Petition for Writ of Certiorari — 50509 Marine LLC, et al., Petitioners v. Pension Benefit Guaranty Corporation

No. 20In the

Supreme Court of the United States

50509 MARINE LLC, AMH GOVERNMENT

SERVICES, LLC, et al.,

Petitioners,

v.

PENSION BENEFIT GUARANTY CORPORATION,

Respondent.

On Petition for a Writ of Certiorari to the United

States Court of A ppeals for the Eleventh Circuit

PETITION FOR A WRIT OF CERTIORARI

Craig Tompkins

Craig Tompkins, PLLC

2269 Acorn Palm Road

Boca Raton, FL 33432

(561) 271-4868

Robert J. Hauser

Counsel of Record

Pankauski Hauser

Lazarus, PLLC

415 South Olive Avenue

West Palm Beach, FL 33401

(561) 514-0900

courtfilings@phflorida.com

Counsel for Petitioner

304381

A

(800) 274-3321 • (800) 359-6859

i

QUESTION PRESENTED

This case is about the lower courts’ failure to respect

stare decisis and unambiguous legislation. This petition is

made necessary because lower courts have now invented

new federal common law to evade this Court’s precedent

set by Chicago Title & Tr. Co. v. Forty-One Thirty-Six

Wilcox Bldg. Corp., 302 U.S. 120 (1937). The application

of Chicago Title combined with the plain language of

the relevant ERISA statutes required a result that

both the district and circuit court found undesirable.

Accordingly, the lower courts judicially altered the

existing enforcement schemes contained within the

“comprehensive and reticulated” ERISA legislation. Pet.

App. 8a–13a, 23a–25a. These alterations are irreconcilable

with state corporate law.

It is incontrovertible that under Illinois law, Liberty

Lighting Co., Inc. ceased to exist and its stock was

“destroyed” no later than 1997. Pet. App. 25a. Chicago

Title teaches that federal courts are powerless to change

that. 302 U.S. at 128–29. Yet both the district court and

the Eleventh Circuit have now held that, “under ERISA”

the corporation “still existed” and had stock that could

be owned, voted, and controlled in 2012. (Pet. App. 2a,

23a–24a). Accordingly, the Question Presented is:

Whether under Chicago Title & Tr. Co. v.

Forty-One Thirty-Six Wilcox Bldg. Corp., 302

U.S. 120 (1937) and the Tenth Amendment to

the United States Constitution, state law, not

ERISA or federal common law, controls the

questions of whether an Illinois corporation,

that after a Chapter 7 bankruptcy liquidation

ii

dissolved in 1992, and had its stock destroyed

in 1997 (1) still existed in 2012; and (2) had

stock that was still owned and “controlled”

with “voting rights” by the corporation’s 1992

shareholder in 2012?

iii

PARTIES TO THE PROCEEDING

Pursuant to Rule 14.1, Petitioners state the following:

Petitioners (defendants-appellants below) are 50509

Marine, LLC; American Marine Holdings, LLC; AMH

Government Services, LLC; Baja Marine, Inc.; Bedford

Materials Co., Inc.; Buffalo Power Electronics Center,

Inc.; Donzi Marine, LLC; Fountain Dealers Factory Super

Store, Inc.; Fountain Powerboat Industries, Inc.; Fountain

Powerboats, LLC; Liberty Acquisition FPB, LLC;

Liberty Analytical Corporation.; Liberty Associates, LC;

Liberty Polyglas, Inc.; Liberty Properties at Bedford,

LLC; Liberty Properties at Carey, LLC; Palmetto Park

Financial, LLC; Pro-Line Boats, LLC; and Pro-Line of

North Carolina, Inc.

Respondent is the Pension Benef it Guaranty

Corporation (plaintiff-appellee below) (“PBGC”).

iv

RULE 29.6 STATEMENT

The Petitioners are the above-named entities. None

of the Petitioner entities named to this proceeding is a

publicly held company. No publicly held company owns

10% or more of their stock.

v

RELATED PROCEEDINGS

• In re Buffalo Power Electronics Center, Inc., 21-11686MAM, U.S. Bankruptcy Court for the Southern District

of Florida. Petition for Bankruptcy filed February 22,

2021.

• Pension Benefit Guaranty Corp. v. 20 SE 3rd St LLC,

et al., 18-cv-81009, U.S. District Court for the Southern

District of Florida. Judgment entered Nov. 22, 2019.

• Pension Benefit Guaranty Corp. v. 50509 Marine,

LLC, AMH Government Services, LLC, et al. No. 1914968, U.S. Court of Appeals for the Eleventh Circuit.

Judgment Entered Nov. 24, 2020.

vi

TABLE OF CONTENTS

Page

QUESTION PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . i

PARTIES TO THE PROCEEDING . . . . . . . . . . . . . . . iii

RULE 29.6 STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . iv

RELATED PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . v

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . vi

TABLE OF APPENDICES . . . . . . . . . . . . . . . . . . . . . viii

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . ix

PETITION FOR A WRIT OF CERTIORARI . . . . . . . 1

OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

RELEVANT STATUTORY PROVISIONS . . . . . . . . . . 2

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . 5

REASONS FOR GRANTING THE PETITION . . . . 12

A. The Court should reaffirm Chicago Title

and its delegation to the states of control

over the existence and ownership of

state-created entities. . . . . . . . . . . . . . . . . . . . . . 14

vii

Table of Contents

Page

B. Federal courts are not free to rewrite

a statute that relies on unambiguous

definitions with “federal common law.” . . . . . . . 18

C. Certiorari review is warranted to restore the

states’ constitutional authority to determine

and regulate the ownership and existence

of their own state-created entities. . . . . . . . . . . 20

D. The underlying policy justification to

disregard state law, invent federal common

law, and deem the Plan Sponsor to exist

indefinitely despite state law depends on a

flawed premise. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

1.

T he de c i sion e x p o s e s bu si ne s s

owners to indefinite liabilities for an

indefinite amount of time. . . . . . . . . . . . . . . 21

2.

ERISA already contemplates the

“missing Plan Sponsor” problem. . . . . . . . 22

3.

PBGC already has remedies to prevent

a failure of succession of a Plan Sponsor

that do not inter fere w ith state

corporate law . . . . . . . . . . . . . . . . . . . . . . . . 26

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

viii

TABLE OF APPENDICES

Page

APPENDIX A — OPINION OF THE UNITED

STAT ES COU RT OF A PPEA LS FOR

T H E ELE V EN T H CI RCU I T, FI LED

NOVEMBER 24, 2020 . . . . . . . . . . . . . . . . . . . . . . . . 1a

APPENDIX B — ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

SOUTHERN DISTRICT OF FLORIDA,

DATED NOVEMBER 22, 2019 . . . . . . . . . . . . . . . . 14a

APPENDIX C — DENIAL OF REHEARING

OF THE UNITED STATES COURT OF

APPEALS FOR THE ELEVENTH CIRCUIT,

FILED JANUARY 21, 2021 . . . . . . . . . . . . . . . . . . 37a

APPENDIX D — STATUTORY PROVISIONS . . . . 39a

ix

TABLE OF CITED AUTHORITIES

Page

Cases

Barnhart v. Sigmon Coal Co.,

534 U.S. 438 (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Burks v. Lasker,

441 U.S. 471 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Burks v. Lasker,

441 U.S. 471 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Chicago Title & Tr. Co. v.

Forty-One Thirty-Six Wilcox Bldg. Corp.,

302 U.S. 120 (1937) . . . . . . . . . . . . . . . . . . . . . . . passim

Freedman v. magicJack Vocaltec Ltd.,

963 F.3d 1125 (11th Cir. 2020) . . . . . . . . . . . . . . . . . . 15

Great-W. Life & Annuity Ins. Co. v. Knudson,

534 U.S. 204 (2002) . . . . . . . . . . . . . . . . . . . . . . . . 22, 24

Horbach v. Kaczmarek,

915 F. Supp. 18 (N.D. Ill. 1996) . . . . . . . . . . . . . . . . . 19

In re Peer Manor Bldg. Corp.,

134 F.2d 839 (7th Cir. 1943) . . . . . . . . . . . . . . . . . . . . . . 4

In re Peer Manor Bldg. Corp.,

134 F.2d 839 (7th Cir. 1943) . . . . . . . . . . . . . . 16, 18, 27

x

Cited Authorities

Page

In re Segno Comms.

264 B.R. 501, 510 (Bankr. N.D. Ill. 2001) . . . . . . . . . 17

Kamen v. Kemper Fin. Services, Inc.,

500 U.S. 90 (1991) . . . . . . . . . . . . . . . . . . . . 4, 13, 14, 15

Marsh v. Rosenbloom,

499 F.3d 165 (2d Cir. 2007) . . . . . . . . . . . . . . . . . . . . . . 4

Massachusetts Mut. Life Ins. Co. v. Russell,

473 U.S. 134 (1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Mertens v. Hewitt Associates,

508 U.S. 248 (1993) . . . . . . . . . . . . . . . . . . . . . . . . 22, 23

Mich. Ind. Condo. Ass’n v.

Mich. Place, Ltd. Liab. Co.,

8 N.E.3d 1246 (Ill. App. 1st Dist. 2014) . . . . . . . . 6, 17

Michigan Indiana Condominium Ass’n v.

Michigan Place, LLC,

8 N.E.3d 1246 (App. Ct. 1st Dist. 2014),

appeal denied, 20 N.E.3d 1256 (Ill. 2014) . . . . . . . . 16

Nachman Corp. v.

Pension Benefit Guaranty Corporation,

446 U.S. 359 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Nw. Airlines, Inc. v. Transp. Workers Union,

451 U.S. 77 (1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

xi

Cited Authorities

Page

PBGC v. Durango-Ga. Paper Co.,

2006 WL 3762085 (S.D. Ga. Dec. 20, 2006),

aff’d per curiam, 251 Fed. Appx. 664 (11th Cir.

Oct. 19, 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

PBGC v. FEL Corp.,

798 F. Supp. 239 (D.N.J. 1992) . . . . . . . . . . . . . . . 26, 27

PBGC v. Mize Co.,

987 F.2d 1059 (4th Cir. 1993) . . . . . . . . . . . . . . . . . . . 27

PBGC v. Mizrachi,

363 F. Supp. 3d 342 (E.D.N.Y. 2019) . . . . . . . . . . . . . 26

PBGC v. Republic Tech. Int’l, Inc.,

386 F.3d 659 (6th Cir. 2004) . . . . . . . . . . . . . . . . . . . . 27

PBGC v. The Renco Group,

13-cv-621 RJS, 2015 WL 997712,

(S.D.N.Y. Mar. 6, 2015) . . . . . . . . . . . . . . . . . . . . . . . . 27

PBGC v. White Consol. Indus.,

215 F.3d 407 (3d Cir. 2000) . . . . . . . . . . . . . . . . . . . . . 26

Pension Benefit Guar. Corp. v.

Findlay Industries, Inc., et al.,

902 F.3d 597 (6th Cir. 2018), pet. for cert.

dismissed sub nom. September Ends Co. v.

Pension Ben. Guar. Corp., 140 S. Ct. 16 (2019) . 13, 26

Pielet v. Pielet,

978 N.E. 2d 1000 (Ill. 2012) (e.s.) . . . . . . . . . . . . . . . . 17

xii

Cited Authorities

Page

Shute v. Chambers,

492 N.E.2d 528 (Ill. App. 1st Dist. 1986) . . . 17, 19, 21

Teamsters Pension Trust Fund

of Philadelphia and Vicinity v.

Central Michigan Trucking, Inc.,

857 F.2d 1107 (6th Cir. 1988) . . . . . . . . . . . . . . . . . . . 23

United States v. Bestfoods,

524 U.S. 51 (1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Statutes and Other Authorities

U.S. Const. Amend X . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

26 U.S.C. § 1563 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 18

26 U.S.C. § 1563(a) . . . . . . . . . . . . . . . . . . . . . . . . . . passim

28 U.S.C. § 1259(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

29 U.S.C. § 1002(16)(A) . . . . . . . . . . . . . . . . . . . . . . . . 2, 24

29 U.S.C. § 1002(16)(A)(iii) . . . . . . . . . . . . . . . . . . . . . . . 24

29 U.S.C. § 1002(16)(B) . . . . . . . . . . . . . . . . . . . . . . . . 2, 24

29 U.S.C. § 1301(a)(14) . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

29 U.S.C. § 1301(a)(14)(B) . . . . . . . . . . . . . . . . . . . . . . . . . 15

xiii

Cited Authorities

Page

29 U.S.C. § 1303(e)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

29 U.S.C. § 1303(e)(6)(B)-(C) . . . . . . . . . . . . . . . . . . . . . . 27

29 U.S.C. § 1362 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 19

29 U.S.C. § 1369 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

29 U.S.C. § 1369(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

26 C.F.R. § 1.414(b)-1(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3 Am. Jur. Corporations § 412 (1938) . . . . . . . . . . . . . . . 21

19 Am. Jur., 2d Corporations § 2458 (2015) . . . . . . . . . . 16

26 CFR § 1.414(c)-2 . . . . . . . . . . . . . . . . . . . . . . . . . . passim

I l l . Ju r. BUSI N E S S R EL AT IONSH I P S

§ 10:53 (2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

P B G C . g o v, R i s k Mi t i g a t i o n & E a r l y

War ning Program, available at https://

www.pbgc.gov/prac/risk-mitigation . . . . . . . . . . . . . 26

1

PETITION FOR A WRIT OF CERTIORARI

Petitioners respectfully petition this Court to grant

certiorari review of the November 24, 2020 decision of the

United States Court of Appeals for the Eleventh Circuit.

OPINIONS BELOW

The November 24, 2020 court of appeals opinion,

Docket No. 19-14698 (Pet App. 1a) is published at 981 F.3d

927. The November 22, 2019 district court memorandum

decision [D.E. 158] in Case No. 18-CV-81009 (S.D. Fla.)

(Pet. App. 14a) is published at 424 F. Supp. 3d 1239.1

It resulted in a final judgment [D.E. 163] entered on

December 6, 2019.

JURISDICTION

Petitioners’ appeal was timely taken to the court of

appeals on December 11, 2019. [D.E. 164]. The judgment

of the court of appeals was entered on November 24,

2020. (Pet. App. 1a). On January 21, 2021, the court of

appeals denied Petitioners’ timely petition for rehearing

and rehearing en banc. (Pet. App. at 37a). On March 19,

2020, this Court extended the deadline for submission of

Petitions for Writs of Certiorari to 150 days. This Court

has jurisdiction pursuant to 28 U.S.C. § 1254(1) (allowing

review via “writ of certiorari granted upon the petition of

any party to any civil or criminal case . . .”).

1. Citations abbreviated “D.E.” refer to documents in the

record of Case No. 18-CV-81009 (S.D. Fla.) by their docket entry

(“ECF No.”) number.

2

RELEVANT STATUTORY PROVISIONS

Although Petitioners believe there is no ambiguity,

this matter may require the Court to construe 26 U.S.C.

§ 1563 (“Definitions and special rules”) (Pet. App.

39a–57a); 29 U.S.C. § 1002(16)(A) and (B) (definitions of

“Plan Administrator” and “Plan Sponsor”) (Pet. App.

57a–58a); 29 U.S.C. 1301(a)(14) (Definition of “controlled

group” and “common control”) (Pet. App. 59a–61a); 26

C.F.R. § 1.414(b)–1(a) (Definition of “controlled group of

corporations.”) (Pet. App. 62a–63a); and 26 CFR § 1.414(c)2 (defining “two or more trades or businesses under

common control.”) (Pet. App. 64a–72a).

INTRODUCTION

The lower courts disregarded the precedent set by

Chicago Title & Tr. Co. v. Forty-One Thirty-Six Wilcox

Bldg. Corp., 302 U.S. 120 (1937) and instead created new

federal common law “under ERISA.” The district court

declared that “someone must bear the cost,” without

appropriately considering that ERISA already provides

that insurer/guarantor PBGC would properly bear the

cost. (Pet. App. 16a).

The lower courts held that despite its 1997 statelaw extinction, Liberty Lighting Co., Inc. continued its

existence “for purposes of ERISA.” Id. 20a. Moreover,

they determined that an Illinois corporation could

continue to exist in perpetuity “under ERISA” regardless

of what result Illinois law requires outside of the ERISA

context. Id. 11a, n.2. Because it existed for ERISA

purposes—Illinois law notwithstanding—the district

court concluded that the corporation also still had stock

3

that was commonly owned with the Petitioners. Id. 20a.

As a consequence, these Petitioners were all held to exist

in a “controlled group” with Liberty Lighting Co., Inc. on

July 31, 2012. Id. 27a–33a.

The non-existent former Illinois corporation, Liberty

Lighting Co., Inc., was never a party to this dispute. Id.

24a–25a. Nonetheless, the district court found all the

Petitioners liable for Liberty Lighting’s alleged debts,

jointly and severally. An appeal followed to the Eleventh

Circuit.

In the Eleventh Circuit, Petitioners continued to

observe that the non-existent corporation, Liberty

Lighting Co., Inc., could not exist in a “controlled group”

with the Petitioners in 2012 under the plain language of

26 U.S.C. 1563(a) and/or the applicable Treasury Reg.

1.414(c)-2. Furthermore, under the language of 26 U.S.C.

