          United States Court of Appeals
                     For the First Circuit


No. 12-2312

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

                     Plaintiffs, Appellees,

                               v.

     NEW ENGLAND TEAMSTERS & TRUCKING INDUSTRY PENSION FUND,

          Defendant, Third Party Plaintiff, Appellant,

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

                     Third Party Defendants.


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

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


                             Before

                       Lynch, Chief Judge,
              Thompson and Kayatta, Circuit Judges.


     Renee J. Bushey and Catherine M. Campbell, with whom Melissa
A. Brennan and Feinberg, Campbell & Zack, PC were on brief, for
appellant.
     Eric Field, Assistant Chief Counsel, with whom Judith R.
Starr, General Counsel, Israel Goldowitz, Chief Counsel, Karen L.
Morris, Deputy Chief Counsel, Craig T. Fessenden, Attorney, and
Beth A. Bangert, Attorney, were on brief, for Pension Benefit
Guaranty Corporation, amicus curiae.
     Patrick F. Philbin, with whom Theodore J. Folkman, P.C.,
Murphy & King P.C., John F. Hartmann, P.C., Marla Tun, Jeffrey S.
Quinn, Kellen S. Dwyer, John S. Moran, and Kirkland & Ellis LLP
were on brief, for appellees.
July 24, 2013
          LYNCH, Chief Judge.   This case presents important issues

of first impression as to withdrawal liability for the pro rata

share of unfunded vested benefits to a multiemployer pension fund

of a bankrupt company, here, Scott Brass, Inc. (SBI). See Employee

Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et

seq., as amended by the Multiemployer Pension Plan Amendment Act of

1980 (MPPAA), 29 U.S.C. § 1381 et seq.    This litigation considers

the imposition of liability as to three groups: two private equity

funds, which assert that they are mere passive investors that had

indirectly controlled and tried to turn around SBI, a struggling

portfolio company; the New England Teamsters and Trucking Industry

Pension Fund (TPF), to which the bankrupt company had withdrawal

pension obligations and which seeks to impose those obligations on

the equity funds; and, ultimately, if the TPF becomes insolvent,

the federal Pension Benefit Guaranty Corporation (PBGC), which

insures multiemployer pension plans such as the one involved here.

If the TPF becomes insolvent, then the benefits to the SBI workers

are reduced to a PBGC guaranteed level.    See 29 U.S.C. §§ 1322a,

1426, 1431.   According to the PBGC's brief, at present, that level

is about $12,870 for employees with 30 years of service.

          The plaintiffs are the two private equity funds, which

sought a declaratory judgment against the TPF.      The TPF, which




                                -3-
brought into the suit other entities related to the equity funds,1

has counterclaimed and sought payment of the withdrawal liability

at issue.      The TPF is supported on appeal by the PBGC, as amicus.2

            We conclude that at least one of the private equity funds

which operated SBI, through layers of fund-related entities, was

not   merely    a   "passive"   investor,   but   sufficiently   operated,


      1
       Those related entities are not before us in this appeal. An
entry of default was entered against those parties in the district
court, but judgment was never entered on the claims against those
parties. However, it is apparent from the procedural history and
actions of the TPF that the TPF has abandoned the claims against
those parties, and therefore, we have appellate jurisdiction under
28 U.S.C. § 1291. See, e.g., Balt. Orioles, Inc. v. Major League
Baseball Players Ass'n, 805 F.2d 663, 667 (7th Cir. 1986) ("[A]n
order that effectively ends the litigation on the merits is an
appealable final judgment even if the district court did not
formally enter judgment on a claim that one party has abandoned.").
      2
       The authority of the PBGC to promulgate regulations for
§ 1301(b)(1) is set forth in the statute. The PBGC is a wholly
owned United States government corporation, which is modeled after
the FDIC and administers and enforces Title IV of ERISA. Pension
Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 637 (1990). The
PBGC also acts as an insurer of multiemployer plans when a covered
plan terminates with insufficient assets to satisfy its pension
obligations (i.e., is insolvent).       Id. at 637-38.      When a
multiemployer plan becomes insolvent, benefits must be reduced to
the PBGC-guaranteed level, and the PBGC provides the plan with
financial assistance. See 29 U.S.C. §§ 1322a, 1426, 1431. In this
case, it is not clear whether the plan will become insolvent if the
private equity funds are not determined to have withdrawal
liability, and as a result, it is not clear whether the PBGC will
incur any losses.
     The PBGC insures about 1450 multiemployer plans covering about
10.3 million participants. Pension Benefit Guaranty Corporation,
2012     PBGC    Annual     Report     33,     available         at
http://www.pgbc.gov/documents/2012-annual-report.pdf. It provides
about $95 million in annual financial assistance to 49 insolvent
multiemployer plans covering 51,000 participants. Id. As of the
end of fiscal year 2012, the PBGC's multiemployer insurance fund
had a negative net position of $5.237 billion. Id.

                                    -4-
managed, and was advantaged by its relationship with its portfolio

company, the now bankrupt SBI.        We also conclude that further

factual development is necessary as to the other equity fund.    We

decide that the district court erred in ending the potential claims

against the equity funds by entering summary judgment for them

under the "trades or businesses" aspect of the two-part "control

group" test under 29 U.S.C. § 1301(b)(1). See Sun Capital Partners

III, LP v. New Eng. Teamsters & Trucking Indus. Pension Fund, 903

F. Supp. 2d 107, 116-18, 124 (D. Mass. 2012).

          As a result, we remand for further factual development

and for further proceedings under the second part of the "control

group" test, that of "common control," in 29 U.S.C. § 1301(b)(1).

The district court was, however, correct to enter summary judgment

in favor of the private equity funds on the TPF's claim of

liability on the ground that the funds had engaged in a transaction

to evade or avoid withdrawal liability.     See 29 U.S.C. § 1392(c);

Sun Capital, 903 F. Supp. 2d at 123-24.

                                I.

          The material facts are undisputed.

A.        The Sun Funds

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

firm founded by its co-CEOs and sole shareholders, Marc Leder and

Rodger Krouse.   Sun Capital, 903 F. Supp. 2d at 109.    It is not a

plaintiff or party in this case.   SCAI and its affiliated entities


                                -5-
find investors and create limited partnerships in which investor

money is pooled, as in the private equity funds here.   Moreover,

SCAI finds and recommends investment opportunities for the equity

funds, and negotiates, structures, and finalizes investment deals.

Id. SCAI also provides management services to portfolio companies,

and employs about 123 professionals to provide these services.

          The plaintiffs here are two of SCAI's private equity

funds (collectively the "Sun Funds"), Sun Capital Partners III, LP

("Sun Fund III")3 and Sun Capital Partners IV, LP ("Sun Fund IV").

They are organized as Delaware limited partnerships. SBI is one of

their portfolio companies, and the two Sun Funds have other

portfolio companies.   The Sun Funds do not have any offices or

employees; nor do they make or sell goods, or report income other

than investment income on their tax returns.4   Id. at 117.      The


     3
      Sun Fund III is technically two different funds, Sun Capital
Partners III, LP and Sun Capital Partners III QP, LP. Like the
district court, we consider them one fund for purposes of this
opinion because they are "parallel funds" run by a single general
partner and generally make the same investments in the same
proportions. Sun Capital Partners III, LP v. New Eng. Teamsters &
Trucking Indus. Pension Fund, 903 F. Supp. 2d 107, 109 n.1 (D.
Mass. 2012).
     4
       For ERISA purposes, the Sun Funds are Venture Capital
Operating Companies (VCOC). According to the Sun Funds' private
placement memos to potential investors, this requires that the
partnerships:
     (i) . . . ha[ve] direct contractual rights to
     substantially participate in or substantially influence
     the management of operating companies comprising at least
     50% of its portfolio (measured at cost) and (ii) in the
     ordinary   course   of   [their   businesses],   actively
     exercis[e] such management rights with respect to at

                               -6-
stated purpose of the Sun Funds is to invest in underperforming but

market-leading companies at below intrinsic value, with the aim of

turning them around and selling them for a profit.          As a result,

the Sun Funds' controlling stakes in portfolio companies are used

to implement restructuring and operational plans, build management

teams,   become   intimately   involved   in   company   operations,   and

otherwise cause growth in the portfolio companies in which the Sun

Funds invest.     The intention of the Sun Funds is to then sell the

hopefully successful portfolio company within two to five years.

