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PENSION BEN. GUAR. CORP. v. JEANNETTE NEWSPAPERS

May 9, 1984

PENSION BENEFIT GUARANTY CORPORATION
v.
JEANNETTE NEWSPAPERS, INC., a/k/a Jeannette Publishing Company, et al



The opinion of the court was delivered by: WEBER

 For the reasons stated in the accompanying Opinion, IT IS HEREBY ORDERED:

 1) Plaintiff's Motion to Dismiss Defendants' Lancaster, Burkhalter, Logan Banner, Inc. and Maryville-Alcoa Newspapers, referred to as the "Lancaster Defendants", is hereby GRANTED.

 2) The Motion for Summary Judgment by the remaining defendants, referred to as the "Monsour Defendants", is GRANTED.

 3) The Monsour Defendants' crossclaim, and the Lancaster Defendants' Motion for Summary Judgment on the crossclaim, are MOOT.

 4) The Clerk is DIRECTED to mark this matter CLOSED.

 WEBER, D.J.

 Various dispositive motions are now pending and have been fully briefed and supported. These matters are now ripe for disposition.

 FACTS

 This is an action by the Pension Benefit Guaranty Corporation to recover deficiencies in the two employee pension plans of Jeannette Newspapers at their termination on July 29, 1975. The Pension Benefit Guaranty Corporation has sued a number of individuals and business entities in an effort to identify the controlling entity or group which would be responsible for the deficiencies.

 The confusion over the identity of the responsible party is due in large part to the fact that a sale of Jeannette Newspapers was effected on the same day the plan was terminated, July 29, 1975. Thus there are two groups who could conceivably satisfy the definition of "employer" under ERISA. 29 U.S.C. § 1301(b); 29 C.F.R. § 2612.2.

 Prior to July 29, 1975, the stock of Jeannette Newspapers was held by four stockholders, defendants Lancaster, Burkhalter, Logan Banner, Inc., and Maryville-Alcoa Newspapers. (Lancaster Defendants). On July 29, 1975 these Lancaster defendants sold all their shares in Jeannette Newspapers to the four Monsour Brothers. The remaining defendants are entities allegedly controlled by the Brothers Monsour and included in this suit under a "common control" theory, 26 C.F.R. § 11.414(c)-2, and together with the Brothers comprise the "Monsour Defendants" for ease of reference.

 During negotiations for the purchase of Jeannette Newspapers, the Brothers Monsour extracted the agreement to terminate the pension plans. Jeannette Newspapers had fallen behind on its obligations to the funds and the Brothers Monsour did not wish to assume responsibility for these deficiencies. It was therefore agreed that the plans would be terminated as a condition of sale and the Monsours would pay higher wages to the employees of Jeannette Newspapers in return.

 The sale of the newspaper and termination of the pension plans were both accomplished on July 29, 1975. When the Pension Benefit Guaranty Corporation ascertained ...


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