1563(a) and 26 CFR 1.414(c)-2, entities must have stock

that was still actually owned by a common owner in order

to be in a “controlled group.” In order to be “owned” by

somebody, a corporation must exist and have stock. That

precondition to finding a controlled group was simply

missing here. The alleged owner had no enforceable or

usable legal ownership rights under state law. Petitioners

argued, therefore, that it was erroneous for the courts to

impute ownership and “voting rights” as liabilities under

federal law “for purposes of ERISA.” See, e.g., 26 CFR

1.414(c)-2 (finding “control” requires looking at “voting

rights”).

On de novo review, a three-judge panel of the Eleventh

Circuit affirmed the district court judgment. Pet. App. 1a.

After acknowledging that this was “a difficult case,” the

4

Court of Appeals reasoned that, “under ERISA,” Liberty

Lighting Co., Inc. still had a sufficient existence on July

31, 2012 to be the “federally defined” Plan Sponsor on that

date, triggering strict ERISA “controlled group” liability

for all of the Petitioners. Id. 2a (“existed” “under ERISA”),

5a (“difficult case”), 12a (finding that “Liberty remained

the Plan’s sponsor” and concluding that therefore the

Petitioners are liable without providing analysis of

whether there was sufficient common ownership to find a

“Controlled Group”).

The decision to disregard Illinois’ own rules of

corporate existence and ownership is in conflict with the

decisions of this Court and other circuits. See, e.g., Kamen

v. Kemper Fin. Services, Inc., 500 U.S. 90, 98–99 (1991)

(“‘Corporations,’ we emphasized, ‘are creatures of state

law’ . . . and it is state law which is the font of corporate

directors’ powers.”); Burks v. Lasker, 441 U.S. 471, 477–78

(1979) (“As we have said in the past, the first place one

must look to determine the powers of corporate directors

is in the relevant State’s corporation law.”); Chicago Title

& Tr. Co. v. Forty-One Thirty-Six Wilcox Bldg. Corp., 302

U.S. 120 (1937); In re Peer Manor Bldg. Corp., 134 F.2d

839, 840–41 (7th Cir. 1943) (relying on Chicago Title);

Freedman v. magicJack Vocaltec Ltd., 963 F.3d 1125,

1132 (11th Cir. 2020) (“corporate law is overwhelmingly

the province of the states”) (quoting Marsh v. Rosenbloom,

499 F.3d 165, 176 (2d Cir. 2007)).

Since at least the 1930s, federal courts have recognized

that business corporations are solely creatures of state law,

and that state law determines the existence, ownership,

and rights of control of such corporations even when

federal issues (such as the ability to file bankruptcy) are

5

at issue. Chicago Title, 302 U.S. 120. The decision below

expands the power of the federal government to an area

in which it has never before purported to exercise control.

STATEMENT OF THE CASE

Liberty Lighting Co., Inc. was the Plan Sponsor

and Plan Administrator of a pension plan known as

the “Liberty Lighting Co., Inc. Pension Plan for IBEW

Employees” (hereafter the “Plan” or “Pension Plan”). Pet.

App. 2a. Prior to the company’s demise, administrative

duties related to the Plan were dispatched by certain of

Liberty Lighting’s employees and/or third-party vendors.

See id. 10a (coloring these “administrative duties” as acts

taken by a “Plan Sponsor”). After the company’s demise,

much of the Plan’s administrative duties were carried

out by pension plan vendor “AON.” See App. Initial Br.

at 12–13 (Dec. 27, 2019) (11th. Cir. Docket No. 19-14698).

Due to the infiltration of Chinese-made electrical

goods into Liberty Lighting’s U.S. customer base, Liberty

Lighting ran into financial trouble no later than 1990. Id.

at 22.

Liberty Lighting Co., Inc. entered Chapter 7

bankruptcy, liquidated, and dissolved in the early 1990s.

Id. All of its assets (and therefore any potential earning

capacity) were surrendered to a secured creditor at that

time. Id. Liberty Lighting was administratively dissolved

by the State of Illinois in 1992. Id. Through these events,

Mr. Wortley (who had recently bought the company in

1989) lost both legal and de facto control and ownership

of the company; the company and its assets were in the

hands of its secured creditors and the bankruptcy trustee.

6

In 1993, Mr. Wortley filed a personal bankruptcy.

Id. at 23. That bankruptcy resulted in a discharge and

then a Final Decree in 1998. Id. In that bankruptcy

proceeding, all of Mr. Wortley’s personal assets were listed

on a schedule and surrendered to a bankruptcy trustee,

including 100% of the ownership of Liberty Lighting. Id.

Meanwhile, by operation of Illinois law, Liberty

Lighting ceased to exist and the stock was “destroyed”

no later than 1997, at which point Liberty Lighting’s

dissolution and windup period terminated. Shute v.

Chambers, 492 N.E.2d 528, 531 (Ill. App. 1st Dist. 1986)

(dissolution “destroys” the stock of a corporation); Mich.

Ind. Condo. Ass’n v. Mich. Place, Ltd. Liab. Co., 8 N.E.3d

1246, 1256 (Ill. App. 1st Dist. 2014) (discussing legal effect

of reaching the end of the windup period, and concluding

“the corporation ceases to exist altogether after the grace

period of five years”). As the district court correctly

recognized, “federal law respects the rights of states to

define corporate existence.” Pet. App. at 25a.

Many years later, in 2018, PBGC sued Petitioners

in the Southern District of Florida, creating Docket No.

19-14698. PBGC alleged that the Defendants were in a

“controlled group” with non-party Liberty Lighting Co.,

Inc. as of July 31, 2012 when the Pension Plan terminated.

PBGC therefore reasoned that Petitioners were strictly

liable under sections 1306(a), 1307 and 1362(a) for

pension benefits, premiums, interest, and penalties. (The

particulars of those claims are not at issue here; only

statutory “controlled group” liability vel non.)

PBGC initially justified the litigation by contending

that “Liberty Lighting did not notify or otherwise inform

7

PBGC of its commencement of bankruptcy, the reduction

in active Plan participants, its liquidation, or its dissolution

(collectively, the ‘Reportable Events’) for over twenty

years after it was required to . . . .” [D.E. 71 (Sec. Am.

Compl.) at ¶ 69]. As the litigation progressed, even PBGC

acknowledged that not only was this allegation irrelevant,

nobody knows if it is actually true. [See, e.g., D.E. 124 at

5–6; D.E. 140 at 8]. Too much time has passed.

In 1991, Liberty Lighting’s owner turned the company

over to a bankruptcy trustee and counsel for the bankrupt

debtor. [See D.E. 71 (Sec. Am. Compl.) at ¶ 67]. At that

point, the shareholder had no authority to act on behalf

of the bankrupt entity. Moreover, the bankruptcy was

subject to supervision by the United States Trustee,

which is a division of the U.S. Department of Justice. The

Petitioners are skeptical that PBGC remained ignorant

of Liberty Lighting’s failure for all of these years. When

pressed, PBGC conceded that whether or not it received

contemporaneous notice was irrelevant to PBGC’s claims.

[See, e.g., D.E. 124 at 5–6; D.E. 140 at 8]. Nonetheless,

PBGC’s unproven, and inarguably irrelevant, suggestion

of fault seemingly convinced the lower courts to make

this a deciding factor. See Pet App. at 6a (the notice

issue “looms large”); id. at 15a–16a, 25a (“an entity could

dissolve [and] not notify [PBGC] . . . . That is exactly what

is alleged to have happened in this case.”).

PBGC’s position required courts to accept that

Liberty Lighting Co., Inc. actually existed and had stock

that could be owned with voting rights in common with

the Petitioners until the date of plan termination in July

31, 2012. See 26 U.S.C. 1563(a); 26 CFR 1.414(c)-2. But

in reality, even though the Plan still existed in 2012,

8

the company had long ago been dissolved and its stock

destroyed by Illinois law.

There is no dispute that Mr. Wortley continued

to sign papers relating to the Plan’s administration,

notwithstanding the sponsor’s dissolution, for many

years. Various parties (such as AON, who was the vendor

administering the Plan and sending checks to pensioners,

and United Jersey Bank and its successors, who were the

trustees for the Plan from at least 1989 until 2012 when

the Plan terminated) represented to Mr. Wortley that

failure to do so would result in Liberty Lighting’s former

employees not receiving their benefits. See Pet. App. 10a.

(erroneously characterizing these activities as “Plan

Sponsor” activities, rather than “Plan Administrator”

activities). Wortley merely complied with the requests of

these Plan professionals.

In 2012, PBGC contacted Mr. Wortley. PBGC

sought Wortley’s help to “terminate” the Plan through a

settlement agreement without filing a federal lawsuit to

establish “Plan Termination.” See Pet. App. 3a.

Without objection from PBGC, Mr. Wortley signed

the parties’ final negotiated settlement agreement as

the “putative president” of Liberty Lighting Co., Inc.

Mr. Wortley used the term “putative” because he and his

counsel had repeatedly represented to PBGC that the

corporation no longer existed. See App. Initial Br. at 15–18

(Dec. 27, 2019) (11th. Cir. Docket No. 19-14698). PBGC

accepted the settlement agreement signed by the “putative

president”, thus acknowledging the non-existence of

Liberty Lighting Co., Inc., and ending the matter. See

Pet. App. 3a (“Wortley and PBGC eventually agreed to a

9

settlement that represented Liberty as having dissolved

in the ’90s and the agreement contained language that

Wortley believed established a final cutoff date for his

remaining liability . . . .”).

A s d iscussed above, PBGC had justi f ied its

commencement of this litigation on the grounds that it

was not notified of Liberty Lighting’s 1991 bankruptcy. To

that end, PBGC could have obtained the Liberty Lighting

bankruptcy court file to conclusively prove its allegation

that it was not served with notice of the bankruptcy when

it was filed. In 2012 and 2013, Wortley even offered to

bear the cost of having the entire bankruptcy file copied

for PBGC. PBGC represented to Wortley, however, that

obtaining the file was not necessary, and the bankruptcy

court file was coincidentally destroyed by the National

Archives while PBGC’s lawsuit was pending below. See

App. Initial Br. at 18–19, n.6 (Dec. 27, 2019) (11th. Cir.

Docket No. 19-14698).

Petitioners moved for summary judgment. The gist

of the summary judgment motion was that the named

defendants could not have been in a “controlled group”

with Liberty Lighting on July 31, 2012 because (1) Liberty

Lighting did not exist after 1997 under the controlling

Illinois state corporate laws; and (2) even if it existed,

it could not have been actually owned by Mr. Wortley

because his stock had been destroyed. [D.E. 112 at 4-9].

Therefore, under the plain terms of 26 U.S.C. 1563(a)

and 26 CFR 1.414(c)-2, the Petitioners could not be in a

controlled group with Liberty Lighting Co., Inc.

PBGC also moved for summary judgment. [D.E. 114].

In that motion, PBGC contended that the Petitioners were

10

in a “controlled group” as a matter of law with Liberty

Lighting Co., Inc. as of July 31, 2012; and invited the

district to make new federal common law adopting that

position. Id. at 3, 10. The district court accepted the

invitation, and gave Liberty Lighting Co., Inc. renewed

existence “under ERISA” 15 years after Illinois law had

permanently destroyed it. Pet. App. 23a–25a.

The district court granted summary judgment to

PBGC and denied summary judgment sought by the

Petitioners. Id. 35a. The district court agreed with the

Petitioners that Liberty Lighting ceased to exist under

state law. Id. 25a. The district court further agreed with

the Petitioners that federal law defers to the states to

define corporate existence. Id. (“Liberty Lighting ceased

to exist under state law and federal law respects the rights

of states to define corporate existence.”).

Nevertheless, the district court made a “narrow”

policy-based exception. Id. The district court declared that

“someone must bear the cost.” Id. 16a. As a result, it held

that Liberty Lighting Co., Inc. continued its existence and

wrote that “only for the purposes of a federal, ERISAfocused application . . . a state-law dissolution does not

disturb an entity’s federal, ERISA contributing sponsor

designation.” Id. 25a. Because the district court gave

Liberty Lighting existence for “ERISA purposes” in

2012—Illinois law notwithstanding—the district court

implicitly concluded that the corporation still had stock

that could be owned or transferred, and it was still owned

by Mr. Wortley in 2012. See Id.; 26 U.S.C. 1563(a); 26

CFR 1.414(c)-2. As a consequence, these Petitioners were

deemed by the court to be in a controlled group with

Liberty Lighting Co., Inc. as of July 31, 2012.

11

The district court decided that the expired Liberty

Lighting stock was deemed ‘abandoned’ back to Mr.

Wortley from his personal bankruptcy trustee in 1998.

Pet. App. at 26a. Therefore, the district court held that

Liberty Lighting was still owned by Mr. Wortley 14 years

later as of July 31, 2012. As a consequence, all of the

companies that he also owned on July 31, 2012 would be

jointly and severally liable for the entire claimed pension

premium liability, plus interest and penalties. Id. 28a–31a.

A final judgment resulted on December 6, 2019.

[D.E. 163]. Petitioners’ unsuccessful appeal to the court

of appeals was timely filed on December 11, 2019. [D.E.

164]; Pet. App. at 1a.

In the Eleventh Circuit, Petitioners contended that a

non-existent corporation under state law could not remain

in a “controlled group” under 26 U.S.C. 1563(a) and/or

the applicable Treasury Reg. 1.414(c)-2. Furthermore, 26

U.S.C. 1563(a) and 26 CFR 1.414(c)-2, clearly require the

existence of stock. The stock has to be actually owned by

a common owner in order to be in a “controlled group.”

Because Mr. Wortley had no enforceable or usable legal

ownership rights over Liberty Lighting Co., Inc. under

Illinois state law, nothing could actually be “abandoned”

from the bankruptcy. The federal courts could not

resurrect those rights and assign them to a former owner

without violating Chicago Title & Tr. Co. v. Forty-One

Thirty-Six Wilcox Bldg. Corp., 302 U.S. 120 (1937).

On de novo review, a three-judge panel of the Eleventh

Circuit affirmed. Although this was a “a difficult case,”

the Court of Appeals believed Liberty Lighting Co.,

Inc., still had a sufficient existence on July 31, 2012 to

12

be the “federally defined” Plan Sponsor on that date,

triggering strict ERISA “controlled group” liability

for the Petitioners. Pet App. at 5a, 7a. Rehearing and

rehearing en banc were denied. Id. at 37a-38a.

REASONS FOR GRANTING THE PETITION

Certiorari review is needed to restore the longunderstood meaning of Amendment X of the United

States Constitution and Chicago Title & Trust Co. v.

Forty-One Thirty-Six Wilcox Bldg. Corp., 302 U.S. 120,

127-28 (1937) (holding that “[h]ow long and upon what

terms a state-created corporation may continue to exist

is matter exclusively of state power. . . . And it hardly will

be claimed that the federal government may breathe life

into a corporate entity thus put to death by the state . . . .”).

Creative justification and application of federal common

law should not be used to evade this Court’s mandated

deference to state corporate laws.

The decisions below also conflict with this Court’s

repeated admonition that federal courts are not to

create federal common law to materially alter existing,

unambiguous federal statutes. Even when federal common

law rules are authorized, they are to be filled by adopting

state law principles absent clear congressional direction

to the contrary.

This Court has repeatedly been required to reign in

some federal courts’ desires to “improve” upon the work

of Congress and the common law by inventing new rules

and remedies never approved by any legislature. See, e.g.,

United States v. Bestfoods, 524 U.S. 51, 63 (1998) (stating

that “CERCLA is thus like many another congressional

13

enactment in giving no indication that the entire corpus

of state corporation law is to be replaced simply because a

plaintiff’s cause of action is based upon a federal statute,”

and “in order to abrogate a common-law principle, the

statute must speak directly to the question addressed by

the common law[.]”) (internal quotes omitted); Kamen

v. Kemper Fin. Servs., Inc., 500 U.S. 90, 98 (1991) (“The

presumption that state law should be incorporated into

federal common law is particularly strong in areas in

which private parties have entered legal relationships with

the expectation that their rights and obligations would be

governed by state-law standards.”).

The Court’s intervention is required again. The

decision below is part of a growing line of cases in which

federal courts of appeals have adopted principles of

liability that are hostile to business interests and far

exceed anything actually enacted or contemplated by

Congress’s ERISA statutory scheme. See, e.g., Pension

Benefit Guar. Corp. v. Findlay Industries, Inc., et al.,

902 F.3d 597, 609-13 (6th Cir. 2018) (when the facts of the

case fell outside of ERISA’s express statutory successor

liability provisions, i.e., 29 U.S.C. § 1369, the 6th Circuit

created liability by applying federal common law successor

liability), petition for cert. dimissed sub nom., September

Ends Co. v. Pension Ben. Guar. Corp., 140 S. Ct. 16

(2019); see also id. at 618 (McKeague, J., concurring and

dissenting) (“The [Defendant]s argue that 29 U.S.C.

§ 1369 enumerates the only circumstances where the

PBGC can impose Termination Liability on the successor

to a plan sponsor. The [Defendant]s are right.”). The Court

needs to signal that a reversal of this trend is required.

14

A. The Court should reaffirm Chicago Title and its

delegation to the states of control over the existence

and ownership of state-created entities.

