Pension Benefit Guaranty Corporation v. White Consolidated Industries, Inc., 215 F.3d 407 (3^rd Cir. 2000)-The Third Circuit dealt with a company's attempt to rid itself of underfunded defined benefits plans through a sale.  The court affirmed White Consolidated's "predecessor liability" under 29 U.S.C. § 1369.  To accommodate that section's five year "bright line" rule, the parties agreed that they would not terminate the plans during the five years following the sale.

The scheme almost worked. The plans lasted over five years from the sale. What WCI did not forsee was this court's decision to count the five years of plan solvency from the "effective date" of the transaction, rather than the closing date—over a four year difference. The court determined that a "transaction does not become effective for purposes of section 1369 until the company that transferred a pension plan no longer makes substantial pension contributions."

Thus, the transaction fell under 29 U.S.C. § 1369, and the court turned its focus to whether WCI had "a principal purpose" of evading its pension liabilities. Evidence gathered from the transaction negotiations confirmed this purpose.  WCI clearly sought to use the transfer of a group of failing businesses as a means of evading the pension liabilities associated with those businesses. It was simply not a case in which a corporation sought to transfer pension liabilities as part of a legitimate divestiture of unprofitable subsidiaries.