Allied Painting & Decorating, Inc. v. Int'l Painters & Allied Trades Indus. Pension Fund

• Decision Date: 01 March 2023
• Docket Number: Civil Action 3:21-cv-13310
• Parties: ALLIED PAINTING & DECORATING, INC., Plaintiffs, v. INTERNATIONAL PAINTERS AND ALLIED TRADES INDUSTRY PENSION FUND, Defendants.
• Court: U.S. District Court — District of New Jersey

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ALLIED PAINTING & DECORATING, INC., Plaintiffs, v. INTERNATIONAL PAINTERS AND ALLIED TRADES INDUSTRY PENSION FUND, Defendants.

Civil Action No. 3:21-cv-13310

United States District Court, D. New Jersey

March 1, 2023

MEMORANDUM AND ORDER

PETER G. SHERIDAN, U.S.D.J.

This matter is an appeal from an arbitration award in the amount of $427,195.00 in favor of Defendant International Painters and Allied Trades Industry Pension Fund (“the Fund”) and against Plaintiff Allied Painting &amp Decorating, Inc. (“Allied”). Both parties brought dispositive motions wherein the Fund seeks to confirm the award (ECF No. 31) and Allied seeks to vacate the award (ECF No. 34). See, PG Publishing, Inc. v. Newspapers Guild of Pittsburgh, 19 F.4^th 308, 312-314 (3d. Cir. 2021). Procedurally the motions are more appropriately read as cross motions to confirm or vacate the award. The Court has jurisdiction under 29 U.S.C §§ 1401(b)(2) and 1451(c). Venue is proper under 29 U.S.C. § 1451(d) as the Fund conducts its operations in the District of New Jersey.

In this case, there is one issue - whether withdrawal liability is barred by laches after an approximate 10-year delay between the resumption of work after withdrawal by Allied, and the time of notification by the Fund to Allied that it is subject to withdrawal liability. Specifically, the Fund's demand letter was sent twelve years after Allied's obligation to contribute to the pension fund allegedly ended in 2005; and in calculating five years pursuant to the construction industry exception, seven years after which the Fund could have determined if Allied had made a complete withdrawal by resuming covered work in the jurisdiction. In very broad terms, the arbitrator found there was a very prolonged unreasonable delay by the Fund of its notification of withdrawal liability to Allied; but since Allied showed no prejudice, its laches objection was denied. (Decision on Employer's Motion for Calculation of the Award (“Opinion 5” at p. 30))^[1].

I.

There are certain undisputed facts.

The Fund identified the date of Allied's withdrawal from its obligation to the Fund as July 31, 2005, on or prior to the expiration of the alleged CBA in April 2006. (ECF 36, Allied SOMF at ¶ 2(b)).

Allied conceded before the Arbitrator that it was clear on its website that it had been performing work in New Jersey throughout the alleged withdrawal period (2005-2010). (ECF No. 5 at 67); see also (ECF No. 33-5 at 15); (ECF No. 38-35 at T:350-1 to 351-23). Significantly, Robert Smith (owner of Allied) testified as follows:

A. (Robert Smith): . . . Because we were performing painting work in New Jersey on hospitality jobs. So the ACM website referred to some of those previous projects. There are also other projects, later, post-2005, '06, '07, sometime in that period, that were strictly Allied Construction renovation projects, where there were painting components to them, to the contracts.

Q. (Mr. Begg, attorney for Allied). So what were those jobs in New Jersey, timeframe-wise? And if you need to look at the document, that's fine. I can show it to you.

A. Yeah, I mean, generally 2007, 2008, somewhere in that timeframe. One project in particular that I've been reminded of that we did was a Hilton Hampton Inn in Parsippany, New Jersey, significant renovation that had painting and wall coverings in it.

Q. How about the Flamingo Hotel in Atlantic City?

A. That was later, probably 2010-ish. Sometime around that period.

(ECF No. 38-35 at Tr..350:1-24)

Allied appeared on the Fund's October 2011 inactive list, thus noticing the Fund staff that Allied was subject to withdrawal liability. (ECF 36, Allied SOMF at ¶28).

On July 20, 2017, the Fund notified Allied of its obligation to pay over $400,000 in withdrawal liability (relying upon a Withdrawal Liability Worksheet noting that Allied defaulted on July 31, 2005).

On October 9, 2017, Allied requested review of the Fund's demand. (ECF 36, Allied SOMF at ¶ 52). The Fund conducted a review and declined to withdraw its statement of liability by letter dated February 1, 2018. (ECF No. 43, Fund Response to SOMF at ¶ 53). Allied timely requested arbitration on March 29, 2018. (ECF 38-1 at p.1). The parties agreed to bring the claim before arbitrator, James T. Carney for a one-day hearing which was held on April 24, 2019. (ECF No. 38-35).

II.

