Trustees of National Retirement Fund v. Fireservice Mgmt. LLC

384 F.Supp.3d 412

TRUSTEES OF the NATIONAL RETIREMENT FUND, Plaintiffs,

v.FIRESERVICE MANAGEMENT LLC f/k/a Fireservice Management Michigan LLC; Smeltzer Enterprises Incorporated; and John Does 1-10 (all other Trades or Businesses Under Common Control with Fireservice Management LLC f/k/a Fireservice Management Michigan LLC), Defendants.

No. 17-CV-4003 (CS)

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

Signed April 17, 2019

David C. Sapp, Stephanie Myers Bersak, Jennifer Oh, Alicare, Inc., White Plains, New York, Counsel for Plaintiffs.

Carmine J. Castellano, Hodgson Russ LLP, New York, New York, Counsel for Defendants and Proposed Intervenors.

OPINION & ORDER

CATHY SEIBEL, District Judge

Before the Court are the motion for summary judgment of Plaintiffs Trustees of the National Retirement Fund, (Doc. 51), and the motion to intervene, (Doc. 33), and motion for summary judgment, (Doc. 35), of Proposed Intervenors TurnoutRental LLC and Schoolcraft Ventures LLC. For the reasons stated below, Proposed Intervenors' motions are DENIED, and Plaintiffs' motion is GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

A. Facts

The following facts are taken from the parties' Local Civil Rule 56.1 Statements and supporting materials and are undisputed unless otherwise noted.

Plaintiffs Trustees of the National Retirement Fund (the "Fund"), based in White Plains, New York, (see Doc. 2 at 2), sponsor a multiemployer pension plan (the "Plan") that provides pension benefits to, among others, members of the Chicago and Midwest Regional Joint Board (the "Union") under the Employee Retirement Income Security Act of 1974 ("ERISA") (codified at 29 U.S.C. §§ 1001 - 1461 ). (Doc. 43 ("Ds' 56.1 Resp.") ¶ 1.) Defendant Fireservice Management LLC f/k/a Fireservice Management Michigan LLC ("Fireservice"), a Michigan limited liability company that cleans and repairs protective clothing used in the firefighting industry, (Doc. 47 ("Ps' 56.1 Resp.") ¶¶ 1-2), was a party to a collective bargaining agreement with the Union, (Ds' 56.1 Resp. ¶ 3). Pursuant to this agreement, Fireservice made contributions to the Fund on behalf of certain of Fireservice's employees. (Id. )

Defendant Smeltzer Enterprises Inc. ("Smeltzer"), a Michigan corporation, operated under the name "White Tower Industrial Laundry & Cleaners Inc." and provided cleaning services to the automotive industry. (Ps' 56.1 Resp. ¶¶ 4-6.) It ceased doing business and was dissolved on July 15, 2009. (Id. ¶ 8.)

At all times, Martin T. Smeltzer was the sole owner of Smeltzer. (Id. ¶ 9.) He also initially owned 100 percent of Fireservice, but Joel Weiner purchased a 49 percent interest in Fireservice on July 1, 2007, and maintained that interest through the filing date of the Complaint in this case. (Doc. 42-1 ("Smeltzer Aff.") ¶¶ 20-22; Doc. 42-2 ("Weiner Aff.") ¶¶ 3-4.) Mr. Smeltzer and Mr. Weiner each own 50 percent of the membership interests of two other businesses incorporated in Michigan: TurnoutRental LLC, which rents out firefighting gear, and Schoolcraft Ventures LLC, which owns the real property out of which Fireservice and TurnoutRental operate (together, "Proposed Intervenors"). (Ps' 56.1 Resp. ¶¶ 11-12, 14-17, 19.)

Smeltzer and Fireservice ("Defendants") contend that Smeltzer was a party to a collective bargaining agreement with the Union that was separate and distinct from Fireservice's agreement. (Ds' 56.1 Resp. ¶ 3.) According to Plaintiffs, however, Defendants "were parties to a series of collective bargaining agreements" and "collectively identified themselves as the employer obligated to make contributions to the Fund." (Doc. 54 ("Ps' 56.1 Stmt.") ¶ 3.)¹

On May 4, 2011, the Fund notified Defendants that it had determined that "Fire Service Management LLC f/k/a White Tower Laundry" had withdrawn from the Plan as of December 31, 2009, and therefore incurred a withdrawal liability to the Fund of $ 221,783.46 under 29 U.S.C. § 1381. (Oh Decl. Ex. B; Ds' 56.1 Resp. ¶¶ 4, 6.) The notice demanded that Defendants make eighty payments of $ 4,079.09 per quarter beginning on or before June 1, 2011. (Ds' 56.1 Resp. ¶ 6.) On June 15, 2011, the Fund notified Defendants that they had failed to make the first quarterly payment and would be in default unless they cured within sixty days. (Oh Decl. Ex. C; Ds' 56.1 Resp. ¶ 7.)

