Empire State Bus Corp. v. Local 854 Health & Welfare Fund

Decision Date13 February 2023
Docket Number21-cv-10471 (LJL)
PartiesEMPIRE STATE BUS CORP., et al., Plaintiffs, v. LOCAL 854 HEALTH AND WELFARE FUND, Defendant.
CourtU.S. District Court — Southern District of New York

EMPIRE STATE BUS CORP., et al., Plaintiffs,


No. 21-cv-10471 (LJL)

United States District Court, S.D. New York

February 13, 2023


LEWIS J. LIMAN, United States District Judge:

Plaintiffs Empire State Bus Corp., Allied Transit Corp., and Empire Charter Service, Inc. (“Plaintiffs”) bring an action against Defendant Local 854 Health and Welfare Fund (“Defendant” or “Teamsters Fund”) for a declaratory judgment. Dkt. No. 1-1. Prior to the close of discovery, Plaintiffs moved for summary judgment and attorneys' fees. Dkt. Nos. 11, 12. The remaining discovery deadlines were stayed pending the Court's resolution of the motion. Dkt. No. 32.

For the following reasons, summary judgment is granted in Plaintiffs' favor, although Plaintiffs' request for attorneys' fees is denied.


The following facts, which are largely drawn from the parties' Local Rule 56.1 statements of facts, Dkt. Nos. 14, 15, 24, 30, are undisputed unless otherwise indicated.[1]


Plaintiffs are companies that operate school buses primarily in Manhattan, Brooklyn, Queens, the Bronx, and Staten Island. Joint 56.1 Statement ¶ 1. Plaintiffs' unionized employees include bus drivers for general and special needs children and escorts for special needs children. Id. ¶ 2. These unionized bus drivers and escorts were, as of July 1, 2016, members of International Brotherhood of Teamsters Local 553 (“Teamsters Local 553”), a labor union. Id. ¶¶ 4-5.

Plaintiffs and Teamsters Local 553 executed Collective Bargaining Agreements (“CBAs”) with three-year terms, each expiring on June 30, 2019. Id. ¶ 6. The CBAs obligated Plaintiffs to contribute to the Teamsters Fund on behalf of their employees who were members of Teamsters Local 553. Id. ¶ 12. The Teamsters Fund is a multiemployer welfare plan, which provides health coverage to union members who participate in the plan, including members of Teamsters Local 553 who were employed by Plaintiffs. Id. ¶¶ 15-16. The CBAs incorporated by reference the Teamsters Fund's Agreement and Declaration of Trust (the “Trust Agreement”). Id. ¶ 14.

On June 30, 2019, the CBAs expired by their terms and no written extensions of the CBAs were executed after November 15, 2019. Id. ¶¶ 23-24. Although Plaintiffs and Teamsters Local 553 engaged in negotiations for new CBAs, formal negotiations between the parties stopped after January 2020. D's 56.1 Response ¶¶ 30-31.

During the relevant time period, the Teamsters Fund had six trustees: three trustees who were appointed by Teamsters Local 553 (the “Union Trustees”) and three trustees who were appointed by and/or to represent contributing employers to the Teamsters Fund (the “Employer Trustees”). Ps' 56.1 Statement ¶¶ 17-19; D's 56.1 Response ¶¶ 17-19. On March 25, 2020, the three Union Trustees attended a Board of Trustees' meeting. D's 56.1 Response ¶ 2; Ps' 56. 1


Response ¶ 2. At that meeting, Demos P. Demopoulos, one of the Union Trustees, made a motion to amend the Trust Agreement to provide for a termination premium for former contributing employers (the “Proposed Amendment”). D's 56.1 Response ¶ 3; Ps' 56.1 Response ¶ 3. Plaintiffs state that the Proposed Amendment “would have required all withdrawing employers to pay out-of-pocket for any medical expenses that were incurred while the employer was contributing to the fund, but not presented to the fund for payment until after the employer stopped contributing to the fund”; these expenses are termed “Incurred But Not Reported” claims (“IBNR”). Dkt. No. 16 at 3-4. The Union Trustees voted in favor of the Proposed Amendment at the meeting, pending ratification by the full Board of Trustees. D's 56.1 Response ¶ 4; Ps' 56.1 Response ¶ 4. The motion containing the Proposed Amendment was circulated to the Employer Trustees in writing via email by Demopoulos on March 25, 2020. D's 56.1 Response ¶ 5; Ps' 56.1 Response ¶ 5.

