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Members of Board of Administration of Toledo Area Industries UAW Retirement Income Plan v. Obz, Inc.

United States District Court, N.D. Ohio, Western Division

October 20, 2017

Members of the Board of Administration of the Toledo Area UAW Retirement Income Plan, Plaintiff,
v.
OBZ, Inc., et al., Defendants.

          ORDER

          James G. Carr, Sr. U.S. District Judge.

         This is an ERISA pension withdrawal liability case in which plaintiff, Members of the Board of Administration of the Toledo Area UAW Retirement Income Plan, claims defendant, RAKA Corp. (d/b/a Lockrey Manufacturing) (Lockrey), remains liable for defendant OBZ, Inc.'s (f/k/a Toledo Wire Products Inc.) (Toledo Wire) withdrawal liability under the Employee Retirement Income Security Act (ERISA) and the Multiemployer Pension Plan Amendments Act (MPPAA).

         Jurisdiction exists under 28 U.S.C. § 1331.

         Pending is defendant Lockrey's motion to dismiss for failure to state a claim. (Doc. 34). Plaintiff has filed a response (Doc. 37) to which defendant Lockrey has replied. (Doc. 38).

         For the following reasons, I deny the motion.

         Background

         In September, 2014, Lockrey, a Toledo-based company, entered into an asset purchase agreement with Toledo Wire, another Toledo-based company engaged in the wire-forming business. The purpose of the sale was for Lockrey to become a wire-forming company. For $250, 000 Lockrey purchased a portion of Toledo Wire's assets and its customer list.

         Unlike Lockrey, a nonunion employer, Toledo Wire operated as a union company and participated in a multiemployer pension plan (the Plan) under a collective bargaining agreement (CBA) with The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America. For ERISA purposes, Toledo Wire was a “contributing employer” with respect to the Plan.

         Pursuant to the CBA, Toledo Wire made monthly contributions to the Plan on behalf of its unionized workers until May, 2013. On that date, Toledo Wire ceased operations covered by the CBA. The result was a complete withdrawal from the Plan.

         Toledo Wire remained liable, however, for withdrawal liability under the MPPAA, which plaintiff alleges Lockrey knew about before entering into the asset purchase agreement. In accordance with ERISA and the MPPAA, on October 17, 2013, the Plan informed Toledo Wire of its withdrawal liability, calculated at $644, 311. In November, 2013, Toledo Wire made its first withdrawal liability payment to the Plan and continued to make such payments to the Plan until October, 2014.

         As noted above, in September, 2014, Toledo Wire sold the majority of its assets to Lockrey. Although Lockrey continued to do the same type of work in the jurisdiction of the CBA for which contributions were previously required of Toledo Wire, Lockrey did not make any contributions to the Plan or withdrawal liability payments following its purchase of Toledo Wire's assets.

         According to plaintiff, Lockrey has since continued Toledo Wire's operations, thus operating as Toledo Wire's successor. This, plaintiff asserts, is evidenced by:

. The purpose of the sale was for Lockrey to enter the same type of business in which Toledo Wire previously engaged;
. Lockrey required Toledo Wire to change its name as a condition of sale;
. Lockrey held itself out as acquiring Toledo Wire to the public on its website;
. Lockrey acquired all of Toledo Wire's employees;
. Lockrey hired a former Toledo Wire employee who left Toledo Wire prior to the sale;
. Former Toledo Wire customers were notified of the sale and the effect that the sale would have on payments and invoices-namely, that future payments would be made to Lockrey;
. Lockrey retained over half of Toledo Wire's former customers until at least October, 2016; and
. Lockrey used all of Toledo Wire's assets after the sale and currently uses approximately fifty percent of those assets.

         When Toledo Wire stopped making withdrawal liability payments to the Plan, the Plan advised Toledo Wire owners that Toledo Wire remained under the same legal obligation for withdrawal liability regardless of any change in ownership. Toledo Wire did not make any additional payments, and the withdrawal liability amount remains unsatisfied.

         Due to Toledo Wire's failure to make withdrawal payments, on April 17, 2015, plaintiff filed suit against defendants Toledo Wire (referred to as OBZ, Inc. in plaintiffs initial complaint) and Ann Obertacz, part owner of OBZ, Inc., ...


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