United States District Court, S.D. Florida
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
L. ROSENBERG, UNITED STATES DISTRICT JUDGE.
matter is before the Court on Plaintiff's Motion for
Partial Summary Judgment [DE 114], Defendants' Motion for
Summary Judgment [DE 112], Plaintiff's 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.
BACKGROUND AND INTRODUCTION
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.
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
SUMMARY JUDGMENT STANDARD
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 (1986). A dispute is genuine if “a 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).
deciding a summary judgment motion, the Court views the facts
in the light most favorable to the non-moving 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.
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
requires companies that maintain pensions to notify the
Plaintiff if a pension plan is at risk for termination
because Plaintiff administers pension plans 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.
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.
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. In 2002, Mr. Wortley filed a 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.
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,
subsequently filed the suit before this Court. Plaintiff did
not file suit against Liberty Lighting, a long-dissolved
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 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
LEGAL ANALYSIS AND DISCUSSION
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. 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 judgment, arguing that the same companies cannot be
held liable as a matter of law.
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),  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 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.
Liberty Lighting's Role as the Pension ...