On June 2, 2011, and July 1, 2011, Fireservice requested by letter that Plaintiffs review their withdrawal liability determination because Fireservice is "separate and distinct" from Smeltzer. (Oh Decl. Ex. D; Ds' 56.1 Resp. ¶ 9.) Defendants did not initiate arbitration of the withdrawal liability. (Ps' 56.1 Resp. ¶ 10.) Defendants have made no withdrawal liability payments to the Fund. (Id. ¶¶ 8, 11.)

B. Procedural History

Plaintiffs commenced this action on May 26, 2017, and asserted four causes of action. The first claim alleges that Defendant Fireservice is in default within the meaning of Section 4219(c)(5)(A) of ERISA and that Plaintiffs are entitled to immediate payment of withdrawal liability in the amount of $ 221,783.46 plus accrued interest, liquidated damages, and attorneys' fees and costs under Section 502(g). (See Doc. 1 ("Compl.") ¶¶ 21-30; Ps' 56.1 Resp. ¶ 7.) The second claim alleges that Defendant Smeltzer is an "employer" of the employees of Fireservice within the meaning of Section 3(5) of ERISA because it had an alter ego, single employer, and/or joint employer relationship with Fireservice, and that Smeltzer therefore is jointly and severally liable for Fireservice's withdrawal liability, interest, liquidated damages, and attorneys' fees and costs. (Id. ¶¶ 31-35.) The third claim alleges that John Doe Defendants 1-10 are and at all relevant times were trades or businesses under common control with Fireservice under Section 4001(b)(1) of ERISA and Section 414 of the Internal Revenue Code of 1986, and that the John Does are therefore jointly and severally liable for the total amount of Fireservice's liability. (Id. ¶¶ 36-40.) The fourth claim alleges that the Fund will be irreparably harmed unless Defendants are immediately restrained from disposing of their assets. (Id. ¶ 42.)

Discovery concluded on June 4, 2018. (See Doc. 21.) On September 7, 2018, Proposed Intervenors moved to intervene or be joined. (Doc. 34 ("Intervenors' Mem.").) On the same date Proposed Intervenors also moved for summary judgment on Plaintiffs' third and fourth claims on the ground that Proposed Intervenors were not under common control with Defendants when Fireservice withdrew from the Plan. (Doc. 35; Doc. 40 ("Intervenors' SJ Mem.") at 2.) On October 15, 2018, Plaintiffs moved for summary judgment on their claims against Fireservice and Smeltzer. (Doc. 51.)

II. LEGAL STANDARD

A. Intervention and Joinder

Proposed Intervenors advance several theories to support their introduction into this action.

1. Intervention as of Right

Under Federal Rule of Civil Procedure 24(a)(2),

the court must permit anyone to intervene who ... claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.

An applicant seeking to intervene must "(1) timely file an application, (2) show an interest in the action, (3) demonstrate that the interest may be impaired by the disposition of the action, and (4) show that the interest is not protected adequately by the parties to the action." "R" Best Produce, Inc. v. Shulman-Rabin Mktg. Corp. , 467 F.3d 238, 240 (2d Cir. 2006) (internal quotation marks omitted). Failure to satisfy any one of these factors is sufficient ground to deny the application. Id. at 241.

2. Permissive Intervention

Under Federal Rule of Civil Procedure 24(b), "the court may permit anyone to intervene who ... has a claim or defense that shares with the main action a common question of law or fact.... In exercising its discretion, the court must consider whether the intervention will unduly delay or prejudice the adjudication of the original parties' rights." Courts in this Circuit also consider " ‘the nature and extent of the intervenors' interests,’ the degree to which those interests are ‘adequately represented by other parties,’ and ‘whether parties seeking intervention will significantly contribute to [the] full development of the underlying factual issues in the suit and to the just and equitable adjudication of the legal questions presented.’ " Apple v. Atl. Yards Dev. Co. , No. 11-CV-5550, 2014 WL 5450030, at *4 (E.D.N.Y. Oct. 27, 2014) (alteration in original) (quoting U.S. Postal Serv. v. Brennan , 579 F.2d 188, 192 (2d Cir. 1978) ). A district court's discretion in this capacity is broad, and "a denial of permissive intervention has virtually never been reversed."

Catanzano ex rel. Catanzano v. Wing , 103 F.3d 223, 234 (2d Cir. 1996) (internal quotation marks omitted).

3. Required Joinder of Parties

Rule 19 requires joinder of necessary parties. A party is necessary if, in its absence, "the court cannot accord complete relief among existing parties" or the party has an interest relating to the subject of the action and its absence may impair or impede its ability to protect that interest or leave other persons at risk of incurring multiple or inconsistent obligations. Fed. R. Civ. P. 19(a) ; see Riverkeeper, Inc. v. Mirant Lovett, LLC , 675 F. Supp. 2d 337, 353 (S.D.N.Y. 2009). "[B]ecause of joint and several liability, joint tortfeasors and coconspirators are not indispensable parties under the Federal Rules of Civil Procedure; Rule 19(a) does not require joinder of an absent party that can later be held responsible for contribution or indemnification." Garner v. Behrman Bros. IV , 260 F. Supp. 3d 369, 381 (S.D.N.Y. 2017) (internal quotation marks omitted).

4. Permissive Joinder of Parties

Rule 20 permits joinder of defendants where "any right to relief is asserted...