Resilient Floor Covering Pension Fund v. TD Sports Group, LLC

Background

Resilient Floor Covering Pension Fund and the Board of Trustees of the Resilient Floor Covering Pension Fund sued TD Sports Group, LLC under the Employee Retirement Income Security Act (ERISA). They sought to collect withdrawal liability assessed against Field Turf Construction, Inc. The plaintiffs argued that TD Sports was Field Turf’s successor and therefore jointly and severally liable for that assessment.

The matter was tried to the court without a jury in January 2024. Field Turf had entered collective bargaining agreements with District Council 16 of the International Union of Painters and Allied Trades and had contributed to the pension fund for covered employees. Field Turf decided to go out of business in December 2015 and filed a certificate of dissolution on January 4, 2016. TD Sports was formed in January 2016 and never entered a collective bargaining agreement with the union.

The pension fund assessed withdrawal liability of $808,615 against Field Turf and sent notices to Field Turf and TD Sports. Neither company made payments toward the assessment. TD Sports requested review of the assessment but admitted that it did not initiate arbitration.

Successor Liability Analysis

The court applied the Ninth Circuit’s totality-of-the-circumstances test for labor and employment successorship. The test asks whether there was substantial continuity between the old and new businesses. Relevant factors include continuity of business operations, use of the same facility, workforce, jobs, supervisors, equipment, production methods, and products or services. In withdrawal-liability cases involving the construction-industry exception, the court explained that whether the successor deliberately took over basically the same customer base is especially important.

The court found that both companies obtained significant business from FieldTurf USA or its affiliates. When Field Turf dissolved, almost all of its work came from FieldTurf USA. The court found that the vast majority of TD Sports’ sales in 2018 and 2019 also came from FieldTurf USA or affiliated companies.

The court recognized that Field Turf’s principal business was synthetic-turf installation, while TD Sports primarily performed synthetic-turf maintenance, minor repairs, earthwork, and site-furnishing work. It nevertheless found substantial continuity because Field Turf had agreed to arrange maintenance work for FieldTurf USA customers, billed FieldTurf USA for that work, and paid the resulting amounts to Cleaner Greener, the business that later became TD Sports. After TD Sports was formed, it billed FieldTurf USA directly. The court concluded that TD Sports basically took over Field Turf’s customer base and that this factor strongly favored successor liability.

The court found that TD Sports did not use Field Turf’s location or facilities and did not acquire Field Turf’s equipment. Those facts weighed against successor liability. TD Sports also did not employ the same or substantially the same workforce: it hired three former Field Turf employees out of a workforce of about 30 to 40 people. However, Darrell Brown, a former 50-percent owner of Field Turf, later became a manager or member and, by the time of trial, the chief financial officer and a 50-percent owner of TD Sports. The court found evidence that Brown had a substantial role in TD Sports well before he testified he became a full-time employee, including signing company proposals and state contractor-license documents.

The court also found that the actual work performed by most employees differed: Field Turf employees installed turf, while TD Sports employees maintained it. That factor weighed against successor liability. On balance, however, the court held that the strong evidence of continuity and Brown’s substantial involvement established successor liability by a preponderance of the evidence.

Notice of Withdrawal Liability

Under the court’s reading of the applicable law, a successor may be liable for a predecessor’s withdrawal liability if the successor had notice of that liability. The court found that TD Sports had constructive notice, meaning circumstances reasonably allowed knowledge of the potential liability to be attributed to the company even without proof of actual knowledge.

The court reasoned that Brown had been an owner of Field Turf and had signed a collective bargaining agreement requiring contributions to the pension fund. The agreement also stated that the fund had been in critical status since January 2010. The court found that these facts should have alerted Brown to the possibility of withdrawal liability. Because Brown became substantially involved in TD Sports starting in 2016, before Field Turf’s withdrawal liability was officially incurred in June 2019, the court imputed his constructive notice to TD Sports.

TD Sports argued that the notice requirement was not satisfied because Tim Golden allegedly did not know about the liability until 2021 and Brown was not formally brought into the company until 2020. The court rejected the argument that notice had to exist before the initial transfer of the business. It held that, under the circumstances, Brown’s notice soon after the transfer was sufficient because TD Sports had several years to anticipate the liability and take preventive action.

Arbitration and Amount of Liability

The court considered whether to enter judgment for the assessment amount or send the amount issue to arbitration. Under the Multiemployer Pension Plan Amendments Act, an employer disputing withdrawal liability generally must timely initiate arbitration. The court described this as a “pay first, question later” system: the employer must make the demanded payments while the dispute is resolved.

The court held that TD Sports waived its right to contest the amount in arbitration. TD Sports did not timely initiate arbitration, file a declaratory-judgment action to preserve its claims, or seek an order postponing or stopping the arbitration period. The court rejected TD Sports’ argument that disputing whether it was an employer excused the arbitration deadline. It found that TD Sports waited until less than one month before trial to raise the issue, and that this course of action constituted waiver.

Disposition

The court found that TD Sports was Field Turf’s successor and was liable for the withdrawal liability as calculated by the pension fund. It ruled that the plaintiffs were entitled to judgment in their favor and that arbitration was not authorized at that stage. The court’s conclusion states that TD Sports was liable for the withdrawal liability, along with statutory penalties, interest, and attorneys’ fees. The plaintiffs were directed to submit a proposed judgment of two pages or less by February 11, 2025.