BD. OF TRUSTEES TRUCKING EMPLOYEES v. GOTHAM FUEL

• Decision Date: 27 April 1993
• Docket Number: Civ. A. No. 92-4094.
• Citation: 860 F. Supp. 1044
• Parties: BOARD OF TRUSTEES OF TRUCKING EMPLOYEES OF NORTH JERSEY WELFARE FUND, INC. — PENSION FUND, Plaintiff, v. GOTHAM FUEL CORPORATION, a New Jersey Corporation, and Hobin Fuel Oil, a New Jersey Corporation, Oil City Petroleum, a New York Corporation, Ray Combustion Corporation, a New Jersey Corporation, Jersey York Corporation, a New Jersey Corporation, Murray Haber, a sole proprietorship, jointly and severally, Defendants.
• Court: U.S. District Court — District of New Jersey

860 F. Supp. 1044

BOARD OF TRUSTEES OF TRUCKING EMPLOYEES OF NORTH JERSEY WELFARE FUND, INC. — PENSION FUND, Plaintiff, v. GOTHAM FUEL CORPORATION, a New Jersey Corporation, and Hobin Fuel Oil, a New Jersey Corporation, Oil City Petroleum, a New York Corporation, Ray Combustion Corporation, a New Jersey Corporation, Jersey York Corporation, a New Jersey Corporation, Murray Haber, a sole proprietorship, jointly and severally, Defendants.

Civ. A. No. 92-4094.

United States District Court, D. New Jersey.

April 27, 1993.

COPYRIGHT MATERIAL OMITTED

Herbert New and David W. New, P.C., Clifton, NJ, Eames, Wilcox, Mastej, Bryant, Swift and Riddell, Elizabeth Roberto, Detroit, MI, for plaintiff.

Grotta, Glassman & Hoffman, P.A., Kirsten Hotchkiss, Roseland, NJ, for defendants.

OPINION

HAROLD A. ACKERMAN, District Judge:

In this action, plaintiff Board of Trustees of Trucking Employees of North Jersey Welfare Fund, Inc. — Pension Fund ("Trustees") seeks to collect a statutory assessment of withdrawal liability from defendants Gotham Fuel Corporation, Hobin Fuel Oil, Oil City Petroleum, Ray Combustion Corporation, Jersey York Corporation, and Murray Haber¹ pursuant to 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, et seq. Before me now are the following motions: 1) plaintiff's motion for partial summary judgment pursuant to Fed.R.Civ.P. 56(a) as to the corporate defendants Gotham Fuel Corporation, Hobin Fuel Oil, Oil City Petroleum, Ray Combustion Corporation, and Jersey York Corporation ("Oil Group") and to strike defenses as to all the defendants; 2) defendants' cross-motion for summary judgment pursuant to Fed.R.Civ.P. 56(b). For the following reasons, plaintiff's motion for partial summary judgment is granted and defendants' cross-motion is denied. Plaintiff's motion to strike defenses is granted in part and denied in part.

I. Overview of ERISA and MPPAA

Under ERISA, an employer may contribute to a pension plan on behalf of its employees who belong to a participating union. Congress found, however, that ERISA did not adequately protect pension plans from the adverse consequences that resulted when employers withdrew from the plans. Flying Tiger Line v. Teamsters Pension Trust Fund of Philadelphia, 830 F.2d 1241, 1243 (3d Cir.1987) (quoting Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 722, 104 S.Ct. 2709, 2714, 81 L.Ed.2d 601 (1984)). Congress, therefore, enacted the MPPAA in order to protect the solvency of multiemployer pension plans. See IUE AFL-CIO Pension Fund v. Barker & Williamson, Inc., 788 F.2d 118, 127 (3d Cir.1986) ("The MPPAA was designed `(1) to protect the interests of participants and beneficiaries in financially distressed multiemployer plans, and (2) ... to ensure benefit security to plan participants.'") (quoting H.R.Rep. No. 869, 96th Cong., 2d Sess. 71, reprinted in 1980 U.S.Code Cong. & Admin.News 2918, 2939). Pursuant to the MPPAA, when a contributing employer to a multiemployer pension plan withdraws from participation in the plan, the plan's trustees may collect withdrawal liability from the employer.²

Under the MPPAA's statutory scheme, once an employer withdraws from a pension plan, the plan's trustees must make a determination of the amount of the withdrawal liability owed. 29 U.S.C. §§ 1381, 1382(1). The trustees must then notify the employer of the amount of the liability assessed and demand payment. 29 U.S.C. §§ 1382(2), 1399(b)(1). The employer then has 90 days from receipt of the Notice to request a review of the liability determination by the trustees of the plan. 29 U.S.C. § 1399(b)(2)(A)(i). If the dispute over the existence or amount of the liability is not resolved, either party may institute arbitration proceedings. 29 U.S.C. § 1401(a)(1). If the employer fails to initiate arbitration proceedings, the withdrawal liability assessment becomes due and owing and the trustees may commence an action to collect the unpaid withdrawal liability from the employer. 29 U.S.C. §§ 1401(b)(1), 1451.

