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MORUZZI v. DYNAMICS CORP. OF AMERICA

December 30, 1977

John MORUZZI, et al., Plaintiffs,
v.
DYNAMICS CORPORATION OF AMERICA, and its subsidiaries, Defendants



The opinion of the court was delivered by: BRODERICK

MEMORANDUM ORDER

 VINCENT L. BRODERICK, U.S.D.J.

 Plaintiffs seek to compel arbitration concerning certain grievances regarding the defendant's handling of a pension fund created pursuant to a collective bargaining agreement. The case is currently before me on defendant's motion to dismiss and cross-motions for summary judgment. For the reasons hereinafter stated, I find that the plaintiffs lack standing to compel arbitration, and defendant's motion to dismiss is granted.

 Certain plaintiffs are former employees of a Long Island City, New York plant of defendant's Reeves Instrument Division (hereinafter "Reeves"), suing individually and as the "Reeves Pension Committee." Another plaintiff is "Local 478, International Union of Electrical, Radio, Machine Workers AFL-CIO, by Mike Capuano its President" (hereinafter "Capuano").

 A. Facts

 On or about December 12, 1969, defendant Dynamics Corporation of America ("Dynamics") announced in a letter to the employees of Reeves in Garden City that it would cease operations in that plant in approximately 13 months.

 From November 3, 1967 through November 2, 1970, there was in effect a collective bargaining agreement between Reeves and "the International Union of Electrical, Radio and Machine Workers, AFL-CIO-CLC ("the Union") for and on behalf of and in conjunction with Local 478, International Union of Electrical, Radio and Machine Workers, AFL-CIO-CLC, its successors and assigns." Part of the agreement was the continued existence of a pension plan, which had been most recently amended in 1964.

 Subsequent to the letter announcing the closing of the plant, Local 478 negotiated with Reeves concerning the termination of the Pension Plan. At a July 6, 1970 meeting, Reeves allegedly indicated that it would undertake to fulfill all the responsibilities of the Pension Fund so that all employees would receive pensions and severance pay, even though the Pension Fund itself was not adequate, if the plan were to terminate.

 On December 1, 1970, Reeves was permanently shut down. According to Union rules and the various exhibits accompanying the affidavit of David Fitzmaurice, Secretary-Treasurer of the Union, Local 478 ceased to exist as an entity in December, 1970.

 Caesar C. Guazzo, counsel for Local 478, wrote Everett Lewis, counsel for District 3 of the Union, on August 31, 1972 in order to offer him information concerning the negotiations involving the Pension Plan as a basis for Lewis' intervention in order ". . . to protect the rights of the employees in accordance with their attestations at that meeting which [I] did not attend."

 On the basis of exchange of correspondence in late 1972 and early 1973, Dynamics and Union representatives met on March 1, 1973 in Dynamics corporate headquarters, then in New York City. During this meeting Dynamics representatives revealed that the Pension Plan contained insufficient assets to meet all vested pension obligations. They further related that favorable developments, i.e., a rise in the stock market, which had been hoped for in 1970 and which would have solved the problems of the Pension Plan by increasing the value of its assets, had not occurred, nor were they likely to occur within the foreseeable future. Therefore, the March 1, 1973 meeting was largely devoted to exploring alternative courses of action for the final resolution of the Pension Plan. A consensus was reached at this meeting that the probable best course would be to sell the assets of the Pension Plan to an insurance company.

 On August 27, 1973, letters were sent to the former members of Local 478 informing them that there were insufficient assets in the Pension Plan to pay all vested benefits. The letter pointed out that only "pensioners and joint annuitants or beneficiaries to whom benefits have commenced to be paid" would be paid benefits under the terminated plan, and that those pensioners and annuitants would receive approximately 80% of their former level. Therefore, those plaintiffs whose benefits had commenced as of August 1973 have been deprived of 20% of their benefits contemplated in the Pension Plan, and those plaintiffs whose benefits had not commenced in August 1973 have been deprived of 100% of such benefits.

 On March 5, 1974, Mr. Guazzo on behalf of Capuano and the "Reeves Pension Committee" sent Dynamics a "Notice of Intention to Arbitrate" concerning the Pension Plan. Edward Mooney, a Dynamics vice-president, replied that Dynamics was at that time involved in Chapter XI proceedings, and that Bankruptcy Judge Ryan had issued a stay order.

 On May 29, 1974, Mr. Guazzo filed a complaint in the bankruptcy proceeding seeking to have the stay vacated. On January 13, 1975, Judge Ryan issued an order which vacated the stay. However, Judge Ryan emphasized that he was not ...


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