Review is warranted so that the Question Presented

may be addressed and answered in the affirmative. One

important area of law traditionally regulated exclusively

by the states has long been the existence, termination, and

ownership of state-created business entities. Here, Illinois

law exclusively controls the question of when Liberty

Lighting Co., Inc. ceased to exist as a corporation, as well

as the question of whether it had outstanding, issued stock

capable of any private ownership and voting control.

“The powers not delegated to the United States

by the Constitution, nor prohibited by it to the

States, are reserved to the States respectively,

or to the people.”

U.S. Const. Amend X.

Only a state can determine whether a corporation

that it has created exists or terminates. See, e.g., Kamen

v. Kemper Fin. Services, Inc., 500 U.S. 90, 98–99 (1991).

Only a state can regulate who, if anyone, is entitled to own

or control it. Id. A well-developed, stable body of state

corporate law exists upon which American commerce

depends and relies. Id. at 98 (“The presumption that

state law should be incorporated into federal common law

is particularly strong in areas in which private parties

have entered legal relationships with the expectation that

their rights and obligations would be governed by statelaw standards.”). Federal law, in turn, builds on state

corporate law for various purposes. See, e.g., id. at 108

15

(reaffirming Burks v. Lasker, 441 U.S. 471 (1979)). The

Internal Revenue Code, in particular, builds upon and

relies on an existing body of state business organizations

law. And ERISA explicitly relies on definitions in the

Internal Revenue Code. E.g., 29 U.S.C. § 1301(a)(14)(B)

(ERISA definition and determination of a “controlled

group” requires using the “regulations prescribed for

similar purposes by the Secretary of the Treasury under

subsections (b) and (c) of section 414 of Title 26[.]”).

Accordingly, despite the seemingly limitless and everexpanding regulatory power of the federal government,

federal courts have historically been “powerless” to

“resurrect a corporation which a state has put out of

existence for all purposes.” Chicago Title & Trust Co.

v. Forty-One Thirty-Six Wilcox Bldg. Corp., 302 U.S.

120, 128 (1937)). “A corporation can only exist under the

express laws of the State by which it was created.” As a

result, “[h]ow long and upon what terms a state-created

corporation may continue to exist is matter exclusively

of state power. . . . And it hardly will be claimed that the

federal government may breathe life into a corporate

entity thus put to death by the state . . . .”. Id. at 127-28.

This rule was universally accepted, including by the

Eleventh Circuit and this Court. It is a “widely accepted”

and firmly established principle that “corporations . . . are

creatures of state law[.]” Freedman v. magicJack Vocaltec

Ltd., 963 F.3d 1125, 1133 (11th Cir. 2020) (quoting Kamen

v. Kemper Fin. Servs., 500 U.S. 90, 98 (1991)).

This Court’s decision in Chicago Title has never been

overruled, modified or limited, but the decisions below

have implicitly done so. In that Chicago Title decision,

by coincidence, this Court specifically examined Illinois

16

corporate law. 302 U.S. at 121. Chicago Title teaches

that Mr. Wortley, as the former shareholder or officer

of a dissolved entity, could not continue its existence or

even hire a lawyer for the entity, even if he had wanted

to continue its existence for purposes of remaining an

ERISA ‘plan sponsor’ or other corporate activity. In re

Peer Manor Bldg. Corp., 134 F.2d 839, 840 (7th Cir. 1943)

(relying on Chicago Title).

Illinois is a jurisdiction that treats corporate

dissolution the same as the death of a natural person after

a certain windup period. See 19 Am. Jur., 2d Corporations

§ 2458 (2015) (“A corporation considered a person also

can be considered living or dead, depending on whether it

remains in operation or instead has been dissolved. Under

some [state] statutes, the dissolution of a corporation is,

in legal effect, the same as the death of a natural person.”)

(emphasis added; footnotes omitted) (citing Michigan

Indiana Condominium Ass’n v. Michigan Place, LLC, 8

N.E.3d 1246 (App. Ct. 1st Dist. 2014), appeal denied, 20

N.E.3d 1256 (Ill. 2014). From the perspective of Illinois,

a former stockholder like Mr. Wortley could not take any

official action on behalf of the “dead” Liberty Lighting

entity. Id. It follows that a federal court should not assign

it a fictional ERISA Plan Sponsor existence. It could never

impute ownership authority or control to a former owner,

who was divested of such power, without encroaching

on state law and violating the precedent of this Court’s

Chicago Title decision. Peer Manor, 134 F.2d at 841 (“The

State of Illinois has the power of life and death over its

corporations. It says the corporation is dead. We know of

no [federal] rule of bankruptcy which has the power of

resurrection.”).

17

Illinois law itself remains completely clear. It has

been consistent since the early 20 th Century. See Ill.

Jur. BUSINESS RELATIONSHIPS § 10:53 (2019)

(“Dissolution of a corporation or a limited liability

company terminates its existence.”); In re Segno Comms.

264 B.R. 501, 508 (Bankr. N.D. Ill. 2001) (“The wind-up

period is limited in Illinois to five years, after which the

corporation ceases to exist.”); Mich. Ind. Condo. Ass’n v.

Mich. Place, Ltd. Liab. Co., 8 N.E.3d 1246, 1256 (Ill. App.

1st Dist. 2014) (discussing legal effect of reaching the end

of the windup period, and concluding “the corporation

ceases to exist altogether after the grace period of five

years”). Similarly, the Liberty Lighting Co., Inc. stock

no longer existed. In re Segno, at 508 (Bankr. N.D. Ill.

2001) (giving Illinois statutes their “plain and ordinary

meaning” and concluding: “The wind-up period is limited

in Illinois to five years, after which the corporation ceases

to exist.”); Shute v. Chambers, 492 N.E.2d 528, 531 (Ill.

App. 1st. Dist. 1986) (dissolution “destroys” the stock of

a corporation).

Most recently, the Illinois Supreme Court restated and

confirmed that “the five-year extension to a corporation’s

life granted by [805 Illinois Compiled Statutes 5/]

section 12.80 establishes a fixed endpoint beyond which

a corporation ceases to exist.” Pielet v. Pielet, 978 N.E.

2d 1000, 1008 n.3 (Ill. 2012) (e.s.). Accordingly, from the

perspective of the Illinois courts and the Illinois Secretary

of State, Liberty Lighting in fact ceased to exist no later

than the expiration of the five-year winding up period in

1997.

Moreover, even if Liberty Lighting Co., Inc. were

deemed arguendo to retain some theoretical ongoing

federal legal existence as a nominal Plan Sponsor for

18

purposes of ERISA, that is not the end of the “controlled

group” inquiry. Mr. Wortley was still without legal

authority to “control” or “own” any such entity after his

stock was dissolved no later than 1997. As explained below,

federal courts lacked authority to tell Mr. Wortley that he

“owned” stock that he absolutely could not own, control, or

transfer under Illinois law. Peer Manor, 134 F.2d at 84041 (debtor corporation was no longer in existence; it had

no power to exist for the purpose of being sued, to file an

answer through counsel, or to carry out reorganization).

B. Federal courts are not free to rewrite a statute that

relies on unambiguous definitions with “federal

common law.”

In Title 29, Congress specifically relied on concrete,

non-controversial state law concepts like “ownership”

and “stock.” To define concepts like a “controlled group,”

it referred to definitions that existed in the Internal

Revenue Code, Title 26. See 29 U.S.C. § 1301(a)(14); 26

U.S.C. §1563(a). For tax purposes, state law clearly exists

and defines and describes who “owns” a corporation

without ambiguity. State law also sets the parameters

for lawful issuance and actual control of shares of stock

in a corporation. State law also provides the backdrop for

federal statutes like 26 U.S.C. § 1563 that rest upon statedefined concepts like “nonvoting stock,” “treasury stock,”

“trusts,” “estates,” “spouse,” “children” “grandchildren,”

and “parents.” Congress has never tried to legislate these

matters anew for the states. Moreover, as a matter of

Congressional intent, there is no evidence that Congress

ever intended to overwrite state corporate laws on

ownership and control of state-created entities. There

was never any need to reinvent an established body of

reliable, workable law.

19

In the action below, PBGC’s claims depended entirely

upon the disputed premise that Joseph G. Wortley

still owned at least 80% of Liberty Lighting Co., Inc.’s

stock on July 31, 2012. This was simply not factually

correct. Mr. Wortley did not own the company, or any

shares of the stock. He had surrendered the stock to his

bankruptcy estate. No later than 1997 (and while he was

in bankruptcy), his surrendered stock was “destroyed”

under Illinois law. When Mr. Wortley emerged from

bankruptcy with a discharge in 1998, the stock could not

be “abandoned” back to him because the stock was gone.

Both the company and the stock were destroyed under the

governing Illinois law. Nobody owned it in 1998, or in 2012.

Controlled group status depends on ownership at

the time of plan termination. Pet. App. 21a, 27a (quoting

29 U.S.C. § 1362(a)). Here, Lighting’s stock remained

unowned and “destroyed” under state law and could not be

owned by anybody, including Joseph Wortley, long before

plan termination in 2012. Shute v. Chambers, 492 N.E.2d

528, 531 (Ill. App. 1st Dist. 1986) (dissolution “destroys”

the stock of a corporation); Horbach v. Kaczmarek, 915 F.

Supp. 18, 21 (N.D. Ill. 1996) (“When that five year ‘windup’ period expires, corporate property that has not been

disposed of automatically passes to the shareholders.”).

Without issued, outstanding corporate stock under

state law (and, significantly, legally recognizable voting

interests associated with that stock and held under

authority of state law by Mr. Wortley on July 31, 2012),

Mr. Wortley lacked the legal right under state law to

“control.” There could be no ERISA “controlled group.”

26 U.S.C. §1563(a) (determination of a controlled group

requires looking at contemporaneous stock ownership

and voting rights). Mr. Wortley’s continued ownership

20

of a minimum of 80% of the corporate stock under state

corporate law would be absolutely required to trigger the

federal “controlled group” statute. That required element

was simply missing here from PBGC’s case.

Through the holding below, the Eleventh Circuit

has now usurped Illinois’ exclusive constitutional

prerogative to define who owns and controls an Illinoiscreated corporation. See Chicago Title & Tr. Co., 302

U.S. at 124–25 (“the federal government is powerless to

resurrect a corporation”). Liberty Lighting Co., Inc. had

no outstanding stock as of 2012 according to the only entity

that ever allowed that stock to exist: Illinois. Because

Illinois law alone, not federal law, speaks clearly to that

issue, Liberty Lighting thereafter had no controlling

stockholder, even if a federal agency desires to call it a

“Plan Sponsor.”

C. Certiorari review is warranted to restore the states’

constitutional authority to determine and regulate

the ownership and existence of their own statecreated entities.

The Court should hear this case in order to restore

uniformity of decisions with Chicago Title and the entire

body of federal law that flowed from it. It should check

ever-encroaching federal power against the states. If

certiorari is granted, this Court can hold once and for

all that federal ERISA laws do not trample any state’s

own long-established rules for the (1) existence vel non

and (2) private ownership and governance and control of

corporations, upon which critical American commercial

interests rely every day.

21

The Court should halt the advance of invented “federal

common law” at the expense of the states, congressional

legislation, and the Tenth Amendment. Here, the new

rule announced by the Eleventh Circuit would extend

corporate life and impute stock ownership to otherwisepowerless, unwitting and helpless former owners in

conflict with state law. To be owned, Liberty Lighting Co.,

Inc. needed to exist and have stock that could be owned.

Under the plain meaning of 29 U.S.C. section 1563(a) and

Treasury Regulation 1.414(c)-2, it is impossible for anyone

to “own” 80% or more of a corporation that does not exist.

Instead, upon collapse of the corporate form, any assets of

the corporation are distributed to be owned thereafter by

the shareholders individually. See, e.g., Shute v. Chambers,

492 N.E.2d 528, 531 (Ill. App. 1st Dist. 1986) (citing 3 Am.

Jur. Corporations § 412, at 465 (1938)). But here, there

were no assets. Everything was seized by the creditors.

D. The underlying policy justification to disregard

state law, invent federal common law, and deem the

Plan Sponsor to exist indefinitely despite state law

depends on a flawed premise.

1.

The decision exposes business owners to

indefinite liabilities for an indefinite amount

of time.

There are other logical and practical reasons to review

the Eleventh Circuit’s decision. It held that the Liberty

Lighting ERISA Plan Sponsor continued to nominally

exist and remained owned and controlled by its former

shareholder beyond its dissolution for twenty years (from

1992 to 2012). As inherently extreme and unreasonable

as that may sound, it is not even the outer limit of the

22

holding. Under the exact same reasoning, and that of the

district court, a long-dissolved corporation could actually

remain in ERISA limbo, and its former owners still

deemed to own the stock in perpetuity, and for as long as

no successor plan sponsor existed. That could be decades

or even centuries. That is not a reasonable or predictable

result. Rather, the result is needlessly hostile to business

interests that rely on everyday state law concepts of

“dissolution,” “windup” and “ownership.” In Illinois, for

example, when a dissolution and windup period concludes

after five years, business owners should have confidence

that—absent specific statutory exceptions or intentional

fraud—corporate existence is actually extinguished.

2.

ERISA already contemplates the “missing

Plan Sponsor” problem.

This Court has observed “repeatedly that ERISA is

a ‘comprehensive and reticulated statute,’ the product of

a decade of congressional study of the Nation’s private

employee benefit system.” Great-W. Life & Annuity

Ins. Co. v. Knudson, 534 U.S. 204, 209 (2002) (quoting

Mertens v. Hewitt Associates, 508 U.S. 248, 251 (1993)

and Nachman Corp. v. Pension Benefit Guaranty

Corporation, 446 U.S. 359, 361 (1980)). Therefore, this

Court has “been especially ‘reluctant to tamper with [the]

enforcement scheme’ embodied in the statute by extending

remedies not specifically authorized by its text.” Id.

(quoting Massachusetts Mut. Life Ins. Co. v. Russell, 473

U.S. 134, 147 (1985)). This is because “ERISA’s carefully

crafted and detailed enforcement scheme provides strong

evidence that Congress did not intend to authorize other

remedies that it simply forgot to incorporate expressly.”

Id. (internal quotes omitted). Outside of the ERISA

23

context, this Court has similarly cautioned courts not

to “fashion new remedies that might upset carefully

considered legislative programs.” Nw. Airlines, Inc. v.

Transp. Workers Union, 451 U.S. 77, 97 (1981).

These rules restricting a federal court’s power to make

federal common law apply even if the policies underlying

the statute seem to favor the requested remedy. “This

is especially true with legislation such as ERISA, an

enormously complex and detailed statute that resolved

innumerable disputes between powerful competing

interests—not all in favor of potential plaintiffs.” Mertens

v. Hewitt Associates, 508 U.S. 248, 262 (1993). When

analyzing the ERISA “statutory scheme as a whole:

‘There is no congressional mandate to engage in legal

gymnastics in order to guarantee pension plans at all

costs.’” Teamsters Pension Trust Fund of Philadelphia

and Vicinity v. Central Michigan Trucking, Inc., 857 F.2d

1107, 1109 (6th Cir. 1988) (quoting District Judge Wendell

A. Miles). It was therefore inappropriate for PBGC to ask

the courts to create new remedies to fit this case. See,

e.g., Barnhart v. Sigmon Coal Co., 534 U.S. 438, 461-62

(2002) (“We will not alter the text in order to satisfy the

policy preferences of the Commissioner. These are battles

that should be fought among the political branches and

the industry. Those parties should not seek to amend the

statute by appeal to the Judicial Branch.”).

Worse yet, the ultimate decision to override longestablished state law with a “narrowly crafted” new federal

common law rule rested on an erroneous and unnecessary

policy justification that was premised on a confusion

of ERISA’s definitions. See Pet. App. 10a–11a. The

Eleventh Circuit wrote that an ERISA Plan’s “continuing

24

maintenance—can only have been undertaken by the

Plan’s sponsor.” Id. 10a. Respectfully, that is not correct.

ERISA relies on carefully defined terms arising from “a

decade of congressional study.” Knudson, 534 U.S. at 209.

An ERISA “Plan Administrator” was responsible for

continuing maintenance. See 29 U.S.C. § 1002(16)(A). As

this case proves, a “Plan Sponsor,” in contrast, is merely

the founder and contributor for the Plan. See 29 U.S.C.

§ 1002(16)(B). A Plan Sponsor may stop functioning. A

sole proprietor/Plan Sponsor may die. An entity sponsor

may be dissolved (voluntarily or involuntarily), go into

receivership, go bankrupt, or simply stop operating.

Nothing can stop these normal events of business life.

That is why a “Plan Administrator” is still actually

and legally responsible for maintaining the plan. Once

the Panel Opinion commingled the defined terms “Plan

Sponsor” with “Plan Administrator,” these Petitioners

were prejudiced.

Congress did not inadvertently leave room for

ERISA to fall into chaos if a Plan suddenly lacked a Plan

Sponsor. Rather, in the definition of “Plan Administrator,”

ERISA affirms that “in the case of a plan for which an

administrator is not designated and a plan sponsor

cannot be identified, [the Plan Administrator is] such

other person as the Secretary [of Labor] may by regulation

prescribe.” 29 U.S.C. §1002(16)(A)(iii) (e.s.). Obviously,

the default situation in which “a plan sponsor cannot be

identified” was foreseen. The scheme created by Congress’

choice of words in the statute did not need the federal

court system’s further assistance. A Plan Administrator,

not the Plan Sponsor, exists to ensure continuity of plan

operation.

