Pension Benefit Guaranty Corp. v. Ouimet Corp.

Emil Ouimet owned (1) 80 percent of Ouimet Stay & Leather Company (Stay), (2) 80 percent of Ouimet Corporation (Ouimet) (plaintiff), and 100 percent of Avon Sole Company (Avon). All three companies (collectively, the Ouimet Group) were involved in the production and manufacturing of shoe trimming, soles, laces, or other elements. Avon wholly owned a subsidiary, Tenn-ERO, which was also involved in sole manufacturing. Avon, pursuant to a labor agreement established prior to its acquisition by Emil, created and then underfunded a pension plan for its hourly workers. Avon notified Pension Benefit Guaranty Corporation (PBGC) of its intent to terminate the pension plan when its closure appeared imminent. In 1975, Avon and Tenn-ERO ceased operations; and the Avon pension plan was underfunded by over $500,000. Subsequently, Avon and Tenn-ERO filed for bankruptcy and were adjudicated as bankrupts. Subsequently, PBGC filed suit against the Ouimet Group, seeking the balance owed to fully fund the Avon pension deficiency. The district court found that all members of a commonly controlled group of companies are jointly liable under the Employee Retirement Income Security Act of 1974 (ERISA) for pension benefits and granted partial summary judgment to PBGC, remanding the case to the bankruptcy court to determine the net worth of the Ouimet Group of companies. Ouimet appealed.