          United States Court of Appeals
                     For the First Circuit


Nos. 16-1376
     19-1002

 SUN CAPITAL PARTNERS III, LP; SUN CAPITAL PARTNERS III QP, LP;
                  SUN CAPITAL PARTNERS IV, LP,

                     Plaintiffs, Appellants,

                               v.

     NEW ENGLAND TEAMSTERS & TRUCKING INDUSTRY PENSION FUND,

           Defendant, Third Party Plaintiff, Appellee,

        SCOTT BRASS HOLDING CORP.; SUN SCOTT BRASS, LLC,

                     Third Party Defendants.


          APPEALS FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Douglas P. Woodlock, U.S. District Judge]


                             Before

                    Lynch, Stahl, and Lipez,
                         Circuit Judges.


     John C. O'Quinn, with whom John F. Hartmann, Devin A.
DeBacker, Kirkland & Ellis LLP, Theodore J. Folkman, and Pierce
Bainbridge Beck Price & Hecht LLP, were on brief for appellants.
     Catherine M. Campbell, with whom Melissa A. Brennan, Renee J.
Bushey, and Feinberg, Campbell & Zack, PC were on brief for
appellee.
     Craig T. Fessenden, with whom Judith R. Starr, Kartar S.
Khalsa, Charles L. Finke, and Louisa A. Soulard were on brief for
Pension Benefit Guaranty Corporation, amicus curiae.
November 22, 2019
            LYNCH, Circuit Judge.        The issue on appeal is whether

two private equity funds, Sun Capital Partners III, LP ("Sun Fund

III") and Sun Capital Partners IV, LP ("Sun Fund IV"), are liable

for $4,516,539 in pension fund withdrawal liability owed by a brass

manufacturing company which was owned by the two Sun Funds when

that company went bankrupt.       The liability issue is governed by

the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA").

Under that statute, the issue of liability depends on whether the

two Funds had created, despite their express corporate structure,

an implied partnership-in-fact which constituted a control group.

That question, in the absence of any further formal guidance from

the Pension Benefit Guaranty Corporation ("PBGC"), turns on an

application of the multifactored partnership test in Luna v.

Commissioner, 42 T.C. 1067 (1964).

            If the MPPAA imposes such withdrawal liability, PBGC

states it assumes the New England Teamsters & Trucking Industry

Pension Fund ("Pension Fund") intends to look to the private equity

funds,   including     their   general    partners   and   their    limited

partners,   to   pay   the   liability.     The   issues   raised   involve

conflicting policy choices for Congress or PBGC to make.            On one

hand, imposing liability would likely disincentivize much-needed

private investment in underperforming companies with unfunded

pension liabilities.     This chilling effect could, in turn, worsen

the financial position of multiemployer pension plans.              On the


                                  - 3 -
other hand, if the MPPAA does not impose liability and the Pension

Fund becomes insolvent, then PBGC likely will pay some of the

liability, and the pensioned workers (with 30 years of service)

will receive a maximum of $12,870 annually. See 18 U.S.C. § 1322a.

              The    district    court    held        that    there     was   an   implied

partnership-in-fact which constituted a control group.                        We reverse

because we conclude the Luna test has not been met and we cannot

conclude      that    Congress   intended        to    impose     liability        in   this

scenario.

                                          I.

              We     describe    the     facts        as     to   the    organizational

structures of the Sun Funds1 and related entities.                        We also refer

to the facts set forth in our previous opinion in Sun Capital

Partners III, LP v. New England Teamsters & Trucking Industry

Pension Fund, 724 F.3d 129, 135 n.3 (1st Cir. 2013) (Sun Capital

II).       The two Sun Funds are each distinct business entities with

primarily different investors and investments.                            But they are

controlled by the same two men, and they coordinate to identify,

acquire, restructure, and sell portfolio companies.                            The Funds


       1  Sun Fund III and Sun Fund IV are collectively referred
to as the "Sun Funds" or "Funds."      Sun Fund III technically
comprises two funds: Sun Capital Partners III, LP and Sun Capital
Partners III QP, LP. Because these are parallel funds, share a
single general partner, and invest nearly identically, we treat
them as one entity, as we did in Sun Capital Partners III, LP v.
New England Teamsters & Trucking Industry Pension Fund, 724 F.3d
129, 135 n.3 (1st Cir. 2013).