In fact, the Sun Funds have earned significant profits from sales

of various portfolio companies.5

           These private equity funds engaged in a particular type

of investment approach, to be distinguished from mere stock holding

or mutual fund investments.        See, e.g., S. Rosenthal, Taxing

Private Equity Funds as Corporate 'Developers', Tax Notes, Jan. 21,

2013, at 361, 364 & n.31 (explaining that private equity funds

differ from mutual funds and hedge funds because they "assist and

manage the business of the companies they invest in").            As one


     least one of the operating companies in which [they
     invest]. An "operating company" is an entity engaged in
     the production or sale of a product or service, as
     distinguished from a reinvesting entity.
See also 29 C.F.R. § 2510.3-101(d)(1), (d)(3). We do not adopt the
TPF's argument that any investment fund classified as a VCOC is
necessarily a "trade or business."
     5
      For instance, Sun Fund IV, the larger of the Funds, reported
total investment income of $17,353,533 in 2007, $57,072,025 in
2008, and $70,010,235 in 2009.

                                  -7-
commentator puts it, "[i]t is one thing to manage one's investments

in businesses. It is another to manage the businesses in which one

invests."     C. Sanchirico, The Tax Advantage to Paying Private

Equity Fund Managers with Profit Shares: What Is It?                Why Is It

Bad?, 75 U. Chi. L. Rev. 1071, 1102 (2008).

             The Sun Funds are overseen by general partners, Sun

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

and Krouse are each limited partners in the Sun Funds' general

partners and, together with their spouses, are entitled to 64.74%

of the aggregate profits of Sun Capital Advisors III, LP and 61.04%

of such profits from Sun Capital Advisors IV, LP.               The Sun Funds'

limited    partnership    agreements     vest   their   respective     general

partners with exclusive authority to manage the partnership.                Part

of this authority is the power to carry out all the objectives and

purposes     of   the    partnerships,    which    include      investing    in

securities, managing and supervising any investments, and any other

incidental    activities    the   general   partner     deems    necessary    or

advisable.

             For these services, each general partner receives an

annual fee of two percent of the total commitments (meaning the

aggregate cash committed as capital to the partnership6) to the Sun

Funds, paid by the limited partnership, and a percentage of the Sun


     6
       The aggregate capital commitment of Sun Fund IV was $1.5
billion, which the TPF asserts means the management fee at the 2%
rate was $30 million.

                                    -8-
Funds' profits from investments.    The general partners also have a

limited partnership agreement, which provides that for each general

partner a limited partner committee makes all material partnership

decisions.     Sun Capital, 903 F. Supp. 2d at 110-11.        Leder and

Krouse are the sole members of the limited partner committees. Id.

at 111.   Included in the powers of the limited partner committees

is the authority to make decisions and determinations relating to

"hiring, terminating and establishing the compensation of employees

and agents of the [Sun] Fund or Portfolio Companies."       The general

partners also each have a subsidiary management company, Sun

Capital Partners Management III, LLC and Sun Capital Partners

Management IV, LLC, respectively.       Id.   These management companies

contract with the holding company that owns the acquired company to

provide management services for a fee, and contract with SCAI to

provide the employees and consultants.         See id.   When portfolio

companies pay fees to the management companies, the Sun Funds

receive an offset to the fees owed to the general partner.7

B.           The Acquisition of Scott Brass, Inc.




     7
       This sort of fee arrangement is common in private equity
funds. See S. Rosenthal, Taxing Private Equity Funds as Corporate
'Developers', Tax Notes, Jan. 21, 2013, at 361, 362 n.6 (explaining
that equity funds usually pay the fees to their general partners,
which often redirect the fee to a management services company that
renders the management services for the partnership, and that the
general partner or management company will often receive fees from
the portfolio company, in which case the partnership (the equity
fund) receives a fee offset).

                                  -9-
           In 2006, the Sun Funds began to take steps to invest in

SBI, the acquisition of which was completed in early 2007.     Leder

and Krouse made the decision to invest in SBI in their capacity as

members of the limited partner committees.

           SBI, a Rhode Island corporation, was an ongoing trade or

business, and was closely held; its stock was not publicly traded.

SBI was a leading producer of high quality brass, copper, and other

metals "used in a variety of end markets, including electronics,

automotive, hardware, fasteners, jewelry, and consumer products."

In 2006, it shipped 40.2 million pounds of metal.           SBI made

contributions to the TPF on behalf of its employees pursuant to a

collective bargaining agreement.

           On November 28, 2006, a Sun Capital affiliated entity

sent a letter of intent to SBI's outside financial advisor to

purchase 100% of SBI.   In December 2006, the Sun Funds formed Sun

Scott Brass, LLC (SSB-LLC) as a vehicle to invest in SBI.   Sun Fund

III made a 30% investment ($900,000) and Sun Fund IV a 70%

investment ($2.1 million) for a total equity investment of $3

million.   This purchase price reflected a 25% discount because of

SBI's known unfunded pension liability.8   SSB-LLC, on December 15,

2006, formed a wholly-owned subsidiary, Scott Brass Holding Corp.



     8
       The Sun Funds contend that they reduced the purchase price
based on the expectation that a future buyer would pay less for a
company with unfunded pension obligations, not because of a concern
that they were incurring potential withdrawal liability.

                               -10-
(SBHC).   SSB-LLC transferred the $3 million the Sun Funds invested

in it to SBHC as $1 million in equity and $2 million in debt.    Id.

at 111.   SBHC then purchased all of SBI's stock with the $3 million

of cash on hand and $4.8 million in additional borrowed money. Id.

The stock purchase agreement to acquire SBI's stock was entered

into on February 8, 2007.9

           On February 9, 2007, SBHC signed an agreement with the

subsidiary of the general partner of Sun Fund IV to provide

management services to SBHC and its subsidiaries, i.e., SBI. Since

2001, that general partner's subsidiary had contracted with SCAI to

provide it with advisory services.     In essence, as the district

court described, the management company acted as a middle-man,

providing SBI with employees and consultants from SCAI.    Id.

           Numerous individuals with affiliations to various Sun

Capital entities, including Krouse and Leder, exerted substantial

operational and managerial control over SBI, which at the time of

the acquisition had 208 employees and continued as a trade or

business manufacturing metal products.   For instance, minutes of a

March 5, 2007 meeting show that seven individuals from "SCP"

attended a "Jumpstart Meeting" at which the hiring of three SBI

salesmen was approved, as was the hiring of a consultant to analyze



     9
       The cover page of the agreement states the agreement is
dated February 8, 2007, but the text of the stock purchase
agreement says it is dated February 9, 2007. The discrepancy is
not of importance here.

                                -11-
a computer system upgrade project at a cost of $25,000.                Other

items    discussed      included    possible      acquisitions,      capital

expenditures,     and   the   management   of    SBI's   working   capital.

Further, Leder, Krouse, and Steven Liff, an SCAI employee, were

involved in email chains discussing liquidity, possible mergers,

dividend payouts, and concerns about how to drive revenue growth at

SBI.    Leder, Krouse, and other employees of SCAI received weekly

flash reports from SBI that contained detailed information about

SBI's   revenue,     key   financial   data,    market   activity,    sales

opportunities, meeting notes, and action items.          According to the

Sun Funds, SBI continued to meet its pension obligations to the TPF

for more than a year and a half after the acquisition.

