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T.I.M.E.-DC, INC. v. NEW YORK STATE TEAMSTERS CONF

February 15, 1984

T.I.M.E.-DC, INC., Plaintiff,
v.
NEW YORK STATE TEAMSTERS CONFERENCE PENSION & RETIREMENT FUND, Defendant.



The opinion of the court was delivered by: MINER

MEMORANDUM-DECISION and ORDER

MINER, District Judge.

 I

 This action, seeking injunctive and declaratory relief against the threat of prosecution, enforcement, or collection by defendants of certain sums of money allegedly due as "withdrawal liability" under the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1381-1405 (West Supp.1976-1982), arises out of a labor dispute which began on April 1, 1982. Jurisdiction is predicated upon 28 U.S.C. § 1331 and 29 U.S.C. § 1451(c) (West Supp.1976-1982). Before this Court is plaintiff's motion for a preliminary injunction, Fed.R.Civ.P. 65. *fn1"

 II

 Plaintiff T.I.M.E.-DC, Inc. ("TIME-DC"), is an interstate motor carrier of freight and has operated nationwide under union contracts with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America ("Teamsters" or "union"). Defendant New York State Teamsters Conference Pension and Retirement Fund ("Fund") is an employee benefit fund that is maintained pursuant to a collective bargaining agreement and a declaration of trust between contributing employers and various local unions of the Teamsters. The Fund is a multiemployer fund within the meaning of ERISA, 29 U.S.C. §§ 1002(37)(A), 1301(a)(3), and is one of twenty-seven such Teamsters multiemployer pension funds covering different regions of the United States. Under the terms of the collective bargaining agreement, TIME-DC has contributed to the Fund based on time worked by union employees.

 Since 1952, TIME-DC has conducted its trucking operations under union contracts with the Teamsters. The latest collective bargaining agreement between these parties was the National Master Freight Agreement covering the period from April 1, 1979 to March 31, 1982. That agreement had been negotiated between the Teamsters National Freight Industry Negotiating Committee and Trucking Management, Inc. ("TMI"), an association of carriers.

 Beginning in the late 1970's, TIME-DC's business began to deteriorate, primarily due to increased competition from non-union firms and the 1978 deregulation of the trucking industry. Responding to the threat posed by this new competition, and realizing that its prospects for continued profitability depended on its ability to compete effectively with non-union carriers, TIME-DC decided to bargain with the Teamsters on an indivdual basis. Accordingly, in September of 1981, TIME-DC withdrew from the multiemployer bargaining carried on between TMI and the Teamsters. TIME-DC's efforts to negotiate a new contract proved unsuccessful, however, and the Teamsters instructed its membership to strike TIME-DC as of April 1, 1982. The strike, reinforced by picketing, closed TIME-DC's terminals across the United States, including three of its four upstate New York terminals. Teamsters at TIME-DC's Syracuse terminal, employed as ocal pick-up and delivery drivers, came to work on April 1st in defiance of the union's strike instructions, and continued to work until the terminal ran out of freight to be delivered. Ultimately, the Syracuse terminal was closed as well, and TIME-DC laid off the remaining drivers. During the strike, TIME-DC suspended its contributions to the Fund.

 In August of 1982, the Teamsters made an unconditional offer to return to work. TIME-DC accepted that offer subject to a no-strike commitment for a period equal to the length of the strike to date. On November 23, 1982, TIME-DC informed the Teamsters National Negotiating Committee that it would resume operations. On December 1, 1982, TIME-DC publicly announced the end of the strike and its intention to gradually resume its operations. In March of 1983, the teamsters and TIME-DC commenced negotiations toward a new agreement. Negotiations continued through April 15, 1983, when the Teamsters notified TIME-DC that they would be in touch in the near future but that their no-strike commitment would expire on April 26th. The parties met again on August 30, 1983 to discuss various contract proposals. At the conclusion of that meeting, the Teamsters' lead negotiator advised TIME-DC that he was giving notice pursuant to his April 15th letter that the Teamsters might resume their strike at any time. The next bargaining session was then scheduled for September 26th.

