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

Background

Resilient Floor Covering Pension Fund and its Board of Trustees sued TD Sports Group, LLC under the Employee Retirement Income Security Act (ERISA). They sought to collect withdrawal liability that the Pension Fund assessed against Field Turf Construction, Inc. Plaintiffs argued that TD Sports was Field Turf’s successor and therefore jointly and severally liable for the assessment. The matter was tried to Judge Gilliam without a jury in January 2024.

Field Turf had entered collective bargaining agreements with a union and made contributions to the Pension Fund for covered employees. Field Turf decided to go out of business in December 2015 and filed a certificate of dissolution in January 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 demanded payment from Field Turf and TD Sports. Neither company made payments.

Successor liability

The court applied the Ninth Circuit’s totality-of-the-circumstances test, which asks whether there was substantial continuity between the old and new businesses. The court gave special significance to whether TD Sports took over basically the same customer base, because that factor is particularly important when determining successor liability for pension withdrawal liability in the construction industry.

The court found that both companies received significant business from FieldTurf USA or its affiliates. Field Turf’s main business was synthetic-turf installation, while TD Sports primarily performed synthetic-turf maintenance, minor repairs, earthwork, and related work. But before Field Turf closed, it agreed to take on maintenance work for FieldTurf USA customers in Northern California. Field Turf referred that work to Tim Golden’s business, which later became TD Sports; Field Turf invoiced FieldTurf USA and passed the payments to Golden’s business. After Field Turf closed, TD Sports billed FieldTurf USA directly and continued the maintenance work.

The court concluded that TD Sports had basically taken over Field Turf’s customer base and that this showed substantial continuity of business operations. Other factors weighed against successor liability: TD Sports did not use Field Turf’s facility, acquire its equipment, or employ substantially the same workforce, and the companies’ employees performed different jobs. The court nevertheless found that the customer-continuity factor and Darrell Brown’s substantial involvement in TD Sports supported successor liability.

Notice of withdrawal liability

The court also found that TD Sports had constructive notice of Field Turf’s potential withdrawal liability. Constructive notice means that the circumstances were sufficient for the company to be treated as knowing about the liability, even without proof of actual knowledge.

Darrell Brown had been an owner of Field Turf and had signed a collective bargaining agreement requiring pension contributions. The court found that contributing to an underfunded union pension fund should have alerted him to the possibility of withdrawal liability. The evidence showed that Brown became substantially involved with TD Sports soon after it took over Field Turf’s maintenance operations, including identifying himself in official documents as a TD Sports manager or owner. The court held that Brown’s constructive notice could be attributed to TD Sports.

The court rejected TD Sports’ argument that it could not be liable because the evidence did not show that TD Sports had notice before the business operations were initially transferred. The court held that the relevant legal standard did not expressly require notice before the transfer and that, under these circumstances, notice obtained soon after the transfer was sufficient. The court emphasized that imposing liability was fair because Brown had a significant role in TD Sports before Field Turf’s withdrawal liability was incurred in 2019, giving TD Sports time to anticipate the liability and take preventive action.

Arbitration and amount of liability

The court considered whether to enter judgment for the amount assessed by the Pension Fund or refer the amount of liability to arbitration. Under the Multiemployer Pension Plan Amendments Act, an employer that disputes withdrawal liability generally must timely seek arbitration and make required payments while the dispute is resolved. The court found that TD Sports did not initiate arbitration, file a declaratory judgment action to preserve the issue, or obtain an order delaying the arbitration deadline.

The court held that TD Sports waived its right to contest the amount of liability in arbitration. It rejected TD Sports’ argument that disputing whether it was an employer excused it from complying with the arbitration deadline. Because TD Sports failed to preserve its arbitration rights, the court determined that the Pension Fund’s calculation controlled.

Disposition

The court found TD Sports liable for the withdrawal liability as calculated by the Pension Fund, along with penalties, interest, and attorneys’ fees under the applicable statute. Plaintiffs were directed to submit a proposed judgment of two pages or less by February 11, 2025.