25

If the Plan Administrator failed as a fiduciary,

there are remedies, addressed below. If information is

intentionally withheld or concealed from PBGC, there are

very specific remedies. Those issues were never litigated

or explored in this case; they were neither applicable

nor relevant. This was a strict liability, Plan Sponsor

“controlled group” case, never a claim asserted against

a Plan Administrator or fiduciary for its alleged faults,

failures or non-feasance. While the PBGC and the lower

courts all offered suggestive commentary to justify their

erroneous positions, actual fault was not litigated, because

it was not relevant to the underlying claims.

Accordingly, ERISA is not “silent” when a Plan

Sponsor ceases to exist. The statutory scheme does not

fall apart. Congress considered the issue. There was no

need to tamper with ERISA’s enforcement scheme in this

manner. If there were actually “uncertainty in ERISA

law” then this same problem would be expected to have

arisen repeatedly in the past. Over decades, Congress and

the Secretary of Labor were authorized to address the

continuity issue if it were a concern. Even the Eleventh

Circuit agreed that “it is ERISA . . . that determines the

identity of a plan’s sponsor in a situation such as this.”

In light of the foregoing, the Court should grant

review. The Eleventh Circuit’s decision should be quashed

in favor of the plain language of the statute and with due

deference to the state law that dictates the existence and

ownership of corporations. There is no gap in ERISA that

needed to be filled.

26

3.

PBGC already has remedies to prevent a failure

of succession of a Plan Sponsor that do not

interfere with state corporate law.

ERISA a l ready prov ides the PBGC w ith an

extraordinary toolbox of remedies to prevent a failure

of succession of a Plan Sponsor. The situation is referred

to as a “controlled group breakup.” See Pension Benefit

Guaranty Corp. v. FEL Corp., 798 F. Supp. 239 (D. N.J.

1992); see also PBGC.gov, Risk Mitigation & Early

Warning Program, available at https://www.pbgc.gov/

prac/risk-mitigation (using the term “controlled group

breakup”). The Eleventh Circuit was incorrect when it

concluded that “ERISA [does not] tell[] us what to do

with pension liabilities when the sponsor of a plan has

dissolved but the plan has continued to operate.” (Pet

App. 8a). Congress has directed PBGC exactly what to

do. PBGC’s “toolbox” includes:

i.) The ability to disregard transactions made to

“evade” ERISA liabilities;2

ii.) Fiduciary duty lawsuits with alternate statutes of

limitations;3

2. 29 U.S.C. §1369(a); PBGC v. White Consol. Indus., 215

F.3d 407 (3d Cir. 2000); Pension Benefit Guar. Corp. v. Findlay

Industries, Inc., et al., 902 F.3d 597 (6th Cir. 2018), pet. for cert.

dismissed sub nom. September Ends Co. v. Pension Ben. Guar.

Corp., 140 S. Ct. 16 (2019).

3. 29 U.S.C. §1303(e)(6); PBGC v. Mizrachi, 363 F. Supp. 3d

342 (E.D.N.Y. 2019).

27

iii.) Extended statutes of limitations in cases of fraud

and concealment;4

iv.) The ability to bring any and all state law causes

of action;5 and

v.) The benefit of hindsight and nearly unfettered

deference when choosi ng a Dat e of Pla n

Termination.6

The real purpose of ERISA’s Controlled Group

provisions is to prevent a Plan Sponsor from “funneling

its assets into other entities it owns” before going out of

business. See, e.g., (Pet App. 8a). That was never alleged

to have happened here. Liberty Lighting simply went

out of business, liquidated in a Chapter 7 bankruptcy,

and was a dead and inactive entity for twenty years. No

other co-owned entities are alleged to have taken on its

assets or business. Mr. Wortley had no right to control

or operate it, as the Seventh Circuit has previously held

(applying Illinois law). In re Peer Manor Bldg. Corp., 134

F.2d 839 (7th Cir. 1943) (relying on Chicago Title). Mr.

Wortley could not even hire a lawyer to represent Liberty

Lighting. See id. Accordingly, the corporate existence and

stock ownership rules invented by the Eleventh Circuit

4. 29 U.S.C. §1303(e)(6)(B)-(C).

5. PBGC v. The Renco Group, 13-CV-621 RJS, 2015 WL

997712, (S.D.N.Y. Mar. 6, 2015).

6. PBGC v. FEL Corp., 798 F. Supp. 239 (D.N.J. 1992); PBGC

v. Republic Tech. Int’l, Inc., 386 F.3d 659 (6th Cir. 2004); PBGC

v. Mize Co., 987 F.2d 1059 (4th Cir. 1993); PBGC v. Durango-Ga.

Paper Co., 2006 WL 3762085 (S.D. Ga. Dec. 20, 2006), aff’d per

curiam, 251 Fed. Appx. 664 (11th Cir. Oct. 19, 2007).

28

for this case are not only offensive to state law, but also

create a new ERISA remedy for a wrong that did not

actually occur here.

CONCLUSION

For the foregoing reasons, the petition for a writ of

certiorari should be granted.

Respectfully submitted,

Robert J. Hauser

Counsel of Record

Pankauski Hauser

Lazarus, PLLC

415 South Olive Avenue

West Palm Beach, FL 33401

(561) 514-0900

courtfilings@phflorida.com

Craig Tompkins

Craig Tompkins, PLLC

2269 Acorn Palm Road

Boca Raton, FL 33432

(561) 271-4868

Counsel for Petitioner

May 25, 2021

APPENDIX

1a

Appendix A — Appendix

opinionAof the united

states court of appeals FOR THE

ELEVENTH CIRCUIT, FILED

NOVEMBER 24, 2020

United States Court of Appeals

for the Eleventh Circuit

No. 19-14968

PENSION BENEFIT GUARANTY CORPORATION,

Plaintiff-Appellee,

versus

50509 MARINE LLC, AMH GOVERNMENT

SERVICES, LLC, et al.,

Defendants-Appellants.

Appeal from the United States District Court

for the Southern District of Florida.

November 24, 2020, Decided

November 24, 2020, Filed

Before MARTIN, ROSENBAUM, and TALLMAN,*

Circuit Judges.

The Honorable Richard C. Tallman, Circuit Judge for the

United States Court of Appeals for the Ninth Circuit, sitting by

designation.

*

2a

Appendix A

TALLMAN, Circuit Judge:

From the confluence of bankruptcy, employee benefits,

and corporations law comes this most unusual case. The

answer to a seemingly simple but surprisingly complex

question controls our disposition: Did the Liberty Lighting

Company exist in July 2012? Liberty was an Illinois

corporation that went bankrupt and dissolved under state

law in the 1990s. But if it nevertheless continued with the

assistance of its sole stockholder owner as the sponsor of

a pension plan under the federal Employee Retirement

Income Security Act (ERISA), then federal law dictates

that other companies owned by Liberty’s owner may be

held liable for the unfunded liability, which was paid by

the government agency known as the Pension Benefit

Guaranty Corporation (PBGC), when the plan ran out of

funds. Those companies—the appellants in this action—

protest that they cannot be considered owned in common

with Liberty for the simple reason that Liberty ceased

to exist long ago. We disagree. Concluding that, in the

unusual circumstances of this case, Liberty still existed in

2012 sufficiently to act as the plan’s sponsor under ERISA,

we affirm the district court.

I

Joseph Wortley owned Liberty Lighting Co., Inc.

(“Liberty”), a unionized electrical supply manufacturing

company based near Chicago in the late 1980s. Prior to

its ultimate dissolution, Liberty was the plan sponsor and

administrator of the “Liberty Lighting Co., Inc. Pension

Plan for IBEW Employees” (the “Plan”) under Title

3a

Appendix A

IV of ERISA, 29 U.S.C. § 1301 et seq. Liberty ran into

financial trouble in the early ’90s, entered bankruptcy

and surrendered its assets to a creditor in 1992, and was

thereafter administratively dissolved under state law.

Wortley, Liberty’s sole owner with 100% of the company’s

stock, soon followed with his own personal bankruptcy

in 1993, from which he was discharged in 1998. As part

of the bankruptcy proceedings, all of Wortley’s assets

were surrendered to a trustee, including his stock in

Liberty. Meanwhile, Wortley continued to act as the Plan’s

administrator, signing papers on behalf of the Plan at the

request of the Plan’s actuary for years after Liberty’s

purported dissolution. These signatures were necessary

to effect continuing payments to pensioners.

In 2012, as the Plan’s funds ran low, the bank

administering the Plan notified PBGC of the Plan’s

looming insolvency. PBGC, as the federal agency charged

with protecting the retirement incomes of workers in

private-sector defined benefit pension plans, contacted

Wortley to reach a settlement regarding the unfunded

remaining liability of the Plan. Wortley and PBGC

eventually agreed to a settlement that represented

Liberty as having dissolved in the ’90s and the agreement

contained language that Wortley believed established a

final cutoff date for his remaining liability by conveying

“any and all powers, authority, et[] cetera, that [Wortley]

may have on behalf of Liberty [] and/or the Plan to PBGC”

on July 31, 2012.

But six years later, PBGC brought suit against these

19 appellants (“the Companies”) in the United States

4a

Appendix A

District Court for the Southern District of Florida,

alleging that they, as other companies owned by Wortley,

were nonetheless part of a “controlled group” with

Liberty, and therefore were still liable for Liberty’s unpaid

pension benefits, premiums, interest, and penalties under

29 U.S.C. §§ 1306(a)(7), 1307, and 1362(a). PBGC’s theory

of the case under ERISA is simple: with Liberty unable

to meet its ERISA obligations to its former employees,

Wortley’s other companies must foot the bill. See id.

§ 1307(e)(2).

After denying the Companies’ motion to dismiss,

the district court granted summary judgment to PBGC

on November 22, 2019. The court based its finding on

several alternate grounds: (1) ERISA makes Liberty the

contributing sponsor of the Plan, and no operation of state

law can change that; (2) courts are authorized to make

“federal common law” in pursuit of ERISA’s scheme and

goals, and finding that Liberty was the sponsor would

further ERISA’s central goal of protecting the interests

of pension beneficiaries; and (3) Illinois law allows a

dissolved company “to carry on in a manner necessary

to wind up its affairs,” so Liberty was able to continue in

existence after ceasing business operations in order to

meet its obligations under the Plan. The court reasoned

that under the Companies’ view of ERISA, “nobody was

responsible for the pension plan,” a result that “cannot be

squared with ERISA as a whole,” which “does not allow

pension plans to exist in a state of limbo, devoid of any

caretaker.” Final judgment was entered on December 6,

2019, and the Companies timely appealed.

5a

Appendix A

II

The district court had federal-question jurisdiction

under 28 U.S.C. § 1331, and we have appellate jurisdiction

under § 1291.

We review the granting of summary judgment de

novo, viewing all facts in the light most favorable to the

nonmoving party. See Nesbitt v. Candler Cnty., 945 F.3d

1355, 1357 (11th Cir. 2020). Summary judgment is proper

only “if the movant shows that there is no genuine dispute

as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a).

III

This is, as the district court wrote in its summaryjudgment order, “a difficult case.” It comes down to what

seems on the surface an easy question: On July 31, 2012,

was Liberty the “contributing sponsor” of the “Liberty

Lighting Co., Inc. Pension Plan for IBEW Employees”

under Title IV of ERISA?1 If it was—and if Joseph Wortley

was its owner—then the companies sued by PBGC are

responsible for the so-called termination liabilities: the

Plan’s shortfall, plus premiums, penalties, and interest

associated with the Plan, totaling approximately $6.2

million. 29 U.S.C. §§ 1362(b), 1306(a), 1307(c), 1307(d).

1. The Companies do not deny that Liberty was the Plan’s

sponsor before Liberty’s dissolution. And no one questions that

Wortley owns the requisite percentage of the stock of the 19

companies seeking to avoid Liberty’s unfunded pension plan liability.

6a

Appendix A

But asking that seemingly easy question triggers

several others: What was the effect of Liberty’s 1992

bankruptcy on its status as the Plan’s sponsor? Does

it matter that Wortley—sometimes using Liberty

letterhead—continued to sign the forms authorizing

payment to the pensioners? If Liberty wasn’t the Plan’s

sponsor, who was? Answering them is made more difficult

by an important omission: the record does not show

whether Liberty reported its bankruptcy, liquidation,

and dissolution to PBGC, as it was required to do under

ERISA. As a result, two decades passed between

Liberty’s filing for bankruptcy and the agreement that

terminated the Plan. That delay, and the unfortunate

destruction of the old bankruptcy court files under the

judiciary’s records retention policies, looms large as we

search for answers and grapple with this case’s unique

circumstances.

A

We begin by noting that, while the district court

provided three reasons for its decision, “we may affirm

on any ground that finds support in the record.” Long

v. Comm’r, 772 F.3d 670, 675 (11th Cir. 2014) (citation

omitted). Both ERISA and Illinois law provide relevant

clues to solving the mystery of Liberty’s existence and

corporate demise.

1

Liber ty was an Illinois cor poration; Illinois

corporations law thus lays the groundwork for its

7a

Appendix A

corporate status. See Freedman v. magicJack Vocaltec

Ltd., 963 F.3d 1125, 1133 (11th Cir. 2020) (“[C]orporations

. . . are creatures of state law . . . .” (quoting Kamen v.

Kemper Fin. Servs., 500 U.S. 90, 98, 111 S. Ct. 1711, 114

L. Ed. 2d 152 (1991))) . Dissolution “terminates [an Illinois

corporation’s] existence” and “a dissolved corporation shall

not thereafter carry on any business,” except wind-up and

liquidation. 805 Ill. Comp. Stat. 5/12.30(a). At common

law, a corporation could no longer sue or be sued after

its dissolution. See Henderson-Smith & Assocs., Inc. v.

Nahamani Family Serv. Ctr., 323 Ill. App. 3d 15, 752

N.E.2d 33, 37, 256 Ill. Dec. 488 (Ill. App. Ct. 2001). But

like most jurisdictions, Illinois has modified that rule by

statute, allowing a corporation to live on for another five

years beyond its dissolution. 805 Ill. Comp. Stat. 5/12.80.

See also Mich. Ind. Condo. Ass’n v. Mich. Place, LLC,

2014 IL App (1st) 123764, 380 Ill. Dec. 704, 8 N.E.3d

1246, 1250 (Ill. App. Ct. 2014) (“Section 12.80 extends the

life of the corporation after its dissolution so that suits

which normally would have abated may be brought by and

against the corporation.” (cleaned up)).

The parties sharply disagree about section 12.80’s

effect on a corporation’s ability to serve as a contributing

sponsor under ERISA. The Companies maintain that

a corporation ceases existence for all purposes after

the five-year period, while PBGC argues the statutory

death a corporation suffers five years after its dissolution

affects only the company’s ability to sue and be sued, and

has no effect on its federally defined role as an ERISA

contributing sponsor. The Companies rely heavily on dicta

from Illinois state cases to support their position. See, e.g.,

8a

Appendix A

Pielet v. Pielet, 2012 IL 112064, 978 N.E.2d 1000, 1008 n.3,

365 Ill. Dec. 497 (Ill. 2012) (“[T]he five-year extension to

a corporation’s life granted by section 12.80 establishes

a fixed endpoint beyond which a corporation ceases to

exist. After that point, it may no longer sue or be sued.”

(emphasis added)).

But Illinois courts have not always given section 12.80

such a rigid reading. See, e.g., Moore By and Through

Moore v. Nick’s Finer Foods, Inc., 121 Ill. App. 3d 923,

460 N.E.2d 420, 421, 77 Ill. Dec. 364 (Ill. App. Ct. 1984)

(holding a dissolved corporation liable outside the thentwo-year dissolution period and noting “that the two-year

limitation on corporate survival is not absolute, and may

be extended under certain circumstances”). Moore is

flatly inconsistent with the Companies’ construction of

section 12.80. And besides, Pielet’s discussion of Illinois’s

corporate-survival statute is primarily focused on whether

a dissolved corporation may sue or be sued. Whether or

not Illinois law would allow Liberty to sue or be sued is

not the question here; rather, we must ask instead whether

Liberty had the capacity to serve as the Plan’s ERISA

sponsor up until 2012. That is a question of federal law, and

one to which Illinois corporations law provides no answer.

B

Neither ERISA nor Illinois law tells us what to do with

pension liabilities when the sponsor of a plan has dissolved

but the plan has continued to operate. Where ERISA is

silent, we are required “to develop a ‘federal common law

of rights and obligations under ERISA-regulated plans.’”

9a

Appendix A

Arnold v. Life Ins. Co. of N. Am., 894 F.2d 1566, 1567

(11th Cir. 1990) (citing Firestone Tire & Rubber Co. v.

Bruch, 489 U.S. 101, 109, 109 S. Ct. 948, 103 L. Ed. 2d 80

(1989)). In deciding whether a rule should “become part of

ERISA’s common law,” we must decide “whether the rule,

if adopted, would further ERISA’s scheme and goals,”

which are “(1) protection of the interests of employees

and their beneficiaries in employee benefit plans . . . and

(2) uniformity in the administration of employee benefit

plans.” Horton v. Reliance Standard Life Ins. Co., 141 F.3d

1038, 1041 (11th Cir. 1998) (per curiam) (citations omitted).

See also Bd. of Trs. of W. Conf. of Teamsters Pension Tr.

Fund v. H.F. Johnson Inc., 830 F.2d 1009, 1014 (9th Cir.