 It is against this background that the predicate for the instant action developed. On April 13, 1982, the Fund sent TIME-DC a notice of MPPAA withdrawal liability. *fn2" This "alert" letter was not the statutorily required notice and demand for payment of withdrawal liability under 29 U.S.C. § 1399(b)(1). *fn3" Apparently, this letter was prompted both by what the Fund thought to be late contributions and its knowledge of the strike which closed down TIME-DC's operations. On April 21, 1982, TIME-DC responded to the alert letter, noting:

 The effect that this strike will have on future pension contributions cannot be determined until the strike is over and the labor dispute has ended. Even if the strike causes a suspension of contributions, it is our understanding that a strike does not cause a withdrawal from a pension plan while the labor dispute continues.

 (Plaintiff's exhibit 26). The Fund replied on April 28, 1982, acknowledging that its April 13th notice was merely an alert letter and stating that cessation of contributions triggered withdrawal liability regardless of the reason for cessation. (Plaintiff's exhibit 27). By letter dated May 5, 1982, TIME-DC informed the Fund of the labor dispute provision of the MPPAA:

 All laws, unfortunately, are subject to hours and days of interpretation. In this regard, may we direct your attention to ERISA Sec. 4218, which suggests that withdrawal will not occur because of suspension of contributions during a labor dispute. The International Brotherhood of Teamsters would be hard put to deny that it did strike this employer during the early hours of April 1, 1982, and continues to strike the Company. The continuing strike has effectively caused the cessation of the majority of the Company's operations. Therefore, should we temporarily cease contributing to the Fund, it will be for the obvious reason of the continuing strike by the I.B. of T.

 (Plaintiff's exhibit 28 at 3). The Fund responded again on May 13, 1982, indicating that it would stop pursuing withdrawal liability only when TIME-DC actually resumed making contributions to the Fund. (Plaintiff's exhibit 28 at 1-2).

 In January 1983, Alphonse Sgaglione, Executive Administrator of the Fund received from the Fund's actuary a calculation of withdrawal liability in the amount of $265,423. Based on this assessment, Sgaglione forwarded to TIME-DC the statutorily required notification of withdrawal liability, 29 U.S.C. § 1399(b)(1). By letter dated February 8, 1983, Sgaglione informed TIME-DC of the $265,423 demand, to be paid in monthly installments of $10,723.93 commencing within sixty days of the February 8th letter.(Plaintiff's exhibit 29). On March 14, 1983, counsel for TIME-DC wrote back to Sgaglione to explain the strike, the resumption of operations, and the absence of a new collective bargaining agreement. In addition, counsel enclosed with the letter a copy of the then recent decision in T.I.M.E.-DC, Inc. v. Trucking Employees of North Jersey Welfare Fund, Inc., 560 F. Supp. 294 (E.D.N.Y. 1983). In relevant part, the letter set forth the following:

 [I]t is not the intention of T.I.M.E.-DC to permanently cease operations within the jurisdiction of the New York Fund, and that T.I.M.E.-DC will resume operations within your jurisdiction as it is able to find new customers and to finance such operations.

 (Plaintiff's exhibit 30 at 2).Sgaglione responded to this letter on March 25, 1983, advising of his intention to present the matter to the Fund Policy Committee at its April 4th meeting and assuring that the sixty-day notice letter dated February 8th would be held in abeyance pending that Committee meeting. (Plaintiff's exhibit 31). According to deposition testimony, Sgaglione agreed that he would give "two weeks' notice if [he] decided to reactivate [his] demand" and that "the sixty-day notice would not be running on them [(TIME-DC)]." (Deposition of Alphonse Sgaglione at 88-89, 144).

 The Fund Policy Committee met on April 4, 1983 *fn4" and instructed Sgaglione to obtain more information. The minutes of that meeting reflect the following disposition:

 T.I.M.E.-DC . . . [is] allegedly involved in Labor Dispute with I.B.T. In view of the Eastern District Court Decision, the committee believed any attempt to collect EWL [withdrawal liability] from Employers not contributing due to a labor dispute would be a futile effort. These cases would be held in abeyance pending resolve of the dispute. Sgaglione instructed ...


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