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Trustees of the Local 531 Pension Fund v. Al Turi Landfill

September 17, 2010

TRUSTEES OF THE LOCAL 531 PENSION FUND, PLAINTIFFS,
v.
AL TURI LANDFILL, INC., DEFENDANT.



The opinion of the court was delivered by: Ross, United States District Judge

NOT FOR PRINT OR ELECTRONIC PUBLICATION

AMENDED OPINION & ORDER

In the instant action, plaintiffs, Trustees of the Local 531 Pension Fund, allege that defendant Al Turi Landfill is liable to them for unpaid withdrawal liability pursuant to the Employee Retirement Income Security Act ("ERISA") of 1974, 29 U.S.C. § 1301, et. seq., and the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1381-1461. Defendant moves for an order dismissing the complaint and directing the parties to proceed to arbitration. Plaintiffs move for summary judgment. For the reasons set forth below defendant's motion to compel is granted, plaintiffs' motion for summary judgment is denied without prejudice, and the action is stayed pending the outcome of the arbitration.

BACKGROUND

The Local 531 Pension Fund ("Fund") is an "employee benefit fund" as defined in Sections 3(2) and 3(3) of ERISA. See 29 U.S.C. §§ 1002(2); 1002(3). The Fund is operated pursuant to its Trust Agreement and has further adopted Plan Rules and Regulations concerning the administration of the Local 531 Pension Plan, including the enforcement of withdrawal liability obligations. (Aff. of Barry Reich, Dec. 16, 2009 ("Reich Aff."), ¶5, Ex. C.) Defendant Al Turi Landfill, Inc. was party to a series of collective bargaining agreements with Local 531. (Compl. ¶ 7.) Pursuant to the collective bargaining agreements, Al Turi was obligated to make monthly contributions to the Fund on behalf of its employees working in covered employment. (Compl. ¶ 7.) In December 1997, the collective bargaining agreement between Al Turi and Local 531 was amended, and Al Turi and the other signatory employers then contributing to the Fund were no longer obligated to make monthly contributions. (Reich Aff. ¶ 9.) While there is some dispute as to the reasons for the Fund's termination, it is agreed that the Local 531Pension Fund was terminated, and at that time, Al Turi permanently ceased to have an obligation to make monthly contributions to the Fund, and all employer members, including Al Turi, were assessed a withdrawal liability. (Reich Aff., ¶ 11.)

On March 27, 1998, Local 531 notified Al Turi that it had "computed the unfunded vested benefits (UVB) allocated to the Company to be equal to: $236,970.64. This is the Company's withdrawal liability." (Reich Aff. ¶ 11, Ex. D.) On December 2, 1998, defendant filed a Demand for Arbitration with the American Arbitration Association ("AAA") seeking "complete or partial reduction" of its withdrawal liability. (Decl. of Edward Beane ("Beane Decl."), ¶ 17, Ex. C.) On December 21, 1998, defendant sent a letter to the AAA stating that it consented to Local 531's request to hold the arbitration in abeyance for an unspecified period of time. (Beane Decl., ¶ 22, Ex. E.) On January 27, 1999, Local 531 informed Al Turi of its "Reallocation Liability" and stated that Al Turi's total liability, including withdrawal liability, redetermination liability, and reallocation liability, was $441,537.11. (Reich Aff. ¶ 12, Ex. E.) The payment schedule provided for 147 quarterly payments of $6,738.40 each, and a final payment in the amount of $1,326.30, with payments due on February 1, May 1, August 1, and November 1 of each year. (Reich Aff. ¶ 12, Ex. E.) Defendant states that in or around 1999, Al Turi began making these quarterly payments to Local 531 in a timely fashion at the rate of $6,738.40 per quarter, while reserving its right to challenge these assessments in the pending arbitration. (Beane Decl., ¶ 20.)

On September 15, 1999, after a period of inactivity, AAA advised both parties that "[u]nless we are advised to the contrary, by either party, within ten days, our records will be marked to reflect that the matter has been settled and that it is the parties' wish that it be withdrawn from arbitration." (Beane Decl., ¶ 23, Ex. F.) On October 19, 1999, defendant wrote to AAA stating that defendant "has not abandoned this case and would like to move forward with the scheduling matter for arbitration." (Beane Decl., ¶ 24, Ex. G.) Despite the fact that defendant sent its letter after the ten day deadline set by AAA, on November 3, 1999, AAA informed the parties that it had appointed an arbitrator. (Beane Decl., ¶ 25, Ex. H.) Defendant subsequently sent plaintiffs a document request, and on February 4, 2000, AAA notified the parties that an arbitration hearing had been scheduled for April 4, 2000. (Beane Decl. ¶¶ 27, 29, Exs. I, K.) The hearing was adjourned twice, and before the November 6, 2000 hearing, another adjournment was sought. (Beane Decl. ¶¶ 30-31, Exs. L, M.) On February 12, 2001, AAA advised the parties that it had not received any information regarding the status of the arbitration and intended to close the matter within two weeks. (Beane Decl. ¶ 32, Ex. N.)