To prove a laches objection, one must show there was an unreasonable delay by plaintiff and prejudice to the defendant. Kars 4 Kids Inc. v. Am. Can!, 8 F.4th 209, 220 (3d Cir. 2021). Since no party petitioned to vacate or confirm the Arbitrator's finding that the Fund unreasonably delayed in pursuing the withdrawal liability, those facts are not described herein. Suffice it to say, with regard to unreasonable delay, the Arbitrator found that

the failure to devote sufficient resources to determine the existence of withdrawal liability does not excuse the Fund's inaction in this case or make its delay reasonable.

See, Opinion 1 at p. 66; See also, Opinion 2 at p. 52. The facts regarding the prejudice factor are recounted below; and these facts focus on the testimony of Robert Smith, President of Allied, and the opinions of the Arbitrator concerning the prejudice factor of the laches objection. Prior to reviewing Smith's testimony and the Arbitrator's findings, the record provided by the parties is described.

The parties submitted a joint exhibit binder to the arbitrator. (ECF No. 3835, Tr. 5:14-21)^[2]. The Arbitrator stated that exhibits 1 through 27 were admitted by agreement. (Tr. 180:13-24). Despite the alleged agreement, the parties disputed whether the admitted Collective Bargaining Agreement (“CBA”) (Exhibit 16) was authenticated when admitted into evidence. Exhibit 16 is the CBA between District Council No. 711 International Union of Painters and Allied Trades State of New Jersey (“Union”) and the employers: Garden State Council Painting and Decorating Contractors of America (“Council”), The New Jersey Glass and Metal Contractors Association (the “Association”), and The Drywall and Interior Systems Contractors Association, Inc. of New Jersey (“DISCA”) with a term commencing on May 1, 2000 and terminating on April 30, 2006. (ECF 38-16). From a review of the record submitted at the arbitration hearing, there is no evidence whether Allied was a member of any of the associations representing the employers. In addition, neither the Fund nor Allied is a signator to the CBA, so the authenticity of Exhibit 16 as a binding agreement was not examined or dismissed by the Arbitrator.

The Fund alleges Exhibit 15 shows Allied's consent to the CBA. It is a two-page document. The first page to the exhibit contains a signature page to an Agreement dated November 30, 2001 wherein the parties (Allied and District Council No. 711 agreed to “set forth control and regulate the wages, hours, fringe benefits, terms and conditions of employment under which the employer will employ painter, tapers, glazers and Allied trades.” (ECF 38-15). Additionally, the parties agreed that at the beginning of each contract year or upon beginning work with the territory (which was not specified) during the contract year, the employer will pay the Joint Trade Board $50.00. It contains the signatures of Robert Smith (owner of Allied) as “employer,” and Patrick Brennan for the Union and is dated November 30, 2001. Id. Exhibit 15 contains a second page outlining rates, including pension rates; but it does not indicate any agreement by Smith to the terms of the CBA (Exhibit 16), and Exhibit 15 has a term of one year. Exhibit 15 was labeled by the Fund as the signature page of the CBA, but there is no reference made within Exbibit 15 that Smith signed it to confirm Allied agreed to the terms of the CBA. Confusingly, the alleged CBA signature page was signed more than a year after the effective date of the CBA (Exhibit 16), so there is no temporal connection between Exhibits 15 and 16.

In addition to the above issue, Binder No. 5 of the joint binders given to the Arbitrator in advance of the hearing included the deposition transcripts of Vicki McGlone, James Bogart, Kent Cprek and Robert Smith. (ECF No. 61-1 at p. 2). The depositions were submitted to the Arbitrator prior to the arbitration hearing as background materials. (Tr. 7:1-13). Counsel for the Fund acknowledged the limited purpose for submitting the depositions as follows: “They were provided to you yesterday or the day before, I believe, for your review just to enable you to capture the full picture. But I believe that's how you viewed those documents.” (Tr. 11:23- 12:4). At the outset of the arbitration hearing, the Arbitrator indicated that except for McClone's deposition, only the testimony at trial would be considered. “I went through briefly the depositions of the other witnesses, but I'm not -- I didn't make notes on them. I accept that they will testify and I will use only what they testify on the record today, except if you would choose to use portions of the deposition....I did it simply to try to get a good feel for what seems to be going on in this case.”. (Tr. 6:18 - 7:13). The parties and the Arbitrator agreed that “Ms. McGlone's testimony can come in as substantive evidence, as if she were here testifying today.” (Tr. 11:7-16). Based on the Arbitrator's direction, the Court only reviewed the testimony of the arbitration hearing.

Robert Smith's testimony is summarized below.

Robert Smith, as President of Allied, testified at the Arbitration hearing that Allied possesses no business records from the early 2000s (Tr. 352: 9-15). Smith explained that Allied does not possess any contribution records, correspondence with the union, and the terminating agreement. (Tr. 352; 13-22). Allied has a ...