On Monday, the U.S. Supreme Court declined to hear an appeal from Sun Capital Partners Inc., a sponsor of private equity funds, relating to the First Circuit Court of Appeal’s finding that the private equity funds were “trades or businesses” for purposes of ERISA. ERISA holds that “trades or businesses” under “common control” with one another (a controlled group of corporations) are jointly and severally liable for withdrawal liability when a member of such control group withdraws from a multiemployer pension plan. The First Circuit remanded the case back to the District Court to determine the second part of the analysis of whether the funds were under “common control” with the portfolio investment company that incurred the withdrawal liability. For more information about the First Circuit holding, please refer to my previous post More on the Sun Capital Case: Private equity funds request Supreme Court ruling
The First Circuit holding results in the funds potentially being liable for the $4.5 million multiemployer pension plan withdrawal liability incurred by a portfolio investment company of the funds. The request for review to the Supreme Court was made by Sun Capital Partners in November. In its request, Sun Capital asked the Supreme Court to determine whether the First Circuit erred using the “investment-plus” analysis to find that the private equity funds were “trades or businesses” within the meaning of ERISA.
Among other arguments used to fight the request for review, the multiemployer pension fund argued that since the case was remanded to the District Court for further consideration, it was premature for the Supreme Court to intervene in the matter. Thus, depending on why the Supreme Court decided not to accept the case, there may potentially be another bite at the Supreme Court “apple”.