Case 1:13-cv-00621-RJS Document 59 Filed 06/20/14 Page 1 of 2 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------- x : PENSION BENEFIT GUARANTY : 13 Civ. 621 (RJS) CORPORATION, : : EFC Case Plaintiff, : : : - against - : : THE RENCO GROUP, INC., et al., : : Defendants. : : -------------------------------------------------------- x THE PENSION BENEFIT GUARANTY CORPORATION’S NOTICE OF MOTION FOR SUMMARY JUDGMENT PLEASE TAKE NOTICE that upon the accompanying Memorandum of Law in Support of Plaintiff Pension Benefit Guaranty Corporation’s Motion for Summary Judgment, Local Rule 56.1 Statement of Material Facts as to Which There is No Genuine Dispute, and the accompanying Declaration of John A. Menke and the exhibits thereto, and all of the pleadings and proceedings had herein, the undersigned attorneys for Plaintiff move this Court before the Honorable Richard J. Sullivan, 40 Centre Street, New York, New York 10007, for an order in the above captioned action granting Plaintiff’s claims on summary judgment pursuant to Federal Rule of Civil Procedure 56. Case 1:13-cv-00621-RJS Document 59 Filed 06/20/14 Page 2 of 2 Dated: June 6, 2014 New York, NY By: SARAH L. REID JOSEPH BOYLE MERRILL STONE KELLEY DRYE & WARREN LLP 101 Park Avenue New York, NY 10178 Phone: (212) 808-7800 ISRAEL GOLDOWITZ Chief Counsel KAREN L. MORRIS (pro hac vice) Deputy Chief Counsel JOHN A. MENKE (pro hac vice) Assistant Chief Counsel COLIN B. ALBAUGH (pro hac vice) LOUISA A. FENNELL Attorneys Office of the Chief Counsel 1200 K Street, N.W. Washington, DC 20005-4026 Phone: (202) 326-4020 Attorneys for Plaintiff PENSION BENEFIT GUARANTY CORPORATION Case 1:13-cv-00621-RJS Document 60 Filed 06/20/14 Page 1 of 41 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------------ x PENSION BENEFIT GUARANTY : CORPORATION, : 13 Civ. 621 (RJS) : : Plaintiff, : ECF Case : - against - : : THE RENCO GROUP, INC., et al., : : : : Defendants. : ------------------------------------------------------------ x THE PENSION BENEFIT GUARANTY CORPORATION’S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT Case 1:13-cv-00621-RJS Document 60 Filed 06/20/14 Page 2 of 41 TABLE OF CONTENTS PRELIMINARY STATEMENT .........................................................................................1 FACTUAL BACKGROUND ..............................................................................................3 ARGUMENT .....................................................................................................................17 I. PBGC is Entitled to Summary Judgment on its Claim against Defendants for Liability Under 29 U.S.C. § 1369 ............................17 A. The Standard for Liability under 29 U.S.C. § 1369 ................................17 B. The Renco-Cerberus Transaction Satisfies the Section 1369 Criteria ........................................................................19 1. The Pension Plans Terminated within Five Years of the Transaction ..................................................21 2. Renco Entered into the Transaction with a Principal Purpose of Evading RG Steel’s Pension Liability ......................................................................21 a. Renco Informed PBGC of its Intention to Break the Controlled Group ........................................22 b. Renco Insisted on Structuring the Transaction to Break the Controlled Group ........................................22 c. Renco Misled PBGC about the Status of the Transaction ...........................................................26 II. PBGC is Entitled to Summary Judgment against Renco on Each of the State-law Fraud Counts ..............................................................28 A. Renco Fraudulently Induced PBGC to Refrain from Terminating the Pension Plans in January 2012 .....................................28 B. Renco Fraudulently Concealed the Status of the Transaction to Induce PBGC not to Terminate the Pension Plans ....................................................................................32 C. Renco Negligently Misrepresented the Status of the Transaction to Stop PBGC from Terminating the Pension Plans ....................................................................................33 CONCLUSION .........................................................................................................35 i Case 1:13-cv-00621-RJS Document 60 Filed 06/20/14 Page 3 of 41 TABLE OF AUTHORITIES CASES Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) .............................................17 Banque Arabe et Internationale D’Investissement v. Md. Nat’l Bank, 57 F.3d 146 (2d Cir. 1995) ..............................................29, 32 Beneficial Commer. Corp. v. Murray Glick