The opinion of the court was delivered by: MCAVOY
Plaintiff Board of Trustees of Trucking Employees of North Jersey Welfare Fund ("Board of Trustees") originally commenced this action November 30, 1993, in the District of New Jersey, but venue was transferred to the Northern District of New York on motion. In an order dated February 11, 1995, the Court dismissed plaintiff's original complaint under Fed. R. Civ. P. 12(b)(6) but granted plaintiff leave to refile. Plaintiff complied by submitting an Amended Complaint on March 21, 1995. Plaintiff seeks to recover a withdrawal liability assessment pursuant to ERISA, together with interest, statutory liquidated damages, and attorneys' fees, from defendants William Canny, Joseph Canny, Barbara Briggs, Dorothy Conlon, Franklin Fletcher, and Joseph Fletcher ("Canny Family"), as well as from defendant partnership they allegedly created ("Partnership").
The Board of Trustees moved for summary judgment against the Canny Family Partnership and against William Canny, Joseph Canny, Barbara Briggs, and Dorothy Conlon individually based on their failure to initiate arbitration regarding the withdrawal liability assessment pursuant to 29 U.S.C. § 1401. Defendants opposed the motion and moved separately to dismiss the Amended Complaint, or alternatively, to have the case remanded for arbitration and for a more definite statement. The Court heard oral argument on these motions on August 25, 1995. The following constitutes the Court's findings of fact and conclusions of law with respect to the issues raised.
Plaintiff Board of Trustees is the sponsor of a multiemployer pension plan covering employees in the trucking industry. The plan is established and maintained pursuant to collective bargaining agreements and a Declaration of Trust between Local Union 560 and the Motor Carriers Association of North Jersey. Canny Trucking Co., ("Canny Trucking") was a corporation organized and existing under the laws of the State of New York. The company was signatory to an agreement that obliged it to make contributions to plaintiff's pension fund as a participating employer. On September 21, 1987, Canny Trucking filed a petition for bankruptcy in the Northern District Bankruptcy Court. During the course of the proceeding the company discontinued its operations, which allegedly effectuated the complete withdrawal of the company from the pension fund as defined in 29 U.S.C. § 1383(a).
Following the alleged withdrawal, plaintiff imposed a withdrawal liability assessment of $ 1,221,191.00 against Canny Trucking based upon 1987 figures. The assessment was to be paid in 156 monthly installments. Plaintiff alleges that notice of the liability assessment was given to Canny Trucking in proper fashion. Canny Trucking, however, failed to pay and defaulted, which resulted in the acceleration of the balance of the payments due.
Prior to April 26, 1985, each defendant subject to these motions possessed an equal 1/6 of the shares of Canny Trucking, totalling 100 percent. But on that date, defendants entered into an agreement with Canny Trucking and David Lindsey, an employee of the company, under which a portion of their shares were sold to Mr. Lindsey and the remainder were redeemed by the corporation. Following the transaction, defendants no longer were shareholders in Canny Trucking. At least until 1987, each of the defendants also possessed an equal 1/6 interest in property located at 6-18 Spring Forest Avenue in Binghamton, New York. Defendants leased the property to Canny Trucking from 1975 to at least 1987, and Canny Trucking used the property as its general offices, main trucking terminal, and garage facilities.
Plaintiff now brings suit in this Court seeking to recover the withdrawal liability assessment from defendants. Plaintiff's Amended Complaint alleges that the joint ownership and leasing of the subject real property by defendants constitutes a real estate leasing proprietorship or de facto partnership. It also alleges that this leasing enterprise was a "trade or business" under common ownership and control with Canny Trucking, thereby triggering the "controlled group" provisions of ERISA with respect to payment of withdrawal liability assessments.
The Employee Retirement Income Security Act ("ERISA"), as amended by the Multiemployer Pension Plan Amendments Act ("MPPAA"), provides an elaborate system to ensure the financial integrity of multiemployer pension funds. Congress passed MPPAA in part because employers' withdrawals from multiemployer pension plans threatened those plans' solvency, and thus their ability to pay beneficiaries as their benefits came due. Joyce v. Clyde Sandoz Masonry, 276 U.S. App. D.C. 379, 871 F.2d 1119, 1120 (D.C. Cir.), cert. denied, 493 U.S. 918, 107 L. Ed. 2d 260, 110 S. Ct. 280 (1989).
The MPPAA requires employers who cease contributing to a multiemployer pension fund to pay what the statute refers to as "withdrawal liability," a sum that represents a portion of the fund's "unfunded vested benefits." 29 U.S.C. §§ 1381, 1399. Liability is based upon the employer's date of "complete withdrawal" from a multiemployer plan. Special provisions of the Act define the complete withdrawal of employers.
Pension plan sponsors are granted broad authority by MPPAA to assess and collect withdrawal liability. Provisions for the quick and informal resolution of withdrawal liability disputes are an integral part of MPPAA's statutory scheme. The Act first requires the plan sponsor to decide, on its own, whether a withdrawal by an employer has occurred. 29 U.S.C. § 1382(1). See also Flying Tiger Line v. Teamsters Pension Trust Fund, 830 F.2d 1241, 1244 (3d Cir. 1987). Then the sponsor must notify the putative employer, after the employer's withdrawal, of the amount of the employer's alleged withdrawal liability and of the schedule for liability payments established by the fund. 29 U.S.C. § 1399(b)(1). Finally, the fund must demand payment from the employer in accordance with the schedule.
ERISA requires that all trades or businesses -- whether or not incorporated -- that are under "common control," as defined in regulations issued by the Pension Benefit Guaranty Corporation ("PBGC"), "shall be treated . . . as a single employer." 29 U.S.C. § 1301(b)(1). Because a commonly controlled group of trades or businesses is to be treated as a single employer, each member of such a group is liable for the withdrawal of any other member of the group. In determining whether a withdrawal has occurred, MPPAA explicitly provides that any transaction designed to "evade or avoid" withdrawal liability should be ignored. 29 U.S.C. § 1392(c).
A. RULE 12(b)(6) MOTION BY DEFENDANTS
Defendants move pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the Amended Complaint, contending that it fails to state a viable cause of action for imposing liability on defendants under ERISA and the MPPAA. More specifically, defendants argue that the Amended Complaint fails to allege sufficiently that defendants controlled Canny Trucking during the period of the company's withdrawal from the multiemployer plan. On the alternative theory that defendants sold their stock in Canny Trucking in an attempt to evade or avoid withdrawal liability, ...