mandrell and Michael Webster, were aware that

Tiernan & Hoover was a union-affiliated employer. At the due

diligence stage, Webster testified that he conducted an analysis

of Tiernan & Hoover’s union-related obligations to make sure

that the company was current on their payroll and fees to

the union. He also discussed unfunded pension liabilities

with the President of Tiernan & Hoover, Mick Hoover, because

he “knew that the pension was short of money.” Mandrell,

who was also involved in the decision-making process related

to the asset purchase of Tiernan & Hoover, also had concerns

going into the purchase negotiations because he knew “the

risk associated with dealing with the unions.” Mandrell had

previously worked for a union contractor and testified that he

was “very aware” of the concept of withdrawal liability prior

to the asset sale; the asset sale was “not a transaction that
No. 14-1618 11

[he] specifically wanted to do” because he “under[stood] the

underfunded portion of the pension fund” and knew of the

associated risk of “potential liability.” Together, this demonstrates that ManWeb’s key decision-makers were aware of

Tiernan & Hoover’s union obligations and shared concerns

related to unfunded pension plan liabilities.

Additionally, Tiernan & Hoover’s contingent withdrawal

liability was explicitly included in the APA, which was signed

by Webster on behalf of ManWeb, through reference to and

attachment of Tiernan & Hoover’s financial statements and

balance sheets for the years 2006 and 2007. These documents,

which were turned over to ManWeb as part of ManWeb’s prepurchase due diligence, expressly stated that Tiernan &

Hoover “contributes to various multi-employer, unionsponsored pension plans” and that, as such, Tiernan & Hoover

was subject to certain liabilities imposed by ERISA and the

MPPAA, including “the share of the [P]lan’s unfunded vested

liabilities allocable to [Tiernan & Hoover] upon withdrawalfrom the

union ortermination of the plan for which [Tiernan & Hoover]

may be contingently liable” (emphasis added). The APA also

included an “Excluded Liabilities” clause, which provided that

ManWeb was not obligated to assume and did not agree to

assume any liability or obligation “arising out of or related

to union related activities, including without limitation pension obligations,” or “under any Benefit Plan” (a term that is 

defined later in the agreement to include each “Pension Plan

and Multiemployer Plan of Seller”). These sections of the APA,

coupled with Webster and Mandrell’s knowledge of unfunded

pension liabilities, establish that ManWeb had sufficient preacquisition notice of Tiernan & Hoover’s contingent with-
12 No. 14-1618

drawal liability to satisfy the federal successor liability notice

requirement.

C. Imposing Successor Liability on ManWeb is Equitable

As we previously noted, “successor liability is an equitable

doctrine, not an inflexible command, and ‘in light of the

difficulty of the successorship question, the myriad factual

circumstances and legal contexts in which it can arise, and the

absence of congressional guidance as to its resolution, emphasis on the facts of each case as it arises is especially appropriate.’” Tasemkin, 59 F.3d at 49 (quoting Howard Johnson Co., Inc.

v. Detroit Local Joint Exec. Bd., 417 U.S. 249, 256 (1974)). The

district court held that, even if notice of a contingent liability

satisfied the notice requirement for successor liability, imposing such a liability on ManWeb would be inequitable. We

review the district court’s determination to grant equitable

remedies for abuse of discretion. E.E.O.C. v. Northern Star

Hospitality, Inc., 777 F.3d 898, 901 (7th Cir. 2015). However, as

always, an error of law is necessarily an abuse of discretion.

Estate of Enoch ex rel. Enoch v. Tienor, 570 F.3d 821, 822 (7th Cir.

2009).

First, a brief overview of the MPPAA’s mandates is

necessary. Under the MPPAA, “any dispute between an

employer and the plan sponsor of a multiemployer plan

concerning a determination made under sections 4201 through

4219 [29 U.S.C. §§ 1391–1399] shall be resolved through

arbitration.” 29 U.S.C. § 1401(a)(1). Failure to initiate arbitration

has a simple and adverse consequence—withdrawal is conclusively established and the amount demanded by the pension
No. 14-1618 13

plan becomes due and owing. Id. at (b)(1); Robbins v. Admiral

Merchants Motor Freight, Inc., 846 F.2d 1054, 1056 (7th Cir. 1988).

“The result is harsh,” Robbins, 846 F.2d at 1057, but it effectuates Congress’s intent to ensure the stability of pension funds. 

