Pension Benefit Guaranty Corporation v. White Consolidated Industries, Inc., C/o Ct Corporation Systems Registered Agent

OPINION OF THE COURT COWEN, Circuit Judge.

White Consolidated Industries, Inc. (“WCI”) sold a group of unprofitable businesses and their associated underfunded pension plans to a newly .formed corporation. WCI, however, remained contractually obligated to make substantial contributions to the plans for five additional years. More than six years after the stated closing date of this sale, the largest of these pension plans terminated. The Pension Benefit Guaranty Corporation (“PBGC”), which is obligated to pay the guaranteed benefits of this plan to the beneficiaries, seeks to recover for these unfunded obligations from WCI, the predecessor employer.

The district' court dismissed the PBGC’s amended complaint in its entirety. We hold that the PBGC has stated a legally sufficient claim under 29 U.S.C. § 1369 (1988). Section 1369’s requirement that a transaction “become[ ] effective” within five years of the plan termination is met because a transaction does not take effect until the previous plan sponsor stops making substantial payments to the pension plans. On the other hand, because section 1369 specifically addresses predecessor liability and applies to this transaction, we will not read an unexpressed predecessor liability rule into 29 U.S.C. § 1362 (1988). Additionally, the PBGC’s claim that the transaction at issue is a sham also survives the motion to dismiss. We therefore will affirm in part and reverse in part the order of the district court, and remand for further proceedings consistent with this opinion. [*1195] I.