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T.I.M.E. v. TRUCKING EMPLES. OF NORTH JERSEY WELFA

March 9, 1983

T.I.M.E.--DC, INC., Plaintiff,
v.
TRUCKING EMPLOYEES OF NORTH JERSEY WELFARE FUND, INC., Defendant


McLaughlin, District Judge.


The opinion of the court was delivered by: MCLAUGHLIN

MEMORANDUM AND ORDER

McLAUGHLIN, District Judge

 This motion for a preliminary injunction presents an interesting question of statutory interpretation under the Multiemployer Pension Plan Amendments Act ("MPPAA") of 1980. Plaintiff T.I.M.E.-DC, Inc. ("TIME-DC") seeks to enjoin defendant Trucking Employees of North Jersey Welfare Fund, Inc. ("Fund") from asserting withdrawal liability in excess of $373,000 against it. TIME-DC claims that the statutory labor dispute exception, 29 U.S.C. § 1398 (2), relieves it of the obligation to remit the withdrawal liability payments. For the reasons developed below, I agree. Accordingly, defendant is enjoined from enforcing withdrawal liability payments against TIME-DC.

 FACTS

 I. The Parties

 A. TIME-DC

 TIME-DC is an interstate trucking company that transports general commodities throughout the United States. It has operated under union contracts with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (the "Teamsters" or the "union"). For many years, TIME-DC signed the national master contracts negotiated between the Teamsters and a national carrier association called Trucking Management, Inc. ("TMI"). TIME-DC's latest contract with the Teamsters was the National Freight Agreement covering the period of April 1, 1979 to March 31, 1982.

 During 1980-81, however, principally because of increased competition from non-union firms, TIME-DC's business position deteriorated. Governmental deregulation of the trucking industry had allowed these firms to enter the market. Therefore, TIME-DC withdrew from TMI's multiemployer bargaining with the Teamsters in September, 1981. Plaintiff wished to negotiate a separate contract that would enable it to compete more effectively with non-union carriers. The negotiations were not successful, however, and the Teamsters struck TIME-DC nationwide at midnight on March 31, 1982. The strike, reinforced by picketing, closed TIME-DC's terminals throughout the United States.

 B. THE FUND

 The Fund is a pension plan that receives contributions on behalf of members of Local 560 of the Teamsters who are employed by companies having collective bargaining agreements with Local 560. The jurisdiction of Local 560 includes Brooklyn, New York.

 TIME-DC has made pension contributions to the Fund, as well as to twenty-five other Teamster-member funds. The Fund is a corporation operated by a Board of Trustees, and is a multiemployer plan within the meaning of the MPPAA of 1980, 29 U.S.C. §§ 1381-1405 (Supp. 1982).

 The Board of Trustees of the Fund includes representatives of both management and labor. During 1982, the union members of the Fund were: Salvatore Provenzano, President and Chief Executive of Local 560; *fn1" Joseph Sheridan, Vice-President of Local 560; *fn2" and Thomas Reynolds, Trustee of Local 560. On the management side were: Clifford D. Finkle, Jr., of Passaic Terminal and Transportation Co.; Harold Hackett of Hackett Trucking; Clarence Frankel of Cooper Jarrett (Fund member until October 1, 1982); and Raymond Kein of Helms Express (Fund member since October 1, 1982).

 Marvin Zalk, the Administrator of the Fund, is responsible for the collection of payments to the Fund, for keeping the Trustees apprised of developments concerning the Fund, and for calling meetings of the Trustees. In short, he is charged with the day-to-day responsibilities of the Fund.

 II. Withdrawal Liability Under the MPPAA

 Pension plans in the trucking industry are administered under the collective bargaining contract as multiemployer plans. Under the contract, each employer contributes on a formula basis according to the hours worked by its union employees. As a result of the mandatory vesting requirements of the federal Employee Retirement Income Security Act ("ERISA") of 1974, and of the benefit increases declared by pension plan trustees, the pension plans have built up large vested unfunded liabilities to their beneficiaries over the past decade.

 The MPPAA of 1980 created non-contractual liability for employers who withdraw from multiemployer plans. That liability represents a share of the pension plans' total vested unfunded liability, and is not necessarily related to the way in which the liability arose. Thus, because an employer may incur liability for the pensions of other employers' workers, withdrawal liability works as a penalty on an employer who withdraws from the plan.

 The Eastern Conference of Teamsters sent an electronic mailgram to Provenzano, President of Local 560, during the afternoon of March 31, 1982. That communication instructed Local 560 to strike TIME-DC as of 12:01 A.M., April 1. The mailgram indicated that Local 560's members should picket TIME-DC with signs reading "TIME-DC UNFAIR, TEAMSTERS LOCAL UNION No. ." Plaintiff's Exhibit 18; Provenzano Deposition at 11; Jaronko Deposition at 15-16.

 Local 560 complied with these instructions. Jaronko, the business agent for Local 560, instituted strike activities against TIME-DC. He directed the shop steward to picket the Brooklyn terminal beginning early April 1, 1982. Jaronko Deposition at 16-17. No freight crossed the picket line after April 1, nor did truckers cross the line. Id. at 17-18. The strike shut down TIME-DC's Brooklyn operation. Provenzano Deposition at 13-14; Zalk Deposition at 88-89.

 At that point, Jaronko may have believed that TIME-DC was terminating its Brooklyn operation, because sometime in March he had been informed by the shop steward, Mr. Sal Mustaccio, that equipment and furniture were being moved out of the terminal, and that the telephones were being disconnected. *fn3"

 TIME-DC does not dispute that the Brooklyn terminal was cleared out. It also concedes that it allowed the lease on the terminal to expire in May, 1982. The parties are poles apart, however, as to the significance of these actions. In discussing the matter with Zalk (the Fund Administrator), Jaronko indicated that TIME-DC had "closed its doors" and terminated its business. Zalk Deposition at 25. Zalk was told that TIME-DC "had closed ...


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