C.           SBI's Bankruptcy and This Litigation

             In the fall of 2008, declining copper prices reduced the

value of SBI's inventory, resulting in a breach of its loan

covenants.    Unable to get its lender to waive the violation of the

covenants, SBI lost its ability to access credit and was unable to

pay its bills.     See id.

             In October 2008, SBI stopped making contributions to the

TPF, and, in so doing, became liable for its proportionate share of

the TPF's unfunded vested benefits.            See 29 U.S.C. §§ 1381(a),

1383(a)(2). In November 2008, an involuntary Chapter 11 bankruptcy

proceeding was brought against SBI. The Sun Funds assert that they




                                   -12-
lost the entire value of their investment in SBI as a result of the

bankruptcy.

          On December 19, 2008, the TPF sent a demand for payment

of estimated withdrawal liability to SBI.      The TPF also sent a

notice and demand to the Sun Funds demanding payment from them of

SBI's withdrawal liability, ultimately calculated as $4,516,539.

Sun Capital, 903 F. Supp. 2d at 111.   The TPF asserted that the Sun

Funds had entered into a partnership or joint venture in common

control with SBI and were therefore jointly and severally liable

for SBI's withdrawal liability under 29 U.S.C. § 1301(b)(1).    Id.

          On June 4, 2010, the Sun Funds filed a declaratory

judgment action in federal district court in Massachusetts.     The

Sun Funds sought a declaration that they were not subject to

withdrawal liability under § 1301(b)(1) because: (1) the Sun Funds

were not part of a joint venture or partnership and therefore did

not meet the common control requirement; and (2) neither of the

Funds was a "trade or business."

          The TPF counterclaimed that the Sun Funds were jointly

and severally liable for SBI's withdrawal liability in the amount

of $4,516,539, and also that the Sun Funds had engaged in a

transaction to evade or avoid liability under 29 U.S.C. § 1392(c).

The parties both filed cross-motions for summary judgment in

September 2011.




                               -13-
           The district court issued a Memorandum and Order on

October 18, 2012, granting summary judgment to the Sun Funds.     Id.

at 109.    The district court did not reach the issue of common

control, id. at 118, instead basing its decision on the "trade or

business" portion of the two-part statutory test.    It also decided

the "evade or avoid" liability issue.10

           On the "trade or business" issue, the district court

addressed the level of deference owed to a September 2007 PBGC

appeals letter that found a private equity fund to be a "trade or

business" in the single employer pension plan context. Id. at 114-

16.   The appeals letter found the equity fund to be a "trade or

business" because its controlling stake in the bankrupt company put

it in a position to exercise control over that company through its

general partner, which was compensated for its efforts.

           The district court held that the appeals letter was owed

deference only to the extent it could persuade.     Id. at 115.   The

district court found the letter unpersuasive for two reasons: (1)

the appeals board purportedly incorrectly attributed activity of

the general partner to the investment fund; and (2) the appeals

board letter supposedly conflicted with governing Supreme Court tax

precedent. Id. at 115-16. Engaging in its own analysis, the court

found that the Sun Funds were not "trades or businesses," relying


      10
       No party demanded a jury trial in the event the district
court found that the case should proceed to trial rather than be
resolved at summary judgment.

                               -14-
on the fact that the Sun Funds did not have any offices or

employees, and did not make or sell goods or report income other

than   investment   income    on   their   tax   returns.   Id.   at   117.

Moreover, the Sun Funds were not engaged in the general partner's

management activities.       Id.

           As to its "evade or avoid" liability analysis, the

district court stated that § 1392(c) was not meant to apply to an

outside investor structuring a transaction to avoid assuming a

potential liability.     Id. at 122.       The language of the statute

suggested that "it is aimed at sellers, not investors," id., and

imposing liability on investors for trying to avoid assumption of

such liability would disincentivize investing in companies subject

to multiemployer pension plan obligations, thereby undermining the

aim of the MPPAA, id. at 124.

           The TPF has timely appealed. It argues that the district

court erred in finding that the Sun Funds were not "trades or

businesses" and that the Sun Funds should be subject to "evade or

avoid" liability under § 1392(c).          The PBGC has filed an amicus

brief on appeal in support of reversal of the district court's

"trades or businesses" decision, but has taken no position on the

§ 1392(c) claim.

                                    II.

A.         Standard of Review




                                    -15-
              We review a grant or denial of summary judgment, as well

as pure issues of law, de novo.              Rodriguez v. Am. Int'l Ins. Co. of

P.R., 402 F.3d 45, 46-47 (1st Cir. 2005).                        We may affirm the

district court on any independently sufficient ground manifest in

the record.        OneBeacon Am. Ins. Co. v. Commercial Union Assurance

Co. of Can., 684 F.3d 237, 241 (1st Cir. 2012).                        The presence of

cross-motions for summary judgment does not distort the standard of

review.      Rather, we view each motion separately in the light most

favorable      to    the    non-moving       party      and   draw     all       reasonable

inferences in favor of that party.                  Id.   We make a determination

"based on the undisputed facts whether either [party] deserve[s]

judgment as a matter of law."               Hartford Fire Ins. Co. v. CNA Ins.

Co. (Eur.) Ltd., 633 F.3d 50, 53 (1st Cir. 2011).                      To prevail, the

moving party must show "that there is no genuine dispute as to any

material fact," and that it "is entitled to judgment as a matter of

law."   Fed. R. Civ. P. 56(a).

B.            Withdrawal Liability Under the MPPAA

              The   MPPAA     was    enacted       by   Congress       to    protect      the

viability      of    defined       pension     benefit        plans,        to   create    a

disincentive for employers to withdraw from multiemployer plans,

and   also    to    provide    a    means    of    recouping     a     fund's     unfunded

liabilities.        Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467

U.S. 717, 720-22 (1984).             As such, the MPPAA requires employers

withdrawing from a multiemployer plan to pay their proportionate


                                            -16-
share of the pension fund's vested but unfunded benefits.         See 29

U.S.C. §§ 1381, 1391; Concrete Pipe & Prods. of Cal., Inc. v.

Constr. Laborers Pension Trust for S. Cal., 508 U.S. 602, 609

(1993); R.A. Gray, 467 U.S. at 725.      An employer withdraws when it

permanently ceases its obligation to contribute or permanently

ceases covered operations under the plan.      29 U.S.C. § 1383(a).

           The MPPAA provides: "For purposes of this subchapter,

under regulations prescribed by the [PBGC], all employees of trades

or businesses (whether or not incorporated) which are under common

control shall be treated as employed by a single employer and all

such trades and businesses as a single employer."            29 U.S.C.

§   1301(b)(1).   So,   "[t]o   impose   withdrawal   liability   on    an

organization other than the one obligated to the [pension] Fund,

two conditions must be satisfied: 1) the organization must be under

'common control' with the obligated organization, and 2) the

organization must be a trade or business."       McDougall v. Pioneer

Ranch Ltd. P'ship, 494 F.3d 571, 577 (7th Cir. 2007).        The Act's

broad definition of "employer" extends beyond the business entity

withdrawing from the pension fund, thus imposing liability on

related entities within the definition, which, in effect, pierces

the corporate veil and disregards formal business structures.          See

Cent. States, Se. & Sw. Areas Pension Fund v. Messina Prods., LLC,

706 F.3d 874, 877 (7th Cir. 2013) ("When an employer participates

in a multiemployer pension plan and then withdraws from the plan


                                 -17-
with unpaid liabilities, federal law can pierce corporate veils and

impose liability on owners and related businesses.").

