United States District Court, S.D. New York
DIVISION 1181 AMALGAMATED TRANSIT UNION - NEW YORK EMPLOYEES PENSION FUND, by its trustees, Plaintiff,
NEW YORK CITY DEPARTMENT OF EDUCATION, Defendant.
MEMORANDUM AND ORDER
Kevin Castel United States District Judge.
action is brought by plaintiffs Division 1181 Amalgamated
Transit Union -New York Employees Pension Fund and its board
of trustees (collectively, the “Fund”). The Fund
is a multiemployer pension plan that provides retirement
benefits to New York City school bus drivers and other
employees who work in student transportation. The Fund's
participants include employees of eleven non-party bus
companies that contracted with the New York City Department
of Education (the “DOE”). In or around 2013,
their contracts with the DOE expired and were not renewed.
The bus companies each withdrew from the Fund around that
action, the Fund seeks to hold the DOE liable for failing to
pay employee contributions. In a prior ruling, this Court
partially granted the DOE's motion to dismiss pursuant to
Rule 12(b)(6), Fed. R. Civ. P., and dismissed claims alleging
that the DOE had direct contractual obligations to the Fund,
or that it functioned as a single or joint employer with the
eleven non-party bus companies. Div. 1181 Amalgamated
Transit Union - New York Employees Pension Fund v.
New York City Dep't of Educ., 2014 WL 4370724, at *8
(S.D.N.Y. Aug. 27, 2014), reconsideration granted in
part, 2014 WL 6647368 (S.D.N.Y. Nov. 24, 2014).
remaining claims assert that the eleven non-party bus
companies are the DOE's corporate alter egos. According
to the Fund, the DOE violated the Employee Retirement Income
Security Act, 29 U.S.C. § 1001, et seq.
(“ERISA”), as amended by the Multiemployer
Pension Plan Amendments Act, 29 U.S.C. § 1381 (the
“MPPAA”), by failing to make required
contributions to the Fund. In the aggregate, the Fund alleges
that the DOE owes more than $100 million in payment for its
alleged withdrawal liability.
in this case is now closed, and the DOE moves for summary
judgment in its favor. For the reasons that will be
explained, no reasonable trier of fact could conclude that
the eleven non-party bus companies identified by the Fund are
alter egos of the DOE. The DOE's motion for summary
judgment is therefore granted. BACKGROUND.
the facts set forth by the DOE are undisputed. To the extent
that the Fund disputes a fact, the Court accepts the
Funds' version. In all instances, the Court draws every
reasonable inference in favor of the Fund as the non-movant.
Delaney v. Bank of Am. Corp., 766 F.3d 163, 167 (2d
Cir. 2014) (quotation marks omitted).
is a government entity that provides education to
approximately 1.1 million students in New York City (the
“City”) through the operation of approximately 1,
600 public schools. (Def. 56.1 ¶ 2; Pl. 56.1 Resp.
¶ 2.) Under state law, the DOE is required to award all
busing contracts through competitive, sealed bidding. (Def.
56.1 ¶ 38; Pl. 56.1 Resp. ¶ 38.)
DOE's history with bus contractors is important to an
understanding of the Fund's claims. In 1979, following a
strike by bus company employees, the DOE reached a negotiated
agreement with certain local transit unions. (Def. 56.1
¶¶ 39-40; Pl. 56.1 Resp. ¶¶ 39-40.) This
agreement, known as the “Mollen Agreement, ”
provided for certain employee protections that became
standard in DOE busing contracts. (Def. 56.1 ¶¶
41-51; Pl. 56.1 Resp. ¶¶ 41-51.)
employee protections of the Mollen Agreement remained in
place until 2012, following litigation in which some bus
companies successfully challenged certain employee
protections as unlawful. (Def. 56.1 ¶ 54; Pl. 56.1 Resp.
¶ 54.) In 2012 and 2013, the DOE solicited bids for new
bus contracts that would replace those set to expire in 2013.
(Def. 56.1 ¶¶ 54-56; Pl. 56.1 Resp. ¶¶
54-56.) Numerous companies submitted sealed bids. (Def. 56.1
¶ 56; Pl. 56.1 Resp. ¶ 56.) When the DOE awarded
new contracts, they did not contain the employee protections
that were standard under the Mollen Agreement. (Def. 56.1
¶ 56; Pl. 56.1 Resp. ¶ 56.)
these changes to the contracting landscape, the DOE did not
renew its contracts with certain bus companies that had long
provided student transportation. (Third Am. Compl't
¶ 91.) The Fund now contends that the DOE has withdrawal
liability for eleven of those companies, which it
characterizes as alter egos of the DOE.
those eleven companies entered into a collective bargaining
agreement (“CBA”) with Amalgamated Transit Union
Local 1181-106, AFL CIO (“Local 1181”). (Def.
56.1 ¶ 90; Pl. 56.1 Resp. ¶ 90.) The DOE is not a
signatory to the CBA, and was not directly involved in its
negotiation. (Def. 56.1 ¶ 91; Pl. 56.1 Resp. ¶ 91.)
Each CBA defines “Employer” as the respective bus
company that executed the CBA. (Def. 56.1 ¶ 92; Pl. 56.1
Resp. ¶ 92.) The CBA set forth the terms of certain
employee protections and benefits, and the required employer
contributions to fund those benefits. (Def. 56.1 ¶¶
93, 95; Pl. 56.1 Resp. ¶¶ 93, 95.) The CBA permits
Local 1181 to conduct routine audits of the bus companies to
review their contributions to the employee pension fund;
while the union was permitted to conduct such audits, nothing
in the CBA permits the DOE to conduct audits. (Def. 56.1
¶ 102; Pl. 56.1 Resp. ¶ 102.) As noted, the Fund
contends that the bus companies were the DOE's alter ego
for ERISA purposes. It contends that, as an alter ego, the
DOE has withdrawal liability to the Fund, to the same extent
as if it had been a signatory to the CBA with Local 1181.
