In re Seatrain Lines, Inc., Bankruptcy No. 81 B 10311.

• Decision Date: 04 February 1985
• Docket Number: Bankruptcy No. 81 B 10311.
• Citation: 46 BR 320
• Parties: In re SEATRAIN LINES, INC., Debtor.
• Court: U.S. Bankruptcy Court — Southern District of New York

46 B.R. 320 (1985)

In re SEATRAIN LINES, INC., Debtor.

Bankruptcy No. 81 B 10311.

United States Bankruptcy Court, S.D. New York.

February 4, 1985.

Stroock & Stroock & Lavan, New York City, for Seatrain Lines, Inc.

Glynn & Dempsey, Boston, Mass., for BSA-ILA Pension Trust Fund.

DECISION ON OBJECTIONS TO PROOF OF CLAIM

EDWARD J. RYAN, Bankruptcy Judge.

On February 11, 1981, an involuntary petition under Chapter 11 of the Bankruptcy Code (the Code) was filed against Seatrain Lines, Inc. (Seatrain) and an order for relief was entered on that date. Seatrain is currently operating as debtor-in-possession pursuant to § 1108 of the Code.

Until shortly before the filing of the involuntary petition, certain of Seatrain's subsidiaries (Seatrain) were carriers of containerized cargo in the international shipping trade. Prior to September 14, 1979, Seatrain vessels took on and unloaded cargo in the port of Boston. In order to obtain the services of longshoremen to load and unload its vessels, Seatrain engaged independent stevedores, members of the Boston Shipping Association. The independent stevedores hired and paid members of the International Longshoremen's Association (ILA) to perform the work of loading and unloading the containers from Seatrain's vessels.

From September 14, 1979 through November 14, 1980, Seatrain shipped containers through the port of Boston on vessels owned and operated by other independent carriers which had no affiliation with Seatrain. These carriers also used independent stevedores to load and unload Seatrain's containers, and the stevedores in turn hired and paid ILA longshoremen to perform the actual work.

After November 14, 1980, Seatrain shipped no containers through the port of Boston.

Both prior to and after Septmeber 14, 1979, Seatrain did not pay the wages of the longshoremen directly; the workers were paid by the independent stevedores, who also controlled their hiring and firing. If longshoremen were injured while working on vessels carrying Seatrain containers, they filed compensation claims against the stevedores, not against Seatrain. After September 14, 1979, Seatrain did not directly supervise the work of the longshoremen except through the carriers and independent stevedores.

To obtain stevedoring services, Seatrain was obligated under a collective bargaining agreement with the ILA to make payments to the BSA-ILA Pension Trust Fund (Pension Fund or Fund), a multiemployer pension plan. These payments were based on (1) the number of containers loaded or unloaded in Boston (Container Royalties) and (2) the total tonnage of such containers loaded or unloaded (Tonnage Assessments).

On or about August 14, 1981, the Pension Fund filed proof of claim no. 1037 against Seatrain for $323,163.00, for Seatrain's alleged liability for withdrawal as an employer under the Fund, a multiemployer pension plan. This withdrawal liability was based on the provisions of the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. § 1381 et seq. (the Multiemployer Act), which applies to the Fund. Section 1381(a) of the Multiemployer Act provides that "if an employer withdraws from a multiemployer plan . . ., then the employer is liable to the plan in the amount determined under this part to be the withdrawal liability." The Pension Fund also seeks priority status for its claim pursuant to § 507(a)(4) of the Code, as an unsecured claim for contributions to an employee benefit plan.

On June 21, 1983, Seatrain filed its objection to the claim, on the grounds that Seatrain is not an "employer" within the meaning of the Multiemployer Act and that therefore Seatrain has no withdrawal liability for its cessation of contributions to the Fund.

The only issue presented is whether the ILA longshore-men were employees of Seatrain, so as to make Seatrain an "employer" within the meaning of the Multiemployer Act.

It is well established that the relevant factors in determining whether an employer-employee realtionship exists include the right to control,...