Div. 1181 Amalgamated Transit Union-N.Y. Emps. Pension Fund v. N.Y.C. Dep't of Educ.
| Decision Date | 02 November 2020 |
| Docket Number | 14-CV-7405 (ERK)(SMG) |
| Parties | DIVISION 1181 AMALGAMATED TRANSIT UNION-NEW YORK EMPLOYEES PENSION FUND and its Board of Trustees, Plaintiffs, v. NEW YORK CITY DEPARTMENT OF EDUCATION, Jofaz Transportation, Inc., Allied Transit Corp, Pride Transportation Services, Inc. and Quality Transportation Corp., Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Barry S. Slevin, Jeffrey S. Swyers, Paul E. Knupp, Richard S. Siegel, Pro Hac Vice, Slevin & Hart, P.C., Washington, DC, Owen Marc Rumelt, New York, NY, for Plaintiffs.
David Alan McManus, Melissa D. Hill, Michael Friel Fleming, Morgan, Lewis & Bockius, LLP, New York, NY, for Defendant New York City Department of Education.
Richard Milman, Ira D. Wincott, Netanel Newberger, Milman Labuda Law Group PLLC, Lake Success, NY, Jonathan Eric Sturm, Milman Labuda Law Group PLLC, New Hyde Park, NY, for Defendants Jofaz Transportation, Inc., Allied Transit Corp.
Michael Andrew Kaplan, Lowenstein Sandler LLP, New York, NY, Robert J. Kipnees, Andrew E. Graw, Lowenstein Sandler PC, Roseland, NJ, for Defendants Pride Transportation Services, Inc., Quality Transportation Corp.
Plaintiffs Division 1181 Amalgamated Transit Union—New York Employees Pension Fund (the "Fund") and its Board of Trustees (the "Trustees") (collectively, "Plaintiffs") bring this action alleging various Employee Retirement Income Security Act ("ERISA") and related state law contract claims against Jofaz Transportation, Inc. ("Jofaz"), Allied Transit Corp. ("Allied"), Pride Transportation Services, Inc. ("Pride"), Quality Transportation Corp. ("Quality") (collectively, the "Contractors"), and New York City Department of Education ("DOE," and together with Contractors, "Defendants"). Contractors bring motions under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction and all Defendants bring motions to dismiss for failure to state a claim under Rule 12(b)(6).
The crux of this dispute is whether Plaintiffs can require Contractors to contribute to the Fund based on provisions in contracts between DOE and the Contractors to which the Fund is not a party. Because such contribution obligations are not cognizable under ERISA, Plaintiffs’ ERISA claims are dismissed for failure to state a claim. Having dismissed all of Plaintiffs’ claims that arise under federal law, I decline to exercise pendent jurisdiction over Plaintiffs’ state law breach of contract claims and dismiss those claims for lack of subject matter jurisdiction.
The Fund is a multiemployer defined benefit pension plan that is administered in accordance with a Restated Agreement and Declaration of Trust of the Fund (the "Trust Agreement."). Am. Compl. ¶ 4; Fleming Decl. Ex. 3. The Fund's participants are employees of companies that provide school bus transportation for New York City public and nonpublic schools. Am. Compl. ¶ 13.
The Fund's Trust Agreement established the Fund for the "purpose" of "provid[ing] pension and related benefits to" participants "pursuant to" the Trust Agreement and the Division 1181 A.T.U.-New York Employees Pension Plan (the "Plan Document"). Tr. Agr. Art. II §§ 1–2. The Fund is financed by contributions from "Employers." Tr. Agr. Art. VII; Plan Document Art. 7. The Trust Agreement defines an Employer as "any employer that has signed a collective bargaining agreement or any other written agreement with the Union1 ... obligating said employer to be bound to [the Trust] Agreement, the Plan [Document], and the actions of the Board of Trustees to make Contributions to the Fund." Tr. Agr. Art. I § 7(a).2 Article VII of the Trust Agreement provides that the "Contributions of the Employers shall be made in the amounts set forth" and "as required by the collective bargaining agreement or any other written agreement between an Employer and the Union...." Similarly, the Plan Document provides that the "Employer shall pay to the Trustees [of the Fund] contributions in accordance with the Collective Bargaining Agreement in effect between the Employer and the Union or other written agreement requiring contributions to the Fund." Plan Document § 7.1(a). The Plan Document defines a Collective Bargaining Agreement as "an agreement between the Union and an Employer that obligates such Employer to make contributions to the Fund on behalf of Employees covered by the Agreement." Id. § 1.8.