On March 31, 2020, a special meeting of the Board of Trustees of the Teamsters Fund was held by video conference; all three Union Trustees and all three Employer Trustees attended the meeting. Joint 56.1 Statement ¶ 58; D's 56.1 Response ¶ 6; Ps' 56.1 Response ¶ 6; Dkt. No. 13-2. Unsigned minutes from that meeting state that the Union Trustees of the Teamsters Fund reintroduced the Proposed Amendment. Joint 56.1 Statement ¶ 54. According to the unsigned minutes, a termination premium would be assessed in an amount equal to the IBNR claims attributable to each employer's employees and their dependents. Id. ¶ 55. The motion for the Proposed Amendment did not pass and was not adopted at that meeting. Id. ¶ 56. The unsigned meeting minutes state:

Fund Counsel Friedman asked whether the Employer Trustees were going to vote on the motion and reported that the Union Trustees were all going to vote in favor. Mr. Pollack stated that he would notify Mr. Friedman and the Union Trustees of the Employer Trustees' vote by the close of business tomorrow

Dkt. No. 13-12 at 5. On April 1, 2020, as promised, Jeffrey Pollack-who Defendant claims is Employer Trustee Liaison Counsel-sent an email to all the trustees apparently with the votes of the three Employer Trustees: “Welfare Motion 2 re IBNR assessment. Curcio and Barrett vote yes (based on Vicki's statement that the IBNR is usually 2x one month's welfare contribution). Cassesse did not participate or vote.” Dkt. No. 13-19; see D's 56.1 Response ¶ 10; Ps' 56.1 Response ¶ 10 (noting that while they do not challenge “the veracity of the email,” they dispute “Pollack's recitation of employer trustee votes on the grounds that no valid vote occurred or could occur via that email” and they have “no personal knowledge of Pollack's title with the Teamsters Fund”). John Curcio, one of the Employer Trustees mentioned in the April 1 email, is the principal of both Empire State Bus Corp. and Empire Charter Service, Inc., and has a management role with Allied Transit Corp. D's 56.1 Response ¶ 11; Ps' 56.1 Response ¶ 11.

On September 14, 2020, Plaintiffs' employees voted to leave the Teamsters Local 553 and to join the union known as Amalgamated Transit Workers Local 854. Joint 56.1 Statement ¶ 34. On November 12, 2020, the Teamsters Fund sent a letter to Plaintiffs demanding that the Bus Companies pay the Teamsters Fund a termination premium of $239,892 (“Termination Premium”). Id. ¶ 71; D's 56.1 Response ¶ 70. After Plaintiffs refused to pay, the Teamsters Fund sent Plaintiffs a letter on November 3, 2021 declaring Plaintiffs to be in “default” and demanding payment in full within seven days. Joint 56.1 Statement ¶ 88. In that letter, the Teamsters Fund stated: “If Allied/Empire fails to remit the Termination Premium within this time period, the Fund shall take all required steps to collect the monies due, including, but not limited to authorizing Blitman & King to file suit ....” Dkt. No. 13-18.


On or about November 14, 2021, Plaintiffs commenced this action in the Supreme Court of New York County. Dkt. No. 1 ¶ 1. The complaint requested a declaratory judgment that the


Proposed Amendment was never validly voted on and adopted and Plaintiffs were therefore not liable for the Termination Premium. Dkt. No. 1-1. Defendant removed the action to this Court on December 7, 2021 pursuant to 28 U.S.C. §§ 1441 and 1446. See Dkt. No. 1.

On March 25, 2022, prior to the close of discovery, Plaintiffs filed a motion for summary judgment on all causes of action in the complaint along with supporting documentation. Dkt. Nos. 11, 12-16. Defendant submitted their memorandum of law in opposition to the motion along with supporting documentation on April 22, 2022. Dkt. Nos. 23-26. Plaintiffs submitted a reply memorandum of law and supporting documentation on May 9, 2022. Dkt. Nos. 27-30.

On June 23, 2022, the parties requested a stay of discovery deadlines pending a decision on the motion for summary judgment. Dkt. No. 32. The Court granted that request the next day. Dkt. No. 33.

On November 10, 2022, Plaintiffs filed a notice of supplemental authority in support of their motion for summary judgment. Dkt. No. 34.


Under Federal Rule of Civil Procedure 56, a court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “An issue of fact is ‘material' for these purposes if it ‘might affect the outcome of the suit under the governing law,'” while “[a]n issue of fact is ‘genuine' if ‘the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'” Konikoff v. Prudential Ins. Co. of Am., 234 F.3d 92, 97 (2d Cir. 2000) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). In determining whether there are any genuine issues of material fact, the Court must view all facts “in the light most favorable to the non-moving party,” Holtz v. Rockefeller & Co., Inc., 258 F.3d 62, 69 (2d Cir. 2001), and the movant bears the burden of demonstrating that “no genuine issue of material fact


exists,” Marvel Characters, Inc. v. Simon, 310 F.3d 280, 286 (2d Cir. 2002) (citations omitted). If the movant meets its burden, “the nonmoving party must come forward with admissible evidence sufficient to raise a genuine issue of fact for trial in order to avoid summary judgment.” Jaramillo v. Weyerhaeuser Co., 536 F.3d 140, 145 (2d Cir. 2008).

“[A] party may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment.” Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (quoting Fletcher v. Atex, Inc., 68 F.3d 1451, 1456 (2d Cir. 1995)). Nor may the nonmoving party “rely on conclusory allegations or unsubstantiated speculation.” F.D.I.C. v. Great Am. Ins. Co., 607 F.3d 288, 292 (2d Cir. 2010) (quoting ...

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