                While Congress in § 1301(b)(1) authorizes the PBGC to

prescribe regulations, those regulations "shall be consistent and

coextensive with regulations prescribed for similar purposes by the

Secretary of the Treasury under [26 U.S.C. § 414(c)]" of the

Internal Revenue Code.11          29 U.S.C. § 1301(b)(1).          The PBGC has

adopted regulations pertaining to the meaning of "common control,"

see 29 C.F.R. §§ 4001.2, 4001.3(a), but has not adopted regulations

defining or explaining the meaning of "trades or businesses."12

                The phrase "trades or businesses" as used in § 1301(b)(1)

is not defined in Treasury regulations and has not been given a

definitive, uniform definition by the Supreme Court. See Comm'r of

Internal Revenue v. Groetzinger, 480 U.S. 23, 27 (1987) (observing

that despite the widespread use of the phrase in the Internal

Revenue Code, "the Code has never contained a definition of the

words        'trade   or   business'    for    general    application,   and   no

regulation        has   been   issued   expounding       its   meaning   for   all



        11
       In turn, § 414(c) is concerned with seven further sections
and sub-sections of the Code, which are themselves concerned with
qualified pension plans, profit-sharing plans, stock bonus plans,
and individual retirement accounts. See 26 U.S.C. § 414(c); see
also id. §§ 401, 408(k), 408(p), 410, 411, 415, 416.
        12
       29 C.F.R. § 4001.3(a) references regulations issued by the
Treasury under § 414(c) of the Code, but the Treasury regulations
cross-referenced do not define "trades or businesses" either. See,
e.g., 26 C.F.R. § 1.414(c)-2.

                                        -18-
purposes").   The Supreme Court has warned that when it interprets

the phrase, it "do[es] not purport to construe the phrase where it

appears in other places," except those sections where it has

previously interpreted the term.   Id. at 27 n.8.   The Court has not

provided an interpretation of the phrase as used in § 1301(b)(1).

C.        Failing to Have Promulgated Regulations, the PBGC
          Nonetheless Offers Guidance on the Meaning of "Trades or
          Businesses"

          The only guidance we have from the PBGC is a 2007 appeals

letter, defended in its amicus brief.

          In a September 2007 response to an appeal,13 the PBGC, in

a letter, applied a two-prong test it purported to derive from

Commissioner of Internal Revenue v. Groetzinger, 480 U.S. 23, to

determine if the private equity fund was a "trade or business" for

purposes of the first part of the § 1301(b)(1) requirement.      The

PBGC asked (1) whether the private equity fund was engaged in an

activity with the primary purpose of income or profit and (2)

whether it conducted that activity with continuity and regularity.

See id. at 35 ("We accept . . . that to be engaged in a trade or

business, the taxpayer must be involved in the activity with



     13
        The PBGC's Appeals Board renders final agency decisions on
various liability and benefit determinations in writing pursuant to
29 C.F.R. § 4003.59. According to the PBGC's website, only three-
member decisions are made available on its website.        The 2007
letter was a one-member decision and was apparently not published,
or at least not made widely publicly available through its website.
See Pension Benefit Guaranty Corporation, Appeals Board Decisions,
http://www.pbgc.gov/prac/appeals-board-decisions.html.

                               -19-
continuity and regularity and that the taxpayer's primary purpose

for engaging in the activity must be for income or profit.").

           The PBGC found that the private equity fund involved in

that matter met the profit motive requirement.   It also determined

that the size of the fund, the size of its profits, and the

management fees paid to the general partner established continuity

and regularity.    The PBGC also observed that the fund's agent

provided management and advisory services, and received fees for

those services.   Indeed, the Appeals Board noted that the equity

fund's agent, "N," received 20% of all net profits received in

exchange for its services and that its acts were attributable to

the fund as the fund's agent.14 In addition, the fund's controlling

stake in the portfolio company put it in a position to exercise

control through its general partner, consistent with its stated

purpose.    The approach taken by the PBGC has been dubbed an

"investment plus" standard.   See Bd. of Trs., Sheet Metal Workers'

Nat'l Pension Fund v. Palladium Equity Partners, LLC, 722 F. Supp.

2d 854, 869 (E.D. Mich. 2010).

           The PBGC does not assert that its 2007 letter is entitled

to deference under Chevron, U.S.A., Inc. v. Natural Resources

Defense Council, 467 U.S. 837 (1984).      It does, however, claim

entitlement to deference under Auer v. Robbins, 519 U.S. 452


     14
       The letter did not mention whether the equity fund received
any offsets to the fees paid to "N" for fees "N" may have received
from the portfolio company, i.e., the withdrawing employer.

                                 -20-
(1997).     We disagree.   The PBGC's letter stating its position is

owed no more than Skidmore deference. See Skidmore v. Swift & Co.,

323 U.S. 134, 140 (1944).

             The letter was not the result of public notice and

comment, and merely involved an informal adjudication resolving a

dispute between a pension fund and the equity fund.          Thus far, the

letter has received no more deference than the power to persuade.

See Sun Capital, 903 F. Supp. 2d at 115; Palladium, 772 F. Supp. 2d

at 869.     And rightly so.     "[I]nterpretations contained in formats

such as opinion letters are 'entitled to respect' . . . only to the

extent that those interpretations have the 'power to persuade.'"

Christensen v. Harris Cnty., 529 U.S. 576, 587 (2000) (quoting

Skidmore, 323 U.S. at 140).

             The PBGC contends that, because it is interpreting a

phrase    that   appears   in   its   own    regulations,   see   29   C.F.R.

§§ 4001.2, 4001.3, its interpretation is owed deference under Auer.

Which is to say that the court must defer to that interpretation

unless it is plainly erroneous or inconsistent with its own

regulations.     Auer, 519 U.S. at 461.

             The letter is not owed Auer deference in this case

because such deference is inappropriate where significant monetary

liability would be imposed on a party for conduct that took place

at a time when that party lacked fair notice of the interpretation

at issue.    See Christopher v. SmithKline Beecham Corp., 132 S. Ct.


                                      -21-
2156, 2167 (2012).             Christopher stressed that the agency in that

case had taken decades before acting, during which time the

industry practice at issue developed and continued.15                   Id. at 2168

("But        where,       as   here,     an    agency's    announcement    of   its

interpretation is preceded by a very lengthy period of conspicuous

inaction, the potential for unfair surprise is acute.").                   In this

case,        the    Sun   Funds   made    their      investment   and   operational

arrangements in early 2007, while the PBGC did not issue its

appeals letter until September 2007.

                   Moreover, even if Christopher was not an impediment to

Auer deference, the anti-parroting principle would be. Gonzales v.

Oregon, 546 U.S. 243, 257 (2006) ("Simply put, the existence of a

parroting regulation does not change the fact that the question

here is not the meaning of the regulation but the meaning of the

statute. An agency does not acquire special authority to interpret

its own words when, instead of using its expertise and experience

to formulate a regulation, it has elected merely to paraphrase the

statutory language.").             The PBGC regulations make no effort to


        15
        So too, here.     Private equity funds date back to the
nineteenth century, and have grown exponentially since around 1980.
N. Jordan et al., Advising Private Funds: A Comprehensive Guide to
Representing Hedge Funds, Private Equity Funds, and Their Advisers
§ 16:2 (2012) (observing that investor commitments were $10 billion
in 1991, $160 billion in 2000, and $680 billion in 2008). And,
before the PBGC's appeals letter, many fund managers did not think
they were exposed to withdrawal liability for portfolio companies.
Id. § 18:5 (explaining also that "the principles set out by the
PBGC are likely to apply across a wide spectrum of private equity
firms").

                                              -22-
define "trades or businesses," 29 C.F.R. § 4001.3(a), and merely

refer to Treasury regulations, which, as mentioned, also do not

define the phrase.

