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D'Antonio v. Metropolitan Transportation Authority

March 4, 2008

DANIEL P. D'ANTONIO, ET AL., PLAINTIFFS,
v.
METROPOLITAN TRANSPORTATION AUTHORITY; NEW YORK CITY TRANSIT AUTHORITY; TRANSPORT WORKERS UNION OF AMERICA, AFL-CIO, LOCAL 100; ROGER TOUSSAINT AS PRESIDENT OF TRANSPORT WORKERS UNION LOCAL 100; AND JOHN DOE AND JANE DOE AND OTHER: PERSONS TO BE NAMED LATER AS OFFICIALS OF TRANSPORT WORKERS UNION, AFL-CIO, LOCAL 100, DEFENDANTS.



The opinion of the court was delivered by: Kimba M. Wood, U.S.D.J.

Opinion and Order

This action arises from Defendants' alleged wrongful diversion of money from Plaintiffs' employee retirement health benefit funds. In this Order, the Court resolves three motions pending before the Court (the "three motions"): (1) Defendant Metropolitan Transportation Authority (the "MTA")'s motion for reconsideration of the Court's April 27, 2007 order denying the MTA's motion to dismiss the Complaint;*fn1 (2) Defendant New York City Transit Authority (the "NYCTA")'s motion to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6);*fn2 and (3) Defendants Transport Workers Union of America Local 100 (the "Union"), Roger Toussaint, John Doe, and Jane Doe (together, the "Union Defendants")'s motion for partial judgment on the pleadings.

For the reasons stated below, the Court (1) GRANTS the MTA's motion for reconsideration and GRANTS in part and DENIES in part the MTA's earlier motion for judgment on the pleadings; (2) GRANTS in part and DENIES in part the NYCTA's motion to dismiss; and (3) GRANTS in part and DENIES in part the Union Defendants' motion for partial judgment on the pleadings.

I. Background*fn3

A. The Parties

Plaintiffs are allegedly employees of the MTA and members of the Union, and are currently about to retire. Compl. ¶¶ 1, 3. Defendant MTA is a public authority and public benefit corporation, created and operated pursuant to the Public Authorities Law of the State of New York. See N.Y. Pub. Auth. Law § 1263. It is responsible for operating, inter alia, all of the rapid transit lines within New York City. See Compl. ¶ 12. Defendant NYCTA is also a public authority and public benefit corporation, created and operated pursuant to the Public Authorities Law of the State of New York. See N.Y. Pub. Auth. Law § 1201. It provides subway and bus transportation throughout New York City. Plaintiffs allege that the NYCTA is a subsidiary of the MTA. See Compl. ¶ 13. Defendant Union is Plaintiffs' collective bargaining representative. Defendant Toussaint is President of the Union.

B. Plaintiffs' Retirement Health Benefit Plans

The Complaint alleges that Plaintiffs are participants in or beneficiaries of two health benefit plans. First, under the "25/55 Plan," "some" of the Plaintiffs, as well as thousands of similarly-situated MTA and NYCTA employees, were "assured of" certain health benefits upon retirement in exchange for contributing 2.3 percent of their wages to a fund maintained by the MTA (the "Health Benefit Fund").*fn4 Compl. ¶¶ 1, 2, 46.

Plaintiffs' briefing clarifies that they allege the 25/55 Plan was established pursuant to a Collective Bargaining Agreement between the NYCTA and the Union (the "25/55 CBA"). See Pl. Counterstatement (D.E. 47) ¶ 13; see also Pegram v. Herdrich, 530 U.S. 211, 230 n.10 (2000) (noting that the Court may use a plaintiffs' brief to clarify allegations in the complaint whose meaning is unclear). Second, the Complaint also alleges the existence of an "Active Benefit Fund," which was established "for . . . [Plaintiffs'] benefit" to pay for health benefits upon retirement. The Active Benefit Fund was also funded through wage deductions from Plaintiffs. However, the Complaint does not specify how the Active Benefit Fund was created, or whether the Active Benefit Fund was also established pursuant to the 25/55 CBA. See Compl. ¶¶ 2, 3, 62.

C. Diversion of Funds

The Complaint alleges that the "MTA and/or NYCTA" took and misapplied money from the Health Benefit Fund and Active Benefit Fund (the "Funds"), with the active or tacit consent of the Union. Compl. ¶ 63. Money from the Funds is no longer available to fund Plaintiffs' retirement health benefits, and Plaintiffs are allegedly going to be deprived of retirement health benefits as a result of this diversion of funds. Compl. ¶¶ 3, 63, 65, 90. In addition, the Complaint alleges that the Union induced Plaintiffs to vote for approval of the 25/55 Plan, while knowing that the MTA and/or the NYCTA intended to use the Health Benefit Fund as their own "slush fund." Compl. ¶¶ 5, 56.

