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Board of Trustees of The Local Union 373 United Associationof Journeymen v. T.M. Brennan Contractors, Inc.

United States District Court, S.D. New York

January 14, 2015



NELSON S. ROMN, District Judge.

The Board of Trustees of the Local Union 373 United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry Local 373 Benefit Funds ("Plaintiff') commenced this action by complaint filed August 23, 2012 (dkt. no. 1), against T.M. Brennan Contractors, Inc. ("Defendant"),

The complaint asserts a claim for withdrawal liability in the sum of $1, 241, 873.00, under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq., as amended by the Multi-Employer Pension Plan Amendments Act of 1980 (the "MPPAA"), 29 U.S.C. §§ 1381 et seq. The complaint also seeks interest, liquidated damages, costs, and attorneys' fees.

The operative sections of ERISA and the MPPAA, including MPPAA Section 4219(c)(5)(B), impose withdrawal liability on an employer who has "withdrawn" and "defaulted, " through non-payment of agreed contributions to a multi-employer ERISA retirement plan. See 29 U.S.C. § 1399(c)(5)(B). Here, Plaintiff Board of Trustees is operating in a fiduciary capacity for the Local Union 373 "UAJAP" Pension Fund (the "Fund"), and brings this action with respect to a retirement plan for unionized employees established and maintained by the Fund. Plaintiff is acting as "plan sponsor" for purposes of this action, id. § 1002(16)(B)(iii), and Defendant is an "employer" within the meaning of the MPPAA, id. § 1002(5).

Plaintiff now moves for summary judgment pursuant to Federal Rule of Civil Procedure 56 (dkt. no. 29). Defendant opposes the motion, arguing that countervailing legal authority and issues of material fact preclude judgment as a matter of law. For the following reasons, the Court GRANTS the motion and enters summary judgment for Plaintiff with further instructions detailed below.


The facts are gleaned from the parties' Rule 56.1 statements, affidavits, declarations, and exhibits, and are not in dispute, except where so noted. The Plan is an "employee pension benefit plan" and a "multi-employer plan" within the meaning of 29 U.S.C. §§ 1002(2) and (37). Multiple employers participate by paying contributions for covered union employees, who are the beneficiaries of the Plan. Defendant was a participating employer and made contributions to the Plan pursuant to a collective bargaining agreement (the "2005 CBA"). See Declaration of Giacchino Russo ("Russo Decl.") (dkt. no. 43) Ex. A. Defendant adopted the 2005 CBA by executing a compliance agreement effective May 1, 2005, which ran through April 30, 2008. Id. Ex. B. Defendant executed another compliance agreement effective May 1, 2008, which ran through April 30, 2011. Id.

In or about April 2011, Defendant stopped paying wages and benefits as it previously had done pursuant to the terms of the 2005 CBA. Defendant says it did so because it had a labor dispute with UA Local 373, the union and counterparty to the 2005 CBA. Defendant contends the dispute centered on the union's failure to negotiate in good faith a successor collective bargaining agreement or compliance agreement with Defendant, which would have run from May 1, 2011 onward.

The 2005 CBA and Defendant's compliance agreement lapsed as of May 1, 2011. The parties dispute the extent to which the union initiated dialogue with Defendant about a successor agreement before the 2005 CBA lapsed. See id. Defendant says it did not receive any notice concerning a successor agreement in April or May 2011. See Affidavit of Thomas Brennan ("Brennan Aff.") (dkt. no. 34) ¶¶ 11-12. Plaintiff argues, however, that the union sent such notices as a matter of course and must have sent one to Defendant's last known address. See Reply Affidavit of Robert Ambrosetti ("Ambrosetti Reply Aff.") (dkt. no. 37) ¶¶ 2-4. Plaintiff has produced a copy of the cover memo and form compliance agreement mailed to other compliant employers in or about April 2011, which would have extended Defendant's commitment for an additional year. See id. But there is no record evidence of any actual mailing to Defendant.

