August 23, 1982
TRUSTEES OF THE RETIREMENT FUND OF THE FUR MANUFACTURING INDUSTRY, Plaintiffs,
LAZAR-WISOTZKY, INC., and BURTON SIMON, Defendants; TRUSTEES OF THE RETIREMENT FUND OF THE FUR MANUFACTURING INDUSTRY, Plaintiffs, v. SCHNEIDER & COHEN, INC., SOL COHEN and ESTHER COHEN, Defendants; TRUSTEES OF THE RETIREMENT FUND OF THE FUR MANUFACTURING INDUSTRY, Plaintiffs, v. EXELBERT FUR CORP., HARRY EXELBERT, and JEROME EXELBERT, Defendants; TRUSTEES OF THE RETIREMENT FUND OF THE FUR MANUFACTURING INDUSTRY, Plaintiffs, v. FANTASIA FURS, INC., MAC WARE, and NATHAN PRINCE, Defendants; TRUSTEES OF THE RETIREMENT FUND OF THE FUR MANUFACTURING INDUSTRY, Plaintiffs, v. FUREVER FURS, INC., LEONARD BRAZIN, and SAM HABER, Defendants; TRUSTEES OF THE RETIREMENT FUND OF THE FUR MANUFACTURING INDUSTRY, Plaintiffs, v. JERRY SORBARA, INC., BERNARD MERSON, THEODORE KAHN, and JERRY SORBARA, Defendants; TRUSTEES OF THE RETIREMENT FUND OF THE FUR MANUFACTURING INDUSTRY, Plaintiffs, v. KAHN BROS. & PINTO, INC., LEONARD KAHN, and RICHARD PINTO, Defendants
The opinion of the court was delivered by: SAND
These actions were brought by the Trustees of the Retirement Fund of the Fur Manufacturing Industry ("plaintiffs") to recover withdrawal liability allegedly owed by the defendant employers pursuant to the Employee Retirement Income Security Act ("ERISA"), as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA", collectively called "the Act").
The defendants in No. 82 Civ. 1368, Lazar-Wisotzky, Inc. and Burton Simon, have moved for summary judgment and to dismiss the complaint for failure to state a claim upon which relief can be granted, primarily on the ground that the provisions of the Act establishing withdrawal liability are unconstitutional. The defendants in No. 82 Civ. 1366 have joined in this motion, and the attorney for the defendants in Nos. 82 Civ. 1368 and 82 Civ. 1363 has informed the Court that he wishes this matter to be taken on submission as to his clients. The defendant Simon further moves to dismiss on the ground that the Act does not contemplate the personal liability of individuals. The plaintiffs have moved to compel the defendants immediately to pay them the amount allegedly due under the Act plus interest, or to pay that amount into an escrow fund pending the outcome of this litigation, or to post a bond in that amount.
The defendants contend that the provisions of the MPPAA which establish employer liability upon a complete or partial withdrawal from a multiemployer plan are unconstitutional because:
(1) they deprive the defendants of their property without a prior hearing in violation of the fifth amendment;
(2) by requiring submission of disputes to arbitration, they deprive the defendants of their seventh amendment right to trial by jury;
(3) by depriving the defendants of their property without compensation, they effect a "taking" of the defendants' property without due process of law;
(4) they violate the due process clause because:
(a) they impair the pre-existing provisions of trust agreements;
(b) they impair pre-existing collective bargaining agreements;
(c) they serve no overriding legitimate public purpose; and
(d) they impose liabilities upon employers in multiemployer plans that are arbitrarily more onerous than those imposed on single employer plans.
These asserted challenges to the Act's constitutionality have been rejected by all of the courts which have addressed them. Peick v. Pension Benefit Guaranty Corp., 539 F. Supp. 1025 (N.D. Ill. 1982); Ells v. Construction Laborers Pension Trust, 3 EBC 1449 (C.D. Cal. May 10, 1982); Republic Industries v. Central Pennsylvania Teamsters Pension Fund, 534 F. Supp. 1340 (E.D.Pa.1982). These carefully considered opinions have rejected each of the challenges here raised by the defendants, and the Court agrees with their analyses. Therefore, for the reasons discussed in Peick, Ells, and Republic Industries, we reject the defendants' motion to dismiss on the constitutional grounds enumerated above.
The defendants further assert that a number of employers contributed unequally to the Fund but that their employees received equal benefits, and that contributions were made on behalf of persons who were not employees of the contributing employers. See Burstein Affidavit of July 30, 1982. These contentions are irrelevant to the motions presently before the Court. Allegations of disparity or other improprieties in the contractual basis for contributions to the Fund do not absolve an employer of its statutory duties under the Act, but rather, may afford it a cause of action against the Trustees. The issue of whether the alleged misconduct affects the proper computation of an employer's withdrawal liability is one properly subject to resolution by an arbitrator, pursuant to the terms of the Act.
One defendant, Burton Simon, has moved for dismissal of the complaint against him on the ground that, under the Act, there is no basis for personal liability. It is the plaintiff's theory, however, that Simon's liability derives not from the terms of the Act, but from the collective bargaining agreement pursuant to which he and the corporate defendant contributed to the Fund. In light of this ...
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