Div. 1181 Amalgamated Transit Union—N.Y. Emps. Pension Fund v. Logan Transp. Sys., Inc.

293 F.Supp.3d 336

DIVISION 1181 AMALGAMATED TRANSIT UNION—NEW YORK EMPLOYEES PENSION FUND, et al., Plaintiffs,

v.LOGAN TRANSPORTATION SYSTEMS, INC., et al., Defendants.

No. 14–CV–5974 (JFB)(SIL)

United States District Court, E.D. New York.

Signed March 30, 2018

Plaintiffs are represented by Christopher Leins, Jeffrey S. Swyers, and Owen M. Rumelt of Selvin & Hart, P.C., 1625 Massachusetts Ave., NW, Suite 450, Washington, D.C. 20036.

Defendants are represented by Brian J. Shenker of SilvermanAcampora LLP, 100 Jericho Turnpike, Suite 300, Jericho, NY 11753; and Alan B. Pearl of Alan B. Pearl & Associates, P.C., 6800 Jericho Turnpike, Suite 218E, Syosset, NY 11791.

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, United States District Judge

Plaintiffs Division 1181 Amalgamated Transit Union—New York Employees Pension Fund and its trustees Michael Cordiello and Stanley Brettschneider (collectively, "plaintiffs" or "the Fund") commenced this action for withdrawal liability against defendants Logan Transportation Systems, Inc. ("LTSI"), Logan Bus Company, Inc. ("Logan Bus"), Logan Matron Co., Inc. ("Logan Matron"), Little Linda Bus Co., Inc. ("Little Linda Bus"), Little Linda Matron Co., Inc. ("Little Linda Matron"), and Lin Lis Transportation Corp. ("Lin Lis," and collectively, "defendants") under the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. , as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1381 – 1453.¹ Plaintiffs allege that that defendants are in default under ERISA and the MPPAA for failing to make required withdrawal liability payments to the Fund, and therefore, that defendants are liable to the Fund for withdrawal liability, interest, liquidated damages, attorney's fees, and costs. Defendants filed counterclaims seeking declaratory judgments that (1) plaintiffs' purported notices and demands for withdrawal liability were insufficient under MPPAA section 1399(b)(2), and (2) plaintiffs should be compelled to arbitrate all claims against defendants.

Presently before the Court are motions for summary judgment. For the reasons that follow, the Court grants defendants' motion for summary judgment, denies plaintiffs' motion for summary judgment, and stays this action pending arbitration.

I. BACKGROUND

A. Facts²

1. Relevant Entities

The Fund is multiemployer pension plan under ERISA that provides retirement benefits to eligible participants. (Compl. ¶ 2.)

LTSI is a signatory to certain collective bargaining agreements ("CBAs") with the Division 1181 Amalgamated Transit Union ("Local 1181" or "the Union"). (Defs. 56.1 ¶ 1.) At times relevant to this action, LTSI employed individuals represented by Local 1181 for purposes of collective bargaining. (Compl. ¶ 10.) Under the CBAs, LTSI was required to contribute to the Fund on behalf of those employees. (Id. ¶ 12.)

In addition to LTSI, entities Grandpa's Bus Co., Inc. ("Grandpa's Bus"), Lorissa Bus Co., Inc. ("Lorissa Bus"), and Bobby's Bus Co., Inc. ("Bobby's Bus") are also signatories to CBAs with the Union. (Defs. 56.1 ¶ 7.) These four entities act as a single entity for purposes of collective bargaining. (Id. ) They send a single contribution payment check to the Fund every month. (Id. ¶ 8.)

Logan Bus is neither a signatory to CBAs with the Union, nor has it ever contributed to the Fund. (Id. ¶ 2.) Logan Bus, however, is a signatory to a collective bargaining agreement with a different union, and has contributed to that union's pension fund for over 20 years. (Id. )

Defendants, including LTSI and Logan Bus, are 100 percent owned by Lorinda Logan. (Pls. 56.1 ¶ 2.)³ Lorissa Bus and Bobby's Bus are 100 percent owned by Michael Tornabe, Lorinda Logan's husband (Reece Reply Decl. ¶ 10.) Grandpa's Bus is owned by Lorinda Logan's brother, Richard Logan. (Id. ¶ 9.)

2. LTSI's Contract with the City of New York⁴ and Cessation of Contributions to the Fund

On or about April 1, 2013, the City of New York informed LTSI that, effective July 1, 2013, it was terminating LTSI's contract to provide certain busing services. (Defs. 56.1 ¶ 4.) LTSI's work under its contract with the City of New York was the only work for which LTSI made contributions to the Fund. (Pls. 56.1 ¶ 11.) The Fund learned that the City of New York was terminating LTSI's contract, although it is unclear when it became aware of that fact. (Id. ¶ 10.)