1987) (relying on Congress’s command to use “Federal

substantive law” to fill in statutory gaps).

Mindful that this power to create rules that fit

ERISA’s purposes is to be wielded carefully and narrowly,

we exercise it here. 29 U.S.C. § 1307(e)(2) establishes

liability for the “controlled group” of a plan sponsor—that

is, other entities “under common control with” the sponsor.

29 U.S.C. § 1301(a)(14)(A). The purpose and effect of this

provision is plain: the sponsor of a defunct pension plan

cannot be allowed to funnel its assets into other entities

it owns, and then leave PBGC holding the bag for the

plan’s continuing liabilities. If a sponsor is on the hook

for unfunded pension liabilities, then every other entity

sharing a specified percentage ownership interest in

common (here through Wortley) is also on the hook, jointly

and severally. 29 U.S.C. § 1307(e)(2); see also DurangoGeorgia Paper Co. v. H.G. Estate, LLC, 739 F.3d 1263,

1266 (11th Cir. 2014) (“In the event that the contributing

10a

Appendix A

sponsor can no longer pay benefits when they are due,

the PBGC is authorized to terminate the plan . . . and to

demand that the contributing sponsor and the members

of the controlled group provide for the unfunded benefit

liabilities.” (internal citations omitted)). Joseph Wortley

owned Liberty, and Joseph Wortley owns the Companies;

there is no dispute about that.

Further, Wortley’s actions on behalf of Liberty after

its purported dissolution constitute strong evidence

that Liberty continued to serve as the Plan’s sponsor de

facto, whatever its technical status under Illinois law. For

years after its dissolution, Liberty—through Wortley—

continued to authorize payments out of the Plan. Liberty

played an active role in the Plan years after its bankruptcy;

most notably, Wortley filed with the government and the

bank that held the assets in 2002 and 2004 ERISA forms

that identified Liberty as the Plan’s sponsor. And Wortley

sent a letter to the Plan’s actuary on Liberty letterhead

inquiring about benefit entitlements. These steps—

necessary to the Plan’s continuing maintenance—can only

have been undertaken by the Plan’s sponsor.

With all this in mind, we follow the Supreme Court’s

instruction to fill in ERISA’s gaps with common-law rules,

see Firestone, 489 U.S. at 109, and we hold that where the

sponsor of an ERISA plan dissolves under state law but

continues to authorize payments to beneficiaries and is

not supplanted as the plan’s sponsor by another entity, it

remains the constructive sponsor such that other members

of its controlled group may be held liable for the plan’s

termination liabilities. Under the narrow rule we craft

11a

Appendix A

here, the Companies are liable to PBGC for the Plan’s

termination liabilities for the simple reason that Liberty

persisted as the Plan’s sponsor even as it dissolved as an

Illinois corporation.

This rule “further[s] ERISA’s scheme and goals”

by “protecting . . . the interests of employees and their

beneficiaries in employee benefit plans”—it ensures

that a plan such as this does not go without a sponsor—

and it promotes “uniformity in the administration of

employee benefit plans” by clarifying that disparate state

corporations laws are not the sole factor in determining a

sponsor’s identity. Horton, 141 F.3d at 1041. By contrast,

giving credence to the Companies’ overly broad view of

Illinois law would mean leaving the government agency

to pick up the Plan’s tab rather than first exhausting any

funds that might be kept in Wortley’s other entities, and

it would make the definition of sponsor entirely dependent

on state laws that may differ widely on a corporation’s

post-dissolution status. 2

The Companies claim that Liberty cannot have been

the Plan’s sponsor, but they provide no possible alternative

2. To be sure, we do not hold that ERISA preempts Illinois

corporations law. See Graham v. R.J. Reynolds Tobacco Co., 782 F.3d

1261, 1275 (11th Cir. 2015) (the “presumption against preemption”

means “the historic police powers of the States were not to be

superseded by [federal law] unless that was the clear and manifest

purpose of Congress” (citation omitted) (alteration in original)

(overruled on other grounds by Graham v. R.J. Reynolds Tobacco

Co., 857 F.3d 1169 (11th Cir. 2017) (en banc))). Rather, we clarify

that it is ERISA—not Illinois law—that determines the identity of

a plan’s sponsor in a situation such as this.

12a

Appendix A

sponsor. PBGC insists that it was never notified at the

time of Liberty’s bankruptcy in 1992 that the company

was dissolving so that it could lodge an appropriate claim

as a creditor to the bankrupt corporate estate and make

provision for protecting retirees’ future benefit payments.

The government agency has no record of any such

communications and the bankruptcy court file that might

contain the answer no longer exists. And the Companies

point to no provision of ERISA that contemplates a

plan without a sponsor—certainly, no provision that

contemplates a plan continuing to operate and pay out

pension benefits for twenty years after the purported

dissolution of its sponsor while apparently failing to meet

its notification requirements to PBGC. Ruling for the

Companies would mean holding that an extant pension

plan may be left without a sponsor for decades, which

could have vast ripple effects across even unrelated

provisions of ERISA. See, e.g., 29 U.S.C. § 1082(c)(4)(A)(ii)

(naming a plan’s sponsor as one party that may perfect a

security interest as part of a minimum-funding waiver);

§ 1083(c)(2)(D)(vi)(I) (requiring a plan’s sponsor to use

certain segment rates in determining waiver amortization

installments). The implication that an ERISA plan may

function without a sponsor risks chaos by muddying the

meaning of these sections and others that depend on

an ascertainable sponsor. We decline the Companies’

invitation to create this uncertainty in ERISA law.

Because we craft this common-law rule to conclude

that Liberty remained the Plan’s sponsor until the

execution of the 2012 agreement, we do not reach the

parties’ other arguments or the district court’s other

findings.

13a

Appendix A

IV

We hold that—under the particular circumstances

presented here, and mindful of ERISA’s scheme and

protectionist goals—the Companies owned by Joseph

Wortley are liable for the Plan’s termination liabilities

notwithstanding Liberty’s apparent dissolution under

Illinois law. The judgment of the district court is

AFFIRMED.

14a

B THE UNITED

APPENDIX B —Appendix

ORDER OF

STATES DISTRICT COURT FOR THE SOUTHERN

DISTRICT OF FLORIDA, DATED

NOVEMBER 22, 2019

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 18-CV-81009-ROSENBERG/REINHART

PENSION BENEFIT GUARANTY CORPORATION,

Plaintiff,

v.

20 SE 3RD ST LLC, et al.,

Defendants.

November 22, 2019, Decided

November 22, 2019, Entered on Docket

ORDER GRANTING PLAINTIFF’S MOTION FOR

PARTIAL SUMMARY JUDGMENT, GRANTING

PLAINTIFF’S MOTION FOR SUMMARY

JUDGMENT AS TO THE AFFIRMATIVE

DEFENSES, DENYING DEFENDANTS’ MOTION

FOR SUMMARY JUDGMENT, AND DENYING

DEFENDANTS’ MOTION IN LIMINE

This matter is before the Court on Plaintiff’s Motion

for Partial Summary Judgment [DE 114], Defendants’

Motion for Summary Judgment [DE 112], Plaintiff’s

15a

Appendix B

Motion for Summary Judgment as to Affirmative Defenses

[DE 152], and Defendants’ Motion in Limine [DE 116]. The

Motions have been fully briefed. For the reasons set forth

below, Plaintiff’s Motions are granted and Defendants’

Motions are denied.

I. BACKGROUND AND INTRODUCTION

This is a case about delay. When a company offers its

employees a pension plan, certain federal requirements

attach to the plan. One of those requirements is that

in the event the company ceases to do business (or

dissolves), the company must notify the Pension Benefit

Guarantee Corporation—the Plaintiff in this case.

Plaintiff is a government-sponsored agency that insures

and administers pension plans for companies that have

ceased to do business. In 1991, a company offering a

pension plan—Liberty Lighting—began the process

of liquidating and dissolving. Plaintiff brought this suit

on the premise that Liberty Lighting never informed

the Plaintiff of Liberty’s dissolution. During the 1990s,

Liberty Lighting finished its dissolution proceedings

and the owner of Liberty Lighting, Mr. Joseph Wortley,

went through a personal bankruptcy. During that time,

and throughout the early 2000s, pensioners continued to

collect pension payments, but the pension funds dwindled.

Finally, in 2012, Plaintiff became aware of Liberty

Lighting’s dissolution in the 1990s. By the time Plaintiff

learned of Liberty’s dissolution, however, the funds in the

pension were completely depleted. The Defendants before

the Court are a collection of companies that Mr. Wortley

owned when the pension plan terminated in 2012.

16a

Appendix B

The delay in this case is extreme. Twenty-one years

passed from the time Liberty Lighting began to dissolve

to the time its pension fund was depleted. Although it is

unclear whether Liberty Lighting notified Plaintiff of

its dissolution, someone must bear the cost of the delay

of Plaintiff’s takeover of the pension. If Defendants

prevail, the costs associated with the delayed wind-up of

the Liberty pension will be borne by active companies in

the marketplace that pay pension insurance premiums to

Plaintiff. If Plaintiff prevails, the costs associated with

the delayed wind-up will be borne by non-parties who had

very little, if any, connection to Liberty Lighting, as well

as Mr. Wortley who, from his perspective, attempted to

put Liberty Lighting behind him via bankruptcy many

years ago. In all candor to the parties, the Court has found

this to be a difficult case. The Court does not believe that

a delay of twenty-one years was contemplated when the

applicable federal laws were enacted. Nonetheless, the

Court ultimately concludes that federal law compels it to

enter summary judgment in favor of the Plaintiff.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate if “the movant

shows that there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter

of law.” Fed. R. Civ. P. 56(a). The existence of a factual

dispute is not by itself sufficient grounds to defeat a motion

for summary judgment; rather, “the requirement is that

there be no genuine issue of material fact.” Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S. Ct.

2505, 91 L. Ed. 2d 202 (1986). A dispute is genuine if “a

17a

Appendix B

reasonable trier of fact could return judgment for the

non-moving party.” Miccosukee Tribe of Indians of Fla. v.

United States, 516 F.3d 1235, 1243 (11th Cir. 2008) (citing

Anderson, 477 U.S. at 247-48). A fact is material if “it

would affect the outcome of the suit under the governing

law.” Id. (citing Anderson, 477 U.S. at 247-48).

In deciding a summary judgment motion, the Court

views the facts in the light most favorable to the nonmoving party and draws all reasonable inferences in

that party’s favor. See Davis v. Williams, 451 F.3d 759,

763 (11th Cir. 2006). The Court does not weigh conflicting

evidence. See Skop v. City of Atlanta, 485 F.3d 1130, 1140

(11th Cir. 2007). Thus, upon discovering a genuine dispute

of material fact, the Court must deny summary judgment.

See id.

III. FACTS

In 1989, Liberty Lighting Company, Inc. became

the sponsor and administrator of a pension plan. DE 115

at 1. That plan was subject to federal law and federal

regulations: The Employee Retirement Income Security

Act (“ERISA”). At some point between 1989 and 1991,

Liberty Lighting experienced business problems

significant enough to force it into bankruptcy. DE 113 at 2.

After bankruptcy, Liberty Lighting was administratively

dissolved by the State of Illinois in 1992. Id.

ERISA requires companies that maintain pensions

to notify the Plaintiff if a pension plan is at risk for

termination because Plaintiff administers pension plans

18a

Appendix B

for companies that have ceased to do business. See 29

U.S.C. § 1302(a). A plan is at risk for termination if the

company administering the plan enters bankruptcy or

dissolves. Id. Although Liberty Lighting became bankrupt

and dissolved, the parties dispute whether Liberty

Lighting ever notified Plaintiff of the same. For its part,

Plaintiff contends that Liberty Lighting never sent the

required notice. DE 134-9. For their part, Defendants

contend that “nobody . . . knows if this is actually true;

too much time has passed.” DE 113 at 3. In any event, it

is undisputed that Liberty Lighting did not terminate its

pension plan liability pursuant to ERISA or otherwise

resolve its obligation to pass the administration of the

plan to Plaintiff. Instead, time passed.

In 1993, the sole owner of Liberty Lighting, Mr.

Wortley, filed for personal bankruptcy. DE 113 at 3.

Mr. Wortley’s assets (which were surrendered to the

bankruptcy court) included Mr. Wortley’s Liberty

Lighting stock. Id. The bankruptcy court issued its final

decree in 1998. Id. Mr. Wortley’s Liberty Lighting stock

was not sold during the bankruptcy and was instead “fully

administered” property. DE 115 at 5.

During Mr. Wortley’s bankruptcy and in the years

that followed, various pension plan documents were

executed by Liberty Lighting and Mr. Wortley. In 1994,

Mr. Wortley executed an amendment to the plan on behalf

of Liberty Lighting. Id. at 2.1 In 2002, Mr. Wortley filed a

1. Although Defendants dispute the effective date of the

amendment, Defendants do not dispute the date upon which the

amendment was executed. DE 138 at 2.

19a

Appendix B

Department of Labor pension plan benefit form on behalf

of Liberty Lighting. Id. at 2-3. In 2003, Mr. Wortley sent

a letter on Liberty Lighting letterhead to a consulting

organization regarding the benefits of the pension plan.

Id. In 2004, Liberty Lighting entered into an Investment

Management Agreement with a bank to manage the assets

of the pension plan. Id. at 3. That agreement was signed

by Mr. Wortley. Id.

In 2012, the pension plan ran out of money and the bank

administering the pension payments informed Plaintiff of

the same. See DE 134-2; 134-9. After communications and

negotiations between Plaintiff and Mr. Wortley, Liberty

Lighting’s pension plan was terminated and Plaintiff

took over the administration of pension benefits. DE 115

at 3-4. The date of termination, an important date, was

July 31, 2012. Id.

Plaintiff subsequently filed the suit before this Court.

Plaintiff did not file suit against Liberty Lighting, a longdissolved entity with no assets. Instead, Plaintiff filed

suit against Mr. Wortley and against various companies

in which Mr. Wortley held an ownership interest on the

date of plan termination, July 31, 2012. Defendants filed

a motion to dismiss, and the Court referred the motion to

the Honorable Magistrate Judge Bruce E. Reinhart for

a Report and Recommendation. Defendants argued that

Liberty Lighting could not be responsible for the pension

plan in 2012 because of its earlier dissolution. In his Report,

Judge Reinhart disagreed. Judge Reinhart concluded that

ERISA was silent on the impact of corporate dissolution,

that it was the responsibility of the federal courts to create

20a

Appendix B

common law on issues where ERISA was silent, and that

the appropriate common law, consistent with the purposes

of ERISA, was that Liberty Lighting’s dissolution did

not have the effect of removing Liberty Lighting from its

status as the sponsor of an ERISA-governed pension plan.

DE 86. This Court agreed and adopted Judge Reinhart’s

recommendation over Defendants’ objections. DE 120.

The parties subsequently briefed the cross motions for

summary judgment before the Court, again arguing the

legal significance of Liberty Lighting’s dissolution. The

issue is ripe for the Court’s decision.

IV. LEGAL ANALYSIS AND DISCUSSION

Plaintiff has moved for partial summary judgment,

arguing that it is entitled to judgment as a matter of law

against some of the Defendants in this case. 2 Plaintiff’s

position is that ERISA imposes pension plan termination

liability on the Defendant companies owned by Mr.

Wortley on the day the pension plan was terminated

in 2012. Defendants filed a cross motion for summary

2. The Defendants that are the subject of Plaintiff’s Motion

for Partial Summary Judgment are: Liberty Analytical Corp.;

Bedford Materials Co., Inc.; Liberty Properties at Carey, LLC;

Liberty Properties at Bedford, LLC; Buffalo Power Electronics

Center, Inc.; Liberty Polyglas, Inc.; Liberty Associates, LC;

50509 Marine, LLC; AMH Government Services, LLC; American

Marine Holdings, LLC; Baja Marine, Inc.; Donzi Marine, LLC;

Fountain Dealers Factory Super Store, Inc.; Fountain Powerboat

Industries, Inc.; Fountain Powerboats, LLC; Liberty Acquisition

FPB, LLC; Palmetto Park Financial, LLC; Pro-Line Boats, LLC;

and Pro-Line of North Carolina, Inc.

21a

Appendix B

judgment, arguing that the same companies cannot be

held liable as a matter of law.

When a pension plan is terminated, ERISA imposes

liability on certain parties pursuant to 29 U.S.C. § 1362.

The date ERISA utilizes to impose liability is the date

of plan termination (here July 31, 2012), 3 and the parties

that are subject to liability are the contributing sponsor

of the plan or a member of a contributing sponsor’s

controlled group:

In any case in which a single-employer plan

is terminated in a distress termination under

section 1341(c) of this title or a termination

otherwise instituted by the corporation under

section 1342 of this title, any person who is, on

the termination date, a contributing sponsor

of the plan or a member of such a contributing

sponsor’s controlled group shall incur liability

under this section. The liability under this

section of all such persons shall be joint and

several.

§ 1362(a). It is undisputed that the contributing sponsor

of the pension plan in this case was historically Liberty

Lighting Company, Inc. DE 115 at 1. Liberty Lighting

became the contributing sponsor as early as 1989. Id.

What the parties dispute is: (A) whether Liberty Lighting

could be considered the contributing sponsor as of the

3. The day before the date of termination is used in some

calculations. 29 C.F.R. § 4007.13(g).

