The opinion of the court was delivered by: Sweet, District Judge.
Plaintiffs, the Trustees of the Amalgamated Insurance Fund
("the Fund"), have moved for summary judgment on their claim
for ERISA pension plan withdrawal liability against the
defendants Nathan and Jack Saltz ("the Saltzes"). For the
following reasons, the motion is granted.
The Fund is a trust fund designed to provide health, welfare
and retirement benefits to eligible employees of businesses in
contractual relations with the Amalgamated Clothing and Textile
Workers Union ("the Union") and its affiliates. The Fund
actually consists of two distinct sub-funds: the Retirement
Fund and the Social Insurance Fund. The Retirement Fund is a
multiemployer pension plan as that term is defined by the
Employee Retirement Income Security Act of 1974 ("ERISA"),
29 U.S.C. § 1001-1461, as amended by the Multiemployer Pension
Plan Amendments Act of 1980 ("MPPAA"). 29 U.S.C. § 1381-1405.
The Saltzes are the sole shareholders of Frank Saltz & Sons,
Inc. ("the Corporation"), which prior to 1989 had a collective
bargaining agreement with the Union under which it contributed
to the Fund on behalf of its employees. The Saltzes are also
the owners as joint tenants with rights of survivorship of the
property at which the Corporation's business was located.
Under ERISA and the MPPAA, an employer who ceases making
regular contributions to a multiemployer pension plan is
required to assume responsibility for its share 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. 29 U.S.C. § 1382.
An employer who receives a notice of withdrawal liability may
seek further review by the plan sponsor pursuant to §
1399(b)(2)(A), and if still dissatisfied may seek arbitration
of the dispute under § 1401. Except in unusual circumstances,
arbitration must be initiated within 60 days of the sponsor's
final notification of liability. Notwithstanding the timely
initiation of arbitration, the employer is required to make all
scheduled payments during the pendency of the arbitration. Upon
an employer's failure to make timely payment as requested by
the sponsor, § 1451(b) authorizes the sponsor to bring suit to
enforce the withdrawal liability.
For the purposes of ERISA and the MPPAA, the term "employer"
is defined to include all "trades or businesses" which are
controlled in common with the actual employing entity:
For purposes of this subchapter, under regulations
prescribed by the [PBGC,] all employees of trades
or businesses (whether or not incorporated) which
are under common control shall be treated as
employed by a single employer and all such trades
and businesses [shall be treated] as a single
The relevant facts in this case are undisputed. The Saltzes
each own fifty percent of the shares of the Corporation, which
operated its clothing manufacturing business from 347 Chestnut
Street ("the Property") in Passaic, New Jersey. The Property
was owned by the Saltzes beginning in 1979 and was owned by
them as joint tenants with rights of survivorship from 1985.
The Corporation leased the Property from the Saltzes through a
net lease under which it paid rent and assumed responsibility
for managing and maintaining the Property. The lease extended
from March 1, 1987 to February 28, 2001. Pursuant to the lease,
the Saltzes received rental income during 1987 and 1988 and
took depreciation on the Property while the Corporation paid
all real estate taxes.
The Corporation was party to a collective bargaining
agreement with the Union under which it was to make
contributions to the Fund on behalf of its employees. On August
7, 1989 the Corporation ceased operations, and on August 10 the
Fund notified the Corporation by mail that the Corporation's
withdrawal liability had been calculated at $1,211,491.27 and
that the first payment would be $161,679.81, due on October 1,
1989. The letter included a cursory explanation of the process
for initiating a review of the liability by the sponsor and the
possible consequences of failing to make payment. No mention
was made of the statutory requirement that disputes be
arbitrated or of the time limit ...