Pension Benefit Guaranty Corporation. The Pension Benefit Guaranty Corporation has filed a cross motion for summary judgment against the Monsour defendants, and a motion to dismiss the Lancaster defendants. There are no disputed issues of material fact and summary judgment is appropriate.
We first address the Pension Benefit Guaranty Corporation's Motion to Dismiss the Lancaster defendants. Plaintiff reveals that discovery has provided facts which clearly indicate that the Lancaster defendants are not a controlling group as defined in 26 C.F.R. 11.414(c)-(2) and therefore cannot be liable for the pension plan deficiencies. We see nothing of record to contradict this view of the facts and the motion will therefore be granted.
The Monsour defendants move for summary judgment, contending that they too are outside the definition of employer under the Act. It is argued that the Monsour defendants were not employers for purposes of ERISA because the pension plan had terminated prior to their acquisition of the newspaper. In the alternative, it is argued that if they were employers, they held that role only for one day, July 29, 1975, and cannot be held responsible for past deficiencies.
All evidence of record reveals that the understanding of all persons involved in the negotiations leading to the sale of Jeannette Newspapers that the pension plan would terminate on the date of sale so that the Brothers Monsour would not be forced to assume the burden of the plan. The Union representing the newspaper employees negotiated this concession in return for higher wages. All the principals involved in this transaction intended and understood that the pension plans would expire with the interest of the Lancaster defendants.
Pension Benefit Guaranty Corporation responds by pointing out that application to the Pension Benefit Guaranty Corporation for termination of the plan was not made by the Brothers Monsour until five (5) days later, and the plans were not officially terminated until two years later. However termination was made retroactive to July 29, 1975 and as a practical matter, no payments to or from the pension plan were made under the administration of the Monsours.
Pension Benefit Guaranty Corporation also refers to the contract of sale between the Lancaster defendants and the Monsour defendant. It is pointed out that sale of the stock was made contingent on the "terminability" of the pension plans and not their actual termination. Furthermore, the agreement granted an option until July 31, 1975 to cancel the sale if liability on the pension plans was excessive.
Neither of these points is persuasive. The first is merely an argument over semantics. The second has no effect on the actual fact of the situation. The plan as a practical matter ceased active coverage of employees on July 29, 1975.
The only evidence of record indicates that everyone involved in this transaction intended the pension plans to terminate with the change of ownership. Although the Monsours then submitted the paperwork, they merely operated as the administrator closing past accounts. And finally, the Pension Benefit Guaranty Corporation granted termination retroactive to July 29, 1975, officially recognizing that the plan terminated upon the Monsours' acquisition of the company.
Even if we conclude that the Monsour defendants were employers within the literal definition of the Act at least for July 29, 1975 we do not believe they fall within the intended scope of the Act. The involvement of the Monsour defendants in the pension plans here in issue was limited to the acquisition of the company on the same day the plans were terminated, and the submission of the necessary papers to effect that termination. Though a defendant may fit the literal definition of the statute, care must be taken that the spirit of the Act is not ignored. See PBGC v. Dickens, 535 F. Supp. 922 (W.D. Mich. 1982). Here no purpose of the statute is advanced by visiting past deficiencies on a buyer trying to revive a business, particularly when all expectations are that the plan was terminated and the buyer is not liable. Such a result would be unjust and is not warranted by either the facts or the Act.
Because of this result, the Monsour defendants' cross-claim against the Lancaster defendants becomes moot. Also mooted then is the Lancaster defendants' motion for summary judgment.
For the reasons stated above we conclude that neither the Lancaster defendants nor the Monsour defendants are employers within the meaning of ERISA, and are therefore not liable for the deficiencies on the pension plans. Therefore, Pension Benefit Guaranty Corporation's Motion to Dismiss the Lancaster defendants will be granted. The Monsour defendants' Motion for Summary Judgment will also be granted. The crossclaim asserted by the Monsour defendants and the Lancaster Motion for Summary Judgment on that crossclaim are moot.
An appropriate order will issue.
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