Datsun, Inc., 601 F. Supp. 770 (S.D.NY. 1985) ...................................................................32 Brass v. Am. Film Techs., Inc., 987 F.2d 142 (2d Cir. 1993) ...................................33 Bryson v. United States, 396 U.S. 64 (1969) ............................................................34 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) .........................................................17 Crigger v. Fahnestock & Co., Inc., 443 F.3d 230 (2d Cir. 2006) .............................31 E*Trade Fin. Corp. v. Deutsche Bank AG, 631 F. Supp. 2d 313 (S.D.N.Y. 2009)........................................................30, 31 FDIC v. Great Am. Ins. Co., 607 F.3d 288 (2d Cir. 2010) .......................................17 Fischer v. Kletz, 266 F. Supp. 180 (S.D.N.Y. 1967) ................................................30 HealthNow N.Y. Inc. v. APS Healthcare Bethesda, Inc., No. 1:05CV612, 2006 WL 659518 (N.D.N.Y. Mar. 10, 2006) .......................34 Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999) .............................................8 Hydro Investors, Inc. v. Trafalgar Power Inc., 227 F.3d 8 (2d Cir. 2000) ...............34 Int’l Prods. Co. v. Erie R.R. Co., 244 N.Y. 331 (N.Y. 1927) ...................................34 Junius Constr. Corp. v. Cohen, 257 N.Y. 393 (N.Y. 1931)......................................33 Kimmell v. Schaefer, 675 N.E.2d 450 (N.Y. 1996) ..................................................34 LaChance v. Erickson, 522 U.S. 262 (1998) ............................................................34 Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413 (N.Y. 1996) .....................29 Lopresti v. Pace Press, Inc., 868 F. Supp. 2d 188 (S.D.N.Y. 2012) ........................19 Mallis v. Bankers Trust Co., 615 F.2d 68 (2d Cir. 1980) .........................................31 ii Case 1:13-cv-00621-RJS Document 60 Filed 06/20/14 Page 4 of 41 Manley v. AmBase Corp., 126 F. Supp. 2d 743 (S.D.N.Y. 2001) ............................32 N.Y. Islanders Hockey Club, LLP v. Comerica Bank-Tex, 71 F. Supp. 2d 108 (S.D.N.Y. 1999)..........................................................31, 34 PBGC v. White Consol. Indus., 998 F.2d 1192 (3d Cir. 1993) (WCI I) ............18, 21 PBGC v. White Consol. Indus., 215 F.3d 407 (3d Cir. 2000) (WCI II) ........... passim Santa Fe Pac. Corp. v. Cent. States, Se. & Sw. Areas Pension Fund, 22 F.3d 725 (7th Cir. 1994) .....................................................19 Scott v. Harris, 550 U.S. 372 (2007) ........................................................................17 SUPERVALU, Inc. v. Bd. of Trs. of the Sw. Pa. & W. Md. Area Teamsters & Emp’rs Pension Fund, 500 F.3d 334 (3d Cir. 2007).............................................................................19 Swersky v. Dreyer & Traub, 219 A.D.2d 321 (N.Y. App. Div. 1st Dept. 1996) ................................................................29, 32 STATUTES 26 U.S.C. § 414 .........................................................................................................23 29 U.S.C. § 1301(a)(14) ............................................................................................23 29 U.S.C. § 1302(a) ....................................................................................................3 29 U.S.C. § 1303 .......................................................................................................33 29 U.S.C. § 1307 .......................................................................................................18 29 U.S.C. § 1341(a)(1) ................................................................................................8 29 U.S.C. § 1342(a) ....................................................................................................8 29 U.S.C. § 1342(a)(4) ................................................................................................8 29 U.S.C. § 1342(c) ..............................................................................................9, 16 29 U.S.C. § 1343(b) ....................................................................................................5 29 U.S.C. § 1362(a) ..................................................................................................18 29 U.S.C. § 1362(b) ..................................................................................................18 iii Case 1:13-cv-00621-RJS Document 60 Filed 06/20/14 Page 5 of 41 29 U.S.C. § 1369 ............................................................................................... passim 29 U.S.C. § 1369(a) ..................................................................................................18