Court Rejects Successorship Allegation in Withdrawal Liability Case
A multiemployer pension fund demanded approximately $760,000 in withdrawal liability from our client, a real estate private equity investment firm with over $2 billion in assets. Although our client had not contributed to the pension fund, the fund claimed that withdrawal liability was owing because our client was a successor to an entity that sold hotel assets to our client. We filed a complaint against the fund in a California federal court seeking a declaratory judgment that our client was not a successor and not liable to the fund for withdrawal liability, and was entitled to a refund of withdrawal liability paid, plus interest. The fund counterclaimed for payment of withdrawal liability, plus statutory interest, fees, liquidated damages and costs. After submission of the case on stipulated facts, the judge ruled that our client was not a successor because it had no notice prior to the asset purchase that withdrawal liability would be owed. The court further ruled that our client had no constructive notice of withdrawal liability because it had conducted all necessary withdrawal liability due diligence prior to the purchase. The court ordered the fund to return all withdrawal liability paid by our client, plus statutory interest.