                                         - 4 -
form and finance subsidiary LLCs, through which they acquire and

control portfolio companies, including Scott Brass, Inc. ("SBI"),

the brass manufacturing company.                While the Funds jointly owned

SBI, it filed for bankruptcy and subsequently withdrew from the

Pension Fund, a multiemployer pension fund, incurring withdrawal

liability.2        We restate here only certain facts, and then briefly

give a procedural history of the litigation leading to the instant

appeal.

A.     The Organization of the Sun Funds

               Sun Capital Advisors, Inc. ("SCAI") is a private equity

firm       which   pools   investors'   capital     in    limited   partnerships,

assists       these   limited   partnerships       in    finding    and   acquiring

portfolio companies, and then provides management services to

those portfolio companies.         SCAI established at least eight funds.

Two of them, Sun Fund III and Sun Fund IV, appellants here, are

the investors in SBI, and both are organized under Delaware law as



       2  The price of copper dropped in 2008, reducing the value
of SBI's inventory, which caused a breach of SBI's loan covenants.
This prevented SBI from accessing credit and paying its bills,
causing its bankruptcy and subsequent withdrawal from the Pension
Fund. Sun Capital II, 724 F.3d at 136. There is no suggestion
that mismanagement of SBI by the Funds caused, or even contributed
to, the bankruptcy.    It is clear that declining copper prices,
likely a product of the global recession, caused SBI's bankruptcy.
The Funds' acquisition of SBI may have prolonged the operation of
SBI, and so lengthened the employment of its employees, but there
is no evidence of how the Funds' investment in SBI impacted the
company. There is also no indication that SBI employees had any
alternative retirement savings vehicles (e.g., a 401(k) plan).


                                        - 5 -
limited partnerships. The Sun Funds themselves do not have offices

or employees, do not make or sell goods, and report to the IRS

only investment income.         The Funds expressly disclaimed in their

respective limited partnership agreements any partnership or joint

venture with each other.         The Funds also maintained distinct tax

returns, financial books, and bank accounts.

             Sun Funds III and IV each have one general partner, Sun

Capital     Advisors    III,   LP   and    Sun   Capital   Advisors   IV,   LP,

respectively.          These   general     partners   each   own   respective

subsidiary management companies, Sun Capital Partners Management

III, LLC ("SCPM III") and Sun Capital Partners Management IV, LLC

("SCPM IV").     The two management companies act as intermediaries

between SCAI and holding companies.               The management companies

contract with SCAI for the management services of SCAI's employees

and consultants, and then with the holding company to provide these

management services.

             Sun Funds III and IV, respectively, have 124 and 230

limited partners.        Sixty-four of these limited partners overlap

between the Funds.        The limited partners include both individual

and   institutional      investors,       including   pension   funds,   other

private equity funds, family trusts, and universities.3               The Sun




        3    The identities of the limited partners remain under
seal.



                                      - 6 -
Funds' limited partnership agreements vest exclusive control of

the Funds in their respective general partners, assign the general

partners    percentages    of   the   Funds'     total       commitments   and

investment profits, and require the Funds to pay their general

partners   an   annual   management   fee.4      The   Sun    Funds'   general

partners, which are themselves organized as limited partnerships,

have limited partnership agreements, which vest exclusive control

over the general partners' "material partnership decisions" in

limited    partnership    committees.         These    limited    partnership

committees are each made up of two individuals, Marc Leder and

Rodger Krouse.     These two men also founded and serve as the co-

CEOs and sole shareholders of SCAI.       Leder and Krouse were the co-




     4    The Sun Funds owe to their general partners an annual
management fee equal to two percent of their total commitments. A
general partner may waive these fees to receive "waived fee
amounts," which reduce its capital obligations in the event of a
Sun Fund's future capital call.      Additionally, the Sun Funds
receive an offset to the fees they owe their general partners
commensurate to a portion of the fees the portfolio companies pay
the management companies. When a Fund's management fee offsets
exceed its management fees owed in a six-month period, it receives
a "carryforward" that may offset the fees owed in the subsequent
six-month period.
          The district court quite properly found Sun Fund III's
fee waivers and Sun Fund IV's carryforwards to be direct economic
benefits because they each provided either current, or potential
future, financial benefits that a passive investor would not
accrue. Sun Capital Partners III, LP v. New England Teamsters &
Trucking Indus. Pension Fund, 172 F. Supp. 3d 447, 453–54 (D. Mass.
2016) (Sun Capital III).




