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OLIVIERI v. P.M.B. CONSTRUCTION

August 24, 2005.

JOSEPH OLIVIERI, ARTHUR GODSELL, ROBERT CARLINO, PAUL J. O'BRIEN, JOSEPH GANIRO, ALFREDO REZENDE, GEORGE FRANK, JOHN FUCHS, FRED DAUBER, RALPH BONAVIST, WAYNE ROGERS, WILLIAM SMITH, HOWARD JONES, WILLIAM MacCHIONE, ALAN EHL, WILLIAM HAMILTON, et al., as Trustees of the SUBURBAN NEW YORK REGIONAL COUNCIL OF CARPENTERS WELFARE, PENSION, VACATION, ANNUITY, APPRENTICE TRAINING AND CHARITABLE TRUST FUNDS, Plaintiffs,
v.
P.M.B. CONSTRUCTION, INC., PMB DEVELOPMENT, FREDERIC A. MARSALISI, PATRICIA M. MARSALISI a/k/a PATRICIA M. BISACCIA, PMB FLOORING, INC., PMB DEVELOPMENT TEAM CORP., SYNGEN GROUP CORP., a/k/a TRI-STATE EMPLOYMENT SERVICES, PREMIER STAFFING SOLUTIONS OF NORTHEAST CORP. a/k/a PREMIER STAFFING, CAPITAL MANAGEMENT SOLUTIONS, LLC, STERLING PAYROLL FINANCIAL SERVICES, LLC, VIRTUAL REALTY SOLUTIONS, INC. a/k/a STERLING BUSINESS SOLUTIONS, and EMPLOYMENT SERVICES, INC., Defendants.



The opinion of the court was delivered by: DENIS HURLEY, District Judge

MEMORANDUM OF DECISION AND ORDER

Presently before the Court are the motions by plaintiffs the Trustees of Suburban New York Regional Council of Carpenters Welfare, Pension, Vacation, Annuity, Apprentice Training and Charitable Trust Funds ("Plaintiffs") and defendants Syngen Group Corp. a/k/a Tri-state Employment Services ("Syngen") and Premier Staffing Solutions of Northeast Corp. a/k/a Premier Staffing ("Premier") (collectively, the "Premier Defendants") for summary judgment. For the reasons that follow, Plaintiffs' motion is denied and the Premier Defendants' motion is granted.

  FACTUAL BACKGROUND

  The following facts are undisputed unless noted. Plaintiffs commenced this action to recover unpaid employee fringe benefit contributions from defendants P.M.B. Construction, Inc., PMB Development, Inc., Frederic A. Marsalisi, Patricia M. Marsalisi a/k/a Patricia M. Bisaccia, PMB Flooring, Inc., and PMB Development Team Corp. (collectively, the "PMB Defendants"); the Premier Defendants; Capital Management Solutions, LLC ("Capital"); Sterling Payroll Financial Services, LLC ("Sterling Payroll"); Virtual Realty Solutions, Inc. a/k/a Sterling Business Solutions, Inc. ("Sterling Business"); and Employment Services, Inc., arising under collective bargaining agreements entered into between the PMB Defendants and the United Brotherhood of Carpenters and/or its predecessors, and their affiliated local unions (the "Union"). On June 27, 2002, Sterling Business filed for bankruptcy. By Stipulation and Order dated July 2, 2003, the action was dismissed as to defendant Employment Services, Inc. By Stipulation dated June 25, 2003 (the "Stipulation"), Plaintiffs and the Premier Defendants stipulated that the PMB Defendants are jointly and severally liable to Plaintiffs for unpaid fringe benefit contributions, with interest and attorneys' fees, and that they breached the underlying collective bargaining agreements in violation of the Employee Retirement Income Security Act of 1974 ("ERISA"). (Stipulation dated June 25, 2003 ¶¶ 29-30.) On June 30, 2004, default judgments were entered against the PMB Defendants, Capital, and Sterling Payroll in an amount of $296,876.36. According to Plaintiffs, no part of this judgment has been paid. (Aff. of Patrick Morin, dated July 19, 2004, ¶ 10.) Thus, the Premier Defendants are the remaining defendants in this lawsuit.

  The Premier Defendants were professional employers' organizations providing human resources to their clients in the tri-state area. Typically, their clients "fired" their employees who were then hired by the Premier Defendants, who subsequently leased the employees back to those same clients for a fee. The Premier Defendants administered the payroll for the employees based upon information provided by the clients, assumed responsibility for the payment and collection of payroll taxes, and secured workers compensation coverage for the employees. According to the Premier Defendants, the ability of the client companies to obtain workers compensation at a lower rate was a key selling point that enabled the Premier Defendants to enroll clients and thereby earn fees. (Aff. of John Armenakis, dated Sept. 29, 2004, ¶ 20.)

