The opinion of the court was delivered by: Townes, United States District Judge*fn1
Plaintiffs, Gary LaBarbara and Theodore King, as trustees and fiduciaries (hereinafter "Plaintiffs" or "Trustees") of the Local 282 Welfare, Pension, Annuity, Job Training and the Vacation and Sick Leave Trust Funds (hereinafter "Funds"), bring suit pursuant to the Employee Retirement Income Security Act ("ERISA"), as amended, 29 U.S.C. §1132, and the Labor Management Relations Act ("LMRA"), as amended, 29 U.S.C. §185, against defendant, Audax Construction Corps. ("Audax" or "Defendant"), a signatory to a collective bargaining agreement ("CBA") with Local 282 of the International Brotherhood of the Teamsters, for alleged unpaid contributions to the Funds on behalf of third-party employees. The Trustees also brought suit against the third-party employers - defendants Ferrara Equipment, Inc. ("Ferrara") and Formula 1 Transport, Inc. ("Formula"), and Ferrara's owner, Sal Ferrara ("Sal Ferrara") -- but each of these defendants have since entered into a settlement agreement with the Plaintiffs. Ferrara, Formula, and Sal Ferrara (hereinafter "Cross-claimants") maintain a cross-claim against Audax for their obligations to the Funds on behalf of their employees who performed work for Audax. (Stipulation and Order of Settlement ¶ 11.) Audax seeks summary judgment pursuant to Fed. R. Civ. P. 56 dismissing both the Trustees' claims and the cross-claims by Ferrara and Formula. The Trustees seek summary judgment finding Audax liable for unpaid Fund contributions on behalf of Ferrara employees. Cross-claimants seek summary judgment in their cross-claims against Audax. For the reasons set forth below, Defendant's motion against Plaintiffs is denied and its motion against Cross-claimants is granted, Plaintiffs' motion is granted, and the Cross-claimants' motion is denied.
Audax is engaged in the heavy equipment business. It supplies trucks and other heavy equipment, with drivers, to construction sites. Audax is required to pay benefits into the Funds on behalf of its drivers. This obligation arises from two sources. First, all of Audax's business during the period covered by this action was on behalf of the New York City Department of Design and Construction. New York City requires contractors to pay "prevailing wages and benefits," which, for heavy equipment drivers operating in New York City, pursuant to New York State Labor Law § 220, is equal to the rates set forth in the Local 282 CBA. (Pls.' 56.1 Statement, at ¶ 57.) Second, and more importantly, at all times relevant to this action, Audax has been a signatory to the Local 282 CBA, which directly requires, inter alia, Audax to make benefit payments on behalf of its employees into the Funds at rates prescribed in the CBA. (Def.'s Mem. Supp. Summ. J.; Def's 56.1 Statement.) The CBA obligates Audax and other signatories to make such payments on behalf of their employees performing covered work*fn2 at all times, regardless of whether a contractee required such payments. (Def.'s Motion for Summ. J, Ex. B, CBA (hereinafter, "CBA 2002-2006").)*fn3
Although Audax generally meets its contractual obligations by supplying its own trucks or other equipment*fn4 operated by its own drivers, it also sometimes hires trucks from third parties, as needed, to fulfill its obligations. These outside truck hires are sometimes "bare rentals" involving the rental of the truck or other equipment without a driver, in which case Audax supplies the driver, and pays benefits in accordance with the CBA. On other occasions the rental included both the equipment and the drivers, in which case the drivers' wages and benefits are to be paid by the outside truck supplier. The CBA places certain restrictions on Audax's capacity to hire outside trucks. In particular, it permits the hiring of outside trucks only if "all [of an Employer's] available suitable trucks or equipment are in use." (CBA 2002-2006, Section 6(D).) If all of Audax's trucks are in use, it is permitted to hire "only from truck or equipment suppliers whose drivers receive wages, working conditions, benefits and standards of employment no less favorable than those contained herein . . . ." (CBA 2002-2006 Section 6(D).)*fn5 When Audax hires outside trucks, it is required to notify Local 282 on a weekly basis; "The Employer and/or Contractor shall notify the Local 282 . . . on a weekly basis, of the identity and address of the truck or equipment supplier, the number of trucks supplied and the hours of work involved for each truck."Id.*fn6
The CBA also places restrictions on subcontracting. Pursuant to Section 7(A), employers who subcontract any covered work are required to "[s]ubmit monthly reports of all hours worked for each Employee, in all classifications covered by this Agreement, whether that work is performed by an Employee of the Employer or an Employee of a subcontractor . . . ." (CBA 2002-2006, Section 7(A).) The CBA does not contain a definition of "subcontractor."