In any event, after the 2005 CBA and Defendant's compliance agreement lapsed on May 1, 2011, Plaintiff eventually sent Defendant a notice of, and demand for, withdrawal liability in accordance with 29 U.S.C. § 1382. See Russo Decl. Ex. D. Plaintiff did so by letter dated January 30, 2012, and Defendant acknowledges that it received that letter. The letter indicated that withdrawal liability of $1, 241, 873.00 was due, to be paid by quarterly installments. Plaintiff submits, after actuarial analysis, that this sum is consistent with statutory provisions requiring withdrawing employers to pay a proportionate share of a retirement plan's "unfunded vested benefits, ' calculated as the difference between the present value of the vested benefits and the current value of the plan's assets." Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 217 (1986) (quoting Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 725 (1984)). Defendant does not dispute Plaintiff's withdrawal liability calculation, but does dispute that any liability attaches.

According to Defendant, the January 30, 2012 letter was the first it heard of any withdrawal liability. See Brennan Aff. ¶ 12. Defendant says that during the commencement of the labor dispute in 2011, it believed the 2005 CBA had expired without further financial consequences. See id. Legally, Defendant now posits that because of the 2005 CBA's classification under the National Labor Relations Act (the "NLRA"), the agreement automatically extended on a year-to-year basis when negotiation of a successor agreement failed, which Defendant says undercuts any argument for withdrawal liability. See id. ¶ 11. Defendant also contends that Plaintiff had an affirmative duty to negotiate in good faith a new collective bargaining agreement. See Affidavit of Ronald L. Tobia ("Tobia Aff.") (dkt. no. 35) ¶ 6. Plaintiff disagrees that the 2005 CBA automatically extended and that there was an affirmative duty to negotiate a new agreement. See Ambrosetti Reply Aff. ¶¶ 2-4; see also Reply Declaration of Giacchino Russo ("Russo Reply Decl.") (dkt. no. 39) ¶ 4. Instead, Plaintiff contends Defendant was correct in thinking, during the purported labor dispute, that the 2005 CBA lapsed on May 1, 2011. Plaintiff also asserts, however, that withdrawal liability is a statutory legal consequence of this lapse and of Defendant ending payment of wages and benefits and participation in the Plan.

The parties do not dispute that shortly after Defendant received the January 30, 2012 letter, counsel for Defendant requested supporting documents, as is permitted by ERISA. Russo Decl. Ex. E. Plaintiff responded to that request on March 7, 2012. Id. Ex. F. On May 1, 2012, Plaintiff received from Defendant certain objections to the withdrawal liability demand and a request for review pursuant to Section 4219(b)(2)(A) of ERISA. Id. Ex. G. On May 21, 2012, Plaintiff nevertheless informed Defendant it was in default of its withdrawal liability obligations, id. Ex. H, and, on August 10, 2012, Plaintiff responded to Defendant's objections and request for review by rejecting the objections, pursuant to Section 4219(b)(2)(B) of ERISA, id. Ex. I. There was no further communication between the parties. Id. ¶ 15. On August 23, 2012, Plaintiff commenced this action.

ERISA and the MPPAA require that arbitration resolve any dispute between a plan sponsor and an employer concerning withdrawal liability, at least in the first instance. See 29 U.S.C. § 1401(a)(1); see also ILGWU Nat'l Retirement Fund v. Levy Bros. Frocks, Inc., 846 F.2d 879, 881 (2d Cir. 1988). Either party may initiate the arbitration proceeding within sixty days of the earlier of: (a) the date a plan sponsor notifies an employer of the sponsor's decision on a request for review (here, August 10, 2012); or (b) a date 120 days after the employer's request for review (here, on or about September 1, 2012). 29 U.S.C. § 1401(a)(1)(A)-(B). In this case, the earlier of those two dates is August 10, 2012, the date Plaintiff rejected Defendant's objections. It is undisputed that Defendant did not initiate an arbitration proceeding within sixty days ...

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