Opinion ID: 588852
Heading Depth: 2
Heading Rank: 2

Heading: The Decision of the PBGC Board of Appeals

Text: 8 The Board's reasons for upholding the PBGC's determination of liability are important, and we present them at some length. First, Dutch Boy was not a substantial participant in the UE Plan, and the UE Plan did not terminate within five years of Dutch Boy's withdrawal. If the UE Plan was a multiple-employer plan, therefore, Dutch Boy is not liable. But the Board determined that the UE Plan was not a multiple-employer plan; rather, the PBGC decided that the UE Plan was an aggregate of single-employer plans. 9 According to the Board, the UE Plan was an aggregate of single-employer plans because the contributions of individual employers were not available to satisfy the benefit liabilities of other employers. PBGC Board of Appeals Opinion Letter, No. 90-172 at 2 (Dec. 6, 1990) (Board Decision); see 29 C.F.R. § 2615.2 (1991) 2 (definition of plan); Saramar Aluminum Co. v. Pension Plan for Employees of Aluminum Industry & Associated Industries, 782 F.2d 577, 582-83 (6th Cir.1986) (distinction between single and multiemployer plan); PBGC v. Potash, 7 E.B.C. 1292, 1293-94, 1986 WL 3809 (W.D.N.Y.1986). The Board supported this conclusion by reference to the documents that governed Dutch Boy's participation in the plan, the accounting practices of the UE Plan and the manner in which other employers who withdrew from the UE Plan were treated. Nonetheless, the Board concluded that the terms of the documents alone were sufficient evidence of single-employer status. Board Decision at 4. Accordingly, we will focus on the documents. 10 According to the UE Plan Administrator, every participation agreement by which an employer joined the UE Plan contained a provision similar or identical to the following provision found in the Dutch Boy Participation Agreement: 11 The Parties of this Participation Agreement shall have their funds separate and intact from that of any other group of participants under any other Participation Agreement in the Local 1139 UE Group Pension Fund and shall not have these funds commingled or pooled. 12 Participation Agreement p 2. Further, the UE Plan Agreement and Declaration of Trust (the Trust Agreement), incorporated into the Dutch Boy Participation Agreement by reference, contains the following provisions: 13 6.01 The financing of benefits provided by the Plan is based on the continued contributions from the Participating Employers, as required in the collective bargaining agreements. If a Participating Employer should fail to make the required contributions, the Pension Plan cannot be continued for the Participants, the Employees of such Employer. 14 6.04 If ... the Participating Employer ceases to be obligated to continue contributions to the Fund, the assets then remaining in the Fund credited to the Participants of that Participating Employer shall be allocated, after providing for the expenses of the Plan, to the extent that they shall be sufficient for the purpose of paying retirement benefits based on Credited Service to the date of discontinuance of the Plan to the Pensioners and Participants in [the Plan's predetermined order of precedence]. 15 9.01 ... (b) Nothing in this Agreement shall be construed as making any Union or Participating Employer liable for the payments required to be made by any other Participating Employer.... 16 Trust Agreement §§ 6.01, 6.04, 9.01. According to the Board, these provisions establish that Dutch Boy's contributions were not available to satisfy the benefit liabilities of other employers. Board Decision at 3. 17 Having determined that Dutch Boy had established a single-employer pension plan (the Dutch Boy Plan), the Board went on to decide whether the plan was covered by ERISA. The Board noted that both before and after Dutch Boy joined the UE Plan, the IRS had issued determination letters that the UE Plan was tax-qualified under section 401(a) of the Internal Revenue Code. The Board concluded that these determination letters settled the tax-qualified status of the Dutch Boy Plan. 18 The PBGC then appealed to the District Court for the Northern District of Illinois to enforce its order. 29 U.S.C. § 1303(e). Dutch Boy counterclaimed, seeking relief from the Board's determination. 29 U.S.C. § 1303(f).