Jofaz Transp. v. Local 854 Pension Fund

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JOFAZ TRANSPORTATION, INC. and Y&M TRANSPORT CORP., Plaintiffs, v. LOCAL 854 PENSION FUND, Defendant.

No. 22-CV-3455 (CS)

United States District Court, S.D. New York

August 21, 2024

Jennifer S. Smith, Law Offices of Jennifer Smith PLLC New York, New York Counsel for Plaintiffs

Joseph E. Clark, Sydney L. Juliano, Proskauer Rose LLP New York, New York Counsel for Defendant

OPINION & ORDER

CATHY SEIBEL, U.S.D.J.

Before the Court is the motion of Plaintiffs Jofaz Transportation Inc. and Y&M Transport Corp. (collectively “Plaintiffs” or “Jofaz”), (ECF No 36), for an order (1) entering judgment on the Court's April 26, 2024 Order, (ECF No. 32 (the “Jofaz Order”)), that adopted and applied to this case the March 22, 2024 opinion and order in the related case Mar-Can Transp. Co., Inc. v. Loc. 854 Pension Fund, No. 20-CV-8743, 2024 WL 1250716, at *1 (S.D.N.Y. Mar. 22, 2024) (the “Mar-Can Decision”)), (2) directing Defendant Local 854 Pension Fund (“Defendant” or the “Old Plan”) to produce an accounting of Jofaz's withdrawal liability overpayment, with interest (the “Judgment Amount”), and (3) requiring Defendant to pay the Judgment Amount.

I. BACKGROUND

I assume the parties' familiarity with the record, and with the Mar-Can Decision, and therefore only briefly summarize the background and procedural history leading up to this motion. The Complaint alleges the following facts, which are not disputed unless otherwise noted: Defendant Old Plan is a multi-employer defined benefit pension plan under the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, 29 U.S.C. §§ 1001 et seq.^[1](See ECF No. 1 (“Compl.”) ¶¶ 18-19.) Before July 30, 2021, Jofaz participated in the Old Plan through a collective bargaining agreement (“CBA”) with the International Brotherhood of Teamsters Local 553 (the “Old Union”), (id. ¶¶ 21, 30-31), which required Jofaz to contribute to the Old Plan for employees who performed work covered by that CBA, (id. ¶ 31). On or about July 30, 2021, the National Labor Relations Board (“NLRB”) certified the results of Jofaz's employees' election to leave the Old Union and join Local 854 of the Amalgamated Transit Workers (“ATW”) Union. (Id. ¶ 33; see id. ¶ 22.) This change of the employees' collective bargaining representative triggered Jofaz's involuntary complete withdrawal from the Old Plan. (See id. ¶¶ 34-35, 40.) On September 9, 2021, the Old Plan notified Jofaz about its withdrawal under ERISA's relevant notice provisions, assessed Jofaz's withdrawal liability to the Old Plan as $3,147,109, plus interest, and demanded payment of that withdrawal liability in 10 quarterly installments: nine payments of $341,319 and one payment of $201,540, plus interest, (id. ¶¶ 4042). Jofaz has made all of those required payments. (See ECF No. 36-1 ¶¶ 19-20; ECF No. 39 ¶ 9; see also ECF No. 37 (“Jofaz's Mem.”) at 4-5; ECF No. 38 (“Old Plan's Opp.”) at 4.)

Around October 22, 2021, pursuant to 29 U.S.C. § 1415(b), Jofaz advised the Old Plan that Jofaz's employees would participate in the ATW Fund (the “New Plan”)^[2] because of the certified change in their collective bargaining representative and requested the Old Plan to initiate the corresponding pension transfer. (Compl. ¶ 44.) The Old Plan refused to do so. (Id. ¶ 45.) Around December 3, 2021, Jofaz requested that the Old Plan review its assessment of Jofaz's withdrawal liability and again advised the Old Plan of its obligation to transfer pension assets and liabilities to the ATW Fund in accordance with 29 U.S.C. § 1415. (Id. ¶¶ 46-47.) Jofaz also advised the Old Plan of its obligation to reduce Jofaz's assessed withdrawal liability pursuant to 29 U.S.C. §§ 1415(c) and 1391(e). (Id. ¶¶ 48-49.) Around March 3, 2022, the Old Plan responded to Jofaz's request for review, refusing to initiate the pension transfer or to recalculate Jofaz's withdrawal liability. (Id. ¶¶ 50-51.)^[3] Nor has it reduced Jofaz's withdrawal liability. (Id. ¶ 58.)^[4]

On April 28, 2022, Jofaz commenced this lawsuit, asserting that: (1) under 29 U.S.C. § 1415(b) the Old Plan must initiate the process of transferring pension assets and liabilities to the New Plan, (2) the Old Plan must reduce Jofaz's employer withdrawal liability under 28 U.S.C § 1415(c), estimate that reduction under 29 U.S.C. § 1391(e), and adjust the payment schedule accordingly; (3) the Old Plan is required to execute the transfer of pension assets and liabilities to the New Plan under 29 U.S.C. § 1415; and (4) the Old Plan must reduce Jofaz's withdrawal liability to the Old Plan by an amount equal to the excess of unfunded vested benefits transferred to the New Plan. (See Compl. ¶¶ 64-95.) On June 28, 2022, the Old Plan filed its Answer, (ECF No. 15), and on August 15, 2022, then-Magistrate Judge Paul Davison so-ordered a discovery plan, (ECF No. 21). On August 4, 2023, the parties requested a formal stay of proceedings pending this Court's resolution of summary judgment motions then pending in the related Mar-Can case, in light of the “similar legal and factual issues” in both cases. (ECF No. 26.) That same day, Magistrate Judge Victoria Reznik granted the parties' application and stayed discovery deadlines pending the resolution of the summary judgment motions in Mar-Can. (ECF No. 27.)