Sections 6 and 7 also include language regarding the consequences of non-compliance. Each section states, "[I]f the union, by an officer, by written notice with report of delivery, notifies the Employer and/or Contractor that a truck or equipment supplier is not complying, the [Employer and/or Contractor/Employer] [may/shall] be responsible for such non-compliance for the period only beginning two (2) working days after the day of receipt of such notice." (CBA 2002-2006, Sections 6(D), 7(B).)*fn7 In Section 6, "not complying" refers to the requirement that drivers of outside truck suppliers receive "wages, working conditions, benefits and standards of employment no less favorable than those contained herein." (Id. at Section 6(D).)*fn8 In Section 7, "not complying" refers to any subcontractor who "fails to make contributions to the Local 282 . . . Funds . . . as required by this Agreement . . . ." (Id. at Section 7(B).)
Audax regularly hired outside trucks or equipment and drivers from Cross-claimants Ferrara and Formula on an "as needed basis." (Def.'s 56.1 Statement ¶ 26; Ferrara 56.1 Statement, ¶ 41.) Audax admits that it never informed Local 282 about these outside truck hires pursuant to the reporting requirements in Sections 6(D) or 7(A) of the CBA. (Def.'s Mem. Supp. Summ. J. 3.)
At all times relevant to this action, Ferrara has been in the business of renting trucks as bare rentals or with drivers to contractors. (Ferrara 56.1 Statement ¶ 11.) Sal Ferrara is the owner and controlling officer of Ferrara. (Id. ¶ 12.) Ferrara has never been a signatory to a Local 282 CBA. (Id. ¶ 15.) Sal Ferrara states that he considered having Ferrara become a signatory of the CBA, but did not, because most of the work he did was non-union, and the only union contractor he conducted business with -- Audax -- allegedly discouraged him from becoming a signatory. (Sal Ferrara Dep., 10:23-11:17, Nov. 26, 2003.) Instead, he encouraged his father-in-law, Charles Hirschorn, a retired court reporter with no experience in the construction industry, to start another truck rental business that could be a signatory to the CBA and that could utilize Ferrara's equipment and drivers when they did not have enough non-union work. (Id. 10:2-13:16; Sal Ferrara Dep. 22:7-24:21, Jan 14, 2005.) Hirschorn incorporated Formula 1 in or about January of 2000 and entered into the collective bargaining agreement with Local 282, effective January 13, 2000 to June 30, 2002. (Ferrara, 56.1 Statement ¶¶ 15, 17.)
Formula and Ferrara were almost identical in their business operations: both companies had the same corporate purpose (to lease trucks and equipment), were managed by the same principal (Sal Ferrara), used the same trucks and equipment, employed the same individuals, and operated out of the same location -- an office at the home of Sal Ferrara. (Sal Ferrara Dep., 13:2-18, 33:2-18, 34:20-40:7, 41:14-42:6, Nov. 26, 2003.) Sal Ferrara made all decisions regarding which trucks and drivers would be used on both Ferrara and Formula jobs. Hirschhorn had almost no involvement in running the business other than signing checks prepared by Sal Ferrara. (Hirschorn Dep. 19:17-21:25, Nov. 26, 2003.)
During the period that Formula was a CBA signatory, Audax paid two different truck rental rates to Sal Ferrara, depending on whether he was leasing Formula or Ferrara trucks and drivers to Audax. (Def.'s Counter-statement to Pls.56.1 statement at ¶ 55.) According to Sal Ferrara, he received between 520 to 540 dollars per day for a truck and driver from Ferrara, and 750 to 780 dollars per day for a truck and driver from Formula. (Sal Ferrara Dep., 18:11-14, Nov. 26, 2003.) Plaintiffs allege, and Sal Ferrara corroborates, that Sal Ferrara paid two rates to his drivers who performed work for Audax, depending on whether a union shop steward was present at the job site. (Id., at 13:7-24, 39:2-9; Pls Mem. Supp. Summ. J. at 3; Sal Ferrara Dep. 117:6-14, Jan. 14, 2005; Def's 56.1 Statement, ¶ 23). For so-called non-union jobs, Sal Ferrara's drivers did work as Ferrara employees and were not paid prevailing wages and benefits, but when these same drivers, who were members of Local 282, worked on so-called union jobs, they worked as Formula employees, were paid union wages, and benefit payments were remitted to the Funds for those employees as required. (Sal Ferrara Dep. 13:7-24, Nov. 26, 2003; Pls. 56.1 Statement ¶ 36.) Plaintiffs further allege, and Sal Ferrara corroborates, that Audax was fully aware of and supportive of these dual wage and benefit systems, which enabled Audax to sometimes pay lower truck hire rates, in direct violation of CBA Section 6(D). (Pls. 56.1 Statement at ¶¶ 42, 47, 52, 53; Sal Ferrara Dep. 11:11-21, 18:2-17, Nov. 26, 2003; Sal Ferrara Dep. 117:6-23, Jan. 14, 2005.) Audax denies having made any distinction between "union" or "non-union" jobs in its dealings with Ferrara and Formula, and denies any knowledge of a dual system of wages and benefits for those Formula and Ferrara drivers doing Audax work, but admits that it paid two different rental rates to Sal Ferrara for trucks with drivers, depending on whether they were hired through Ferrara or Formula. (Def.'s Counter-statement to Pls.' 56.1 Statement at ¶ 34, 55.) The CBA specifically requires employers to agree not to "establish or participate in a double breasted*fn9 operation within the geographical jurisdiction of Local 282." (CBA 2002-2006, Section 34.)
