Trs. of the Local 813 Ins. Trust Fund v. Rogan Bros. Sanitation Inc.
| Decision Date | 28 March 2018 |
| Docket Number | 1:12-cv-6249 (ALC) (HBP) |
| Parties | Trustees of the Local 813 Insurance Trust Fund et al., Plaintiffs, v. Rogan Brothers Sanitation Inc. et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Plaintiffs, the Trustees of the Local 813 Insurance Trust Fund (the "Insurance Fund"), the Local 813 Pension Trust Fund (the "Pension Fund"), and the Nurses and Local 813 Retirement Trust Fund f/k/a/ Local 813 and Local 1034 Severance and Retirement Trust Fund (the "Nurses Fund," and together with the Insurance and Pension Funds, the "Funds") commenced this action in order to recover unpaid contributions and withdrawal liability owed to the Funds by Defendant Rogan Brothers Sanitation, Inc. ("RBS"). The Trustees have moved separately for an entry of default judgment against RBS, its owner James Rogan ("Rogan"), and several related companies owned by Rogan. The Trustees have also moved for summary judgment on their unpaid contributions and withdrawal liability claims against two other defendants: R&S Waste Services, LLC ("R&S") as jointly and severally liable with RBS for both unpaid contributions and withdrawal liability and Joseph F. Spiezio, III ("Spiezio") as personally liable for the unpaid contributions. Both R&S and Spiezio have filed separate cross motions for summary judgment as to the claims against them.
For the following reasons, Plaintiffs' motion for default judgment is granted in part and denied in part, Plaintiffs' motion for summary judgment is granted in part and denied in part, R&S's cross motion for summary judgment is denied, and Spiezio's cross motion for summary judgment is granted. The Court finds that default judgment should be entered against RBS as to unpaid contributions and against RBS and the companies in its control group as to withdrawal liability, that R&S is jointly and severally liable with RBS for unpaid contributions and withdrawal liability, and that James Rogan and Joseph Spiezio are not personally liable for unpaid contributions.
The parties have submitted briefs, statements of fact and responses pursuant to Local Civil Rule 56.1, declarations, affidavits, and supporting exhibits, which reflect the following factual background.
Plaintiffs are trustees of employee benefit and multi-employer benefit plans within the meaning of the Employee Retirement Income Security Act ("ERISA"). Second Amended Complaint ("SAC") ¶¶ 4-5. The Funds are co-sponsored by the Local 813, International Brotherhood of Teamsters (the "Union") and contributing employers who are parties to collective bargaining agreements with the Union. The Trustees are fiduciaries within the meaning of ERISA and thus have standing to bring this action in such capacity. Id. ¶ 5.
Defendant RBS is a private sanitation company in the State of New York that maintained operations, among other locations, at 1014 Saw Mill River Road, Yonkers, New York 10701. Pls. 56.1 Stmt. (ECF No. 156) ¶ 3. RBS is wholly owned by Rogan. SAC ¶ 24. The other related companies—A.R.J.R., ARJR Holding, Finne Carting, Finne Refuse, Saw Mill, and Sprain (collectively, the "Rogan Companies")—are also wholly owned by Rogan and defendants in this suit. Id. ¶¶ 12-16, 18 & 24.
Each of the Funds is maintained pursuant to an Agreement and Declaration of Trust (the "Trust Agreements"). Pursuant to the Trust Agreements, the Funds have adopted Employer Contribution Collections Procedures (the "Contribution Procedures"), which provide detailed guidelines on the collection of contributions from employers. Huang Decl. ¶ 11, Giglio Decl. ¶ 8. The Contribution Procedures require the Funds to conduct periodic audits to review an employer's contributions to the Funds and upon a determination of delinquency send a notice, the audit findings, and a demand for payment. Giglio Decl. ¶¶ 9-11. The Contribution Procedures also provide that an employer that fails to timely remit contributions will be liable for interest at the rate of 1.5% "per month of each monthly amount due for each month from the date of the underpayment to the date that it is actually paid." Id. ¶ 42.
Also pursuant to the Trust Agreements, the Pension and Nurses Funds have adopted Withdrawal Liability Procedures. Huang Decl. ¶¶ 23-24. These procedures provide that if an employer fails to timely pay its withdrawal liability, it will be liable for interest "from the due date until the date on which the payment is made" at the "rate established by the Pension Benefit Guaranty Corporation pursuant to section 4219(c)(6) of ERISA or at prime rate plus 3%, whichever is greater" (id. Exs. 16-17 § 10) and also provide that an employer who fails to make timely payment will be liable for liquidated damages equal to "the greater of the interest due or 20% of the principal due" (id. Exs. 16-17 § 12).