The district court held—and the parties to this appeal do

not dispute—that Tiernan & Hoover, by failing to arbitrate the

assessment of its withdrawal liability, waivedany merits-based

defense that may have been available. However, the court

concluded that if Tiernan & Hoover’s waiver was the only

basis upon which it was liable for withdrawal, the Plan would

have to establish that ManWeb had notice of the events that led

to Tiernan & Hoover’s waiver before the asset purchase. The

district court then determined that this would be impossible

(since Tiernan & Hoover was notified of its withdrawal liability

several months after the closing of the APA); consequently,

the court turned to an evaluation of Tiernan & Hoover’s

underlying withdrawal. Ultimately, the district court held that

Tiernan & Hoover did not effectuate a withdrawal under the

MPPAA and that, as a result, it would be inequitable to hold

ManWeb liable as a successor for Tiernan & Hoover’s withdrawal liability.

We address the district court’s two determinations in turn.

First, the district court erred as a matter of law in concluding

that, because Tiernan & Hoover waived any merits-based

defense by failing to arbitrate, the Plan had to establish that

ManWeb had notice that Tiernan & Hoover failed to arbitrate.

This, quite simply, is not required by the successor liability

notice requirement and does not find support in the policies

underlying the imposition of successor liability in the context

of the MPPAA. See supra, Part II.A. The notice requirement is
14 No. 14-1618

animated by concerns that it is inequitable to impose successor

liability upon an innocent purchaser who did not have an

opportunity to protect itself by obtaining indemnification or

negotiating a lower purchase price. See Musikiwamba, 760 F.2d

at 750. Thus, the successor’s remedy for successor liability is

already in place.

Furthermore, while the district court was within its discretion to evaluate whether, under the facts presented in this case,

it would be equitable to impose liability on ManWeb when its

predecessor waived arbitration, it abused this discretion by

ignoring the fact that ManWeb could and did protect itself

against liability. To begin with, ManWeb obtained indemnification “from, against and in respect of any and all losses,

liabilities ... and expenses whatsoever ... that may be incurred

by [Tiernan & Hoover] from or by reason of ... any inaccuracy

or representation or breach of warranty made by [Tiernan &

Hoover] in this Agreement ... [and] the Excluded Liabilities.”

Further, ManWeb, having knowledge of Tiernan & Hoover’s

potential withdrawal liability, could have required Tiernan &

Hoover to obtain an estimate of their withdrawal liability, see

29 U.S.C. § 1021(l) (providing that employers have the right to

annually request an estimate of their potential withdrawal

liability), in order to negotiate a lower purchase price. Shielding a successor employer from liability when the company had

knowledge of the potential liability and still had bargaining

power with regard to the transaction runs counter to the

policies underlying the doctrine of successor liability. See

Golden State, 414 U.S. at 185. See also Einhorn v. M.L. Ruberton

Const. Co., 632 F.3d 89, 96 (9th Cir. 2011) (“The requirement of

notice and the ability of the successor to shield itself during
No. 14-1618 15

negotiations temper concerns that imposing successorliability

might discourage corporate transactions.”). Accordingly, the

district court abused its discretion in this respect.

Finally we turn to the district court’s analysis of Tiernan &

Hoover’s underlying liability. The Plan argues that the question of whether or not Tiernan & Hoover withdrew under the

statute was a question reserved for the arbitrator and, since

Tiernan & Hoover’s withdrawal was conclusively established

once it waived arbitration, the merits of this determination

were removed from the district court’s purview and should

not have been reviewed. We agree. The statute is clear: “any

dispute over withdrawal liability shall be arbitrated.” Robbins,

846 F.2d at 1056 (quoting I.A.M. Nat’l Pension Fund v. Clinton

Engines Corp., 825 F.2d 415, 417 (D.C. Cir. 1987)). Arbitration is

treated as an administrative remedy exhaustion requirement

and courts interpreting § 1401(a)(1) have been consistent in

their conclusion that “‘[a]rbitrate first’ is indeed a rule Congress stated unequivocally.” Robbins, 846 F.2d at 1056. The

result may be harsh, but “the statute embodies a strong public

policy that any dispute [over withdrawal liability] be submitted to arbitration.” Chicago Truck Drivers, Helpers & Warehouse

Workers Union (Indep.) Pension Fund v. Louis Zahn Drug Co., 890

F.2d 1405, 1410 (7th Cir. 1989). In short, “[a]rbitration reigns

supreme under the MPPAA,” Clinton Engines, 825 F.2d at 422,

thus the district court’s substantive review of Tiernan &

Hoover’s underlying withdrawal liability constitutes an error

of law, and by definition, an abuse of discretion.
16 No. 14-1618

III. CONCLUSION 

Forthe aforementioned reasons, the district court’s grant of

judgment as a matter of law to ManWeb and denial of summary judgment to the Plan is reversed. Since the district court

did not address the successor liability continuity requirement,

this case is remanded to the district court for further proceedings consistent with this opinion.