Trustees of Intern. Broth. v. Marangi Bros.

289 F.Supp.2d 455

TRUSTEES OF the INTERNATIONAL BROTHERHOOD OF TEAMSTERS LOCAL 531 SICK AND WELFARE FUND, and Roy W. Harris, as President of the International Brotherhood of Teamsters Local Union No. 531, Plaintiffs, v. MARANGI BROS., INC., Donato Marangi, Inc., Marangi Disposal, and Cottage Carting, Inc., Defendants.

No. 02 Civ. 4384(CM)(MDF).

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

October 30, 2003.

COPYRIGHT MATERIAL OMITTED

Barry I. Levy, Elan Raviv Kandel, Shapiro, Beilly, Rosenberg, Aronowitz, Levy & Fox, LLP, New York City, for Plaintiffs.

David W. Silverman, Granik, Silverman, Campbell & Hekker, New City, NY, for Defendants.

MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

MCMAHON, District Judge.

Plaintiffs, Trustees of the Local 531 Sick and Welfare Fund and Roy W. Harris, as President of the International Brotherhood of Teamsters Local Union No. 531, bring this action pursuant to Employee Retirement Income Security Act ("ERISA") sections §§ 502 and 515 (29 U.S.C. §§ 1132, 1145) and LMRA § 301 (29 U.S.C. § 185) for recovery of delinquent employer contributions to the Sick and Welfare Fund and unpaid dues. Plaintiffs allege that defendant Donato Marangi, Inc. ("Marangi") has violated its Collective Bargaining Agreement by under-reporting the number of employees for purposes of paying dues and failing to make required contributions to the Local 531 Sick and Welfare Fund ("Fund") for those employees and that Marangi Disposal has failed to make payments pursuant to its agreement with Local 531 ("Union"). The defendants, Marangi Brothers, Inc, Donato Marangi, Inc. Marangi Disposal and Cottage Carting, move for summary judgment on the Trustees' claims for delinquent contribution to the Local 531 Sick and Welfare Fund ("Fund") on the grounds that any payments to the Fund would violate LMRA § 302 (29 U.S.C. § 186). For the reasons stated below, the defendants' motion for summary judgment as to the Trustees is granted in part and denied in part.

FACTS

The Fund is a jointly administered, multi-employer, trust fund established pursuant to collective bargaining agreements between the Union and employers in accordance with § 302 of the Labor Management Relations Act of 1947 ("LMRA") (29 U.S.C. § 186). The Fund is an employee benefit plan within the meaning of sections 3(2), 3(3), and 502(d)(1) of ERISA (29 U.S.C. §§ 1002), and is a multi-employer plan within the meaning of sections 3(37) and 515 (29 U.S.C. §§ 1002(2), (3) and 1145). The purpose of the Fund is to provide health and welfare benefits to eligible employees on behalf of those employers who have chosen to participate in the fund by agreement with the Union.

Defendants Donato Marangi, Inc., Cottage Carting, Inc. and Marangi Disposal, a division of Cottage Carting, are for-profit corporate entities doing business within New York State. The companies employ workers, but it is disputed whether the businesses are affiliated — sharing common ownership, management and employees.

It is undisputed that defendant Donato Marangi, Inc. ("Marangi") entered into a Collective Bargaining Agreement ("CBA") with Local 531 on or about June 1, 1997. Pursuant to Article 11 of the CBA, Marangi agreed to make payments to the Sick and Welfare Fund, Local 531 for all employees not covered under any other medical plan. Specifically, Marangi agreed to pay $150 per month for people selecting an individual plan and $250 per month for people selecting the family plan. The CBA provides that "[t]he monies so contributed would be used for the purpose of obtaining benefits that the Trustees deem necessary for such employees, employees of the Union and the employees of all Fringe Benefit Funds in accordance with the Trust Agreement covering such plan." Section (f) further required Marangi to forward to the Fund the names of the employees covered along with its monthly remittance. Additional sections describe the process for making contributions when an employee is absent for an extended period and outline procedures in the case of employer default.