Audax asserts that it complied with Section 6(D) by informing all companies from whom it rented trucks, including Ferrara and Formula, that all Audax jobs were at the prevailing wage and that all outside truck hire employees were required to receive prevailing wages and benefits. (Nicholas Nubile Dep. 22:24-25, 24:5-6, Jan. 31, 2005.) Sal Ferrara claims that Audax never informed him that Ferrara was required to pay prevailing wages and benefits on Audax jobs for the City of New York. (Sal Ferrara Dep. 14:2-15:12, Jan. 14, 2005.)
On June 30, 2002, the CBA between Formula and Local 282 expired, and Formula ceased operations. (Ferrara 56.1 Statement ¶ 35-36.) Thereafter, Audax continued to contact Sal Ferrara to fulfill its outside truck needs. During this period, Audax sometimes rented Ferrara trucks without a driver and then hired the Ferrara drivers directly, placing them on Audax's payroll, to drive Ferrara's trucks. (Pls. 56.1 Statement ¶ 65.) Under this arrangement, Audax paid Ferrara only the bare rental rate, and paid union wages directly to the Ferrara employees and paid benefits on their behalf into the Funds. (Id. at ¶ 65, 67-68; Def.'s Counter-statement to Pls. 56.1 Statement ¶ 65.) Other times, Audax hired trucks with a driver from Ferrara, and the drivers were paid from Ferrara's payroll. (Pls. 56.1 Statement ¶ 66.) Under this arrangement, Audax continued to pay Ferrara lower per day rates than it had paid to Formula; $520-$540 per day, compared with approximately $750-$780 per day that it had paid for the same trucks and drivers through CBA signatory Formula. (Sal Ferrara Dep., 18:11-14, Nov. 26, 2003; Def's 56.1 Statement ¶ 32.)
Plaintiffs allege that Audax is jointly and severally liable with Ferrara for unpaid benefit contributions to the Funds on behalf of Ferrara employees under one of two theories: (1) Audax directly violated Section 6(D) and/or Section 7 of its CBA by hiring Ferrara trucks even though Ferrara did not pay prevailing wages and benefits to its employees, or (2) Audax acted in concert with Ferrara and Formula's single employer or alter ego arrangement prior to June 30, 2002, and with Ferrara alone after that date, to avoid Fund contributions and, therefore, under a joint employer theory, is jointly and severally liable for Ferrara's contribution shortfalls on behalf of union employees who performed Audax work. Plaintiffs seek summary judgment finding Audax liable for payment to the Funds under one of these two theories. Defendant Audax seeks summary judgment on grounds that (1) LMRA § 302(c)(5), 29 U.S.C. § 186(c)(5) prohibits Audax from making payments to the Funds on behalf of Ferrara's employees; (2) Section 6(D) of the CBA does not require Audax to make payments to the Funds for drivers of outside truck suppliers; (3) Audax did not violate Section 6(D) of the collective bargaining agreement since it informed truck hires of their obligation to pay prevailing wages; and (4) there was no joint employer relationship between Audax and Ferrara. Cross-claimants assert that Audax is jointly and severally liable for their obligations to the Funds on behalf of Ferrara employees due to Audax's violation of its CBA, and they seek relief from Audax accordingly. They also have moved for summary judgment, seeking indemnification of their obligations to Plaintiff via the settlement agreement.
A. Standard for Summary Judgment
Summary judgment is generally appropriate where the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Viola v. Philips Med. Sys. Of N. Am., 42 F.3d 712, 716 (2d Cir. 1994) (quoting Fed. R. Civ. P. 56(c)). The relevant governing law in each case determines which facts are material; "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed. 2d 202 (1986). No genuinely triable factual issue exists when the moving party demonstrates, on the basis of the pleadings and submitted evidence, and after drawing all inferences and resolving all ambiguities in favor of the non-movant, that no rational jury could find in the non-movant's favor. See Chertkova v. Conn. Gen. Life Ins. Co., 92 F.3d 81, 86 (2d Cir. 1996).
To defeat a summary judgment motion properly supported by affidavits, depositions, or other documentation, the non-movant must offer similar materials setting forth specific facts that show that there is a genuine issue of material fact to be tried. Rule v. Brine, Inc., 85 F.3d 1002, 1011 (2d Cir. 1996). The non-movant cannot rely on the allegations in his or her pleadings, conclusory statements, or on mere assertions that ...