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William K. Duffy, et al v. Modern Waste Services Corp.

February 14, 2011


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


Plaintiffs seek to enforce Defendants' obligations under the Labor Management Relations Act, the Employee Retirement Income Security Act of 1974 ("ERISA") and a collective bargaining agreement. Pending before the Court is Plaintiffs' unopposed motion for summary judgment. For the reasons that follow, that motion is GRANTED, and the parties are ORDERED to comply with the schedule set forth at the end of this Memorandum and Order.


Defendants have essentially abandoned the defense of this action. They failed to serve initial disclosures pursuant to this Court's scheduling order (Docket Entry 11) and they have failed to respond to any of Plaintiffs' discovery requests, including interrogatories, a request for documents, and a request for admissions. Additionally, Defendants have not responded to Plaintiffs' Local Civil Rule 56.1 Statement. Accordingly, the facts contained therein are deemed admitted. See LOCAL CIV. R. 56.1(c).

I. The Parties

Plaintiffs William K. Duffy, Kenneth Huber, Phillip Capobianco, John Duffy, Scott Adrian, Paul O'Brien, Marc Herbst, James Haney III, and James Pratt III are Trustees of Local 138, 138A & 138B, International Union of Operating Engineers Welfare Fund, Legal Fund, Apprenticeship Training Fund, and Annuity Fund. Michael Fanning is the Chief Executive Officer of the Central Pension Fund, and William K. Duffy, in addition to his role as Trustee, is the president of Local 138, 138A, 138B, and 138C International Union of Operating Engineers. These men and the Union Funds they represent are collectively referred to herein as "Plaintiffs." The Union Funds are jointly administered employee labor-management trust funds established and maintained under the Taft-Hartley Act, 29 U.S.C. § 186(c)(5), and are multi-employer employee benefit plans within the meaning of ERISA, 29 U.S.C § 1002(1), (2) and (37)(a).

Plaintiffs sued three construction companies and two individuals: Modern Waste Services Corporation ("Modern Waste"), Modern Concrete Corporation ("Modern Concrete") and Rotondo Contracting Corporation ("Rotondo Contracting") (collectively, the "Corporate Defendants"); and Maria Dellavedova and Quirino Rotondo (together, the "Individual Defendants"). Of the five Defendants, only Rotondo Contracting failed to answer. Plaintiffs indicated that they intend to seek a default judgment against Rotondo Contracting but have not yet done so.

II. The Collective Bargaining Agreement

Modern Concrete, a New York corporation, is party to a collective bargaining agreement with the International Union of Operating Engineers Local 138, 138A, 138B and 138C ("Local 138") (Pl. 56.1 Stmt. ¶¶ 4, 7.) Defendant Dellavedova signed the collective bargaining agreement (the "Agreement") on Modern Concrete's behalf. (Id. ¶ 5.) The Agreement recognizes Local 138 as the sole and exclusive representative of all employees engaged in operating engineering work, and it obligates its signatories to make fringe benefit contributions to the Union Funds on behalf of those employees. (Affirmation of William K. Duffy, Jr. ("Duffy Aff."), Ex. A, Art. III; Art. IV, § 2.) The required contributions are computed based on the number of hours that covered employees spent performing covered work. (Duffy Aff. ¶ 4.) The agreement also requires its signatory employers to cooperate in periodic books and records audits. (Duffy Aff. Ex. A, Art. IV, § 2-F.)

The Agreement contains several additional provisions that are relevant here. It provides that employers "shall not establish or participate in any double-breasted operation within the geographic jurisdiction of Local 138," (id. Art. IV, § 13), and it forbids employers from directing or requiring "their employees, or persons other than the employees in the bargaining units . . . to perform work which is recognized as the work of the employees in said units." (Id. Art. IV, § 5.) The Agreement provides that the signatory employers "shall be defined to include any Employer having common ownership, control of labor relations, etc. . . ." (Id. Art. IV, § 6.) Also, the Agreement incorporates by reference certain Trust Documents which provide that employee benefit contributions owed to Plaintiffs by Modern Concrete constitute plan assets. (Pl. 56.1 Stmt. ¶ 8; Duffy Aff. ¶¶ 5-13; id. Exs. C-F; Clarity Decl. Ex. I, ¶ 122, Ex. 2, ¶ 125, Ex. 3, ¶ 96, Ex. 4, ¶ 96.)

III. The Wrongdoing

Modern Concrete, which signed the Agreement, and Modern Waste and Rotondo Contracting, which did not, are separate companies in name only. They have common ownership, common officers, common directors and common management. (Pl. 56.1 Stmt. ¶¶ 76-80.) They also share professional and administrative services, including office staff. (Id. ¶ 81). They share equipment and tools, and they have the same employees, who perform the same services for the same customers. (id. ¶¶ 82-91.) They operate from the same location and cover the same geographic area, (id. ¶¶ 92-95.), and they have co-mingled construction project proceeds. (Id. ¶¶ 96-98.)

From at least 2005, the Corporate Defendants have failed to make required fringe benefit contributions, despite having the means to do so. Instead, they retained construction project proceeds and diverted them to other creditors. (Id. ¶¶ 120-125.) The exact extent of the Corporate Defendants' failure to meet their obligations is unclear because Plaintiffs have not been able to audit the Corporate Defendants' books and records.

The Individual Defendants, who are married to each other, are the shared owners of the Corporate Defendants. They are the principals, officers, and managers of each company.

(Pl. 56.1 Stmt. ¶¶ 12-46, 47-75.) As the decision-makers behind each Corporate Defendant, the Individual Defendants decide which creditors to pay, how much they are paid, and when they are paid. (Id. ¶¶ 138-44, 164-72.) They determine which employees are paid by each company, (id. ¶¶ 126, 154), which employees have fringe benefit contributions made on their behalf, (id. ¶¶ 150, 178), and which employees are recorded on the each Corporate Defendant's books and records. (Id. ¶¶ 151, 179.) They have arranged for work covered by the Agreement to be performed by Modern Waste and Rotondo ...

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