Pig Newton, Inc. v. Boards of Dirs. of the Motion Picture Indus. Pension Plan
| Decision Date | 05 March 2015 |
| Docket Number | No. 13 Civ. 7312KPF.,13 Civ. 7312KPF. |
| Parties | PIG NEWTON, INC., Defendants. v. The BOARDS OF DIRECTORS OF the MOTION PICTURE INDUSTRY PENSION PLAN, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Elizabeth O'Leary, William E. Zuckerman, Kauff McGuire & Margolis LLP, New York, NY, for Defendants.
Franklin K. Moss, Gillian Costello, Spivak Lipton Watanabe Spivak & Moss LLP, New York, NY, for Defendants.
On October 16, 2013, Plaintiff/Counter–Defendant Pig Newton, Inc. (“Plaintiff” or “Pig Newton”), commenced this action against Defendants/Counter–Plaintiffs the Boards of Directors (“Defendants” or the “Directors”) of the Motion Picture Industry Pension Plan, Health Plan, and Individual Account Plan (the “Plans”), under the Declaratory Judgment Act, 28 U.S.C. §§ 2201 –2202, seeking a declaration that certain provisions of the Plans' Trust Agreements are invalid and unenforceable. In response, the Directors counterclaimed against Pig Newton under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 –1191c, 1202 –1242, 13011461, for delinquent contributions under terms of the Trust Agreements. The parties have now cross-moved for summary judgment. For the reasons stated in this Opinion, the Court finds that the disputed provisions are valid and enforceable, and awards summary judgment in Defendants' favor.
Pig Newton is the producer of the television series “Louie” (the “Series”), as well as other entertainment ventures, including televised and web-based comedy shows. (Def. 56.1 ¶ 5; Pl. 56.1 ¶ 1). Louis Szekely (“Szekely”) is, and has at all times been, Pig Newton's sole owner and shareholder. (Def. 56.1 ¶¶ 6, 18; see also Pl. 56.1 ¶ 1). Plaintiff employs Szekely in connection with various functions, including as the producer, sole writer, sole director, star performer, and as an editor of the Series. (Def. 56.1 ¶¶ 7, 35, 36; Pl. 56.1 ¶ 2). The instant action focuses entirely on the services Szekely provides as an editor for Pig Newton. He has performed editing services for the Series in each of the four seasons of the Series that have been produced to date, in addition to performing editing services for Pig Newton related to other ventures. (Def. 56.1 ¶¶ 8–9).
Defendants are trustees tasked with administering three “multiemployer plans”: the Motion Picture Industry Pension Plan (the “Pension Plan”), the Motion Picture Industry Individual Account Plan (the “IAP” or the “Individual Plan”), and the Motion Picture Industry Health Plan (the “Health Plan”) (collectively, the “Plans”).
(Def. 56.1 ¶ 1; Pl. 56.1 ¶¶ 6–8).2 The Plans were first established between 1952 and 1979, pursuant to declarations of trust (“Trust Agreements”) entered into by and between certain employers, and various unions that represent individuals employed in a wide variety of crafts within the entertainment industry. (Def. 56.1 ¶ 2).
The Plans provide pension, individual retirement, and health benefits to approximately 55,000 individuals (and their dependents) who work in the entertainment industry throughout the United States and Canada under collective bargaining agreements (“CBAs”) and participation agreements that provide for contributions to the Plans. (Def. 56.1 ¶ 3).
There are four relevant sets of documents to the instant dispute: (i) CBAs between Plaintiff and its union, the International Alliance of Theatrical Stage Employees, Moving Picture Technicians and Allied Crafts of the United States, Its Territories and Canada (the “IATSE”); (ii) one-page “Agreements of Consent” signed by representatives of Plaintiff and the IATSE; (iii) one-page trust acceptance sheets (“Trust Acceptances”) signed by representatives of Plaintiff and the IATSE; and (iii) the Trust Agreements themselves.3
Since 2010, Pig Newton and the IATSE have been parties to various CBAs, including four “Low Budget Episodic Cable Agreements” (one for each season of the Series) and two “Producer–IATSE Basic Agreements” (collectively, the “IATSE CBAs”). (See Pl. 56.1 ¶¶ 9–10; Def. 56.1 ¶¶ 10–11; JA 65–353, 795–818, 821–44, 847–52, 876–901). Pig Newton was represented by counsel in negotiating the CBAs into which it entered. (Def. 56.1 ¶ 55). The IATSE CBAs apply to Plaintiff's employees to the extent they are engaged in the editing—as separate from, for example, the producing, writing, and directing—of television shows and films. (See id. at ¶ 13; Pl. 56.1 ¶ 11). Because of the intense specialization of unions within the entertainment industry, employees who perform multiple roles in connection with their work for Plaintiff belong to multiple unions. (See Def. 56.1 ¶ 19; Pl. 56.1 ¶ 4). Pig Newton, therefore, contributes to multiple benefit plans, and does so for Szekely, who belongs to multiple unions as a result of his multifaceted work for Pig Newton. (See Pl. 56.1 ¶ 5; Def. 56.1 ¶ 64).4
Of particular relevance, the IATSE CBAs obligate Plaintiff to make contributions to each of the Plans, pursuant to the Trust Agreements governing the Plans, for any of its employees covered by the CBAs. (Def. 56.1 ¶ 12; Pl. 56.1 ¶ 6). Generally, the IATSA CBAs require Plaintiff to contribute set hourly rates to the Plans on behalf of covered employees based on the number of hours “worked or guaranteed.” (Pl. 56.1 ¶ 12 (quoting JA 805, 831, 857, 886)). They also provide that such contributions shall be made “[i]n accordance with” provisions of the Trust Agreements regarding contributions. (JA 82, 88, 228, 233).
