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ILGWU NAT. RETIREMENT v. B.B. LIQUIDATING

January 16, 1991

ILGWU NATIONAL RETIREMENT FUND, ET AL., PLAINTIFFS,
v.
B.B. LIQUIDATING CORP., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Sweet, District Judge.

OPINION

Plaintiffs ILGWU National Retirement Fund and two of its trustees ("the Fund") have moved to file an amended complaint and for summary judgment on the complaint as amended. Defendant B.B. Liquidating Corp. ("BBLC") has cross-moved for summary judgment. For the following reasons, the motion to amend the complaint is granted and both motions for summary judgment are denied.

THE PARTIES

The Fund is a New York trust which provides pension benefits to approximately 130,000 workers in the garment industry. It is a "pension plan" and a "multiemployer plan" as those terms are defined in the Employee Retirement Income Security Act (ERISA) §§ 3(2), 3(37), 29 U.S.C. § 1002(3), 1002(37).

BBLC is a New York corporation which operated under the name Blassport, Ltd. ("Blassport-BBLC") from the time of its incorporation in the early 1970's until it sold all of its assets in 1983. At that time, BBLC apparently changed its name to B.P.T. Liquidating Corp. ("BPT"), although the Fund alleges that it currently operates under the name B.B. Liquidating Corp.*fn1 Norman Zeiler ("Zeiler") is alleged to be a New York resident who was an officer and principal stockholder of BBLC at all times pertinent to this action.

THE STATUTORY FRAMEWORK

Multiemployer pension plans such as the Fund are covered under ERISA as amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. § 1381-1405 (1980) ("MPPAA"). Under these amendments, an employer who ceases making contributions to a multiemployer plan becomes liable for at least a portion of the amount of the plan's "unfunded vested benefits." 29 U.S.C. § 1381. It is the responsibility of the plan sponsor to notify the employer of the amount of its withdrawal liability and to make arrangements to collect that liability. § 1382. This notification is to be made "as soon as practicable" after the employer stops contributing. § 1399(b).

When an employer stops contributing as a result of selling its assets to an unrelated party, it incurs no withdrawal liability provided that the purchaser continues to contribute to the plan for a period of five years after the sale. § 1384(a)(1). If the purchaser continues to contribute but ceases before five years from the sale date, then the seller incurs withdrawal liability as if it had withdrawn at the date of sale. § 1384(a)(2). In such a circumstance, of course, the plan sponsor must wait until the purchaser stops contributing before it can even determine the fact of the seller's withdrawal liability, let alone the amount of such liability.

Section 1401(a) requires that disputes between an employer and a plan sponsor concerning the amount of the employer's withdrawal liability be resolved through arbitration. Such arbitration must be initiated within 60 days of the date of the sponsor's notification to the employer of the withdrawal liability except in certain instances not relevant to this case. Notwithstanding the timely initiation of arbitration, the employer is required to make all payments requested by the sponsor during the pendency of the arbitration.

Upon an employer's failure to make timely payment as scheduled by the sponsor, the sponsor may bring suit to enforce the withdrawal liability. § 1451(b). The limitations period for such an action is six years from the date of the default in payment.

THE FACTS

Many of the facts of this case are in dispute. Although many of the facts which follow are taken from the Fund's complaint and its proposed amended complaint, all significant differences between the Fund's allegations and BBLC's contentions are noted.

The Fund alleges that prior to 1983, BBLC, operating as Blassport-BBLC, made regular contributions to the Fund on behalf of some of its own employees and on behalf of employees of companies that manufactured garments for it. According to the Fund, the total amount received from Blassport between 1975 and 1982 was $607,413.69. BBLC for its part claims that it has never made any contributions to the Fund.

In or around August of 1983, BBLC sold its assets to Design Assets Holdings, Inc. ("DAHI") and changed its name to BBLC. At the same time, DAHI adopted the name Blassport, Ltd. ("Blassport-DAHI") and, the Fund asserts, began to make contributions to the Fund. The Fund also asserts that at the time of the sale of its ...


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