             Nonetheless, the views the PBGC expressed in the letter

are entitled to Skidmore deference.         See Skidmore, 323 U.S. at 140

(observing     that   the   "weight"   of    an   agency's    determination

"depend[s]     upon   the   thoroughness    evident   in     [the   agency's]

consideration, the validity of its reasoning, its consistency with

earlier and later pronouncements, and all those factors which give

it power to persuade").

D.           Sun   Fund  IV   is   a   "Trade  or   Business"   Under
             § 1301(b)(1), the PBGC's "Investment Plus" Approach is
             Persuasive, and the Same Approach Would Be Employed Even
             Without Deference

             The Sun Funds argue that the "investment plus" test is

incompatible with Supreme Court tax precedent.             Regardless, they

argue, the Sun Funds cannot be held responsible for the activities

of other entities in the management and operation of SBI. And even

if the Sun Funds had engaged in those activities, they argue, that

would not be enough.

             Where the MPPAA issue is one of whether there is mere

passive investment to defeat pension withdrawal liability, we are

persuaded that some form of an "investment plus" approach is

appropriate when evaluating the "trade or business" prong of

§ 1301(b)(1), depending on what the "plus" is. Further, even if we

were to ignore the PBGC's interpretation, we, like the Seventh

                                   -23-
Circuit, would reach the same result through independent analysis.

In Central States, Southeast & Southwest Areas Pension Fund v.

Messina Products, LLC, 706 F.3d 874, the Seventh Circuit employed

an "investment plus"-like analysis without reference to any PBGC

interpretation.       We agree with that approach.            We see no need to

set forth general guidelines for what the "plus" is, nor has the

PBGC provided guidance on this.           We go no further than to say that

on the undisputed facts of this case, Sun Fund IV is a "trade or

business" for purposes of § 1301(b)(1).16

             In a very fact-specific approach, we take account of a

number of factors, cautioning that none is dispositive in and of

itself. The Sun Funds make investments in portfolio companies with

the principal purpose of making a profit.              Profits are made from

the sale of stock at higher prices than the purchase price and

through dividends.         But a mere investment made to make a profit,

without more, does not itself make an investor a trade or business.

See Cent. States, Se. & Sw. Areas Pension Fund v. Fulkerson, 238

F.3d 891, 895-96 (7th Cir. 2001); Palladium, 722 F. Supp. 2d at

868.

             Here,    however,    the    Sun   Funds   have    also   undertaken

activities    as     to   the   SBI   property.    The   Sun    Funds'   limited

partnership agreements and private placement memos explain that the



       16
       We do not decide if Sun Fund III is a "trade or business"
for reasons discussed later.

                                        -24-
Funds are actively involved in the management and operation of the

companies in which they invest.           Pioneer Ranch, 494 F.3d at 577-78

(observing     that   an    entity's     own    statements    about    its   goals,

purposes, and intentions are "highly relevant, because [they]

constitute . . . declaration[s] against interest." (quoting Connors

v. Incoal, Inc., 955 F.2d 245, 254 (D.C. Cir. 1993)) (internal

quotation mark omitted)).              Each Sun Fund agreement states, for

instance, that a "principal purpose" of the partnership is the

"manag[ement]     and      supervisi[on]"        of   its   investments.        The

agreements also give the general partner of each Sun Fund exclusive

and wide-ranging management authority.

             In addition, the general partners are empowered through

their own partnership agreements to make decisions about hiring,

terminating, and compensating agents and employees of the Sun Funds

and their portfolio companies.                The general partners receive a

percentage of total commitments to the Sun Funds and a percentage

of profits as compensation -- just like the general partner of the

equity fund in the PBGC appeals letter.

             It is the purpose of the Sun Funds to seek out potential

portfolio companies that are in need of extensive intervention with

respect   to   their    management       and    operations,   to   provide     such

intervention,     and      then   to   sell     the   companies.      The    private




                                         -25-
placement memos explain that "[t]he Principals[17] typically work

to reduce costs, improve margins, accelerate sales growth through

new   products         and    market   opportunities,          implement    or   modify

management information systems and improve reporting and control

functions."            More    specifically,         those   memos   represent    that

restructuring and operating plans are developed for a target

portfolio company even before it is acquired and a management team

is    built       specifically         for     the     purchased     company,      with

"[s]ignificant changes . . . typically made to portfolio companies

in the first three to six months."                   The strategic plan developed

initially is "consistently monitored and modified as necessary."

Involvement can encompass even small details, including signing of

all checks for its new portfolio companies and the holding of

frequent        meetings      with   senior     staff     to    discuss    operations,

competition, new products and personnel.

                Such actions are taken with the ultimate goal of selling

the portfolio company for a profit.                  On this point, the placement

memos        explain   that    after    implementing         "significant   operating

improvements . . . during the first two years[,] . . . the

Principals expect to exit investments in two to five years (or

sooner under appropriate circumstances)."




        17
       "Principals" are defined in the private placement memos as
individuals who work for the general partner of the Fund.

                                             -26-
            Further, the Sun Funds' controlling stake in SBI placed

them and their affiliated entities in a position where they were

intimately involved in the management and operation of the company.

See Harrell v. Eller Maritime Co., No. 8:09-CV-1400-T-27AEP, 2010

WL 3835150, at *4 (M.D. Fla. Sept. 30, 2010) (the involvement in

decisionmaking at management level goes "well beyond that of a

passive shareholder" and supports a conclusion that an organization

is a "trade or business").    Through a series of appointments, the

Sun Funds were able to place SCAI employees in two of the three

director positions at SBI, resulting in SCAI employees controlling

the SBI board.18

            Through a series of service agreements described earlier,

SCAI provided personnel to SBI for management and consulting

services.     Thereafter,   individuals   from   those   entities   were

immersed in details involving the management and operation of SBI,

as discussed.

            Moreover, the Sun Funds' active involvement in management

under the agreements provided a direct economic benefit to at least

Sun Fund IV that an ordinary, passive investor would not derive: an

offset against the management fees it otherwise would have paid its




     18
       The Vice President of SSB-LLC, formed by the Sun Funds,
selected the board of SBHC. Two of those three board members were
employees of SCAI.    On February 9, 2007, those same two SCAI
employees were named directors of SBI, along with the CEO, Barry
Golden, who had been retained after the purchase.

                                 -27-
general partner for managing the investment in SBI.19              Here, SBI

made payments of more than $186,368.44 to Sun Fund IV's general

partner, which were offset against the fees Sun Fund IV had to pay

to its general partner.20       This offset was not from an ordinary

investment activity, which in the Sun Funds' words "results solely

in investment returns."      See also United States v. Clark, 358 F.2d

892, 895 (1st Cir. 1966) (holding that taxpayer not engaged in a

"trade or business" in part because no evidence he received

compensation "different from that flowing to an investor").

             In our view, the sum of all of these factors satisfy the

"plus" in the "investment plus" test.          The conclusion we reach is

consistent with the conclusions of other appellate court decisions,

though none has addressed this precise question. In Messina, where

the Seventh Circuit employed an "investment plus"-like analysis on

its   own,   the   pension   fund   was    seeking   to   impose   withdrawal

liability on a limited liability company (LLC) that owned rental




      19
       Specifically, the general partner of each private equity
fund is entitled to an annual fee of 2% of the aggregate
commitments to the fund, but fees the general partner and/or its
wholly-owned subsidiary or their officers, partners, or employees
receive from other sources are offset against the management fees
owed by the Sun Funds to the general partner.
      20
       We do not determine if Sun Fund III is a "trade or business"
because we cannot tell from the record before us if the Fund
received an economic benefit from the offset. Therefore, we leave
that factual issue and the ultimate "trade or business" conclusion
about Sun Fund III for the district court to resolve on remand.

                                    -28-
property.21    706 F.3d at 877.    The Seventh Circuit rejected the

LLC's argument that it was a passive investment vehicle.           Id. at

885-86.