DOE's summary judgment motion asserts that no reasonable
trier of fact could conclude that the eleven bus companies
were its alter egos. In support of its motion, the DOE has
submitted evidence about each of the eleven companies,
including facts about their history, ownership, management,
corporate form, business operations, revenue sources and the
consequences of the DOE's failure to renew its contract
with each company. (Def. 56.1 ¶¶ 104-545; Pl. 56.1
¶¶ 104-545.) The eleven bus companies alleged to be
alter egos of the DOE include three entities wholly owned by
Atlantic Express Transportation Corp. (the “Atlantic
Entities”), Hoyt Transportation Corp. and a related
company, DAK Transportation Corp. (“Hoyt”), Logan
Transportation Systems, Inc. (“Logan”), Canal
Escorts, Inc. (“Canal”), B&M Escorts Inc.
(“B&M”), R and C Transit, Inc. (“R and
C”), and Tufaro Transit Co., Inc. and a related
company, School Days Inc. (“Tufaro”). (See
Fund commenced this action on December 26, 2013, and alleged
that the DOE was liable to the Fund as a result of the bus
companies' withdrawal. (Docket # 1.) The DOE moved to
dismiss the Complaint for failure to state a claim pursuant
to Rule 12(b)(6). This Court granted the motion in part, but
concluded that the Complaint plausibly alleged that, for
ERISA purposes, the non-party bus companies functioned as
corporate alter-egos of the DOE. Division 1181
Amalgamated Transit Union - New York Employees Pension Fund
v. New York City Dep't of Ed., 2014 WL 4370724
(S.D.N.Y. Aug. 27, 2014), reconsideration granted in
part, 2014 WL 6647368 (S.D.N.Y. Nov. 21, 2014). The
parties have engaged in extensive pretrial discovery and
discovery is now closed. The parties agree that any trial of
this action would be to the Court without a jury. (Docket #
judgment “shall” be granted “if the movant
shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law.” Rule 56(a), Fed.R.Civ.P. A fact is material if it
“might affect the outcome of the suit under the
governing law . . . .” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). On a motion for summary
judgment, the court must “construe the facts in the
light most favorable to the non-moving party and resolve all
ambiguities and draw all reasonable inferences against the
movant.” Delaney, 766 F.3d at 167 (quotation
marks omitted). It is the initial burden of the movant to
come forward with evidence on each material element of his
claim or defense, demonstrating that he is entitled to
relief, and the evidence on each material element must be
sufficient to entitle the movant to relief in its favor as a
matter of law. Vt. Teddy Bear Co. v. 1-800 Beargram
Co., 373 F.3d 241, 244 (2d Cir. 2004).
moving party meets its burden, “the nonmoving party
must come forward with admissible evidence sufficient to
raise a genuine issue of fact for trial in order to avoid
summary judgment.” Jaramillo v. Weyerhaeuser
Co., 536 F.3d 140, 145 (2d Cir. 2008). “A dispute
regarding a material fact is genuine ‘if the evidence
is such that a reasonable jury could return a verdict for the
nonmoving party.'” Weinstock v. Columbia
Univ., 224 F.3d 33, 41 (2d Cir. 2000) (quoting Anderson,
477 U.S. at 248).
of alter-ego status is generally a question of fact.
See, e.g., Moore v. Navillus Tile,
Inc., 2016 WL 750797, at *8 (S.D.N.Y. Feb. 24, 2016)
(McMahon, J.). Thus, summary judgment is inappropriate when
the evidence would permit a reasonable trier of fact to
conclude that one organization is the alter ego of another.
See Id. DISCUSSION.
The Law of ERISA Alter Egos.
purpose of the alter ego doctrine in the ERISA context is to
prevent an employer from evading its obligations under the
labor laws ‘through a sham transaction or technical
change in operations.'” Ret. Plan of UNITE HERE
Nat'l Ret. Fund v. Kombassan Holding A.S., 629 F.3d
282, 288 (2d Cir. 2010) (quoting Newspaper Guild of N.Y.,
Local No. 3 of the Newspaper Guild, AFL-CIO v. NLRB, 261
F.3d 291, 298 (2d Cir. 2001)); accord Lihli Fashions
Corp. v. N.L.R.B., 80 F.3d 743, 748 (2d Cir. 1996),
as amended (May 9, 1996). Alter-ego status binds a
non-signatory to the terms of a CBA. United Union of
Roofers, Waterproofers, & Allied Workers Local No. 210,
AFL-CIO v. A.W. Farrell & Son, Inc., 547 F.
App'x 17, 22 (2d Cir. 2013) (summary order). If an entity
is an alter ego for ERISA purposes, Courts will pierce the
corporate veil in order to protect employee benefits.
UNITE, 629 F.3d at 288.
status is determined by a “flexible” test that
weighs the circumstances of each case, and considers the
“important” factors of “‘whether the
two enterprises have substantially identical management,
business purpose, operation, equipment, customers,
supervision, and ownership.'” Id. (quoting
Goodman Piping Prods., Inc. v. NLRB, 741 F.2d 10, 11