As signatory to a collective bargaining agreement (the "CBA") with the Union covering an initial period of December 1, 2005 to November 30, 2008 and then extended by a Memorandum of Agreement through November 30, 2011, RBS became responsible for remitting contributions to the Funds for covered work performed by its employees from December 1, 2005 until November 30, 2011, when the agreement expired. Pls. 56.1 Stmt. ¶¶ 4-15; R&S 56.1 Stmt.(ECF No. 169) ¶ 32. The CBA required RBS to make contributions to the Funds for each week of earnings by those of its employees who were chauffeurs, helpers, or mechanics, or were involved in loading or removing garbage and other waste products ("covered work"). Pls. 56.1 Stmt. ¶ 5. In January 2011, a Vice President of the Union entered into a Memorandum of Agreement (the "2011 MOA") with RBS stating that "the CBAs did not cover [RBS's] drivers and helpers who performed work solely in Northern Westchester County and were domiciled in the Employer's Bedford Hills facility" and that "Article 1 of the CBA has been and is interpreted to cover those employees performing bargaining unit work who are domiciled in Yonkers, which shall cover no fewer than ten (10) chauffeurs." Pls. 56.1 Resp. (ECF No. 178) ¶¶ 394-95. The Trustees allege that RBS failed to contest payroll audit findings of unpaid contributions, failed to remit the contributions that were found owing, and defaulted on the obligations it incurred to make contributions pursuant to a prior settlement agreement with the Funds. From 2007 to 2011, RBS did remit almost a half-million dollars in contributions to the Funds. Id. ¶ 396.
By certified letters dated September 10, 2012, the Pension and Nurses Funds notified RBS that it owed withdrawal liability of $877,498 and $48,597 respectively, and that the first of its monthly installment payments was due on or before November 10, 2012 (the "Assessments"). Pls. 56.1 Resp. ¶¶ 518-19; Huang Decl. Exs. 10-11. When RBS failed to make its first monthly installment payment, both the Pension Fund and the Nurses Fund sent it a certified letter dated November 14, 2012 notifying RBS that it would be declared in default if it failed to cure its non-payment within 60 days. Id. ¶ 520; Huang Decl. Exs. 5-6. When RBS failed to cure its non-payment, both the Pension and the Nurses Fund sent it a letter dated January 16, 2013 declaring RBS to be in default and accelerating its liability. Id. ¶ 521. Neither RBS nor any other entity or individual has ever challenged these assessments or demanded arbitration. Id. ¶ 522.
On December 23, 2010, the Trustees sued RBS to collect unpaid contributions due under the CBA in Trs. of the Local 813 I.B.T. Insurance Trust Fund v. Rogan Brothers Sanitation, Inc., No. 1:10-cv-09561 (S.D.N.Y.) ("Rogan I"). In Rogan I, the Trustees sought to recover unpaid contributions, interest, and liquidated damages due and owing since November 2005. On or about January 24, 2011, RBS entered into a settlement agreement with the Funds (the "2011 Settlement Agreement") whereby it agreed to pay the Funds $203,425.30 in unpaid contributions and other fees due through January 2011. R&S 56.1 Stmt ¶ 3; SAC ¶¶ 40-41; Huang Decl. Ex. 7 (Settlement Agreement). After making $77,294 in payments under the 2011 Settlement Agreement, RBS defaulted on its remaining obligations when it failed to make further payments or cure its default. SAC ¶¶ 42-43.
The Funds' auditor conducted an audit of RBS's books and records for the period 2007 to 2009. By letter dated December 27, 2012, the auditor, Dominick Giglio, served his audit findings of RBS's contributions for the period 2007 to 2009, which concluded that RBS had failed to pay contributions for various employees during this period (the "2007-2009 Audit"). Pls. 56.1 Resp. ¶ 404. These findings were based on a review of materials collected by his predecessor during an in-person audit, which included RBS's payroll journals, NYS Form 45S's, print-outs from RBS's payroll system, and his predecessor's handwritten notes. Id. ¶¶ 402-05.
The Funds attempted to conduct an in-person audit of RBS's 2010 to 2011 contributions by letters dated January 31 and March 1, 2012. Id. ¶ 407. On May 1, 2012, the Trustees filed suit to compel the audit in the matter Trustees of the Local 813 Insurance Trust Fund v. Rogan Brothers Sanitation, Inc., No. 12-cv-3433 (S.D.N.Y.) (Rogan II). On August 8, 2012, the Honorable Jesse M. Furman, U.S.D.J., entered an Order and Judgment requiring RBS to submitto an audit and to pay any delinquencies identified by the audit.
The Funds' auditor conducted another audit based on materials provided by Funds' counsel, which had been turned over in an NLRB proceeding. Id. ¶¶ 412-15. By letter dated June 21, 2013, the Funds' auditor notified RBS that it had failed to pay contributions for various employees from January 1, 2010 to November 30, 2011 (the "2010-2011 Audit"). Id. ¶ 414.
In late 2010, Rogan asked his personal friend, Spiezio, for assistance regarding...
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