                                  - 7 -
CEOs of the management company SCPM IV.5

B.    The Operation of the Sun Funds and SBI

             The Funds used their controlling share of portfolio

companies "to implement restructuring and operational plans, build

management      teams,     become    intimately    involved   in     company

operations,     and      otherwise   cause    growth   in   the    portfolio

companies."     Sun Capital II, 724 F.3d at 134.       The Sun Funds owned

and   managed     their     acquisitions     through   various     corporate

intermediaries.       The Sun Funds together sought out potential

portfolio companies and, through SCAI, developed restructuring and

operating plans before acquisition.            The Sun Funds then would

attempt to sell a portfolio company for a profit, typically within

two to five years of acquisition.            The Sun Funds would acquire,

restructure, and sell companies both independently and together.6

             As part of their acquisition of SBI, the Sun Funds formed

and financed Sun Scott Brass, LLC ("SSB-LLC").          Sun Fund III owned

30% of SSB-LLC and Sun Fund IV owned 70% of SSB-LLC.          These shares

reflect Sun Fund III investing $900,000 and Sun Fund IV investing

$2.1 million in SSB-LLC. SSB-LLC in turn formed and financed Scott



      5   The record does not include SCPM III's Limited Liability
Company Agreement, and so does not set forth the identity of SCPM
III's executives.

      6   The record shows that Sun Funds III and IV held interests
in eighty-eight entities at the relevant times, of which only seven
overlapped. Only the ownership of SBI is at issue here.


                                     - 8 -
Brass Holding Corporation ("SBHC"), a wholly owned, subsidiary

holding company.      SBHC used the Sun Funds' $3 million investment

in SSB-LLC and $4.8 million in debt to purchase all of SBI's stock.

The purchase price reflected a 25% discount from the fair market

value of the SBI stock at acquisition to account for SBI's known,

unfunded pension liability.          The Funds, through SCAI employees

placed in SBI, jointly operated SBI.

C.     Procedural History

              In Sun Capital II, we remanded to the district court to

determine whether the Funds were under common control with SBI and

whether Sun Fund III engaged in trade or business.7             724 F.3d at

150.       It determined that the Sun Funds had formed a partnership-

in-fact sitting on top of SSB-LLC and that this partnership-in-

fact owned 100% of SBI through SSB-LLC, and so concluded the Funds

met the "common control" test utilized in MPPAA law.             Sun Capital

Partners III, LP v. New England Teamsters & Trucking Indus. Pension

Fund, 172 F. Supp. 3d 447, 463–66 (D. Mass. 2016).              That test is

derived from tax law.        See 26 C.F.R. § 1.414(c)-2(b); 29 C.F.R.

§§ 4001.2, 4001.3(a) (incorporating regulations promulgated under

26     U.S.C.   § 414(c)).     The    district   court   held     that   this


       7   On remand, the district court held that Sun Fund III
engaged in trade or business. Sun Capital III, 172 F. Supp. 3d at
454–55. The Funds acknowledge that our decision in Sun Capital II
controlled this holding and do not challenge it on appeal. But
the Funds "reserve the right to seek further review of this . . .
decision."


                                     - 9 -
partnership-in-fact     engaged     in     "trade    or    business"    in   its

operation of SBI.      Sun Capital III, 172 F. Supp. 3d at 466–67.

Accordingly, the district court held the Sun Funds jointly and

severally responsible for SBI's withdrawal liability.              Id. at 467.

             The Sun Funds appealed the rulings that they were under

common control with SBI, that they formed a partnership-in-fact,

and, if a partnership-in-fact did exist, that it engaged in trade

or business. PBGC filed an amicus brief in support of the district

court ruling.

                                     II.

A.    Standard of Review

             This case reaches the court on appeal from a grant of

summary   judgment.     "We     review   a   grant   or   denial   of   summary

judgment, as well as pure issues of law, de novo."                 Sun Capital

II, 724 F.3d at 138 (citing Rodriguez v. Am. Int'l Ins. Co. of

P.R., 402 F.3d 45, 46–47 (1st Cir. 2005)).           This includes both the

determination of withdrawal liability and the recognition of a

partnership-in-fact.     See Pension Ben. Guar. Corp. v. Beverley,

404 F.3d 243, 246, 250–53 (4th Cir. 2005).                Because the parties

filed cross-motions for summary judgment, we "view each motion,

separately, in the light most favorable to the non-moving party,

and   draw   all   reasonable    inferences     in   that    party's    favor."