22a

Appendix B

date of plan termination in 2012 and (B) the application

of ERISA liability to “member[s] of [the] contributing

sponsor’s controlled group.” Each dispute is considered in

turn before the court turns to (C) Defendants’ affirmative

defenses and motion in limine.

A. Liberty Lighting’s Role as the Pension Plan’s

Contributing Sponsor

There is no reasonable inference from the record

evidence that any entity or person other than Liberty

Lighting was ever the pension plan’s contributing

sponsor. Defendants admit that Liberty Lighting was

the contributing sponsor in 1989. DE 138 at 2. There is no

record evidence that Liberty Lighting ever transferred

its responsibilities under the plan to some other entity or

person, was otherwise relieved of its responsibilities, or

somehow ceased to be the contributing sponsor. Instead,

record evidence confirms Liberty Lighting’s continuing

role as the contributing sponsor. For example, Liberty

Lighting executed documents in connection with the plan

in 1994, 2002, 2003, 2004, and 2012. DE 11 at 2-4.

Defendants argue that Liberty Lighting’s dissolution

under state law had the effect of removing Liberty

Lighting from the ambit of contributing sponsor liability

under ERISA. It is undisputed that in 1992 Liberty

Lighting was dissolved under Illinois law. DE 113 at 3.

Defendants cite to no ERISA provision, federal law, or

federal case for the proposition that a contributing sponsor

can cease to be a contributing sponsor by operation of state

law. And while it is true that federal law defers to the law

23a

Appendix B

of the state of incorporation to assess matters of corporate

existence, 4 Plaintiff does not seek any relief against

Liberty Lighting. Liberty Lighting is not a Defendant in

this case—Plaintiff does not seek final judgment against

the company due to its status as the ERISA contributing

sponsor. For these reasons, the Court concludes that (1)

under the clear and unambiguous terms of ERISA Liberty

Lighting was the contributing sponsor of the plan as of

the date of plan termination in 2012 and (2) Defendants

have provided no relevant legal authority to the contrary.

Plaintiff’s Motion for Partial Summary Judgment is

therefore granted on this basis.

In the alternative, ERISA is silent on the issue of

whether dissolution under state law can affect an entity’s

status as a contributing sponsor. As this Court concluded

at the motion to dismiss stage, however, “the federal

courts are to develop a ‘federal common law of rights

and obligations under ERISA-regulated plans.’” Arnold

v. Life Ins. Co. of N. Am., 894 F.2d 1566, 1567 (11th Cir.

1990) (quoting Firestone Tire & Rubber Co. v. Bruch, 489

U.S. 101, 110, 109 S. Ct. 948, 103 L. Ed. 2d 80 (1989)). In

deciding whether to adopt a federal common law rule, a

court “must examine whether the rule, if adopted, would

further ERISA’s scheme and goals.” Horton v. Reliance

Standard Life Ins. Co., 141 F.3d 1038, 1041 (11th Cir.

1998). Here, ERISA’s central goal is the protection

of the interests of pension beneficiaries. Id. Applying

these principles, this Court previously ruled “that the

4. E.g., Chicago Title & Tr. Co. v. Forty-One Thirty-Six

Wilcox Bldg. Corp., 302 U.S. 120, 124-25, 58 S. Ct. 125, 82 L. Ed.

147 (1937).

24a

Appendix B

dissolution of Liberty Lighting under state law did not

terminate Liberty Lighting’s status under ERISA as

a contributing sponsor of the Plan, nor did it relieve

Liberty Lighting of the obligations attendant to being a

contributing sponsor.” DE 86 at 14; DE 120. Upon review

of the summary judgment record, the Court can see no

reason to alter its position. 5

Also in the alternative, the Court concludes that

Illinois law does not bar this Court from finding that

Liberty Lighting was the plan’s contributing sponsor in

2012. Illinois dissolution law permits a dissolved company

to carry on in a manner necessary to wind up its affairs

and, pursuant to Liberty Lighting’s termination of the

plan in 2012, Liberty Lighting still had ERISA-based

affairs that needed to be wound up in 2012. See 805 Ill.

Comp. Stat. 5/12.30. Indeed, Mr. Wortley’s execution

of pension documents over the course of many years

after Liberty Lighting’s dissolution exemplifies the ongoing need for Liberty Lighting to wind up its pension

obligations. Somebody had to administer the pension, and

there was no one else to do so. These alternative bases

support granting Plaintiff’s Motion for Partial Summary

Judgment on the issue that Liberty Lighting could be

considered the contributing sponsor as of the date of plan

termination in 2012.

The Court’s decision may be more difficult if Plaintiff

had sought relief against Liberty Lighting as an entity.

5. The Court adopts and incorporates herein the analysis

and reasoning of Judge Reinhart that was adopted by this Court.

25a

Appendix B

Liberty Lighting ceased to exist under state law and

federal law respects the rights of states to define corporate

existence. But here, the Court’s decision is a narrow one.

The Court holds only that for the purposes of a federal,

ERISA-focused application of ERISA defined terms (such

as a contributing sponsor), a state-law based dissolution

does not disturb an entity’s federal, ERISA contributingsponsor designation. To hold otherwise would permit

contributing sponsors to circumvent the requirements of

ERISA. ERISA provides for the orderly termination of a

contributing sponsor’s liability, but if state law dissolution

also terminated a sponsor’s ERISA liability an entity

could dissolve, not notify Plaintiff of the dissolution, and

thereby avoid all ERISA-based liability. That is exactly

what is alleged to have happened in this case.

Defendants’ position also cannot be squared with

ERISA as a whole. The ramification of Defendants’

position is that nobody was responsible for the pension

plan; not Liberty Lighting, because it dissolved; not

Mr. Wortley, because he went through bankruptcy; and

not Plaintiff, because it never took control of the plan.6

But ERISA does not allow pension plans to exist in a

state of limbo, devoid of any caretaker. A plan trustee’s

obligations are extinguished only when he or she resigns

in accordance with the applicable plan provisions and

makes arrangements—e.g., through the appointment of

a successor—for the continued management of the plan.

6. Even if Liberty Lighting did send Plaintiff notice of its

dissolution and the notice was somehow lost in transit, Liberty

Lighting would still have had the burden to follow-up with Plaintiff

to ensure that the plan was properly cared for.

26a

Appendix B

Chambers v. Kaleidoscope, Inc. Profit Sharing Plan &

Trust, 650 F. Supp. 359, 369 (N.D. Ga. 1986); Pension

Benefit Guaranty Corp. v. Greene, 570 F. Supp. 1483

(W.D. Pa. 1983); Freund v. Marshall & Ilsley Bank, 485

F. Supp. 629 (W.D. Wis. 1979). For all of the reasons

set forth above, Liberty Lighting was the contributing

sponsor of the pension plan on the date of plan termination,

and Plaintiff’s Motion for Partial Summary Judgment is

granted on this basis.

The Bankruptcy of Liberty Lighting’s Sole Owner

The Court addresses one other argument brought by

Defendants that is not tied directly to Liberty Lighting.

Defendants argue that the owner of Liberty Lighting’s

personal bankruptcy (Mr. Wortley) resulted in the stock

of Liberty Lighting no longer being owned by Mr. Wortley

in 1997. Thus, Defendants argue, there could be no

ownership of Liberty Lighting, by Mr. Wortley, in 2012.

That argument is without merit. Mr. Wortley’s stock was

officially abandoned by the bankruptcy trustee. DE 134

at 3; 115-16 at 4. Accordingly, the Liberty Lighting stock

was returned to Mr. Wortley upon the conclusion of his

bankruptcy. See 11 U.S.C. § 554; In re Wright, 566 B.R.

457, 462 (6th Cir. BAP 2017) (“The plain language of the

statute unambiguously states that if an asset was property

scheduled [as in the instant case] and not administered by

the trustee [as in the instant case], upon closing the case,

the asset is abandoned as a matter of law.”).

Relatedly, Defendants contend that the stock was

“destroyed” prior to the stock’s post-bankruptcy return

27a

Appendix B

to Mr. Wortley under Illinois law, but for this proposition

Defendants rely upon a single case: Shute v. Chambers, 142

Ill. App. 3d 948, 953, 492 N.E.2d 528, 97 Ill. Dec. 92 (1986).

Shute, however, simply alludes to the general proposition

(citing a source from 1938) that after dissolution an

entity will no longer possess assets—its assets will be

distributed to creditors or stockholders.7 Thus, the Court

can see no basis to conclude that the stock was somehow

“destroyed” and, as a result, was not returned to Mr.

Wortley at the conclusion of his bankruptcy.

B. The ERISA Liability of the “Controlled Group”

The second main area of dispute between the parties

is whether ERISA-based liability should attach to the

Defendants under the “controlled group” provision.

ERISA imposes pension plan termination liability not

only upon the contributing sponsor of a plan, but also

upon “member[s] of [the] contributing sponsor’s controlled

group” as of the date of plan termination. 29 U.S.C. §

1362. The controlled group is a defined term which means:

“in connection with any person, a group consisting of

such person and all other persons under common control

with such person.” § 1301(a)(14)(A). Common control is

also a defined term, but the definition of common control

is relegated to Treasury Regulations. § 1301(a)(14)(B).

7. Shute acknowledges that a dissolved corporation will

continue to exist to wind-up its affairs. Id. Shute also arguably

supports Plaintiff’s position—not Defendants’; in Shute, the court

permitted the suit to proceed over the defendant’s dissolution

defense, much like the instant case. Id. at 953-54. As in Shute,

the instant case is not against the corporation that was dissolved.

28a

Appendix B

Treasury Regulations in turn define different instances

of common control. One such definition relevant to this

case is that corporations are under common control if

they are under common ownership. 29 C.F.R. § 4001.3(b)

(2); 26 C.F.R. § 1.414(b)-1; 26 C.F.R. § 1.414(c). A second

definition relevant to this case is that entities are under

common control if they are under common ownership

and are also “trades or businesses.” 26 C.F.R. § 1.414(c)1. 8 These regulations set the threshold for common

ownership at no less than 80%. The undisputed owner of

Liberty Lighting was at all times Mr. Wortley.9 The Court

therefore examines the record evidence of the Defendants

in this case to determine whether those Defendants were

8. A contributing sponsor is automatically a part of the

“controlled group” and thus, need not necessarily be a trade or

business. 29 U.S.C. § 1301(a)(13)-(14) (stating that a controlled

group means, in connection with any contributing sponsor, a

group consisting of the contributing sponsor and all other persons

under common control with the contributing sponsor).

9. Defendants admit that Mr. Wortley was the sole owner

of Liberty Lighting prior to the company’s bankruptcy, and Mr.

Wortley disclosed in bankruptcy that he was the 100% owner

of Liberty Lighting. As previously discussed, Defendants’

contestation of the ownership issue is limited to the proposition

that the dissolution of Liberty Lighting and the bankruptcy of

Mr. Wortley had the effect of removing Mr. Wortley and Liberty

Lighting from the ambit of ERISA liability. The Court has rejected

both of those arguments. To be sure, Mr. Wortley’s Liberty

Lighting stock in 2012 would have been valueless, the company

would have had no assets, and Liberty Lighting would have been

unable, under Illinois law, to conduct any business (or to be sued),

but under Illinois law a dissolved company may take any necessary

action to wind-up its affairs. See 805 Ill. Comp. Stat. 5/12.30.

29a

Appendix B

under common ownership with Mr. Wortley at the time

of plan termination.

Liberty Analytical Corporation

Defendants have admitted that Liberty Analytical was

an operating business on the date of plan termination, that

it was a trade or business, and that it was entirely owned

by Mr. Wortley. DE 138 at 4. Thus, Defendant Liberty

Analytical was a member of the plan’s contributing

sponsor control group on the date of plan termination,

and Plaintiff is entitled to partial summary judgment as

to this Defendant.

Bedford Materials Company, Inc.

Defendants have admitted that Bedford Materials

was an operating business on the date of plan termination,

that it was a trade or business, and that it was at least

82% owned by Mr. Wortley. Id. Thus, Defendant Bedford

Materials was a member of the plan’s contributing

sponsor control group on the date of plan termination,

and Plaintiff is entitled to partial summary judgment as

to this Defendant.

Liberty Properties at Carey and Liberty Properties

at Bedford

Defenda nt s have a d m itt ed t hat bot h of t he

aforementioned companies are entirely owned by Mr.

Wortley and that, as of the date of plan termination, each

of the companies owned real property occupied by another

30a

Appendix B

member of the controlled group. Id. at 6-7. Courts have

unanimously held that the leasing of property to a person

under common control is a “trade or business.”10 Thus,

both of the Liberty Property Defendants were members

of the plan’s contributing sponsor control group on the

date of plan termination, and Plaintiff is entitled to partial

summary judgment as to both Defendants.

Buffalo Power Electronics Center, Inc.

Defendants have admitted that Buffalo Power was an

operating business on the date of plan termination, that it

was a trade or business, and that it was entirely owned by

Mr. Wortley. Id. at 7-8. Thus, Defendant Buffalo Power was

a member of the plan’s contributing sponsor control group

on the date of plan termination, and Plaintiff is entitled to

partial summary judgment as to this Defendant.

Liberty Polyglas, Inc.

Defendants have admitted that Liberty Polyglas was

an operating business on the date of plan termination,

that it was a trade or business, and that it was at owned

by Mr. Wortley through marriage. Id. Thus, Defendant

Liberty Polyglas was a member of the plan’s contributing

sponsor control group on the date of plan termination,

and Plaintiff is entitled to partial summary judgment as

to this Defendant.

10. E.g., Pension Benefit Guaranty Corp. v. Findlay, 902

F.3d 597, 607 (6th Cir. 2018); Cent. States Se. & Sw. Areas Pension

Fund v. Messina Prods., LLC, 706 F.3d 874, 882 (7th Cir. 2013).

31a

Appendix B

Liberty Associates, LC

Defendants have admitted that Liberty Associates

was an operating business on the date of plan termination,

that it was a trade or business, and that it was entirely

owned by Mr. Wortley. Id. at 8-9. Thus, Defendant Liberty

Associates was a member of the plan’s contributing

sponsor control group on the date of plan termination,

and Plaintiff is entitled to partial summary judgment as

to this Defendant.

The Marine Companies

Defendants have admitted that a large list of

companies in the maritime business (see docket entry

115 at page 9, the “Marine Companies”) were operating

businesses on the date of plan termination, that they were

trades or businesses, and that they were entirely owned

by Mr. Wortley. Id. Thus, the Marine Companies were

members of the plan’s contributing sponsor control group

on the date of plan termination, and Plaintiff is entitled to

partial summary judgment as to these Defendants.

Defendants’ Policy-Based Argument in Defense of

the Controlled Group Defendants

Defendants argue that it is unfair to hold parties

liable in 2012 for events that occurred in the early 1990s—

parties who had no connection to Liberty Lighting. In

response, the Court discusses three points.

32a

Appendix B

First, ERISA affixes the date of liability to the date

of termination. Liberty Lighting and Mr. Wortley could

have pursued termination of the plan in the 1990s, but

neither one chose to do so, regardless of whether or not

Liberty Lighting provided Plaintiff notice of Liberty’s

dissolution. Had Liberty Lighting taken the steps

necessary to terminate the plan in parallel with state

dissolution proceedings, its ERISA-based liability could

have been resolved far, far earlier than 2012.

Second, ERISA affixes liability for common ownership

at 80%. While other parties may be adversely affected

in the present through their close affiliation with Mr.

Wortley, the same could be said of any pension plan

termination when a party is in a close partnership with

an ERISA contributing-sponsor owner. In the abstract,

events could have transpired differently in this case in

a manner adverse to Plaintiff. Theoretically, Plaintiff’s

collectable recovery in 2012 could have been less than

Plaintiff’s collectable recovery in 1991 or 1992. In that

situation, it may well have been Plaintiff’s plea to the

Court that it was unfair to limit its recovery to a controlled

group in 2012.

Third and finally, ERISA imposes liability on

controlled group members (even if it impacts minorityowner third parties) for a good reason. Controlled group

liability ensures that employers “keep up their end of the

deal” by preventing them from fractionalizing their assets

and isolating them from the Plaintiff’s reach. Pension

Benefit Guaranty Corp. v. Findlay Indus., Inc., 902 F.3d

597, 610 (6th Cir. 2018). Indeed, ensuring that employers

33a

Appendix B

keep up their end of the deal is one of the core purposes

of ERISA. Id.

In any event, ERISA is clear on these issues. ERISA

chose the date to affix liability and ERISA chose the

ownership threshold necessary to impact third parties.

Defendants’ policy-based arguments, therefore, are

tantamount to an argument against the plain terms of

ERISA itself.

C. Defendants’ Affirmative Defenses and Motion in

Limine

In Plaintiff’s Motion for Partial Summary Judgment,

Plaintiff did not address Defendants’ affirmative defenses.

Although Plaintiff did eventually address the defenses

in its Reply, the Court concluded that such matters

were better addressed through a motion, response, and

reply. Accordingly, the Court permitted Plaintiff to file

an additional motion for summary judgment specific to

Defendants’ affirmative defenses. Upon review of that

motion, the Court concludes that the motion is granted.

Defendants assert a statute of limitations affirmative

defense, but Defendants do not specify which sovereign’s

affirmative defense it intends to raise. If Defendants

intended to reference Illinois law,11 Plaintiff has not

brought a claim under Illinois law, nor has Plaintiff sued

Liberty Lighting, an Illinois corporation. If Defendants

law.