D. Plaintiffs' Claims

Plaintiffs allege the following claims, arising from Defendants' alleged diversion of money from the Funds: (1) wrongful misappropriation of funds by the MTA, NYCTA, and Union (claims 1 and 10); (2) conversion and bad faith by the MTA, NYCTA, and Union (claims 2(a) and 11(a)); (3) breach of the duty of fair representation by the Union (claims 2(b) and 11(b)); (4) breach of fiduciary duties by the Union in violation of New York Labor Law § 723 (claims 3 and 12); (5) breach of the Union's duty to hold Plaintiffs' money solely for the benefit of the Union and its members, in violation of 29 U.S.C. § 501 and New York Labor Law § 720 (claims 4 and 13); (6) fraud by the MTA, NYCTA, and Union (claims 5 and 14); (7) unjust enrichment of the MTA and NYCTA by the MTA, NYCTA, and Union (claims 6 and 15); (8) wrongful garnishment of Plaintiffs' wages by the MTA and NYCTA in violation of New York General Municipal Law § 92-a(2) (claims 7 and 16); (9) wrongful garnishment of Plaintiffs' wages by the MTA and NYCTA in violation of New York Labor Law § 193(1)(b) (claims 8 and 17); and (10) breach of contract by the MTA, NYCTA, and Union by unlawfully diminishing Plaintiffs' retirement benefits in violation of the New York Constitution, Article 5, § 7 (claims 9 and 18).

In addition, the Court infers from the Complaint a claim for breach of contract against the NYCTA and MTA, arising from their alleged breach of the 25/55 CBA by diverting money from the Funds (the "25/55 contract claim"). See Newman v. Silver, 713 F.2d 14, 16 n.1 (2d Cir. 1983) ("The nature of federal pleading . . . is by statement of claim, not by legal theories.").

II. Discussion

A. The MTA's Motion for Reconsideration

The MTA asks the Court to reconsider its April 27, 2007 order (the "April 2007 Order") denying the MTA's motion for judgment on the pleadings.*fn5 In the April 2007 Order, the Court converted the MTA's motion to a motion for summary judgment, and concluded that summary judgment was inappropriate because "the parties have not yet engaged in discovery, and the briefing . . . reveals that there are disputed issues of material fact." Order 2. The Court concludes that reconsideration of the April 2007 Order is appropriate.

Although the MTA attached exhibits not referenced in the Complaint, the MTA also made arguments for dismissal based solely on facts alleged in the Complaint. For example, the MTA argued that Plaintiffs' tort claims should be dismissed because Plaintiffs did not file a notice of claim, and that the statutes relied upon by Plaintiffs do not apply to the MTA. See MTA Mem. of Law 14-18 (D.E. 16). The Court erred by not evaluating these arguments on their merits. Because the April 2007 Order overlooked undisputed facts alleged in the Complaint, the Court will reconsider the MTA's motion for judgment on the pleadings. See Travelers Ins. Co. v. Buffalo Reinsurance Co., 739 F. Supp. 209, 211 (S.D.N.Y. 1990) (noting that a court should grant a motion for reconsideration if it failed to consider factual matters that were put before the Court in the underlying motion). The Court analyzes the merits of the MTA's motion for judgment on the pleadings together with the NYCTA's motion to dismiss in Part

II. C.

B. Standard for Motion to Dismiss and Motion for Judgment on the Pleadings*fn6

The NYCTA moves to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim on which relief can be granted. The MTA and the Union Defendants each move for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c).

In weighing a Rule 12(b)(6) motion to dismiss, the Court must "accept[ ] as true the factual allegations in the complaint and draw[ ] all inferences in the plaintiff's favor." Scutti Enters., LLC v. Park Place Entm't Corp., 322 F.3d 211, 214 (2d. Cir. 2003). "[W]hen a complaint adequately states a claim, it may not be dismissed based on a district court's assessment that the plaintiff will fail to find evidentiary support for his allegations or prove his claim to the satisfaction of the factfinder." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1969 n.8 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all of the Complaint's allegations are true (even if doubtful in fact)." Id. at 1965 (citations omitted).

"The standard for addressing a Rule 12(c) motion for judgment on the pleadings is the same as that for a Rule 12(b)(6) motion to dismiss for failure to state a claim." Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir. 2006). A motion for judgment on the pleadings "'is appropriate where material facts are undisputed' after a court has considered the complaint, the answers and incorporated documents or materials, and a judgment 'is possible merely by considering the contents of the pleadings.'" B.K. Solomon-Lufti v. New York City Dep't of Educ., ...


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