OneBeacon Am. Ins. Co. v. Commercial Union Assurance Co. of Can.,

684 F.3d 237, 241 (1st Cir. 2012) (internal quotation marks


                                   - 10 -
omitted).

B.   Withdrawal Liability under the MPPAA

            Congress enacted the MPPAA to ensure defined pension

benefit plans remain viable, dissuade employers from withdrawing

from multiemployer plans, and enable a pension fund to recoup any

unfunded liabilities.           See PBGC v. R.A. Gray & Co., 467 U.S. 717,

720–22     (1984).        An     employer    completely        withdraws    from    a

multiemployer plan when it "(1) permanently ceases to have an

obligation to contribute under the plan, or (2) permanently ceases

all covered operations under the plan." 29 U.S.C. § 1383(a).                       On

withdrawal, an employer must pay its proportionate share of the

plan's "unfunded vested benefits."                   Id. § 1391; see also id.

§ 1381; Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers

Pension Tr. for S. Cal., 508 U.S. 602, 608–11 (1993); Sun Capital

II, 724 F.3d at 138.

            To     prevent      evasion     of   the   payment      of    withdrawal

liability,       the    MPPAA    imposes     joint     and    several     withdrawal

liability not only on the withdrawing employers but also on all

entities     (1)       under    "common     control"         with   the    obligated

organization (2) that qualify as engaging in "trade or business."

29 U.S.C. § 1301(b)(1); see also Sun Capital II, 724 F.3d at 138.

The imposition by Congress of withdrawal liability on commonly

controlled group members can have the beneficial effect of delaying

or preventing pension plans from becoming insolvent, preventing


                                      - 11 -
reductions in pension benefits, and limiting claims on public

monies, i.e., PBGC's multiemployer insurance fund.                 See PBGC v.

Dickens (In re Challenge Stamping & Porcelain Co.), 719 F.2d 146,

150 (6th Cir. 1983).

C.   Common Control

             The MPPAA's "common control" provision exists to prevent

the "shirking [of] ERISA obligations by fractionalizing operations

into many separate entities." Cent. States Se. & Sw. Areas Pension

Fund v. Messina Prods., LLC, 706 F.3d 874, 878 (7th Cir. 2013)

(quoting Cent. States, Se. & Sw. Areas Pension Fund v. White, 258

F.3d 636, 644 (7th Cir. 2001)).         ERISA, of which the MPPAA is a

part,   as   a   remedial   statute,   is    to   be   construed    liberally.

Teamsters Pension Tr. Fund-Bd. of Trs. of W. Conference v. Allyn

Transp. Co., 832 F.2d 502, 507 (9th Cir. 1987).            We have held, in

consequence, that the common control provision "in effect, pierces

the corporate veil and disregards formal business structures."

Sun Capital II, 724 F.3d at 138.            And other circuits which have

addressed the question agree.           See Messina, 706 F.3d at 877

(holding that the MPPAA can "pierce corporate veils and impose

[withdrawal] liability on owners and related businesses"); Ceco

Concrete Constr., LLC, v. Centennial State Carpenters Pension Tr.,

821 F.3d 1250, 1260 (10th Cir. 2016) (holding the same).                   The

legislative history is also consistent with this view.                 See S.

Rep. No. 383, at 43 (1974) ("[T]he committee, by [§ 1301(b)],


                                  - 12 -
intends to make it clear that the . . . provisions cannot be

avoided by operating through separate corporations instead of

separate branches of one corporation."); H.R. Rep. No. 807, at 50

(1974) (same).

            In    1986,   Congress     authorized        PBGC   to   promulgate

regulations      for   implementing     the     common     control    provision

"consistent      and   coextensive    with    regulations       prescribed   for

similar purposes by the Secretary of the Treasury under section

414(c) of Title 26" of the Internal Revenue Code.                    29 U.S.C.

§ 1301(b)(1).