Among the agreements entered into between Plaintiff and the IATSE are one-page Agreements of Consent. Pursuant to these Agreements of Consent, Plaintiff “agree[d] to become a party to and be bound by,” a number of other ancillary documents, including, “the Trust Agreements of the Plans,” and “any amendments, modifications, extensions, supplements, or renewals of the [Trust] Agreements.” (Def. 56.1 ¶ 11 (citing JA 819, 845, 873, 902); see also Pl. 56.1 ¶¶ 16–17).
To memorialize further the link between the IATSE CBAs and the Trust Agreements, employers—such as Pig Newton—are required to sign one-page Trust Acceptance sheets. (See Def. 56.1 ¶ 15; Pl. 56.1 ¶ 18). The Trust Acceptances provide that contributions are required for services “actually rendered in connection with motion picture production” and—echoing language in the CBAs—“for each hour guaranteed by or each hour worked for the Employer by employees for whom the Employer is obligated ... to make the required contributions.” (Pl. 56.1 ¶ 18 (quoting JA 820, 846, 874, 875, 903)).
Pig Newton executed Trust Acceptances pursuant to which Plaintiff, “represent[ed] and agree[d]” among other things, that Plaintiff was “familiar with the provisions of the respective collective bargaining agreements and [Trust Agreements] establishing” the Plans. (Def. 56.1 ¶ 16). In addition, by executing the Trust Acceptances, Plaintiff “agree[d] and intend[ed] to become a party and to participate in the [Plans] to the same extent as though the [Plaintiff] had executed such Trust Agreements or their counterparts with respect to the employees covered by the collective bargaining agreement.” (Id. at ¶ 17; Pl. 56.1 ¶ 19).
The Plans each have separate Trust Agreements and, because of various amendments, there were at least 10 different versions in effect between 2010 and 2014. (See Pl. 56.1 ¶¶ 20–21). The Trust Agreements themselves are long and labyrinthine (see id. ), referencing special conditions and exceptions relevant to particular classes of employees covered by the CBAs of at least 13 separate unions (see, e.g., JA 431–43).
The Trust Agreements grant the Directors a variety of general and specific powers relating to administration of the Plans. (Def. 56.1 ¶ 61). Among other powers, the Trust Agreements grant the Directors the “power to construe the provisions of the [Trust] Agreement ... and the terms used [t]herein,” and provide that “any construction adopted by the Directors in good faith shall be binding upon the Unions, the Employers and the Employees and their families and dependents.” (JA 383 (Health Plan)).5
Pursuant to the Trust Agreements, individuals must work certain minimum hours in covered employment (for the present purposes, editing) in order to qualify for benefits through the Plans. (Def. 56.1 ¶ 4). Thus employees who work sporadically, or only for brief periods of time, may not accrue the minimum hours needed to qualify for health benefits, pension vesting credits, or IAP vesting credits. (See id. at ¶¶ 4, 26).
The incentives that animate the present dispute can be summarized as follows: Certain employees (“Controlling Employees”) exist, who, by virtue of their ownership interest in an employing entity, have more control over the number of hours they work (or report) than the average employee. (See Def. 56.1 ¶ 25). Such a Controlling Employee, recognizing that a minimum hour threshold exists, could self-allocate that precise amount of hourly work—thus maximizing the benefit-to-contribution ratio. (See id. at ¶¶ 25–26). In the more sinister version of this scenario, a Controlling Employee, who likely has access to the employing entity's books and records, could falsify the number of hours worked so that he or she obtains benefits, while ensuring that the company pays the bare minimum in contributions.6
In response to what the Directors perceived as abuse of the minimum hour threshold by Controlling Employees, the Directors added new provisions to the Trust Agreements (the “Controlling Employee Provisions” or the “Provisions”). (See Def. 56.1 ¶¶ 20, 25–27, 63; Zuniga Decl. ¶¶ 10, 19; Szekely Decl. ¶ 14). It is unclear precisely when these amendments occurred, but—for present purposes—it is enough to note that they occurred...
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