Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund, No. 16-1376 (1st Cir. 2019)Annotate this Case
In this case concerning the potential liability of two private equity funds for pension fund withdrawal owed by a company owned by the two funds when the company went bankrupt, the First Circuit reversed the judgment of the district court holding the two funds jointly and severally responsible for the company's withdrawal liability, holding that summary judgment should be granted to the two funds.
At issue was whether two private equity funds, Sun Capital Partners III, LP (Sun Fund III) and Sun Capital Partners IV, LP (Sun Fund IV), were liable for $4.5 million in pension fund withdrawal liability owed by a brass manufacturing company that was owned by the Sun Funds when the manufacturing company went bankrupt. Under the Multiemployer Pension Plan Amendments Act, the issue of liability depended on whether the two funds had created an implied partnership-in-fact that constituted a control group. That question, in turn, depended on the application of the partnership test in Luna v. Commissioner, 42 T.C. 1067 (1964). The district court that there was an implied partnership-in-fact constituting a control group. The First Circuit reversed, holding that the Luna test was not met in this case and that there was no firm indication of congressional intent to impose liability on the private investors.