            The Seventh Circuit looked to the stated intent in the

creation of the enterprise, as well as to the enterprise's legal

form and how it was treated for tax purposes.22       Id. at 885.       The

company's     operating   agreement,   which   explained    that   it   had

developed a business plan to produce, sell, and market gravel, was

highly relevant to the court's trade or business inquiry.23         Id. at

886 (stating that "[i]t was entirely appropriate for the district

court to take these documents at face value").             The court also

found it relevant that the activity was conducted "under the

auspices of a formal, for-profit organization," id., as are the Sun

Funds.


     21
       The LLC was owned by a couple who also owned the withdrawing
employer (a trucking company), establishing common control. See
Cent. States, Se. & Sw. Areas Pension Fund v. Messina Prods., LLC,
706 F.3d 874, 877 (7th Cir. 2013). The pension fund also sought to
impose liability on the couple for owning and renting a separate
property to the withdrawing employer. Id. at 879-80.
     22
        Admittedly, here, the Sun Funds did not list trade or
business income on their Form 1065, which cuts in favor of the Sun
Funds' argument.
     23
        As to the couple, the court looked to actions of the
couple's agents to impose withdrawal liability on the couple.
Messina, 706 F.3d at 884.    However, to the extent the Seventh
Circuit imposed liability because the purpose of the couple's
separate rental business was to fractionalize assets of the
withdrawing employer, see id. at 883, we do not adopt a rule that
in order to impose withdrawal liability the purpose of having a
separate "trade or business" must be to fractionalize assets.

                                  -29-
            Likewise,    in   an    earlier     case,     the   Seventh   Circuit

rejected an argument that a limited liability company that owned

rental property was merely a "personal investment."24 Cent. States,

Se. & Sw. Areas Pension Fund v. SCOFBP, LLC, 668 F.3d 873, 879 (7th

Cir. 2011). It noted that the company was a for-profit LLC, earned

rental income, paid business management fees, and contracted with

professionals    to     provide     legal,      management,     and   accounting

services.     Id.       Hence,     the    company   was    "a   formal    business

organization, engaged in regular and continuous activity for the

purpose of generating income or profit and thus is . . . a 'trade

or business' for purposes of the MPPAA."             Id.

            The Sun Funds, however, argue that they cannot be "trades

or businesses" because that would be inconsistent with two Supreme

Court decisions -- Higgins v. Commissioner of Internal Revenue, 312

U.S. 212 (1941), and Whipple v. Commissioner of Internal Revenue,

373 U.S. 193 (1963) -- which interpret that phrase.                The Sun Funds



     24
       The court defined "personal investments" as:
     [T]hings like holding shares of stock or bonds in
     publicly traded corporations. Ownership of this type of
     property "without more is the hallmark of an investment."
     Owning property can be considered a personal investment,
     at least where the owner spends a negligible amount of
     time managing the leases, although a more substantial
     investment of time may be considered regular and
     continuous enough to rise to the level of a "trade or
     business."
Cent. States, Se. & Sw. Areas Pension Fund v. SCOFBP, LLC, 668 F.3d
873, 878-79 (7th Cir. 2011) (citations omitted) (quoting Cent.
States, Se. & Sw. Areas Pension Fund v. Fulkerson, 238 F.3d 891,
895 (7th Cir. 2001)).

                                         -30-
argue that cases interpreting the phrase "trade or business" as

used anywhere in the Internal Revenue Code are binding because

Congress intended for that phrase to be a term of art with a

consistent meaning across uses.          Also, the Sun Funds essentially

argue that, by relying on Groetzinger, which stated that it was not

cutting back on Higgins, the PBGC's "investment plus" test must be

interpreted in a way consistent with Higgins and its progeny.

Under Higgins, the Funds contend, they cannot be "trades or

businesses."

           As to the first argument, we reject the proposition that,

apart   from   the   provisions    covered      by   26   U.S.C.    §   414(c),

interpretations of other provisions of the Internal Revenue Code

are determinative of the issue of whether an entity is a "trade or

business" under § 1301(b)(1).       Accord United Steelworkers of Am.,

AFL-CIO & Its Local 4805 v. Harris & Sons Steel Co., 706 F.2d 1289,

1299 (3d Cir. 1983) (explaining that a term used for tax purposes

does not have to have the same meaning for purposes of pension fund

plan termination insurance). We are particularly convinced this is

the case because the Supreme Court has been hesitant to express a

uniform definition even within the Code itself.             See Groetzinger,

480 U.S. at 27 n.8; see also Carpenters Pension Trust Fund for N.

Cal. v. Lundquist, 491 F. App'x 830, 831 (9th Cir. 2012) (rejecting

argument   that   Groetzinger     test   must   be   used   in     interpreting

§ 1301(b)(1)); Bd. of Trs. of the W. Conference of Teamsters


                                    -31-
Pension Trust Fund v. Lafrenz, 837 F.2d 892 (9th Cir. 1988)

(deciding       §    1301(b)(1)    case    without    discussing    Groetzinger).

Moreover, § 1301(b)(1)'s statement that it must be construed

consistently with only certain uses of the phrase in the Code

undercuts       the    Sun   Funds'    assertion     that   the   phrase   must   be

uniformly interpreted.

             As to the second argument, we see no inconsistency with

Higgins or Whipple.            Those cases were concerned with different

issues and did not purport to provide per se rules, much less rules

determinative of withdrawal liability under the MPPAA. The premise

of the Sun Funds' argument is that Higgins and Whipple mean that

entities that make investments, manage those investments, and earn

only investment returns cannot be "trades or businesses" for any

purpose.        That argument is too blunt an instrument.             In Higgins,

the issue was whether certain claimed expenses were eligible for

the deduction the taxpayer sought. The taxpayer, who had extensive

investments in real estate, bonds, and stocks, spent a considerable

amount     of       effort   and   time    administratively       overseeing      his

interests.          312 U.S. at 213.      The taxpayer hired others to assist

him and also rented offices to oversee his investments.                    Id.     He

claimed those expenses were deductible under Section 23(a) of the

Revenue Act of 1932 as ordinary and necessary expenses paid or

incurred in carrying on a "trade or business."               Id. at 213-14.       The

Supreme Court held that those expenses were not incurred while


                                          -32-
carrying   on    a   "trade   or    business"   and   were   therefore   not

deductible.     Id. at 217-18.

           The Supreme Court reasoned that this was true because

"[t]he petitioner merely kept records and collected interest and

dividends from his securities, through managerial attention for his

investments."    Id. at 218.       The Court held that, no matter the size

of the estate or the continuous nature of the work required to keep

a watchful eye on investments, that by itself could not constitute

a "trade or business."        Id.    Significantly, the Court noted that

the taxpayer "did not participate directly or indirectly in the

management of the corporations in which he held stock or bonds."

Id. at 214.

           The facts of this case are easily distinguishable from

those of Higgins.       See id. at 217 ("To determine whether the

activities of a taxpayer are 'carrying on a business' requires an

examination of the facts in each case.").          First, the taxpayer in

Higgins was trying to claim a deduction to avoid paying taxes.

Second and more important, unlike the investor in Higgins, the Sun

Funds did participate in the management of SBI, albeit through

affiliated entities.25




     25
       Higgins stated that the size of the portfolio and the amount
of time making investment decisions and taking care of
administrative matters does not transform an investor into a "trade
or business"; we do not rely on those factors in our analysis.

