Sasso v. Vachris

• Decision Date: 12 November 1982
• Citation: 456 N.Y.S.2d 629,116 Misc.2d 797
• Parties: Robert SASSO, John Dee, John Cody, et al., Plaintiffs, v. Charles F. VACHRIS, Anthony Vachris, Helen Vachris and Robert L. Meschi, Defendants.
• Court: New York Supreme Court

Page 629

456 N.Y.S.2d 629

116 Misc.2d 797

Robert SASSO, John Dee, John Cody, et al., Plaintiffs, v. Charles F. VACHRIS, Anthony Vachris, Helen Vachris and Robert L. Meschi, Defendants.

Supreme Court, Special Term,

Nassau County, Part 1.

Nov. 12, 1982.

Sunshine, Slott & Sunshine, New York City, for plaintiffs.

Walker, Gottlieb, Taylor & Howard, New York City, for defendants.

JOHN S. LOCKMAN, Justice.

The individually named Plaintiffs are the trustees of Local 282 Welfare and Pension Trust Funds and as such Trustees they are responsible for the administration of such funds. This fund was established by local Union 282 which is affiliated with the International Brotherhood of Teamsters, Chauffers, Warehousemen and Helpers of America to provide welfare and retirement benefits for its members and other covered employees. Heretofore and prior to the commencement of this action during the periods of May 1978 through February 9, 1979 inclusive, certain employees performed work, labor and services for Vacar Construction Corp. at its request and upon its promise pursuant to the terms of written collective bargaining and Trust Agreements to pay welfare, pension, unemployment and annuity contributions, together with interest and expenses of collection if payment was not made when due to the plaintiffs as Trustees. As a result of the failure to pay said contributions when due, notice in writing was given to the individual defendants who are allegedly the shareholders of Vacar Construction Corp. Plaintiffs served said notice pursuant to Sec. 630 of the Business Corporation Law and Labor Law 198-c seeking to hold the officers and shareholders of Vacar Construction Corp. liable for the aforesaid failure to pay the claimed contributions. No action has been commenced as against Vacar Construction Corp. to collect the sums due since that corporation filed a petition for an arrangement under Chapter XI of the Bankruptcy Act in the United States District Court Eastern District of New York, and creditors were enjoined from commencing any court proceeding as a result thereof. Cross-movant seeks summary judgment dismissing the complaint on the ground that plaintiffs' claims under Business Corporation Law 630 and New York State Labor Law 198-c have been pre-empted by the Employee Retirement Income Security Act of 1974 (ERISA) (U.S. Code, Title 29, Sects. 1001 et seq.) and upon an additional ground that plaintiff failed to give timely notice pursuant to BCL 630. This claim as to untimely notice is denied as moot.

As stated in Young v. Sheet Metal Int., 112 Misc.2d 692, 698, 447 N.Y.S.2d 798:

"The ERISA statute, the legislative history surrounding its enactment and '(t)he thrust of all the Federal decisions dealing with Employee Retirement Income Security Act clearly establishes Federal dominion over the establishment, conduct, supervision and regulation of pension and retirement [and welfare] plans covered by the statute' (National Bank of North Amer. v. International Brotherhood of Elec. Workers Local No. 3, 93 Misc.2d 590, 594, aff'd 69 A.D.2d 679, , app.dismd. 48 N.Y.2d 752 [422 N.Y.S.2d 666, 397 N.E.2d 1333] ). Indeed, it has been held that subdivision (a) of section 1144 of ERISA evinces Congress' intent 'to establish pension [and welfare] plan regulation as exclusively a federal concern'. (See Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 [101 S.Ct. 1895, 1906, 68 L.Ed.2d 402] ). The 'pre-emption is nearly total', excluding 'all State participation in the regulation of employee benefit plans'. (See Goldstein v. Mangano, 99 Misc.2d 523, 530 ; Marshall v. Chase Manhattan Bank, 558 F.2d 680 [2 Cir.1977]; Wayne Chem. v. Columbus Agency Serv. Corp., 426 F.Supp. 316; Hewlett-Packard Co. v. Barnes, 425 F.Supp. 1294)."

Section 1132 (subd. [e], par. [1] ) of title 29 of the United States Code, provides as follows:

"Except for actions under subsection (a)(1)(B) of this Section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, or fiduciary. State courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under subsection (a)(1)(B) of this section."

Clearly not applicable to the instant action is § 1132 which provides:

"Civil Enforcement"

"(a) A civil action may be brought--"

"(1) by a participant or beneficiary * * *"

"(B) to recover benefits due to him under the terms of his plan to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan".

It seeks to hold officers and shareholders of a bankrupt corporation liable for failure to make contributions, pursuant to agreement to pension and welfare funds. As a result the exclusive jurisdiction in the district court of the United States set forth in Section 1132 (subd. [e], par. [1] of title 29 of the United States Code) applies here. This section and the general "Federal pre-emption" provision in ERISA (Section 1144) are in agreement.

"Section 1144. Other laws

"(a) Except as provided in subsection (b) of this section, the provision of this subchapter and subchapter III of this chapter shall supercede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1103(a) of this title and not exempt under section 1003(b) of this title. This section shall take effect on January 1, 1975".

The instant benefit plan does fall within section 1003(a) and is not excluded under 1003(b). As a result ERISA does pre-empt with respect to New York State Business Corporation Law 630. However, this is not true with respect to section 198-c of the Labor Law.

Section 198-c of the Labor Law provides in part:

"1. ... [A]ny employer who is a party to an agreement to pay or provide benefits or wage supplements to employees or to a third party or fund for the benefit of employees ... who fails, neglects or refuses to pay the amount or amounts necessary...within thirty days after such payments are required to be made, shall be guilty of a misdemeanor... Where such employer is a corporation, the president, secretary, treasurer or officers exercising corresponding functions shall each be guilty of a misdemeanor.

2. ... [T]he term 'benefits or wage supplements' includes but is not limited to, reimbursement for expenses; health, welfare, and retirement benefits; and vacation, separation or holiday pay."

The constitutionality of these provisions has long been established (People v. Trapp, 20 N.Y.2d 613, 286 N.Y.S.2d 11, 233 N.E.2d 110; Powers v. Adcraft Typographers, Inc., 86 A.D.2d 566, 446 N.Y.S.2d 292, mot. for lv. to app. den. 56 N.Y.2d 505, 451 N.Y.S.2d ---, 437 N.E.2d 286; People v. Doundoulakis, 38 Misc.2d 984, 239 N.Y.S.2d 452). Furthermore, ERISA Section 1144(b) states that:

"(4) Subsection (a) of this section shall not apply to any generally applicable criminal law of a State".

The phrase "generally applicable criminal law of a state" is not defined in section 1144, subd. (b), par. (4) of title 29 of the United States Code (ERISA) cited above. However;

"A generally applicable law is one which extends to the entire State and embraces all persons or things of a particular class (McKinney's Cons Laws of NY, Book I, Statutes, Sect. 32, subd. b). '[T]he Penal Law of the State is a general law. It has general application to all of the inhabitants of the State' (People v. Wilkerson, 73 Misc.2d 895, 898 ; Goldste v. Mangano, supra [99 Misc.2d] at 531-532, ; see also pages 528-529 )."

Nor is it arguable "that because section 198-c is not found in the penal code, it cannot be classified as a 'generally applicable criminal law of a state'. Research reveals that until the laws of New York State were reorganized in 1965, section 198-c did appear in the penal code (Penal Law, sect. 962-a; see L. 1958, ch 825). No substantive change was made in the law at the time of the recodification, and there is nothing in the Sessions Laws to indicate that any change in its...