296 F.3d 164 (3rd Cir. 2002), 01-2542, Board of Trustees of Teamsters Local 863 Pension Fund v. Foodtown, Inc.

Docket Nº:01-2542.
Citation:296 F.3d 164
Party Name:BOARD OF TRUSTEES OF TEAMSTERS LOCAL 863 PENSION FUND, Appellant, v.FOODTOWN, INC., Martin Vitale; Ronald Ginsberg; Hy Shulman; Nicholas D'Agostino; George P. Farley; Joseph Azzolina; Victor Laracca; Gerard Norkus; Ron Dickerson; Sydney Katz; Williams Michas; Donald Norkus; Edmund J. Paczkowski; Jack Pytluk; Michael Zimmerman; David Maniaci; Willia
Case Date:July 17, 2002
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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296 F.3d 164 (3rd Cir. 2002)


FOODTOWN, INC., Martin Vitale; Ronald Ginsberg; Hy Shulman; Nicholas D'Agostino; George P. Farley; Joseph Azzolina; Victor Laracca; Gerard Norkus; Ron Dickerson; Sydney Katz; Williams Michas; Donald Norkus; Edmund J. Paczkowski; Jack Pytluk; Michael Zimmerman; David Maniaci; William Davidson; Food Circus Supermarkets, Inc.; Norkus Enterprises, Inc.; Norkus, Inc.; Norkus Foodtown, Inc.; Davidson Supermarket, Inc.; Davidson Brothers, Inc.; Franelen, Inc.; Nicholas Markets, Inc.; Food King, Inc.; West Essex Foodtown, Inc.; L.J.V., Inc.; E. Dickerson & Son, Inc.; P.S.K. Supermarkets, Inc.; Manyfoods, Inc.; Francis Markets, Ltd; Harp Marketing Corporation; Sidney Charles Markets, Inc.; D'Agostino Supermarkets, Inc.; V & V, Inc.; Neptune City Liquors, Inc.; John Does 1-50; ABC Corporations 1-5; ABC Corporations 1-50.

No. 01-2542.

United States Court of Appeals, Third Circuit

July 17, 2002

        Argued: April 11, 2002.

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        Kenneth I. Nowak, (argued), Zazzali, Fagella, Nowak, Kleinbaum & Friedman, Newark, NJ, for appellant.

        Roger D. Netzer, (argued), Willkie, Farr & Gallagher, New York City, Susan Stryker Sterns & Weinroth, Trenton, NJ, for appellees—Foodtown, Inc., et al.

        Anthony X. Arturi, Jr., (argued), Alampi, Arturi, D'Argenio, & Guaglardi, LLP, Englewood Cliffs, NJ, for appellee—Martin Vitale.

        James M. Strauss, Christopher M. Houlihan, Putney, Twombly, Hall & Hirson, LLP, New York City, for appellees—Nicholas D'Agostino and D'Agostino Supermarkets, Inc.

        Before: MCKEE and FUENTES, Circuit Judges, and POGUE, Judge, United States Court of International Trade [*] .


        POGUE, Judge, Court of International Trade:

        Obligated by two collective bargaining agreements with Teamsters Local 863 (the "Local"), Twin County Grocers, Inc. ("Twin"), a wholesale distributor of supermarket and related products which had become insolvent, incurred withdrawal liability in the amount of $9.3 million to the Local's multiemployer pension fund. The Board of Trustees of the pension fund ("Appellant") sought judgment against several corporate and individual defendants ("Appellees").1 The Appellant alleges that the Appellees were Twin's alter ego, that Twin's corporate veil should be pierced to assess liability on the Appellees, and that the Appellees breached fiduciary duties and aided and abetted the breach of fiduciary duties owed to the Appellant. The district court dismissed the action for lack of standing, based on its conclusion that the bankruptcy trustee was the only suitable party to pursue such a proceeding. The Board of Trustees of the pension fund appeals. We reverse as to the first three counts.

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        We have jurisdiction to hear this appeal pursuant to 28 U.S.C. § 1291 and 28 U.S.C. § 158(d). O'Dowd v. Trueger, 233 F.3d 197, 201 (3d Cir. 2000).


        We exercise plenary review over the district court's granting of a Fed. R.Civ.P. 12(b)(6) motion to dismiss for lack of standing and failure to state a claim. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). In reviewing the district court's decision to grant such a motion, we accept as true all allegations in the complaint, giving the Plaintiff the benefit of every favorable inference that can be drawn from the allegations. Id.; U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002). A complaint should not be dismissed for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).