                                      -33-
             Whipple    is also distinguishable: The taxpayer there

sought to deduct a worthless loan made to a business he controlled

as a bad business debt incurred in the taxpayer's "trade or

business." 373 U.S. at 194-97. The taxpayer claimed that, because

he furnished regular services, namely his time and energy to the

affairs   of   the     corporation,    he     was   engaged   in   a   "trade   or

business."      Id.    at   201-02.     The    Supreme   Court     rejected     the

argument, stating:

             Devoting one's time and energies to the
             affairs of a corporation is not of itself, and
             without more, a trade or business of the
             person so engaged. Though such activities may
             produce income, profit or gain in the form of
             dividends or enhancement in the value of an
             investment, this return is distinctive to the
             process of investing and is generated by the
             successful operation of the corporation's
             business as distinguished from the trade or
             business of the taxpayer himself.     When the
             only return is that of an investor, the
             taxpayer has not satisfied his burden of
             demonstrating that he is engaged in a trade or
             business since investing is not a trade or
             business and the return to the taxpayer,
             though substantially the product of his
             services, legally arises not from his own
             trade or business but from that of the
             corporation.

Id. at 202 (emphasis added).          The Sun Funds say that, because they

earned no income other than dividends and capital gains, they are

not "trades or businesses."            But the Sun Funds did not simply

devote time and energy to SBI, "without more."                Rather, they were

able to funnel management and consulting fees to Sun Fund IV's

general partner and its subsidiary.            Most significantly, Sun Fund

                                       -34-
IV received a direct economic benefit in the form of offsets

against the fees it would otherwise have paid its general partner.

It is difficult to see why the Whipple "without more" formulation

is inconsistent with an MPPAA "investment plus" test.

                The "investment plus" test as we have construed it in

this opinion is thus consistent with the Groetzinger, Higgins, and

Whipple line of cases.26       Cf. SCOFBP, 668 F.3d at 878 ("[I]t seems

highly unlikely that a formal for-profit business organization

would not qualify as a 'trade or business' under the Groetzinger

test.");       Rosenthal,   Taxing   Private   Equity   Funds   as   Corporate

'Developers', at 365 ("[P]rivate equity funds are active enough to

be in a trade or business.").

                The Sun Funds make an additional argument: that because

none of the relevant activities by agents and different business

entities can be attributed to the Sun Funds themselves, withdrawal

liability cannot be imposed upon them.          We reject this argument as

well.        Without resolving the issue of the extent to which Congress



        26
       Very late in this case the TPF, for the first time, argued
that a series of tax cases from the tax court supported its view
that the Sun Funds are "trades or businesses" because they are
engaged in the development, promotion, and sale of companies. The
TPF cites Deely v. Commissioner of Internal Revenue, 73 T.C. 1081
(1980), Farrar v. Commissioner of Internal Revenue, 55 T.C.M. (CCH)
1628 (1988), and Dagres v. Commissioner of Internal Revenue, 136
T.C. 263 (2011).     The argument was presented too late.       The
"developing business enterprises for resale" theory was not
presented to the district court nor in the opening briefs to us.
Whatever the merit of the theory, our decision does not engage in
an analysis of it.

                                      -35-
intended in this area to honor corporate formalities, as have the

parties, we look to the Restatement of Agency.                 Cf. Vance v. Ball

State Univ., 133 S. Ct. 2434, 2441 (2013) (looking to Restatement

of   Agency    to        decide     when     Title   VII   vicarious     liability

appropriate).        And, because the Sun Funds are Delaware limited

partnerships, we also look to Delaware law.

            Under Delaware law, a partner "is an agent of the

partnership        for    the     purpose     of   its   business,   purposes   or

activities," and an act of a partner "for apparently carrying on in

the ordinary course of the partnership's business, purposes or

activities or business, purposes or activities of the kind carried

on by the partnership binds the partnership."                Del. Code Ann. tit.

6, § 15-301(1); see also Comm'r of Internal Revenue v. Boeing, 106

F.2d 305, 309 (9th Cir. 1939) ("One may conduct a business through

others, his agents, representatives, or employees."). To determine

what is "carrying on in the ordinary course" of the partnership's

business,     we    may    consider     the    partnership's    stated    purpose.

Rudnitsky v. Rudnitsky, No. 17446, 2010 WL 1724234, at *6 (Del. Ch.

Nov. 14, 2000).

            Here, the limited partnership agreements gave the Sun

Funds' general partners the exclusive authority to act on behalf of

the limited partnerships to effectuate their purposes.27                     These


     27
        The Sun Funds try to divert our attention from the Sun
Funds' limited partnership agreements and instead focus on the
purposes of the general partners as provided in their partnership

                                            -36-
purposes included managing and supervising investments in portfolio

companies, as well as "other such activity incidental or ancillary

thereto" as deemed advisable by the general partner.                 So, under

Delaware law, it is clear that the general partner of Sun Fund IV,

in providing management services to SBI, was acting as an agent of

the Fund.

            Moreover, even absent Delaware partnership law, the

partnership agreements themselves grant actual authority for the

general    partner   to   provide    management      services   to   portfolio

companies like SBI.          See Restatement (Third) of Agency §§ 2.01,

3.01; cf. id. § 7.04 (principal incurs tort liability vicariously

where agent acts with actual authority). And the general partners'

own partnership agreements giving power to the limited partner

committee to make determinations about hiring, terminating, and

compensating agents and employees of the Sun Funds and their

portfolio companies show the existence of such authority.               Hence,

the general partner was acting within the scope of its authority.

            Even so, the Sun Funds argue that the general partner

entered the management service contract with SBI on its own accord,

not   as   an   agent   of    the   Sun   Funds.28     The   Sun   Funds'   own


agreements.   But it is the principal's purposes, i.e., the Sun
Funds' purposes, that are relevant.
      28
        The Sun Funds' citation of the Restatement (Third) of
Agency's comment that "[a]n agent may enter into a contract on
behalf of a disclosed principal and, additionally, enter into a
separate contract on the agent's own behalf with the same third

                                      -37-
characterization is not dispositive.29   Cf. Restatement (Third) of

Agency § 1.02 cmt. a (stating "how the parties to any given

relationship label it is not dispositive").

          The argument is unpersuasive for at least two reasons.

First, it was within the general partner's scope of authority to

provide management services to SBI.   Second, providing management

services was done on behalf of and for the benefit of the Sun

Funds.    Cf. Messina, 706 F.3d at 884 (individuals acting for

benefit of married couple are agents whose acts are attributable to

the couple).   The investment strategy of the Sun Funds could only

be achieved by active management through an agent, since the Sun

Funds themselves had no employees. Indeed, the management services

agreement was entered into just one day after the execution of the

stock purchase agreement.   In addition, Sun Fund IV received an

offset in the fees it owed to its general partner because of

payments made from SBI to that general partner.    That provided a


party," is unpersuasive. Restatement (Third) of Agency § 6.01 cmt.
b. In that comment, the Restatement is explaining that an agent
may enter into a contract that binds the agent and not the
principal even where there is a separate contract which the agent
entered into on behalf of the principal. That is not the case here
where there is just one contract to provide management services to
SBI. Additionally, in the illustration that follows, the agent
permissibly enters into a second contract with the same third party
in an area outside the scope of his agency. Again, that is not the
case here where it was within the scope of authority for the
general partner of Sun Fund IV to manage the investment in SBI.
     29
       Likewise, the fact that the general partner did not sign the
management services agreement with SBI explicitly on behalf of Sun
Fund III or Sun Fund IV is not determinative.

                               -38-
benefit by reducing its expenses.              The services paid for by SBI

were the same services that the Sun Funds would otherwise have paid

for themselves to implement and oversee an operating strategy at

SBI.30

            The Sun Funds also make a policy argument that Congress

never intended such a result in its § 1301(b)(1) control group

provision.      They argue that the purpose of the provision is to

prevent   an    employer   "from   circumventing      ERISA   obligations   by

divvying up its business operations into separate entities." It is

not, they say, intended to reach owners of a business so as to

require them to "dig into their own pockets" to pay withdrawal

liability for a company they own.             See Messina, 706 F.3d at 878.