  Between 1998 and 1999, the Premier Defendants entered into three Client Service Agreements with certain of the PMB Defendants whereby the Premier Defendants leased carpentry employees to the PMB Defendants for employment covered under the Agreements. Pursuant to the express terms of each of the Client Services Agreements, the Premier Defendants: (1) shared with the PMB Defendants the right to hire, fire, discipline, manage, and supervise the employees it leased; (2) provided work site employee insurance, including unemployment, workers' compensation, and disability insurance with respect to each of the employees it leased based upon information provided by the PMB Defendants; (3) had the right to share responsibilities of setting and/or overseeing working conditions with respect to the employees it leased; (4) provided the PMB Defendants with entity payroll services and had the right to share with them the responsibilities of employee wage withholdings and tax reporting requirements based upon information provided by the PMB Defendants; and (5) had the right to ensure and/or monitor compliance with applicable governing worker and worksite safety rules, regulations, and laws with respect to the employees it leased. While the Premier Defendants expressly retained the above-referenced rights, the parties agree that there is nothing in the record to indicate that the Premier Defendants actually exercised their contractual rights to hire, fire, discipline, manage or provide direct, on-site supervision of the leased workers.

  The Premier Defendants were not signatories to the collective bargaining agreements between the PMB Defendants and the Union. Moreover, under the Client Service Agreements, the Premier Defendants did not agree to undertake any obligation to withhold, pay, collect, secure or provide for any union benefits, including but not limited to fringe benefit contributions in connection with any collective bargaining agreements with any union.

  With regard to the PMB Defendants' obligations, the Client Services Agreements provided that the PMB Defendants were to furnish all of the instrumentalities used in the employees' work, including but not limited to all facilities, supplies, equipment, and all other necessary items that may be required by the leased employees to perform their respective duties and services. Upon termination of the Client Services Agreements, the leased employees were automatically terminated by the Premier Defendants.

  Plaintiffs move for summary judgment and urge the Court to find as a matter of law that the Premier Defendants were "joint employers" with certain of the PMB Defendants in 1998 and 1999, and are therefore jointly and severally liable under the relevant collective bargaining agreements for monies owed by the PMB Defendants to Plaintiffs during this two-year period. The Premier Defendants also move for summary judgment, maintaining that as non-signatories to the relevant collective bargaining agreements, they are not "employers" within the purview of ERISA and are therefore not obligated to make contributions.

  DISCUSSION

  For purposes of this motion, it will be assumed, arguendo, that the Premier Defendants were joint employers with the PMB Defendants. The discreet issue presented by these motions is whether that status, i.e., being a joint employer, is sufficient to obligate a non-signatory to a collective bargaining agreement to make employer contributions pursuant thereto absent any allegations of fraud or alter ego.*fn1 The Court begins with an analysis of the relevant ERISA provisions. I. Statutory Definition of Employer

  Section 515 of ERISA provides that "[e]very employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement." 29 U.S.C. § 1145 ("Section 515") (emphasis added). ERISA defines an employer as "any person acting directly as an employer, or indirectly in the interest of an employer." Id. § 1002(5)

  In Cement and Concrete Workers Dist. Council Welfare Fund, Pension Fund, Legal Servs. Funs and Annuity Fund v. Lollo, 35 F.3d 29, 36 (2d Cir. 1994), the Second Circuit held that Section 515 applies only to employers "obligated" to make contributions. Thus, satisfying the statutory definition of employer as provided for in 29 U.S.C. § 1002(5) is in itself insufficient to impose a duty on an employer to make pension contributions; rather, Section 515 "permits recovery only against those employers who are already obligated, in the absence of ERISA, to make ERISA contributions." Id.; see id at 36-37 ("[Section 515] does not impose a duty to make pension contributions, even on one who qualifies as an `employer' under the general definition provided in 29 U.S.C. § 1002(5), if the duty to contribute did not previously exist."). "This interpretation is reinforced by the section's legislative history, which stated in a report produced by the Senate Committee on Labor that `"[t]he bill imposes a Federal statutory duty to contribute on employers that are already contractually obligated to make contributions to multiemployer plans."' Id. at 36 (quoting Massachusetts Laborers' Health & Welfare ...


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