Employment — MPPAA

Listen to this article

United States Court of Appeals For the Seventh Circuit

Civil

Employment — MPPAA

Where the employer owned a trucking company and a real estate company, and permitted the trucking company to operate on property owned by the real estate company without paying rent, the real estate company is liable for the trucking company’s liability under the MPPAA.

The district court found that the Messinas’ rental activities did not amount to a ‘trade or business’ under the two-part Groetzinger test. Considering only the sporadic rental activity undertaken by the Messinas themselves, the district court concluded that their rental activity was not sufficiently continuous and regular to be a trade or business rather than an investment. In rendering its decision, however, the district court did not have the benefit of Central States, Southeast and Southwest Areas Pension Fund v. SCOFBP, LLC, 668 F.3d 873 (7th Cir. 2011), issued after the district court’s decision. Without SCOFBP, and particularly its teaching that renting property to a withdrawing employer is ‘categorically’ a trade or business, the district court did not consider properly the legal implications of the facts that the Messinas permitted Messina Trucking, their closely-held corporation and the withdrawing employer, to operate on the property they owned without a formal written lease and without paying rent for several years. See SCOFBP, 668 F.3d at 879. The district court also did not account properly for the property maintenance activities of the Messina Trucking employees, which, without a formal agreement, must be imputed to the Messinas. We therefore reverse the judgment in favor of Mr. and Mrs. Messina.”

Affirmed in part, and Reversed in part.

11-3513 & 12-1333 Central States Southeast and Southwest Areas Pension Fund v. Messina Products, LLC

Appeals from the United States District Court for the Northern District of Illinois, Dow, J., Hamilton, J.