11. Defendants’ argument in its papers relies upon Illinois

34a

Appendix B

intended to reference federal law, the statute of limitations

for ERISA actions is six years and Plaintiff brought

its action within six years. See 29 U.S.C. § 1303(e)(6);

Pension Benefit Guaranty Corp. v. Don’s Trucking Co.,

308 F. Supp. 2d 680, 682 (E.D. Va. 2003) (holding that

pension termination liability accrues on the date of plan

termination).

Defendants assert a “no duty to notify” affirmative

defense, contending that the summary judg ment

Defendants had no duty to notify Plaintiff of Liberty

Lighting’s dissolution. That is irrelevant. Defendants’

failure to notify Plaintiff is not an element of Plaintiff’s

claims or any defense thereto.

Defendants assert a “waiver” affirmative defense, but

Defendants have premised that defense on the proposition

that Plaintiff’s suit was untimely. DE 136 at 16. That is

incorrect. Plaintiff’s suit was timely. Accordingly, this

affirmative defense is also irrelevant.

Defendants filed a motion in limine, contending

that the follow categories of evidence are irrelevant and

should not be admitted at trial: (1) facts surrounding

Liberty Lighting’s dissolution and duty to notify Plaintiff

of the same, (2) facts surrounding Liberty Lighting’s

bankruptcy, (3) facts pertaining to Mr. Wortley’s execution

of documents on Liberty Lighting’s behalf and on behalf

of the company pension, and (4) various other facts

pertaining to the parties’ dealings. Many of these facts

were relevant enough to be referenced in this Order,

and the remaining facts have at least enough potential

35a

Appendix B

relevance that the Court should address objections to the

same at trial. See Garcia v. Scottsdale Ins. Co., No. 1820509, 2019 U.S. Dist. LEXIS 57879, 2019 WL 1491872, at

*1 (S.D. Fla. Apr. 4, 2019) (noting that motions in limine are

disfavored and questions of admissibility should generally

be dealt with at trial).

For the foregoing reasons, Defendants’ Motion in

Limine is denied and Plaintiff’s Motion for Summary

Judgment as to Defendants’ Affirmative Defenses is

granted.

V. CONCLUSION

For the foregoing reasons, Plaintiff is entitled to

partial summary judgment against each of the Defendants

referenced in footnote 2 of this Order. Nonetheless,

Plaintiff’s Motion is a Motion for Partial Summary

Judgement and, as a result, the Court will not enter

final judgment as to any Defendant (as requested by

Plaintiff) at this time. It is ORDERED AND ADJUDGED

that Plaintiff’s Motion for Partial Summary Judgment

[DE 114] is GRANTED. Defendants’ cross Motion for

Summary Judgment [DE 112] is DENIED for the same

reasons Plaintiff’s Motion is granted. Plaintiff’s Motion

for Summary Judgment on Defendants’ Affirmative

Defenses [DE 152] is GRANTED. Defendants’ Motion in

Limine [DE 116] is DENIED WITHOUT PREJUDICE

for the objections to be re-raised, if necessary, at trial.

The parties are ORDERED to file a notice informing the

Court of the remaining issues in this case within three

business days of the date of rendition of this Order.

36a

Appendix B

DONE and ORDERED in Chambers, West Palm

Beach, Florida, this 22nd day of November, 2019.

/s/ Robin L. Rosenberg

ROBIN L. ROSENBERG

UNITED STATES DISTRICT JUDGE

37a

AppendixOF

C REHEARING OF

APPENDIX C — DENIAL

THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT, FILED

JANUARY 21, 2021

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 19-14968-AA

PENSION BENEFIT GUARANTY CORPORATION,

Plaintiff-Appellee,

versus

20 SE 3RD ST LLC, et al.,

Defendants,

50509 MARINE LLC, AMH GOVERNMENT

SERVICES, LLC, AMERICAN MARINE

HOLDINGS, LLC, BAJA MARINE, INC., BEDFORD

MATERIALS COMPANY, INC., BUFFALO

POWER ELECTRONICS CENTER, INC., DONZI

MARINE, LLC, FOUNTAIN DEALERS FACTORY

SUPER STORE, INC., FOUNTAIN POWERBOAT

INDUSTRIES, INC., FOUNTAIN POWERBOATS,

LLC, LIBERTY ACQUISITIONS, FPB, LLC,

LIBERTY ANALYTICAL CORPORATION,

LIBERTY ASSOCIATES, LC, LIBERTY

POLYGLASS, INC., LIBERTY PROPERTIES AT

BEDFORD, LLC, LIBERTY PROPERTIES AT

CAREY, LLC, LIBERTY PARK FINANCIAL, LLC,

38a

Appendix C

PRO-LINE BOATS, LLC, PRO-LINE

OF NORTH CAROLINA, INC.,

Defendants-Appellants.

Appeal from the United States District Court

for the Southern District of Florida

ON PETITION(S) FOR REHEARING AND

PETITION(S) FOR REHEARING EN BANC

BEFORE: MARTIN, ROSENBAUM, and TALLMAN,*

Circuit Judges.

PER CURIAM:

The Petition for Rehearing En Banc is DENIED,

no judge in regular active service on the Court having

requested that the Court be polled on rehearing en banc.

(FRAP 35) The Petition for Rehearing En Banc is also

treated as a Petition for Rehearing before the panel and

is DENIED. (FRAP 35, IOP2)

* The Honorable Richard C. Tallman, Circuit Judge for the

United States Court of Appeals for the Ninth Circuit, sitting by

designation.

39a

D PROVISIONS

APPENDIX D — Appendix

STATUTORY

26 U.S.C.A. § 1563, I.R.C. § 1563

§ 1563. Definitions and special rules

(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.

40a

Appendix D

(2) Brother-sister controlled group.—T wo or

more corporations if 5 or fewer persons who are

individuals, estates, or trusts own (within the

meaning of subsection (d)(2)) stock possessing more

than 50 percent of the total combined voting power

of all classes of stock entitled to vote or more than

50 percent of the total value of shares of all classes

of stock of each corporation, taking into account the

stock ownership of each such person only to the extent

such stock ownership is identical with respect to each

such corporation.

(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).

(4) Certain insurance companies.—Two or more

insurance companies subject to taxation under

section 801 which are members of a controlled group

of corporations described in paragraph (1), (2), or

(3). Such insurance companies shall be treated as

a controlled group of corporations separate from

any other corporations which are members of

the controlled group of corporations described in

paragraph (1), (2), or (3).

41a

Appendix D

(b) Component member.—

(1) General rule.—For purposes of this part, a

corporation is a component member of a controlled

group of corporations on a December 31 of any taxable

year (and with respect to the taxable year which

includes such December 31) if such corporation—

(A) is a member of such controlled group of

corporations on the December 31 included in

such year and is not treated as an excluded

member under paragraph (2), or

(B) is not a member of such controlled group

of corporations on the December 31 included

in such year but is treated as an additional

member under paragraph (3).

(2) Excluded members.—A corporation which is

a member of a controlled group of corporations on

December 31 of any taxable year shall be treated as

an excluded member of such group for the taxable

year including such December 31 if such corporation—

(A) is a member of such group for less than onehalf the number of days in such taxable year

which precede such December 31,

(B) is exempt from taxation under section 501(a)

(except a corporation which is subject to tax on

its unrelated business taxable income under

section 511) for such taxable year,

42a

Appendix D

(C) is a foreign corporation subject to tax under

section 881 for such taxable year,

(D) is an insurance company subject to taxation

under section 801 (other than an insurance

company which is a member of a controlled

group described in subsection (a)(4)), or

(E) is a franchised corporation, as defined in

subsection (f)(4).

(3) Additional members.—A corporation which—

(A) was a member of a controlled group of

corporations at any time during a calendar year,

(B) is not a member of such group on December

31 of such calendar year, and

(C) is not described, with respect to such

group, in subparagraph (B), (C), (D), or (E) of

paragraph (2),

shall be treated as an additional member of such

group on December 31 for its taxable year including

such December 31 if it was a member of such group

for one-half (or more) of the number of days in such

taxable year which precede such December 31.

(4) Overlapping groups.—If a corporation is a

component member of more than one controlled group

of corporations with respect to any taxable year, such

43a

Appendix D

corporation shall be treated as a component member

of only one controlled group. The determination as to

the group of which such corporation is a component

member shall be made under regulations prescribed

by the Secretary which are consistent with the

purposes of this part.

(c) Certain stock excluded.—

(1) General rule.—For purposes of this part, the term

“stock” does not include—

(A) nonvoting stock which is limited and

preferred as to dividends,

(B) treasury stock, and

(C) stock which is treated as “excluded stock”

under paragraph (2).

(2) Stock treated as “excluded stock”.—

(A) Parent-subsidiary controlled group.—For

purposes of subsection (a)(1), if a corporation

(referred to in this paragraph as “parent

corporation”) owns (within the meaning of

subsections (d)(1) and (e)(4)), 50 percent or

more of the total combined voting power of all

classes of stock entitled to vote or 50 percent or

more of the total value of shares of all classes

of stock in another corporation (referred to in

this paragraph as “subsidiary corporation”), the

44a

Appendix D

following stock of the subsidiary corporation

shall be treated as excluded stock—

(i) stock in the subsidiary corporation

held by a trust which is part of a

plan of deferred compensation for

the benefit of the employees of the

parent corporation or the subsidiary

corporation,

(ii) stock in the subsidiary corporation

owned by an individual (within the

meaning of subsection (d)(2)) who is

a principal stockholder or officer of

the parent corporation. For purposes

of this clause, the term “principal

stockholder” of a corporation means

an individual who owns (within the

meaning of subsection (d)(2)) 5 percent

or more of the total combined voting

power of all classes of stock entitled to

vote or 5 percent or more of the total

value of shares of all classes of stock

in such corporation,

(iii) stock in the subsidiary corporation

ow ne d (w it h i n t he me a n i ng of

subsection (d)(2)) by an employee of

the subsidiary corporation if such

stock is subject to conditions which run

in favor of such parent (or subsidiary)

corporation and which substantially

45a

Appendix D

restrict or limit the employee’s right

(or if the employee constructively

owns such stock, the direct owner’s

right) to dispose of such stock, or

(iv) stock in the subsidiary corporation

ow ne d (w it h i n t he me a n i ng of

subsection (d)(2)) by an organization

(other than the parent corporation)

to which section 501 (relating to

certain educational and charitable

organizations which are exempt from

tax) applies and which is controlled

directly or indirectly by the parent

corporation or subsidiary corporation,

by an individual, estate, or trust that

is a principal stockholder (within the

meaning of clause (ii)) of the parent

corporation, by an officer of the parent

corporation, or by any combination

thereof.

(B) Brother-sister controlled group.—For

purposes of subsection (a)(2), if 5 or fewer

persons who are individuals, estates, or trusts

(referred to in this subparagraph as “common

owners”) own (within the meaning of subsection

(d)(2)), 50 percent or more of the total combined

voting power of all classes of stock entitled to

vote or 50 percent or more of the total value of

shares of all classes of stock in a corporation,

the following stock of such corporation shall be

treated as excluded stock—

46a

Appendix D

(i) stock in such corporation held

by an employees’ trust described in

section 401(a) which is exempt from

tax under section 501(a), if such trust

is for the benefit of the employees of

such corporation,

(ii) stock in such corporation owned

(within the meaning of subsection (d)

(2)) by an employee of the corporation

if such stock is subject to conditions

which run in favor of any of such

common owners (or such corporation)

and which substantially restrict

or limit the employee’s right (or if

the employee constructively owns

such st ock , t he d i rec t ow ner ’s

right) to dispose of such stock. If a

condition which limits or restricts

the employee’s right (or the direct

owner’s right) to dispose of such stock

also applies to the stock held by any

of the common owners pursuant to a

bona fide reciprocal stock purchase

arrangement, such condition shall not

be treated as one which restricts or

limits the employee’s right to dispose

of such stock, or

(iii) stock in such corporation owned

(within the meaning of subsection (d)

(2)) by an organization to which section

47a

Appendix D

501 (relating to certain educational

and charitable organizations which

are exempt from tax) applies and

wh ich is cont rol led d i rect ly or

indirectly by such corporation, by

an individual, estate, or trust that is

a principal stockholder (within the

meaning of subparagraph (A)(ii)) of

such corporation, by an officer of such

corporation, or by any combination

thereof.

(d) Rules for determining stock ownership.—

(1) Parent-subsidiary controlled group.—For

purposes of determining whether a corporation is a

member of a parent- subsidiary controlled group of

corporations (within the meaning of subsection (a)(1)),

stock owned by a corporation means—

(A) stock owned directly by such corporation,

and

(B) stock ow ned w ith the application of

paragraphs (1), (2), and (3) of subsection (e).

(2) Brother-sister controlled group.—For purposes

of determining whether a corporation is a member of a

brother-sister controlled group of corporations (within

the meaning of subsection (a)(2)), stock owned by a

person who is an individual, estate, or trust means—

48a

Appendix D

(A) stock owned directly by such person, and

(B) stock ow ned w ith the application of

subsection (e).

(e) Constructive ownership.—

(1) Options.—If any person has an option to acquire

stock, such stock shall be considered as owned by such

person. For purposes of this paragraph, an option to

acquire such an option, and each one of a series of such

options, shall be considered as an option to acquire

such stock.

(2) Attribution from partnerships.—Stock owned,

directly or indirectly, by or for a partnership shall be

considered as owned by any partner having an interest

of 5 percent or more in either the capital or profits of

the partnership in proportion to his interest in capital

or profits, whichever such proportion is the greater.

(3) Attribution from estates or trusts.—

(A) Stock owned, directly or indirectly, by or for

an estate or trust shall be considered as owned

by any beneficiary who has an actuarial interest

of 5 percent or more in such stock, to the extent

of such actuarial interest. For purposes of this

subparagraph, the actuarial interest of each

beneficiary shall be determined by assuming

the maximum exercise of discretion by the

fiduciary in favor of such beneficiary and the

49a

Appendix D

maximum use of such stock to satisfy his rights

as a beneficiary.

(B) Stock owned, directly or indirectly, by or

for any portion of a trust of which a person is

considered the owner under subpart E of part

I of subchapter J (relating to grantors and

others treated as substantial owners) shall be

considered as owned by such person.

(C) This paragraph shall not apply to stock

owned by any employees’ trust described in

section 401(a) which is exempt from tax under

section 501(a).

(4) Attribution from corporations.—Stock owned,

directly or indirectly, by or for a corporation shall be

considered as owned by any person who owns (within

the meaning of subsection (d)) 5 percent or more in

value of its stock in that proportion which the value

of the stock which such person so owns bears to the

value of all the stock in such corporation.

(5) Spouse.—An individual shall be considered as

owning stock in a corporation owned, directly or

indirectly, by or for his spouse (other than a spouse

who is legally separated from the individual under a

decree of divorce whether interlocutory or final, or a

decree of separate maintenance), except in the case

of a corporation with respect to which each of the

following conditions is satisfied for its taxable year—

50a

Appendix D

(A) The individual does not, at any time during

such taxable year, own directly any stock in

such corporation;

(B) The individual is not a director or employee

and does not participate in the management

of such corporation at any time during such

taxable year;

(C) Not more tha n 5 0 percent of such

corporation’s gross income for such taxable year

was derived from royalties, rents, dividends,

interest, and annuities; and

(D) Such stock in such corporation is not, at

any time during such taxable year, subject to

conditions which substantially restrict or limit

the spouse’s right to dispose of such stock

and which run in favor of the individual or his

children who have not attained the age of 21

years.

(6) Child ren , g ra ndchild ren , pa rents , a nd

grandparents.—

(A) Minor children.—An individual shall be

considered as owning stock owned, directly

or indirectly, by or for his children who have

not attained the age of 21 years, and, if the

individual has not attained the age of 21 years,

the stock owned, directly or indirectly, by or

for his parents.

51a

Appendix D

(B) Adult children and grandchildren.—An

individual who owns (within the meaning of

subsection (d)(2), but without regard to this

subparagraph) more than 50 percent of the total

combined voting power of all classes of stock

entitled to vote or more than 50 percent of the

total value of shares of all classes of stock in a

corporation shall be considered as owning the

stock in such corporation owned, directly or

indirectly, by or for his parents, grandparents,

grandchildren, and children who have attained

the age of 21 years.

(C) Adopted child.—For purposes of this

section, a legally adopted child of an individual

shall be treated as a child of such individual by

blood.

(f) Other definitions and rules.—

(1) Employee defined.—For purposes of this section

the term “employee” has the same meaning such term

is given by paragraphs (1) and (2) of section 3121(d).

(2) Operating rules.—

(A) In general.—Except as provided in

subparagraph (B), stock constructively owned

by a person by reason of the application

of paragraph (1), (2), (3), (4), (5), or (6) of

subsection (e) shall, for purposes of applying

such paragraphs, be treated as actually owned

by such person.

52a

Appendix D

(B) Members of family.—Stock constructively

owned by an individual by reason of the

application of paragraph (5) or (6) of subsection

(e) shall not be treated as owned by him for

purposes of again applying such paragraphs in

order to make another the constructive owner

of such stock.