            The MPPAA regulations adopted in 1996 by PBGC, in turn,

adopt the Treasury Department's regulations governing "common

control."     The regulations state that entities are under common

control if they are members of a "parent-subsidiary group of trades

or business under common control."8           26 C.F.R. § 1.414(c)-2(b); 29

C.F.R. §§ 4001.2, 4001.3(a) (incorporating Treasury regulations

under 26 U.S.C. § 414(c)).           Notably, PBGC has not provided the

courts or parties with any further formal guidance on how to

determine common control specifically in the MPPAA context.                  Nor

has PBGC updated its regulation on common control, 29 C.F.R.

§ 4001.3, since that regulation's adoption.


     8    There are also regulations defining "brother-sister
groups of trades or businesses under common control," but these
are not relevant to this appeal. See 26 C.F.R. § 1.414(c)-2(c).



                                     - 13 -
          The Treasury regulations9 define a "parent-subsidiary

group" under the term "parent-subsidiary groups of trades or

businesses under common control" as:

          one or more chains of organizations conducting
          trades   or   businesses   connected   through
          ownership of a controlling interest with a
          common parent organization if . . . (i) [a]
          controlling    interest   in   each   of   the
          organizations, except the common parent
          organization, is owned . . . by one or more of
          the other organizations; and (ii) [t]he common
          parent organization owns . . . a controlling
          interest in at least one of the other
          organizations.

26 C.F.R. § 1.414(c)-2(b)(1).

          Treasury regulations also establish that there is a

"controlling interest" if there is "ownership of stock possessing

at least 80 percent of total combined voting power . . . or at

least 80 percent of the total value of shares."       Id. § 1.414(c)-

2(b)(2)(A).   The plain language of these provisions requires us to

find, and ascribe liability to, the entity that controls (by at

least 80%) the withdrawn employer.       See Dickens, 719 F.2d at 151

("The purpose of the 80% regulation is obviously to find the party

in control.").

D.   Federal Partnership Law

          Like the district court, we inquire into the legal


     9    We also do not engage the Funds' argument that we should
consider interpreting present Treasury regulations in light of the
fate of earlier IRS regulations concerning partnerships and
corporations which were rejected by some circuits.


                                - 14 -
question of whether the record demonstrates the Funds formed a

partnership-in-fact, as a matter of federal common law, to acquire

and operate SBI through SSB-LLC.

            We must look to federal tax law on the partnership-in-

fact issue.    We do so because Congress "intended that a body of

Federal substantive law [would] be developed by the courts to deal

with issues involving rights and obligations under private welfare

and pension plans."     Mass. Mut. Life Ins. Co. v. Russell, 473 U.S.

134, 156 (1985) (quoting Remarks of Senator Javits, 120 Cong. Rec.

29,942 (1974)); Bd. of Trs. of W. Conference of Teamsters Pension

Tr. Fund v. H.F. Johnson, Inc., 830 F.2d 1009, 1014 (9th Cir. 1987)

(quoting the same with respect to MPPAA withdrawal liability).

Moreover, by statute, PBGC's "common control" regulations must be

"consistent    and    coextensive"    with   treasury   regulations   under

§ 414(c).     29 U.S.C. § 1301(b)(1).           These treasury regulations

incorporate federal tax law's definition of partnership. 26 C.F.R.

§ 1.414(c)–2(a) (referencing 26 U.S.C. § 7701(a)(2)).            And courts

facing similar issues have relied on federal tax law.            See, e.g.,

Connors v. Ryan's Coal Co., Inc., 923 F.2d 1461, 1466–67, 1467

n.37 (11th Cir. 1991) (relying on federal tax precedent to affirm

recognition of a partnership and holding one of the partners

responsible for the other partner's withdrawal liability).

            Federal    tax   law     provides    that   the   choice(s)   of

organizational form under state law does not control this question


                                   - 15 -
of whether a partnership-in-fact was established.                  See Comm'r v.

Tower, 327 U.S. 280, 287–88 (1946) (holding that federal law

governs whether parties formed partnership for tax purposes); H.F.

Johnson, Inc., 830 F.2d at 1014 (concluding that federal law

governed whether parties formed a partnership and so were liable

for pension withdrawal under ERISA).                But state law, and express

disclaimers of partnership formation that are determinative under

state law, do provide some guidance.            H.F. Johnson, Inc., 830 F.2d

at 1014 (holding that, "while [a court] may look to state law for

guidance,"     federal     law   governs     whether   joint     venturers     share

withdrawal liability).