In July 2013, LTSI stopped providing busing services under its contract with the City of New York. (Defs. 56.1 ¶ 4.) In or around this time, LTSI also stopped making contributions to the Fund. (Pls. Suppl. 56.1 ¶ 12.) The parties, however, dispute to what extent it was known that LTSI's cessation of contributions to the Fund was only temporary. Plaintiffs assert that the Fund did not have any information at the time LTSI's contract was terminated regarding whether LTSI would resume making contributions to the Fund. (Id. ¶ 13.) Defendants assert that they never stated to the Fund that they had any intention to permanently cease covered operations under the Fund. (Defs. Resp. Pls. Suppl. 56.1 ¶ 13.)

3. The Fund's Approval of Withdrawal Liability Assessments Against LTSI

On December 10, 2013, the Fund's Board of Trustees approved "withdrawal liability assessments and demands for Logan Transportation." (Pearl Decl. Ex. A.) The Fund concluded that LTSI had effectuated a complete withdrawal from the Fund, effective June 30, 2013. (Pls. Suppl. 56.1 ¶ 14.)

4. The Fund's December 12, 2013 Letter

On or about December 12, 2013, Robert D'Ulisse, the Fund Director, sent a "Withdrawal Liability" letter to Logan Bus Company on behalf of the Fund's Board of Trustees. (Pearl Decl. Ex. B.) The letter was addressed to "Logan Bus Company" alone; it was not addressed to a specific individual. (Id. ) The letter states, in relevant part:

To Whom It May Concern:

The Board of Trustees of the Division 1181 A.T.U.—New York Employees Pension Fund (the "Fund") has determined that Logan Bus Company, Inc. (the "Company"), permanently ceased all covered operations under the Fund on or around June 30, 2013. The Board of Trustees has determined that this constitutes a complete withdrawal from the Fund. Pursuant to Section 4202 of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended by the Multiemployer Pension Plan Amendments Act of 1980, this letter constitutes Notice that the Board of Trustees has determined that such a withdrawal has created withdrawal liability on the part of the Company to the Fund, and serves as a demand for such payment in accordance with Section 4219(b)(l) of ERISA. Under Section 4001 of ERISA, this liability is owed by the Company and any or all trades or businesses under common control with the Company.

By application of Section 4211(c) of ERISA, the Fund has initially calculated the Company's withdrawal liability to be $2,064,426.00. Under Section 4219(c), the amount due is required to be paid in a single installment of $2,064,426.00 or 56 quarterly installments of $57,951.91 plus a final quarterly payment of $1,359.34.... The first quarterly installment is due to the Fund no later than sixty (60) days from the date of this letter.

Pursuant to Section 4219(a) of ERISA, you are required to furnish, within thirty (30) days, a response to any written request for information from the Fund. In this regard, please furnish to the Fund within thirty (30) days a complete list of each trade or business under common control with the Company, as that term is defined by ERISA Section 4001(b).

(Id. ) Attached to the letter was a document titled "Division 1181 A.T.U.—New York Employees Pension Fund Withdrawal Liability—Logan." (Id. ) The letter provides that the document is "the payment schedule calculation completed by the Fund's actuary." (Id. )

The letter was signed for by a bus driver for Little Linda Bus, who occasionally performed clerical duties, such as picking up the mail at the post office. (Robertson Decl. ¶¶ 1–2, 4.) It was the employee's practice to leave any letter not addressed to an individual next to the office administrator's desk. (Id. ¶ 6.) Neither Christopher Reece, the Controller of Logan Bus, LTSI, and the other defendant entities (Reece Decl. ¶ 1),⁵ nor management for Logan Bus or any of the defendant entities received the December 12, 2013 letter from the Fund (id. ¶ 7).

D'Ulisse testified that the December 12, 2013 letter should have been addressed to LTSI, instead of Logan Bus, and that the information in the first sentence of the letter stating that Logan Bus had permanently ceased all covered operations under the Fund was incorrect. (D'Ulisse Dep. Tr. at 36, 71, Pearl Decl. Ex. R.) However, the parties dispute why the letter was sent to Logan Bus in the first instance. Plaintiffs claim that the letter was mistakenly sent to Logan Bus because the Fund's actuary used Logan Bus's name on its withdrawal liability calculation. (Pls. 56.1 ¶ 4.) Defendants contest this explanation and assert that it is inconsistent with the documentary evidence and cannot be reconciled with the Board of Trustees minutes approving withdrawal liability assessment and demands for Logan Transportation. (Defs. Resp. Pls. 56.1 ¶ 4.)

It is undisputed that, prior to the December 12, 2013 letter, the Fund had not sent pension fund letters to "Logan Bus Company" in the ordinary course of business. (Defs. 56.1 ¶ 11.) In addition, the Fund did not, in the ordinary course of business, communicate with LTSI by sending correspondence to Logan Bus. (Id. ¶ 26.) Instead, prior to the December 12, 2013 letter, all communications sent from the Fund to LTSI were addressed to Lorinda Logan or Reece. (Id. ¶ 12.)

It is also undisputed that, in 2013 and 2014, the Fund sent between six and eight withdrawal liability notices to Fund contributories, and, aside from the December 12, 2013 letter sent to Logan Bus, every such letter was addressed to and sent to the contributing signatory employer. (Id. ¶¶ 20–21.)

5. LTSI's Renewed...