Court Opinion

ID: 8912093
Source: CourtListenerOpinion
Date Created: 2022-11-27 03:25:40.278242+00
Date Added: 2024-06-11T17:08:37.188550
License: Public Domain

BOWNES, Circuit Judge
(concurring specially).
While I agree with the panel, I think its statutory analysis, like that of the district court, is incomplete. It glosses over, without addressing, the main statutory problem-that ERISA recognizes two groups of businesses: businesses (whether or not incorporated) which are under common control, and a controlled group of corporations. Each is defined separately and treated separately under the Act. Unfortunately, the parties and the district court, to some degree, have used the terms interchangeably. Since the key question is whether the single employer definition of businesses under *14common control under section 1301(b)16 brings the Ouimet Group within the liability provisions of section 1362(a),17 and, since section 1301 does not refer to controlled groups of corporations at all, it is necessary to examine the Act to determine how both entities are treated and into which category the Ouimet Group falls.
Congress defined controlled group by adopting the Internal Revenue Code definitions of 26 U.S.C. § 1563(a)18 which make stock ownership the test. It did not, at the time it passed ERISA, define groups under common control in terms of any existing provisions of the Internal Revenue Code. In section 1301(b), it provided that, under regulations prescribed by PBGC, all employees with trades or businesses under common control are to be treated as employed by a single employer. It further directed that the PBGC regulations “shall be consistent and coextensive with regulations prescribed for similar purposes by the Secretary of the Treasury under section 414(c) of Title 26.” The regulations promulgated by the Secretary of the Treasury after the enactment of ERISA under 26 U.S.C. § 414(c), see footnote 14, supra, defined groups under common control in the same terms as controlled groups. This, however, cannot change the separate treatment given these two entities under the Act.
The Ouimet Group fits into the definition of both entities; it is a group of businesses under common control and also a controlled group of corporations. The problem inherent in this dual role is that businesses under common control and a controlled group of. corporations are not treated in the same manner throughout the Act.
That section defining a multiemployer plan states, “all corporations which are members of a controlled group of corporations . . . shall be deemed to be one employer.” 29 U.S.C. § 1002(37)(B)(ii). There is no mention of trades or businesses under common control in this section of the *15Act. Multiemployer plans are exempted from the liability provisions of 29 U.S.C. § 1362(a). Liability is imposed under 29 U.S.C. § 1364(a) on “all employers who maintain a plan under which more than one employer makes contributions at the time such plan is terminated . . .” Since the plan here is not multiemployer and since Ouimet is a controlled group, it can be argued that only the employer (the bankrupts) who maintained the plan are liable.
*14For purposes of this subchapter, under regulations prescribed by the corporation, 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. The regulations prescribed under the preceding sentence shall be consistent and coextensive with regulations prescribed for similar purposes by the Secretary of the Treasury under section 414(c) of Title 26.
*15For purposes of minimum participation, vesting and benefit accrual, a controlled group and businesses under common control receive separate but equal tandem treatment under 29 U.S.C. §§ 1060(c) and (d).19
Disparate treatment of these entities does not, however, eliminate the common control definition of employer from the liability section of the Act. I would hold specifically that where, as here, there is a controlled group of corporations that also meets the definition of businesses under common control, section 1301(b) makes the group a single employer for liability purposes under section 1362(a).

. 29 U.S.C. § 1301(b) provides in pertinent part:

. 29 U.S.C. § 1362(a) provides in pertinent part: “This section applies to any employer who maintained a plan (other than a multi-employer plan) at the time it was terminated!.]”

. 29 U.S.C. § 1060(c) refers to 26 U.S.C. § 1563(a)(1)-(3) which contains the following definition of controlled group of corporations.
(a) Controlled group of corporations.-For purposes of this part, the term “controlled group of corporations” means any group of-
(1) Parent-subsidiary controlled group.-One or more chains of corporations connected through stock ownership with a common parent corporation if-
(A) stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of stock of each of the corporations, except the common parent corporation, is owned (within the meaning of subsection (d)(1)) by one or more of the other corporations; and
(B) the common parent corporation owns (within the meaning of subsection (d)(1)) stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of stock of at least one of the other corporations, excluding, in computing such voting power or value, stock owned directly by such other corporations.
(2) Brother-sister controlled group.-Two or more corporations if stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of stock of each of the corporations is owned (within the meaning of subsection (d)(2)) by one person who is an individual, estate, or trust.
(3) Combined group.-Three or more corporations each of which is a member of a group of corporations described in paragraph (1) or (2), and one of which-
(A) is a common parent corporation included in a group of corporations described in paragraph (1), and also
(B) is included in a group of corporations described in paragraph (2).

. 29 U.S.C. §§ 1060(c) and (d) provide:
(c) For purposes of sections 1052, 1053, and 1054 of this title, all employees of all corporations which are members of a controlled group of corporations (within the meaning of section 1563(a) of Title 26, determined without regard to section 1563(a)(4) and (e)(3)(C) of Title 26) shall be treated as employed by a single employer. With respect to a plan adopted by more than one such corporation, the minimum funding standard of section 1082 of this title shall be determined as if all such employers were a single employer, and allocated to each employer in accordance with regulations prescribed by the Secretary of the Treasury.
(d) For purposes of sections 1052, 1053, and 1054 of this title, under regulations prescribed by the Secretary of the Treasury, all employees of trades or businesses (whether or not incorporated) which are under common control shall be treated as employed by a single employer. The regulations prescribed under this subsection shall be based on principles similar to the principles which apply in the case of subsection (c) of this section.