             The Internal Revenue Code defines a "partnership" to

include   "a      syndicate,     group,     pool,   joint    venture,    or    other

unincorporated organization, through or by means of which any

business, financial operation, or venture is carried on, and which

is not, within the meaning of this title, a trust or estate or a

corporation."        26   U.S.C.     § 7701(a)(2)      (emphasis    added).          It

similarly    defines      "partner"    to    include    "a   member     in    such    a

syndicate, group, pool, joint venture, or organization."                     Id.

             We   look    to   the   partnership10     factors    the   Tax    Court



     10   A joint venture differs from a partnership primarily in
scope, see Podell v. Comm'r, 55 T.C. 429, 432 (1970), and the
differences do not affect our analysis. Consequently, and like
the district court and parties to this case, we employ the terms
"partner" and "partnership" in our analysis.


                                      - 16 -
adopted in Luna.   42 T.C. at 1077–78.   The factors are:

      1.   "The agreement of the parties and their conduct in

           executing its terms";

      2.   "the contributions, if any, which each party has made

           to the venture";

      3.   "the parties' control over income and capital and the

           right of each to make withdrawals";

      4.   "whether each party was a principal and coproprietor,

           sharing a mutual proprietary interest in the net

           profits and having an obligation to share losses, or

           whether one party was the agent or employee of the

           other, receiving for his services contingent

           compensation in the form of a percentage of income";

      5.   "whether business was conducted in the joint names of

           the parties";

      6.   "whether the parties filed Federal partnership returns

           or otherwise represented to respondent or to persons

           with whom they dealt that they were joint venturers";

      7.   "whether separate books of account were maintained for

           the venture"; and

      8.   "whether the parties exercised mutual control over and

           assumed mutual responsibilities for the enterprise."

Id.




                               - 17 -
              To the extent the Funds argue we cannot apply the Luna

factors because they have organized an LLC through which to operate

SBI, we reject the argument.         Merely using the corporate form of

a   limited    liability   corporation    cannot   alone     preclude    courts

recognizing the existence of a partnership-in-fact.                    There is

precedent for recognizing a partnership-in-fact where the parties

have formed a different entity through an express agreement.

Wabash Railway Co. v. American Refrigerator Transit Co., 7 F.2d

335, 342–44 (8th Cir. 1925), cert. denied, 270 U.S. 643 (1926),

and Shorb v. Beaudry, 56 Cal. 446, 450 (1880), do just that.                See

also In re Hart, Nos. 09-71053, 11-42424, 2014 WL 1018087, at *20

n.11 (Bankr. N.D. Cal. Mar. 14, 2014) ("Shorb [v. Beaudry], though

dated,   is     still   authority    in      California.").       Given     our

understanding, we also reject the separate argument made by the

Funds that the question of liability is resolved by the district

court's conclusion that "[t]he conventional theories of a general

partnership -- those that on the face reflect operational and

institutional overlap between the Funds -- are not evident here."

Sun Capital III, 172 F. Supp. 3d at 463.

              If the Funds have, under this multi-factored Luna test,

formed   a    partnership-in-fact,     then    under   the    common    control

regulations they are jointly and severally liable for the debts of

the partnership, including MPPAA withdrawal liability, if the

separate trade or business test is also met.           E.g., Cent. States,


                                    - 18 -
Se. & Sw. Areas Pension Fund v. Johnson, 991 F.2d 387, 391–92 (7th

Cir. 1993).

          Importantly,      federal     common    law11   allows   a    pre-

incorporation venture or partnership to survive the fact of the

partners incorporating.      See Wabash Ry., 7 F.2d at 342–44; cf.

Chi., Milwaukee & St. Paul Ry. Co. v. Minn. Civic & Commerce Ass'n,

247 U.S. 490, 498 (1918) (holding, for the purposes of a regulatory

regime,   that    a     "technically     . . .    separate,"    subsidiary

corporation was "a mere agency or instrumentality" of the two

railway corporations that wholly controlled it).            That is, under

federal law, if entities have in fact formed a partnership, merely

creating a corporation through which they pursue the goals of the

partnership does not necessarily end that partnership.             Although

not as onerous as the common law veil piercing standard, the test

is   rigorous:   when    parties,     including   when    operating    as   a

partnership, "control[] a subsidiary company so that it may be

used as a mere agency or instrumentality," a court may "deal with

the substance of the transaction involved as if the corporate

agency did not exist and as the justice of the case may require."