By letter dated March 26, 2001, more than two weeks later, defendant advised AAA that due to the health concerns of Al Turi's principal, the matter had been put aside indefinitely, and that the parties had not had the opportunity to settle the matter. (Beane Decl. ¶ 33, Ex. O.) Defendant requested that the mater be restored and reopened so that the parties could move forward. (Beane Decl. ¶ 33, Ex. O.) Over the next year, the arbitration hearing was adjourned four times, and was scheduled for March 12 and 13, 2002. (Beane Decl. ¶¶ 35-37, Exs. P, R.) In January 2002, defendant notified plaintiffs of its "precarious financial position," and that its landfill space was virtually filled to capacity. The defendants stated that without a permit for its expansion, the landfill would no longer be economically viable. (Beane Decl. ¶ 39, Ex. S.) Al Turi sought approval from the New York State Department of Environmental Conservation ("NYSDEC") to expand its landfill, and was denied. This denial was affirmed by the New York Court of Appeals in October 2002. See Al Turi Landfill, Inc., v. New York State Dept. of Environmental Conservation, 98 N.Y.2d 758 (2002).

The date of the arbitration hearing was further postponed on numerous occasions as the parties attempted to reach a settlement. (Beane Decl. ¶¶ 41-46, Exs. T, V-X.) On April 21, 2003, the parties sought to adjourn a May 14, 2003 hearing for settlement purposes. (Beane Decl., Ex. X.) On April 23, 2003, AAA stated that it would place the file in abeyance, and noted that "the Association generally cannot hold cases in abeyance pending settlement longer than twelve (12) months. Accordingly, we will hold the above-captioned matter in abeyance pending further advice from the Parties or until April 2004." (Beane Decl., Ex. Y.)

Defendant states that after May 2003, the parties continued to communicate regarding settlement and Al Turi's financial position. (Beane Decl. ¶ 49.) However, neither party specifically requested that AAA reopen the arbitration proceedings prior to April 2004. Defendant states that in July 2006, defendant again informed plaintiffs of its financial situation, and asserted that that it qualified for "hardship" consideration under the appropriate ERISA rules. (Beane Decl. ¶54, Ex. DD.)

Plaintiffs claim that Al Turi failed to make each of the required quarterly payments that were due beginning on May 1, 2006. (Compl. ¶ 17.) Defendant asserts that it tendered quarterly payments to the Fund for the quarters ending August 1, 2006 and November 1, 2006. (Decl. of Edward Phillips, Mar. 12, 2010, Ex. A.)*fn1 Regardless of when the last payment was made, in September 2007, the Fund, by counsel, demanded payment of the unpaid quarterly payments. (Compl. ¶ 19; Reich Aff. ¶ 15, Ex. F.) Al Turi failed to make any payments after the Fund's September 2007 demand. (Compl. ¶ 17.) Defendant asserts that it is no longer operating and is insolvent. (Def.'s Letter, Aug. 21, 2009, Dkt. No. 18.)

Under the Plan Rules and Regulations, where an employer fails to pay its withdrawal liability quarterly payment when due, and such failure is not cured within sixty days after written notice of such failure, the employer is deemed to be in default of its withdrawal liability obligation. (Reich Aff., Ex. C, Art. 14, § 14.11(c).) The Plan Rules also provide that when an employer has defaulted, it is liable for interest on the total unpaid withdrawal liability from the due date of the first payment which was not timely made, and that the Plan shall be entitled to reasonable attorneys' fees, litigation costs, and liquidated damages. (Reich Aff., Ex. C, Art. 14, §§ 14.11(c), 14.11(e).)

Plaintiffs filed the instant action on March 28, 2008. Defendant now moves for an order dismissing the complaint and directing the parties to proceed to arbitration. Plaintiffs move for summary judgment, claiming that there is no issue of material fact as to defendant's liability. Plaintiffs seek Al Turi's outstanding ...


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