On March 22, 2024, I issued an opinion and order in Mar-Can that disposed of the parties' motions for summary judgment and resolved the outstanding legal issue regarding the interpretation and application of 29 U.S.C. § 1415(c), and on April 26, 2024, after conferring with the parties, (see Minute Entry dated April 26, 2024), I ordered that the Mar-Can Decision applies in this case, (see Jofaz Order (attaching Mar-Can Transp. Co., Inc. v. Loc. 854 Pension Fund, No. 20-CV-8743 ECF No. 249, 2024 WL 1250716 (S.D.N.Y. Mar. 22, 2024))). The instant motion followed.

II. DISCUSSION

A. Entry of Judgment and Accounting

Under Federal Rule of Civil Procedure (“FRCP”) 58(a), “[e]very judgment . . . must be set out in a separate document,” subject to certain exceptions not relevant here. Fed.R.Civ.P. 58(a). “A party may request that judgment be set out in a separate document as required by Rule 58(a).” Fed.R.Civ.P. 58(d). Jofaz moves for entry of judgment on the Jofaz Order.

(ECF No. 36; see Jofaz's Mem. at 2.) Specifically, Jofaz requests an order that: (1) enters judgment as to the Jofaz Order pursuant to FRCP 58(d); (2) requires the Old Plan, within seven days of entry of that judgment, to provide an accounting of the Judgment Amount; (3) provides that if the Old Plan does not post a bond under FRCP 62 within thirty days of the judgment, the Old Plan must pay the Judgment Amount within thirty-one days of entry of judgment; (4) provides that if the Old Plan does file a bond in satisfaction of FRCP 62 and the Second Circuit affirms the Jofaz Order, the Old Plan must, within seven days of a final determination or dismissal of the Old Plan's appeal, either (i) pay the Judgment Amount plus accrued interest and costs or (ii) file an accounting stating the amount the Old Plan must pay Jofaz and stating the factual and legal basis for that accounting; and (5) grants such other relief that the Court deems just and proper. (ECF No. 36.)

While the Old Plan agrees that a judgment should be entered and does not oppose a judgment “that is substantively similar to the judgment in Mar-Can,” (Old Plan's Opp. at 1; see id. at 7),^[5] the parties disagree as to whether that judgment should expressly order the Old Plan to return the interim withdrawal liability payments that Jofaz has paid to the Old Plan, (see id. at 811; Jofaz's Mem. at 1-3; ECF No. 41 (“Jofaz's Reply”) at 1, 4-5). Jofaz contends that the Court's adoption of the Mar-Can Decision independently obligates the Old Plan to apply the § 1415(c) reduction to the more than $3 million in assessed withdrawal liability, which results in $0 withdrawal liability as to the Old Plan, and that as a result, the Old Plan must now return the withdrawal liability payments because they are considered overpayments, citing to 29 C.F.R. § 4219.31(d). (Jofaz's Mem. at 1; Jofaz's Reply at 1, 5.)^[6]

The Old Plan argues that incorporation of the Mar-Can Decision does not require the Old Plan to refund anything, (Old Plan's Opp. at 8), and that there is no independent legal obligation to refund the payments because, under 29 U.S.C. § 1399(c)(2)'s plain language, the payments must continue pending “‘any . . . appeal' before an arbitrator or a federal court,” (id. at 8-9). Moreover, the Old Plan contends that ordering return of the payments would contravene the legislative purpose and history of the Multiemployer Pension Plan Amendments Act (“MPPAA”), (id. at 9-11), and that requesting the refund while the Old Plan's appeal of the Mar-Can Decision and corresponding judgment is pending may lead to administrative and collection challenges if the Second Circuit ultimately concludes that the Old Plan was entitled to the withdrawal liability payments, (id. at 10).

Jofaz responds that § 1399(c)(2), which requires payments to continue during “review and appeal,” and the “pay now, dispute later” procedure of ERISA only apply until the later of when the plan review period ends or when an arbitrator issues its decision, citing T.I.M.E.-DC v. Mgmt.-Lab. Welfare & Pension Funds, of Loc. 1730, 756 F.2d 939 (2d Cir. 1985). (See Jofaz's Reply at 6-9.) Moreover, Jofaz argues that because the Court has already decided that § 1415(c) requires the Old Plan to reduce Jofaz's withdrawal liability, unless the Old Plan obtains a stay it is required to calculate that reduction and refund the overpayment with interest. (Jofaz's Reply at 4-6.)

1. ERISA's Statutory Framework

I assume the parties' familiarity with ERISA's...