Wabash Ry., 7 F.2d at 344.




     11   See also Jolin v. Oster, 172 N.W.2d 12, 16 n.1 (Wis.
1969) (collecting cases stating whether jurisdictions recognize
joint ventures may survive incorporation, and noting the Eighth
Circuit does).


                                    - 19 -
                                     III.

             The MPPAA, ERISA, and tax law require courts to look

beyond how the parties label, or structure, themselves.                 Courts

must rather look to the substance of the relationships. See, e.g.,

Connors, 923 F.2d at 1467–68 (finding MPPAA withdrawal liability

where individuals formed a partnership despite never explicitly

agreeing to form one); Johnson, 991 F.2d at 391–94 (adopting the

test    in   Connors).12     PBGC   regulations    direct   us   to    Treasury

regulations governing common control, which in turn require us to

determine, under federal partnership law and the Luna test, whether

the Funds formed a partnership-in-fact.           There are some facts here

under the Luna factors that tend to support a conclusion that the

Sun Funds formed a partnership-in-fact to assert common control

over SBI, but consideration of all of the factors leads to the

opposite conclusion.

             We first consider the Luna factors that favor a finding

of de facto partnership.        Even before incorporating SSB-LLC, the

Sun     Funds     together     "[sought]     out     potential        portfolio

companies . . . in need of extensive intervention with respect to

their management and operations, to provide such intervention, and

then to sell the companies."          Sun Capital II, 724 F.3d at 142


       12 Indeed in Tower, the Supreme Court disregarded the
parties' own identification as a partnership when the substance of
their relationship did not evidence a partnership. 327 U.S. at
282, 291–92.


                                    - 20 -
(emphasis     added).      The   Funds,    through      SCAI,   developed

restructuring and operating plans for target companies before

actually acquiring them through LLCs.13     Id.   This behavior is some

evidence of the Sun Funds "exercis[ing] mutual control over and

assum[ing]     mutual   responsibilities   for    the    enterprise"    of

identifying, acquiring, and selling portfolio companies together.

Luna, 42 T.C. at 1078.      Moreover, if the Sun Funds had in fact

formed a partnership through these pre-incorporation activities,

the mere creation of SSB-LLC would not, as a matter of law, in and

of itself end this already-existing partnership-in-fact.               See

Wabash Ry., 7 F.2d at 342–44.

             The organization of the control of the Sun Funds and of

control over SBI also is some evidence of a partnership-in-fact.

The two men in control of the Funds' general partners, Leder and

Krouse, essentially ran things for both the Funds and SBI.14



     13   This was a usual mode of operation; the Funds similarly
coinvested and comanaged other companies between 2005 and 2008.
They adopted the same organizational structure for these companies
as they did with SBI.

     14    Sun Capital III, 172 F. Supp. 3d at 461–62. As the only
members of the Sun Funds' general partners' limited partner
committees, Leder and Krouse wholly controlled the general
partners and, by extension, the Sun Funds. Sun Capital II, 724
F.3d at 134.     Although the Sun Funds have different limited
partners, these partners may not participate in management
decisions, and so Leder and Krouse had sole management authority.
See B. Cheffins & J. Armour, The Eclipse of Private Equity, 33
Del. J. Corp. L. 1, 9 (2008) (discussing the role of limited
partners).


                                 - 21 -
Together, and at Leder and Krouse's direction, the Sun Funds placed

SCAI employees in two of SBI's three director positions, allowing

SCAI to control SBI.    Sun Capital III, 172 F. Supp. 3d at 467.

Moreover, this pooling of resources and expertise in SCAI, which

the Funds used not only to identify, acquire, and manage portfolio

companies, and structure those deals, but to provide management

consulting and employees to portfolio companies, including SBI, is

evidence tending to show a partnership.    See Cahill v. Comm'r, 106

T.C.M. (CCH) 324, 2013 WL 5272677, at *4 (2013) (concluding a

party's desire "to pool his resources and to develop business

jointly" evidenced a partnership); Luna, 42 T.C. at 1078 (holding

that "mutual control over and . . . mutual responsibilities for

[an] enterprise" indicate a partnership-in-fact).       Indeed, the

record does not show a single disagreement between the Sun Funds

over how to operate SSB-LLC.   The Funds' conduct in managing SSB-

LLC is further evidence of a partnership-in-fact sitting above.