(3) Special rules.—For purposes of this section—

(A) If stock may be considered as owned by a

person under subsection (e)(1) and under any

other paragraph of subsection (e), it shall be

considered as owned by him under subsection

(e)(1).

(B) If stock is owned (within the meaning of

subsection (d)) by two or more persons, such

stock shall be considered as owned by the

person whose ownership of such stock results

in the corporation being a component member

of a controlled group. If by reason of the

preceding sentence, a corporation would (but

for this sentence) become a component member

of two controlled groups, it shall be treated as

a component member of one controlled group.

The determination as to the group of which

such corporation is a component member shall

be made under regulations prescribed by

the Secretary which are consistent with the

purposes of this part.

53a

Appendix D

(C) If stock is owned by a person within the

meaning of subsection (d) and such ownership

results in the corporation being a component

member of a controlled group, such stock

shall not be treated as excluded stock under

subsection (c) (2), if by reason of treating such

stock as excluded stock the result is that such

corporation is not a component member of a

controlled group of corporations.

(4) Franchised corporation.—If—

(A) a parent corporation (as defined in subsection

(c)(2)(A)), or a common owner (as defined in

subsection (c)(2)(B)), of a corporation which is

a member of a controlled group of corporations

is under a duty (arising out of a written

agreement) to sell stock of such corporation

(referred to in this paragraph as “franchised

corporation”) which is franchised to sell the

products of another member, or the common

owner, of such controlled group;

(B) such stock is to be sold to an employee

(or employees) of such franchised corporation

pursuant to a bona fide plan designed to

eliminate the stock ownership of the parent

corporation or of the common owner in the

franchised corporation;

(C) such plan—

54a

Appendix D

(i) provides a reasonable selling price

for such stock, and

(ii) requires that a portion of the

employee’s share of the profits of

such corporation (whether received

as compensation or as a dividend) be

applied to the purchase of such stock

(or the purchase of notes, bonds,

debentures or other similar evidence

of indebtedness of such franchised

corporation held by such parent

corporation or common owner);

(D) such employee (or employees) owns directly

more than 20 percent of the total value of

shares of all classes of stock in such franchised

corporation;

(E) more than 50 percent of the inventory of

such franchised corporation is acquired from

members of the controlled group, the common

owner, or both; and

(F) a l l of t he cond it ion s cont a i ned i n

subparagraphs (A), (B), (C), (D), and (E) have

been met for one-half (or more) of the number

of days preceding the December 31 included

within the taxable year (or if the taxable year

does not include December 31, the last day of

such year) of the franchised corporation,

55a

Appendix D

then such franchised corporation shall be

treated as an excluded member of such group,

under subsection (b)(2), for such taxable year.

(5) Brother-sister controlled group definition for

provisions other than this part.—

(A) In general.—Except as specif ically

provided in an applicable provision, subsection

(a)(2) shall be applied to an applicable provision

as if it read as follows:

“(2) Brother-sister controlled group.—Two or

more corporations if 5 or fewer persons who are

individuals, estates, or trusts own (within the

meaning of subsection (d)(2) stock possessing—

“(A) 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 corporation,

and

“(B) more than 50 percent of the total

combined voting power of all classes

of stock entitled to vote or more

than 50 percent of the total value of

shares of all classes of stock of each

corporation, taking into account

the stock ownership of each such

person only to the extent such stock

56a

Appendix D

ownership is identical with respect to

each such corporation.”

(B) Applicable provision.—For purposes of

this paragraph, an applicable provision is any

provision of law (other than this part) which

incorporates the definition of controlled group

of corporations under subsection (a).

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Appendix D

29 U.S.C.A. § 1002

§ 1002. Definitions

For purposes of this subchapter:

***

(16)(A) The term “administrator” means—

(i) the person specifically so designated by the

terms of the instrument under which the plan

is operated;

(ii) if an administrator is not so designated, the

plan sponsor; or

(iii) in the case of a plan for which an

administrator is not designated and a plan

sponsor cannot be identified, such other person

as the Secretary may by regulation prescribe.

(B) The term “plan sponsor” means (i) the employer

in the case of an employee benefit plan established

or maintained by a single employer, (ii) the employee

organization in the case of a plan established or

maintained by an employee organization, (iii) in the

case of a plan established or maintained by two or more

employers or jointly by one or more employers and

one or more employee organizations, the association,

committee, joint board of trustees, or other similar

group of representatives of the parties who establish

58a

Appendix D

or maintain the plan, or (iv) in the case of a pooled

employer plan, the pooled plan provider.

****

59a

Appendix D

29 U.S.C.A. § 1301

§ 1301. Definitions

(a) For purposes of this subchapter, the term—

***

(14) in the case of a single-employer plan—

(A) “controlled group” means, in connection

with any person, a group consisting of such

person and all other persons under common

control with such person;

(B) the determination of whether two or more

persons are under “common control” shall be

made under regulations of the corporation

which are consistent and coextensive with

regulations prescribed for similar purposes

by the Secretary of the Treasury under

subsections (b) and (c) of section 414 of Title

26; and

(C)(i) notwithstanding any other provision of

this subchapter, during any period in which

an individual possesses, directly or indirectly,

the power to direct or cause the direction of

the management and policies of an affected

air carrier of which he was an accountable

owner, whether through the ownership of

voting securities, by contract, or otherwise,

60a

Appendix D

the affected air carrier shall be considered to

be under common control not only with those

persons described in subparagraph (B), but also

with all related persons; and

(ii) for purposes of this subparagraph, the

term—

(I) “affected air carrier” means an air

carrier, as defined in section 40102(a)

(2) of Title 49, that holds a certificate

of public convenience and necessity

under section 41102 of Title 49 for

route number 147, as of November

12, 1991;

(II) “related person” means any person

which was under common control (as

determined under subparagraph

(B)) with an affected air carrier on

October 10, 1991, or any successor to

such related person;

(III) “accountable owner” means any

individual who on October 10, 1991,

owned directly or indirectly through

the application of section 318 of

Title 26 more than 50 percent of the

total voting power of the stock of an

affected air carrier;

61a

Appendix D

(IV) “successor” means any person

that acquires, directly or indirectly

through the application of section 318

of Title 26, more than 50 percent of

the total voting power of the stock of

a related person, more than 50 percent

of the total value of the securities (as

defined in section 1002(20) of this title)

of the related person, more than 50

percent of the total value of the assets

of the related person, or any person

into which such related person shall

be merged or consolidated; and

(V) “individual” means a living human being;

****

62a

Appendix D

26 C.F.R. § 1.414(b)–1, Treas. Reg. § 1.414(b)–1

§ 1.414(b)–1 Controlled group of corporations.

(a) Definition of controlled group of corporations. For

purposes of this section, the term “controlled group of

corporations” has the same meaning as is assigned to the

term in section 1563(a) and the regulations thereunder,

except that (1) the term “controlled group of corporations”

shall not include an “insurance group” described in

section 1563(a)(4), and (2) section 1563(e)(3)(C) (relating

to stock owned by certain employees’ trusts) shall not

apply. For purposes of this section, the term “members

of a controlled group” means two or more corporations

connected through stock ownership described in section

1563(a) (1), (2), or (3), whether or not such corporations

are “component members of a controlled group” within

the meaning of section 1563(b). Two or more corporations

are members of a controlled group at any time such

corporations meet the requirements of section 1563(a) (as

modified by this paragraph). For purposes of this section,

if a corporation is a member of more than one controlled

group of corporations, such corporation shall be treated

as a member of each controlled group.

(b) Single plan adopted by two or more members. If two

or more members of a controlled group of corporations

adopt a single plan for a plan year, then the minimum

funding standard provided in section 412, the tax imposed

by section 4971, and the applicable limitations provided

by section 404(a) shall be determined as if such members

were a single employer. In such a case, the amount of

63a

Appendix D

such items and the allocable portion attributable to each

member shall be determined in the manner provided in

regulations under sections 412, 4971, and 404(a).

(c) Cross reference. For rules relating to the application of

sections 401, 408(k), 410, 411, 415, and 416 with respect to

two or more trades or businesses which are under common

control, see section 414(c) and the regulations thereunder.

64a

Appendix D

26 C.F.R. § 1.414(c)–2, Treas. Reg. § 1.414(c)–2

§ 1.414(c)–2 Two or more trades

or businesses under common control.

(a) In general. For purposes of this section, the term

“two or more trades or businesses under common control”

means any group of trades or businesses which is either

a “parent-subsidiary group of trades or businesses under

common control” as defined in paragraph (b) of this

section, a “brother-sister group of trades or businesses

under common control” as defined in paragraph (c) of this

section, or a “combined group of trades or businesses

under common control” as defined in paragraph (d) of

this section. For purposes of this section and §§ 1.414(c)–3

and 1.414(c)–4, the term “organization” means a sole

proprietorship, a partnership (as defined in section 7701(a)

(2)), a trust, an estate, or a corporation.

(b) Parent-subsidiary group of trades or businesses

under common control—(1) In general. The term

“parent-subsidiary group of trades or businesses

under common control” means one or more chains of

organizations conducting trades or businesses connected

through ownership of a controlling interest with a common

parent organization if—

(i) A controlling interest in each of the organizations,

except the common parent organization, is owned

(directly and with the application of § 1.414(c)–4(b)

(1), relating to options) by one or more of the other

organizations; and

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Appendix D

(ii) The common parent organization owns (directly

and with the application of § 1.414(c)–4(b)(1), relating

to options) a controlling interest in at least one of the

other organizations, excluding, in computing such

controlling interest, any direct ownership interest by

such other organizations.

(2) Controlling interest defined—(i) Controlling

interest. For purposes of paragraphs (b) and (c) of

this section, the phrase “controlling interest” means:

(A) In the case of an organization which is a

corporation, ownership of stock possessing at

least 80 percent of total combined voting power

of all classes of stock entitled to vote of such

corporation or at least 80 percent of the total

value of shares of all classes of stock of such

corporation;

(B) In the case of an organization which is

a trust or estate, ownership of an actuarial

interest of at least 80 percent of such trust or

estate;

(C) In the case of an organization which is a

partnership, ownership of at least 80 percent

of the profits interest or capital interest of such

partnership; and

(D) In the case of an organization which is a

sole proprietorship, ownership of such sole

proprietorship.

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Appendix D

(ii) Actuarial interest. For purposes of this section,

the actuarial interest of each beneficiary of trust or

estate shall be determined by assuming the maximum

exercise of discretion by the fiduciary in favor of such

beneficiary. The factors and methods prescribed in

§ 20.2031–7 or, for certain prior periods, § 20.2031–7A

(Estate Tax Regulations) for use in ascertaining the

value of an interest in property for estate tax purposes

shall be used for purposes of this subdivision in

determining a beneficiary’s actuarial interest.

(c) Brother-sister group of trades or businesses under

common control—(1) In general. The term “brothersister group of trades or businesses under common

control” means two or more organizations conducting

trades or businesses if (i) the same five or fewer persons

who are individuals, estates, or trusts own (directly

and with the application of § 1.414(c)–4) a controlling

interest in each organization, and (ii) taking into account

the ownership of each such person only to the extent

such ownership is identical with respect to each such

organization, such persons are in effective control of each

organization. The five or fewer persons whose ownership

is considered for purposes of the controlling interest

requirement for each organization must be the same

persons whose ownership is considered for purposes of

the effective control requirement.

(2) Effective control defined. For purposes of this

paragraph, persons are in “effective control” of an

organization if—

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Appendix D

(i) In the case of an organization which is a corporation,

such persons own stock possessing more than 50

percent of the total combined voting power of all

classes of stock entitled to vote or more than 50

percent of the total value of shares of all classes of

stock of such corporation;

(ii) In the case of an organization which is a trust

or estate, such persons own an aggregate actuarial

interest of more than 50 percent of such trust or estate;

(iii) In the case of an organization which is a

partnership, such persons own an aggregate of more

than 50 percent of the profits interest or capital

interest of such partnership; and

(iv) In the case of an organization which is a sole

proprietorship, one of such persons owns such sole

proprietorship.

(d) Combined group of trades or businesses under

common control. The term “combined group of trades

or businesses under common control” means any group of

three or more organizations, if (1) each such organization

is a member of either a parent- subsidiary group of trades

or businesses under common control or a brother-sister

group of trades or businesses under common control, and

(2) at least one such organization is the common parent

organization of a parent-subsidiary group of trades or

businesses under common control and is also a member

of a brother-sister group of trades or businesses under

common control.

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Appendix D

(e) Examples. The definitions of parent-subsidiary group

of trades or businesses under common control, brothersister group of trades or businesses under common

control, and combined group of trades or businesses

under common control may be illustrated by the following

examples.

Example 1. (a) The A BC partnership owns stock

possessing 80 percent of the total combined voting

power of all classes of stock entitled to voting of S

corporation. ABC partnership is the common parent of

a parent-subsidiary group of trades or businesses under

common control consisting of the ABC partnership and

S Corporation.

(b) Assume the same facts as in (a) and assume further

that S owns 80 percent of the profits interest in the DEF

Partnership. The ABC Partnership is the common parent

of a parent-subsidiary group of trades or businesses under

common control consisting of the ABC Partnership, S

Corporation, and the DEF Partnership. The result would

be the same if the ABC Partnership, rather than S, owned

80 percent of the profits interest in the DEF Partnership.

Example 2. L Corporation owns 80 percent of the only

class of stock of T Corporation, and T, in turn, owns 40

percent of the capital interest in the GHI Partnership.

L also owns 80 percent of the only class of stock of N

Corporation and N, in turn, owns 40 percent of the capital

interest in the GHI Partnership. L is the common parent

of a parent-subsidiary group of trades or businesses

under common control consisting of L Corporation, T

Corporation, N Corporation, and the GHI Partnership.

69a

Appendix D

Example 3. ABC Partnership owns 75 percent of the only

class of stock of X and Y Corporations; X owns all the

remaining stock of Y, and Y owns all the remaining stock

of X. Since interorganization ownership is excluded (that

is, treated as not outstanding) for purposes of determining

whether ABC owns a controlling interest of at least one

of the other organizations, ABC is treated as the owner

of stock possessing 100 percent of the voting power and

value of all classes of stock of X and of Y for purposes of

paragraph (b)(1)(ii) of this section. Therefore, ABC is the

common parent of a parent-subsidiary group of trades or

businesses under common control consisting of the ABC

Partnership, X Corporation, and Y Corporation.

Example 4. Unrelated individuals A, B, C, D, E, and F

own an interest in sole proprietorship A, a capital interest

in the GHI Partnership, and stock of corporations M,

W, X, Y, and Z (each of which has only one class of stock

outstanding) in the following proportions:

ORGANIZATIONS

Individuals

A

B

C

D

E

A

GHI

M

W

X

Y

Z

100% 50% 100% 60% 40% 20% 60%

— 40%

— 15% 40% 50% 30%

—

—

—

— 10% 10% 10%

—

—

— 25%

— 20%

—

— 10%

—

— 10%

—

—

100% 100% 100% 100% 100% 100% 100%

70a

Appendix D

Under these facts the following four brother-sister groups

of trades or businesses under common control exist: GHI,

X and Z; X, Y and Z; W and Y; A and M. In the case of GHI,

X, and Z, for example, A and B together have effective

control of each organization because their combined

identical ownership of GHI, X and Z is greater than 50%.

(A’s identical ownership of GHI, X and Z is 40% because

A owns at least a 40% interest in each organization. B’s

identical ownership of GHI, X and Z is 30% because B owns

at least a 30% interest in each organization.) A and B (the

persons whose ownership is considered for purposes of the

effective control requirement) together own a controlling

interest in each organization because they own at least

80% of the capital interest of partnership GHI and at least

80% of the total combined voting power of corporations X

and Z. Therefore, GHI, X and Z comprise a brother-sister

group of trades or businesses under common control. Y is

not a member of this group because neither the effective

control requirement nor the 80% controlling interest

requirement are met. (The effective control requirement is

not met because A’s and B’s combined identical ownership

in GHI, X, Y and Z (20% for A and 30% for B) does not

exceed 50%. The 80% controlling interest test is not

met because A and B together only own 70% of the total

combined voting power of the stock of Y.) A and M are

not members of this group because B owns no interest in

either organization and A’s ownership of GHI, X and Z,

considered alone, is less than 80%.

Example 5. The outstanding stock of corporations U and

V, which have only one class of stock outstanding, is owned

by the following unrelated individuals:

71a

Appendix D

CORPORATIONS

Individuals

A

B

C

D

E

F

G

H

U

(percent)

12

12

12

12

13

13

13

13

100

V

(percent)

12

12

12

12

13

13

13

13

100

Any group of five of the shareholders will own more than

50 percent of the stock in each corporation, in identical

holdings. However, U and V are not members of a brothersister group of trades or businesses under common control

because at least 80 percent of the stock of each corporation

is not owned by the same five or fewer persons.

Example 6. A, an individual, owns a controlling interest

in ABC Partnership and DEF Partnership. ABC, in

turn, owns a controlling interest in X Corporation. Since

ABC, DEF, and X are each members of either a parentsubsidiary group or a brother- sister group of trades

or businesses under common control, and ABC is the

common parent of a parent-subsidiary group of trades or

businesses under common control consisting of ABC and

72a

Appendix D

X, and also a member of a brother-sister group of trades

or businesses under common control consisting of ABC

and DEF, ABC Partnership, DEF Partnership, and X

Corporation are members of the same combined group of

trades or businesses under common control.