Ninth Circuit Applies “Successorship Doctrine” to Claim for MPPAA Withdrawal Liability

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The Ninth Circuit concluded in a case of first impression that an employer could be held liable for its predecessor’s withdrawal liability to a multiemployer pension fund pursuant to the “successorship doctrine.”  The Court ruled that “the most important factor in assessing whether an employer is a successor for purposes of imposing MPPAA withdrawal liability is whether there is substantial continuity in the business operations between the predecessor and the successor, as determined in large part by whether the new employer has taken over the economically critical bulk of the prior employer’s customer base.”  The Ninth Circuit concluded that the district court failed to weigh whether the alleged successor had retained a significant portion of its predecessor’s customer base, or “market share.” In addition, the lower court miscalculated the “continuity of workforce” factor by failing to limit the test to employees in the “bargaining unit,” which could have led to a finding that there was in fact workforce continuity between the employers.  The Court reversed and remanded the case for further consideration.  The case is Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael’s Floor Covering, Inc., No. 12-17675, 2015 WL 5295091 (9th Cir. Sept. 11, 2015).

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