Cf. Luna, 42 T.C. at 1077 (paralleling Luna factor one: "[t]he

agreement of the parties and their conduct in executing its terms"

(emphasis added)).

          We next discuss the Luna factors that counsel against

recognizing a partnership-in-fact.      The record evidence is clear

that the Funds did not "intend[] to join together in the present

conduct of the enterprise" (at least beyond their coordination

within SSB-LLC).   Comm'r v. Culbertson, 337 U.S. 733, 742 (1949);


                               - 22 -
see also Luna, 42 T.C. at 1077 (counting against factor one).                      The

fact that the Funds expressly disclaimed any sort of partnership

between the Funds counts against a partnership finding as to

several of the Luna factors.                   See Luna, 42 T.C. at 1077-78

(counting against factor one, the "agreement of the parties";

factor five, "whether business was conducted in the joint names of

the   parties";       and    factor       six,      "whether     the    parties . . .

represented to . . . persons with whom they dealt that they were

joint venturers").          Most of the 230 entities or persons who were

limited partners in Sun Fund IV were not limited partners in Sun

Fund III. The Funds also filed separate tax returns, kept separate

books, and maintained separate bank accounts -- facts which tend

to rebut partnership formation.15                Id. at 1078 (counting against

factors six and seven). The Sun Funds did not operate in parallel,

that is, invest in the same companies at a fixed or even variable

ratio,     which    also    shows       some   independence        in   activity    and

structure.

             The creation of an LLC by the Sun Funds through which to

acquire    SBI     also    shows   an    intent     not    to   form    a   partnership

(although    not     as    categorically       as    the   Funds    contend).      The

formation of an LLC both prevented the Funds from conducting their


      15  There was some disagreement at oral argument about
whether the record shows the Sun Funds co-investing with entities
that Leder and Krouse do not control. The answer to this question
would not change our decision.


                                         - 23 -
business in their "joint names" (Luna factor five) and limited the

manner in which they could "exercise[] mutual control over and

assume[] mutual responsibilities for" managing SBI (Luna factor

eight).    Id.

               The fact that the entities formally organized themselves

as limited liability business organizations under state law at

virtually all levels distinguishes this case from Connors and other

cases     in    which     courts       have     found   parties      to    have     formed

partnerships-in-fact, been under common control, and held both

parties responsible for withdrawal liability.                      E.g., Connors, 923

F.2d at 1467–68. These cases often involved individuals (typically

married couples), rather than limited liability business entities

like limited partnerships, further distinguishing them from the

instant case.          E.g., id. at 1464.         And many of the cases in which

courts    have    recognized           these   types    of    partnerships        involved

fractionalizing already-existing businesses, rather than pursuing

investments in different ones.                 E.g., id. at 1467–68; Johnson, 991

F.2d at 392–94.         Using the Luna factors, we conclude that most of

them, on these facts, point away from common control.

               We credit the district court for its careful and reasoned

analysis of the complex facts and law at hand.                       Nonetheless, the

district       court    (and     the    Pension    Fund      and   PBGC)   too    greatly

discounted       the      Luna     factors        rebutting        partnership-in-fact

formation.        Importantly, although the district court correctly


                                          - 24 -
concluded that incorporating SSB-LLC did not in and of itself

prevent recognizing a partnership-in-fact between the Funds, SSB-

LLC's incorporation implicates many Luna factors counting against

that recognition (an analysis absent from the district court's

opinion).

             Moreover,   we     are    reluctant   to   impose   withdrawal

liability on these private investors because we lack a firm

indication of congressional intent to do so and any further formal

guidance from PBGC.           Two of ERISA and the MPPAA's principal

aims -- to ensure the viability of existing pension funds and to

encourage the private sector to invest in, or assume control of,

struggling companies with pension plans -- are in considerable

tension here.

             We do not reach other legal issues in the case, including

the trade or business issue. We decide the issue of common control

only as it has been framed before us and do not reach other

arguments that might have been available to the parties.

                                       IV.

             We reverse entry of summary judgment for the Pension

Fund and remand with directions to enter summary judgment for the

Sun Funds.     No costs are awarded.




                                      - 25 -