        Appellant's claim is based on withdrawal liability established by the Employee 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. §§ 1381-1461.2

        ERISA was enacted by Congress to protect employees' pension rights. Milwaukee Brewery Workers' Pension Plan v. Jos. Schlitz Brewing Co., 513 U.S. 414, 416, 115 S.Ct. 981, 130 L.Ed.2d 932 (1995). Congress found, however, that ERISA "did not adequately protect plans from the adverse consequences that resulted when individual employers terminate[d] their participation in, or withdr[e]w from, multiemployer plans." Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 722, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984). As a result, several years after the enactment of ERISA, Congress promulgated the MPPAA to foster the growth and continuance of multiemployer pension plans. See Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp., 522 U.S. 192, 196, 118 S.Ct. 542, 139 L.Ed.2d 553 (1997). The MPPAA's primary objective is to insulate these plans in order to protect the retirement benefits of covered employees. In order to satisfy this goal, the MPPAA requires employers who withdraw from underfunded multiemployer pension plans to pay a "withdrawal liability." See, e.g., ILGWU Nat'l Retirement Fund v. Minotola Indus., Inc., 1991 WL 79466 (S.D.N.Y.1991) (Withdrawal liability is imposed in order "to ensure that workers' retirement benefits w[ill] actually be available during retirement,").

        Complete withdrawal liability, pursuant to 29 U.S.C. § 1383(a), is not incurred until an employer "(1) permanently ceases to have an obligation to contribute under the plan, or (2) permanently ceases all covered operations under the plan." Therefore, a cause of action under the MPPAA does not ripen until the employer fails to make a payment on the schedule set by the fund. See Bay Area Laundry & Dry Cleaning Pension Trust Fund, 522 U.S. at 200-01, 118 S.Ct. 542. As the Pension Benefit Guaranty Corporation ("PBGC")3 advises, under ERISA, as

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amended by the MPPAA, the date of withdrawal is the date that operations actually cease—the date does not relate back to the date of filing of a Chapter 11 petition if operations have continued thereafter. See PBGC Op. Letter No. 87-1 (Jan. 23, 1987).

        With regard to alter ego liability in cases involving claims to pension benefits protected by ERISA, as amended by the MPPAA, there is "a federal interest supporting disregard of the corporate form to impose liability." Lumpkin v. Envirodyne Indus., Inc., 933 F.2d 449, 460-61 (7th Cir. 1991) ("[T]he congressional intent of ERISA is to hold employers responsible for pension benefits, so that when the corporate form poses a bar to liability, 'concerns for corporate separateness are secondary to what we view as the mandate of ERISA.' ") (internal citations omitted).

        In the instant case, the district court held that the trustee of the bankruptcy estate, rather than Appellant, was the proper party to pursue the present action.4 That court reasoned that Appellant's alleged injuries were the "property of the bankruptcy estate," Appellant's Br., Ex. B at 6, and would "impact[ ] Twin directly and all of Twin's creditors indirectly." Id. at 9.

        Certainly the district court was correct that once a company or individual files for bankruptcy, creditors lack standing to assert claims that are "property of the estate." The Bankruptcy Code defines the "estate" as "all legal or equitable interests of the debtor in property as of the commencement of the case," 11 U.S.C. § 541(a)(1), as well as "[a]ny interest in property that the estate acquires after the commencement of the case." Id. at 541(a)(7). This definition is given broad application and includes "all kinds of property, including . . . causes of action. . . ." United States v. Whiting Pools, Inc., 462 U.S. 198, 205 n. 9, 103 S.Ct. 2309, 76 L.Ed.2d 515 (1983).5 Moreover, at least in some circuits, a trustee in bankruptcy may maintain a "veil piercing" suit or alter ego action on behalf of a bankrupt corporation where the claim alleged involves a generalized injury to all creditors. See, e.g., Koch Refining v. Fanners Union Cent. Exch., Inc., 831 F.2d 1339, 1346-47 (7th Cir. 1987).6

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        Here, however, Twin's withdrawal liability is not property of the estate. Although Twin filed its bankruptcy petition on December 7, 1998, it did not cease operations until it entered into a Shutdown Agreement on December 25, 1998, and it continued contributions to the pension fund until January 25, 1999. Therefore, the claim for withdrawal liability did not arise until after the filing of the bankruptcy petition.7

        The claim for withdrawal liability is also not a legal or equitable interest of the debtor. In order for the claim to be the "legal or equitable interest of the debtor in property," the claim must be a "general one, with no particularized injury arising from it." St, Paul Fire & Marine Ins. Co. v. PepsiCo, Inc., 884 F.2d 688, 701 (2d Cir. 1989) ("If a claim is a general one, with no particularized injury arising from it, and if that claim could be brought by any creditor of the debtor, the trustee is the proper person to assert the claim, and the creditors are bound by the outcome of the trustee's action."). On the other hand, if the claim is specific to the creditor, it is a "personal" one and is a legal or equitable interest only of the creditor. A claim for an injury is personal to the creditor if other creditors generally have no interest in that claim. Koch Refining, 831 F.2d at 1348-49.8

        In this case, the injury is not insolvency stemming from Appellees' actions. Here, the injury is the Appellees' evasion of withdrawal liability. Withdrawal...

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