Clark Hill attorneys Daniel V. Kinsella and Amy Newton secured a significant arbitration victory involving the application of the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) and its “5-Year Free Look Rule.”
The matter arose after a purchaser acquired the assets of a business in an arm’s-length transaction. As is common in many asset acquisitions, the purchaser continued operating the business with the same employees, entered into its own collective bargaining agreement (CBA) with the same union, and contributed to the same union pension fund as the seller. Four-and-a-half years later, the purchaser negotiated a new CBA with the union to withdraw from the fund. As a result, the employer ceased contributions to the fund within five years of making its initial contribution.
The pension fund asserted that the purchaser was responsible for withdrawal liability under the MPPAA and assessed liability based on both the seller’s and the purchaser’s contribution histories.
Clark Hill argued that the purchaser qualified for the MPPAA’s 5-Year Free Look Rule because it was a new employer rather than a continuation of the seller. The firm successfully demonstrated that the purchaser was neither an alter ego of the seller nor part of a single-employer relationship with the seller. Clark Hill further argued, and the arbitrator held that, although the purchaser qualified as a successor employer under the National Labor Relations Act, citing Golden State Bottling Co. v....
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