Article 36 of the CBA provided that the agreement would remain in full force and effect from June 1, 1997 to May 31, 2000 and would automatically renew from year to year thereafter unless either party provided notice that it wished to terminate or modify the agreement. Between September 1997 and May 2000, Marangi made regular payments on behalf of the employees identified on its dues remittance sheets. On March 21, 2000 the President of the Union, John Zirpoli, sent Marangi a letter which expressly asked that the Agreement be terminated on its expiration date, May 31, 2000. (Silverman Aff. Ex. B). The Union indicated that it would like to renegotiate the Agreement, but there is no evidence that any revised agreement was drafted. Marangi did not specifically acknowledge this termination in writing, and continued to make regular contributions to the Fund until July 2002. (Aff. Serena Troche, Ex. A).

Defendant Marangi Disposal also entered into a Memorandum of Agreement ("Marangi Disposal Agreement") dated June 8, 1999 with the Union whereby it agreed to make certain contributions to the "Welfare Fund" and agreed to certain policies governing vacation days and wages. By its terms, the Marangi Disposal Agreement was to run from June 1, 1999 — June 1, 2002. Although the Memorandum Agreement states "[w]hereas, the terms and conditions of the Collective Bargaining Agreement entered into between the Union and the Employer remain unchanged except for the following terms and conditions," it is undisputed that no other written agreements were created between the Union and Marangi Disposal. Marangi Disposal made one payment to the Fund in August 1999, but made no further contributions.

In February 2001, the Trustees directed their auditors to conduct an audit of both Marangi's and Marangi Disposal's books and records for the period June 1, 1997 through December 31, 1999. (Prezioso Aff. ¶ 4, 6). The company acceded to the request and the audit was performed. The audit reports determined that both Marangi and Marangi disposal were delinquent in contributions for the periods between June 1997 and December 1999 and June 1999 through December 1999.

The present complaint alleges that Marangi is liable for contributions in the amount of $38,850 to the Fund between June 1997 through December 1999 any additional contributions determined to be due pursuant to an audit of Marangi's books for the period January 2000 through the date of judgment and any applicable statutory damages and interest.¹ Plaintiffs also seeks to recover for non-payment of dues and initiation fees as well as auditors and attorneys fees. Defendants' pending motion only seeks to dismiss the Trustees' claims on behalf of the Sick and Welfare Fund and the other aspects of the complaint are not under consideration.

DISCUSSION

Standard for Summary Judgment

Under Fed.R.Civ.P. 56(c), a party is entitled to summary judgment if the moving party establishes that there is no genuine issue of material fact and that he or she is entitled to judgment as a matter of law. "[T]he moving party bears the initial burden of establishing that there are no genuine issues of material fact, once such a showing is made, the non-movant must `set forth specific facts showing that there is a genuine issue for trial.'" Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986)). The court will "view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor ... and may grant summary judgment only when `no reasonable trier of fact could find in favor of the nonmoving party.'" Allen v. Coughlin, 64 F.3d 77, 79 (2d Cir. 1995) (internal citations and quotations omitted).

Defendants argue they cannot be held liable to the Fund for contributions between January 1999 and May 2000² because contributions would violate § 302. They also assert that any recovery of damages by the Fund from this suit would also violate § 302.

For the reasons set forth below, I find that defendants can in fact be held liable for failing to make contributions and the Funds recovery of any damages in this action is permissible under § 302. However, that portion of defendants' motion which seeks to limit damages after May 31, 2000 is granted.

Contributions to the Fund Do Not Violate § 302 of the Labor Management Relations Act

Section 302 makes it unlawful as a general matter for employers to provide payments to union affiliated representatives and entities beyond certain narrowly tailored exceptions outlined in subsection (c). 29 U.S.C. §§ 186(a), 186(c). The relevant exception for purposes of determining the legality of payments to an employee Trust Fund is § 302(c)(5). Under § 302(c)(5) an employer may make payments to a Union affiliated trust fund provided that the fund was established:

for the sole and exclusive benefit of the employees of such employer, and their families and dependents (or of such employees ... jointly with the employees of other employers making similar payments, and their families and dependents): Provided, that (A) such payments are held in trust for the purpose of paying ... for the benefit of employees ... for medical or hospital care ... unemployment benefits or life insurance, disability and sickness insurance, or accident insurance; (B) the detailed basis on which such payments are to be made is specified in a written agreement with the employer, and employees and employers are equally represented in the administration of such fund, together with such neutral persons as the representatives of the employers and ... employees may agree upon.

The Collective Bargaining Agreement entered into between the Union and Marangi clearly meets these criteria. The CBA constitutes a written...