Contractors are companies that provide school bus services to New York City schools pursuant to contracts with DOE. Am. Compl. ¶ 13. The school bus service contracts (the "School Bus Contracts") between the Contractors and DOE contain provisions called Employee Protection Provisions (the "EPP"). Id. ¶ 15. The EPP requires that DOE maintain two Master Seniority Lists—one for school bus drivers, dispatchers, and mechanics and another for school bus escorts. Id. ¶ 21; Milman Dec. Ex. B at 1–2; Fleming Dec. Ex. 3 at 20–21. Under the EPP, when a driver, dispatcher, mechanic or escort becomes unemployed as a result of either their employer losing a DOE contract or a DOE-ordered reduction in services, Contractors must fill vacant positions from the pool of unemployed workers on the Master Seniority Lists until the lists are exhausted. Am Compl. ¶ 22; Milman Dec. Ex. B at 2; Fleming Dec. Ex. 3 at 21. Displaced employees on the Master Seniority Lists choose, in seniority order, from positions available among DOE contractors at Master Picks that are operated and managed by DOE. Am. Compl. ¶ 24.
The EPP requires Contractors to abide by certain rules with respect to the wages and benefits of employees hired off the Master Seniority Lists. Id. ¶ 25; Milman Dec. Ex. B at 2–3; Fleming Dec. Ex. 3 at 21-23. With respect to the pensions of Master Seniority List employees, the EPP provides that employees "on the Master Seniority Lists who participated in the Division 1181 A.T.U.-New York Employees Pension Fund and Plan as of June 30, 2010, and who do not exercise their option to withdraw from the Fund and Plan shall continue to participate in such Pension Plan." Am Compl. ¶ 26; Milman Dec. Ex B at 1; Fleming Dec. Ex. 3 at 20. The EPP also provides:
The Contractor shall sign an agreement with Division 1181 A.T.U.—New York Employees Pension Fund and Plan to participate in such plan on behalf of all operators (drivers), mechanics, dispatchers and escorts (matrons-attendants), in the event the Contractor employs escorts, who appear on the Master Seniority Lists and who participated in the Fund and Plan as of June 30, 2010. [the "Participation Agreements"] This requirement shall not be interpreted to require any existing contractor or new contractor to enter into a collective bargaining agreement with the union, nor shall it prohibit any new contractor or existing contractor from entering into a collective bargaining agreement with the union. The Contractor shall file a copy of the executed [Participation Agreement] with the Trustees of the Fund and Plan to participate in said Fund and Plan and with the Director before the start of any school bus service under this Contract.
Am. Compl. ¶¶ 27, 46; Milman Dec. Ex. B at 3; Fleming Dec. Ex. 3 at 22. The EPP specifies the contributions that Contractors must make to the Fund and the amounts Contractors must withhold from covered employees’ paychecks for contribution to the Fund. Am. Compl. ¶¶ 47–51; Milman Dec. Ex. B at 3; Fleming Dec. Ex. 3 at 22. But the EPP also states that "employees who are on the Master Seniority List and who do not participate in the Local 1181-1016 Fund and Plan ... shall not be required to participate in the Plan but shall participate in the collective bargaining agreement, if any, of their employer." Milman Dec. Ex B at 3; Fleming Dec. Ex. 3 at 22.
The EPP also contains a section entitled "Enforcement," also known as the "Attachment Obligation Procedure," which provides in pertinent part:
"if the contractor is found to be in violation of the foregoing Employee Protection Provisions regarding the payment of ... pension contributions ..., then the Director of the Office of Pupil Transportation, within thirty (30) days of written notice, shall withhold the appropriate amounts from any payments due to the contractor and pay them directly to the applicable union for the benefit of the employees affected, to the [Fund] or other applicable union pension fund for the benefit of the employees affected....
Am. Compl. ¶ 52; Milman Dec. Ex B at 4.
The EPP began appearing in DOE transportation contracts in 1979 as a result of the Mollen Agreement, which was an agreement between the Union, DOE, and employers at the time to end a strike. Id. ¶¶ 19–20. Although the Mollen Agreement expired in 1982, and DOE started to issue new bids for some transportation contracts that did not contain the EPP in 2012, the Amended Complaint alleges that the majority of DOE transportation contracts, including the School Bus Contracts with Contractors in this case, include the EPP. Id. ¶ 39; see also Div. 1181 ATU New York, Emps. Pension Fund v. City of New York , 910 F.3d 608, 613 (2d Cir. 2018). DOE has stated that it has continued to include the EPP in its School Bus Contracts for the purpose of maintaining labor peace with the Union. Am Compl. ¶ 31.
The Amended Complaint does not allege that the Contractors who are defendants in this action were parties to the Mollen Agreement, nor does the Amended Complaint allege that the Contractors have signed any collective bargaining or other written agreement with the Union or the Fund. The School Bus Contracts containing the EPP were agreements between DOE and the Contractors. While they required the Contractors to make contributions for Fund participants whom DOE placed on the Master Seniority Lists, neither the Fund nor Union were parties to those agreements. Whether the Fund can enforce the contribution obligations imposed by the EPPs is...
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