            These are fine lines.             The various arrangements and

entities meant precisely to shield the Sun Funds from liability may

be viewed as an attempt to divvy up operations to avoid ERISA

obligations.        We recognize that Congress may wish to encourage

investment in distressed companies by curtailing the risk to

investors      in   such   employers     of    acquiring   ERISA   withdrawal

liability.      If so, Congress has not been explicit, and it may


     30
       Contrary to the Sun Funds' argument, attributing activities
of an agent to a principal to determine if the principal is engaged
in a "trade or business" does not result in the principal assuming
the status of the agent. That is too simplistic of a way to view
the inquiry. Instead, "the court must attribute the activities of
an agent that is acting on behalf of a principal to the principal,
to determine whether there are sufficient activities of the
principal to constitute a trade or business." Rosenthal, Taxing
Private Equity Funds as Corporate 'Developers', at 365 n.43.

                                       -39-
prefer instead to rely on the usual pricing mechanism in the

private market for assumption of risk.

          We express our dismay that the PBGC has not given more

and earlier guidance on this "trade or business" "investment plus"

theory to the many parties affected.    The PBGC has not engaged in

notice and comment rulemaking or even issued guidance of any kind

which was subject to prior public notice and comment.       See C.

Sunstein, Simpler 216 (2013) ("[G]overnment officials learn from

public comments on proposed rules. . . . It is not merely sensible

to provide people with an opportunity to comment on rules before

they are finalized; it is indispensable, a crucial safeguard

against error.").   Moreover, its appeals letter that provides for

the "investment plus" test leaves open many questions about exactly

where the line should be drawn between a mere passive investor and

one engaged in a "trade or business."

          Because to be an "employer" under § 1301(b)(1) the entity

must both be a "trade or business" and be under common control, we

reverse entry of summary judgment on the § 1301(b)(1) claim in

favor of Sun Fund IV and vacate the judgment in favor of Sun Fund

III. We remand the § 1301(b)(1) claim of liability to the district

court to resolve whether Sun Fund III received any benefit from an

offset from fees paid by SBI and for the district court to decide

the issue of common control.   We determine only that the "trade or

business" requirement has been satisfied as to Sun Fund IV.


                                -40-
                                   III.

            We deny, for different reasons than the district court,

the TPF's appeal from entry of summary judgment against its claim

under 29 U.S.C. § 1392(c).         That provision of the MPPAA states

"[i]f a principal purpose of any transaction is to evade or avoid

liability   under   this   part,   this   part   shall   be   applied   (and

liability shall be determined and collected) without regard to such

transaction."    29 U.S.C. § 1392(c) (emphasis added).

            The TPF argues that § 1392(c) applies because the Sun

Funds, during the acquisition, purposefully divided ownership of

SSB-LLC into 70%/30% shares in order to avoid the 80% parent-

subsidiary common control requirement of § 1301(b)(1).                  Under

Treasury regulations, to be in a parent-subsidiary group under

common control, the parent must have an 80% interest in the

subsidiary.     26 C.F.R. § 1.414(c)-2(b)(2)(i).         The TPF asserts

that, because a Sun Fund representative testified that a principal

purpose of the 70%/30% division was to avoid unfunded pension

liability and because an email states that a reason ownership was

divided was "due to [the] unfunded pension liability," liability

can be imposed on the Sun Funds under § 1392(c).31


     31
        The claim raises a number of issues that we need not
address. We do not decide whether an agreement between Sun Fund
III and Sun Fund IV can be considered a "transaction." Nor do we
decide whether, as the district court found, § 1392(c) can serve as
an independent basis for liability even if none were to exist under
§ 1301(b)(1) (that is, that the Sun Funds need not first be "trades
or businesses").    We also need not resolve whether an outside

                                   -41-
            We hold that § 1392(c) cannot serve as a basis to impose

liability    on   the   Sun    Funds     because,   by   applying   the   remedy

specified by the statute, the TPF would still not be entitled to

any payments from the Sun Funds for withdrawal liability. We begin

(and ultimately end) our analysis by reviewing the plain language

of § 1392(c).     See United States v. Kelly, 661 F.3d 682, 687 (1st

Cir. 2011) ("We begin our analysis by reviewing the plain language

of the [statute].").

            The language of § 1392(c) instructs courts to apply

withdrawal   liability        "without    regard"   to   any   transaction   the

principal purpose of which is to evade or avoid such liability. 29

U.S.C. § 1392(c).        The instruction requires courts to put the

parties in the same situation as if the offending transaction never

occurred; that is, to erase that transaction.                  It does not, by

contrast, instruct or permit a court to take the affirmative step

of writing in new terms to a transaction or to create a transaction

that never existed.      In order for the TPF to succeed, we would have

to (improperly) do the latter because simply doing the former would

not give the TPF any relief, but would only sever any ties between

the Sun Funds and SBI.

            Disregarding the agreement to divide SSB-LLC 70%/30%

would not result in Sun Fund IV being the 100% owner of SBI.                 At


investor who structures an investment in a manner to avoid assuming
unfunded pension liabilities can ever be held to be evading or
avoiding withdrawal liability.

                                         -42-
the moment SSB-LLC was divided 70%/30%, the transaction to purchase

SBI had not been completed.     There is no way of knowing that the

acquisition would have happened anyway if Sun Fund IV were to be a

100% owner, but it is doubtful. SSB-LLC was formed on December 15,

2006, at which point the 70%/30% division became official. SBI did

not enter into a stock purchase agreement to be acquired until

February 8, 2007.   In essence, the TPF requests that we create a

transaction that never occurred -- a purchase by Sun Fund IV of a

100% stake in SBI.     But as stated, that we cannot do.         Cf.

Teamsters Pension Trust Fund of Phila. & Vicinity v. Cent. Mich.

Trucking, Inc., 857 F.2d 1107, 1109 (6th Cir. 1988) ("There is no

congressional mandate to engage in legal gymnastics in order to

guarantee pension plans at all costs[,] . . . or to apply the

statute in a nonsensical fashion in order to assure full payment of

withdrawal liability.").   Moreover, the TPF does not provide a

single case in which a court created a fictitious transaction in

order to impose § 1392(c) liability.

          The TPF argues that because Sun Fund IV had already

signed a letter of intent to purchase 100% of SBI before the

decision was made to divide ownership between the Sun Funds, we can

rely on the letter of intent.   The TPF claims that the decision to

split ownership to avoid the automatic assumption of withdrawal

liability at 80% ownership was made after a binding transaction was

entered into through the letter of intent.   That is not true.   The


                                 -43-
letter of intent was so named because it was not a binding contract

or any sort of purchase agreement.       Rather, the letter explicitly

contained a clause stating that:

            The first five captioned paragraphs of this
            letter ('Purchase Price', 'Purchase Agreement
            Terms', 'Financing', 'Timing & Process', and
            'Due Diligence') represent only the intent of
            the parties, do not constitute a contract or
            agreement, are not binding, and shall not be
            enforceable against the Sellers, the Company,
            or Sun Capital. . . . [N]either party shall
            have any legally binding obligation to the
            other unless and until a definitive purchase
            agreement is executed.

This is simply not a case about an entity with a controlling stake

of 80% or more under the MPPAA seeking to shed its controlling

status to avoid withdrawal liability.        As such, disregarding the

agreement to divide ownership of SSB-LLC would not leave us with

Sun Fund IV holding a controlling 80% stake in SBI.

            The Sun Funds are not subject to liability pursuant to

§ 1392(c) and the district court's conclusion that they are not is

affirmed.

                                   IV.

            Accordingly,   the   district   court's   grant   of   summary

judgment is reversed in part, vacated in part, and affirmed in

part.   The case is remanded to the district court for further

proceedings, including those needed to determine the "trade or

business" issue as to Sun Fund III, and the issue of common

control.    So ordered.    No costs are awarded.


                                  -44-