Under the MPPAA, all trades or businesses under "common control" with a contributing employer are treated as a "single employer." 29 U.S.C. § 1301(b)(1). Such a group of business entities is known as a "controlled group." Since all the members of a controlled group are to be treated as one employer, each member is liable for the withdrawal liability of any other member of the controlled group. Flying Tiger, 830 F.2d at 1244. The primary purpose of the controlled group concept is to prevent an employer from avoiding its responsibilities under ERISA by conducting its operations through many related but separate entities. See S.Rep. No. 383, 93d Cong., 2d Sess. 43, reprinted in 1974 U.S.Code Cong. & Admin.News 4639, 4890, 4928; see also H.Rep. No. 807, 93d Cong., 2d Sess. 50, reprinted in 1974 U.S.Code Cong. & Admin.News 4670, 4716.

II. Factual Background

The following facts are undisputed.

Plaintiff Trustees is the plan sponsor of a multiemployer pension fund ("Fund") as defined under ERISA. 29 U.S.C. §§ 1002(37), 1301(a)(3). The Fund provides retirement benefits to plan participants who are members of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local 560 ("Local 560").

Oil City Petroleum Company, a New Jersey corporation, ("Oil City-NJ") was a contributing employer to the Fund.³ Pursuant to collective bargaining agreements with Local 560, Oil City-NJ agreed to make contributions to the Fund on behalf of its employees covered by the agreements. In September 1984, Oil City-NJ ceased operations and ceased paying contributions to the Fund.

The Trustees determined that Oil City-NJ had permanently terminated operations and calculated its withdrawal liability. On November 19, 1984, the Fund sent Oil City-NJ a notice and demand for payment of its withdrawal liability under the provisions of the MPPAA ("Notice"). The Notice set forth the total amount of the withdrawal liability assessment, $59,966.00, which was to be paid in monthly installments of $1,738.00 beginning on February 1, 1985. The Notice also informed Oil City-NJ that it had 90 days from receipt of the Notice to request a review of the Trustees' assessment determination and to seek arbitration before the New Jersey State Board of Mediation — Pension and Welfare Panel. The Notice also stated that the Trustees had a right to look to another company under common control with Oil City-NJ in the event the assessment could not be collected from it.

No review or arbitration proceedings were initiated within ninety days of receipt of the Notice and no payment of the withdrawal liability assessment was made. On February 7, 1985, the Trustees sent a past due Notice to Oil City-NJ.

On October 8, 1985, the Fund commenced an action in United States District Court in New Jersey against Oil City-NJ. See Trucking Employees of North Jersey Welfare Fund, Inc. v. Oil City Petroleum, Civ. Act. No. 85-4782. A default judgment was entered against Oil City-NJ on September 25, 1986 in the amount of $59,966.00, plus interest of $10,194.22, liquidated damages of $11,993.20, and attorneys' fees and costs of $2,750.00, totalling $84,897.42. To date, no part of this judgment has been paid.

Over six years later, and eight years after Oil City-NJ first defaulted on its withdrawal liability, the Trustees instituted this action against the defendants, alleging that they are liable for the withdrawal liability assessment and the 1986 judgment.

It is conceded that defendants Gotham Fuel Corporation, Hobin Fuel Oil, Oil City-NY, Ray Combustion Corporation and Jersey York Corporation ("Oil Group") were, as of the date of the withdrawal, members of a controlled group with the contributing employer, Oil City-NJ.

III. Discussion

A. Standard for Summary Judgment

Summary judgment may be granted only if the pleadings, supporting papers, affidavits, and admissions on file, when viewed with all inferences in favor of the nonmoving party, demonstrate that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c); see Todaro v. Bowman, 872 F.2d 43, 46 (3d Cir.1989); Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir.), cert. dism'd, 483 U.S. 1052, 108 S.Ct. 26, 97 L.Ed.2d 815 (1987). Put differently, "summary judgment may be granted if the movant shows that there exists no genuine issues of material fact that would permit a reasonable jury to find for the nonmoving party." Miller v. Indiana Hospital, 843 F.2d 139, 143 (3d Cir.), cert. denied, 488 U.S. 870, 109 S.Ct. 178, 102 L.Ed.2d 147 (1988). An issue is "genuine" if a reasonable jury could possibly hold in the nonmovant's favor with regard to that issue. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). A fact is material if it influences the outcome under the governing law. Id. at 248, 106 S.Ct. at 2510.

Within the framework set out above, the moving party essentially bears two burdens. First, there is the burden of production, of making a prima facie showing that it is entitled to summary judgment. This may be done either by demonstrating that there is no genuine issue of fact and that as a matter of law, the moving party must prevail, or by demonstrating that the nonmoving party has not shown facts relating to an essential element of the issue for which it bears the burden. Once either showing is made, this burden shifts to the nonmoving party who must demonstrate facts supporting each element for which it bears the burden as well as establish the existence of genuine issues of material fact. Second, there is the burden of persuasion. This burden is a stringent one which always remains with the moving party. If there remains any doubt as to whether a trial is necessary,...