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Trustees of the Amalgamated Insurance Fund

November 16, 1998

THE TRUSTEES OF THE AMALGAMATED INSURANCE FUND
PLAINTIFF,
V.
CROWN CLOTHING, INC.,
DEFENDANTS.



The opinion of the court was delivered by: Stanley S. Brotman

FOR PUBLICATION

OPINION ON MOTION FOR SUMMARY JUDGMENT AND FOR SANCTIONS

BROTMAN, DISTRICT JUDGE.

Presently before this Court is the motion of plaintiff The Trustees of the Amalgamated Insurance Fund ("Trustees") for summary judgment and for sanctions.

I. FACTUAL AND PROCEDURAL BACKGROUND

The Amalgamated Insurance Fund ("Fund") is a multiemployer trust fund established to provide retirement benefits to eligible employees of employers obligated by the terms of certain collective bargaining agreements. See Burker Aff., ¶ 2. As of June 1, 1991, Crown Clothing Company ("Crown") was a participating employer in the Fund. *fn1 In June of 1991 a labor dispute existed between Crown and Baltimore Region Joint Board, Amalgamated Clothing and Textile Workers Union, ALF-CIO-CLC ("Union") regarding whether Crown would continue to participate in the Fund's health and welfare benefit plan pursuant to the Union's proposed collective bargaining agreement. See Crown Clothing Company's Memorandum of Law in Opposition to Summary Judgment ("Opposition Brief"), Exhs. 1, 2. Crown has submitted evidence to show that the Union attempted to pressure it into signing the proposed agreement by threatening to impose withdrawal liability if Crown did not sign by June 14, 1991. See id., Exh. 14. Crown did not sign the agreement as of that date. See id.

On June 17, 1991, the Union advised Crown by facsimile that it was renouncing its representation of Crown's employees. See id., Exh. 15. On June 18, 1991, the Fund notified Crown by letter that it had incurred withdrawal liability as a result of the Union's renunciation of representation in the amount of $621,102.14. See Burker Aff., Exh. A. The Fund provided Crown with evidence of the calculations it performed to make this determination and indicated a schedule of payments. *fn2 See id. On October 31, 1991, the Fund notified Crown by letter that it had incorrectly calculated Crown's withdrawal liability. See id., Exh. B. The Fund provided evidence of the calculations its performed to determine that Crown had actually incurred withdrawal liability in the amount of $623,980.31, some $2,878.17 more than the Fund originally indicated. See id. The Fund also explained that its error would not change the size or number of Crown's quarterly payments, with the exception of Crown's final payment which would be $5,197.63. See id. On October 31, 1991, Crown commenced interim liability payments. See Declaration of Howard Levin ("Levin Declaration"), ¶ 2. Crown made the quarterly payments due on and prior to November 1, 1996. See id., ¶ 3; Burker Aff., ¶ 12. Crown did not make the quarterly payments due on February 1, 1997, May 1, 1997, August 1, 1997, November 1, 1997, and February 1, 1998. See Burker Aff., Exhs. D, F. 3 The Fund notified Crown of each of its defaults, and more than 60 days have elapsed since each notification. See id.

On October 31, 1991, Crown commenced arbitration proceedings to dispute its withdrawal liability. See Burker Aff., ¶ 9. On June 18, 1992, Crown filed suit in this Court against (1) the Union; (2) Carmen Papale, the Union's manager; (3) the Fund; (4) Amalgamated Life Insurance Company ("Amalgamated"), the Fund's administrator; and (5) Jeffrey Warbet, the vice president of Amalgamated. See Crown Clothing Company v. Papale, 854 F. Supp. 316, 317 (D.N.J. 1994). The complaint challenged the Fund's imposition of withdrawal liability. See id. at 318. It contained five counts; the Court ordered that three be dismissed, one be sent to arbitration, and one be stayed pending arbitration. See id. at 323. *fn3 Since the Court issued its order on June 10, 1994, there has been only one day of testimony before the American Arbitration Association ("Association"). See Warbet Aff., ¶ 5. This testimony took place on September 5, 1995. See id. On October 15, 1997, the Association contacted both Crown's and the Fund's attorneys by letter to request that the parties update the Association regarding the status of the dispute. See Burker Aff., Exh. C. On January 14, 1998, Crown's attorney wrote the Association to request that the arbitration proceed. See id., Exh. E.

On November 24, 1997, the Trustees filed their complaint in the instant action to collect the quarterly withdrawal liability payments Crown had failed to make while arbitration was pending. The Trustees seek full payment of the unpaid balance of Crown's withdrawal liability in the amount of $156,008.43 together with accrued interest and liquidated damages in the amount of 20 percent. Crown also seeks reimbursement for its costs and attorney's fees in connection with this action. Crown filed its answer on January 5, 1998. On June 1, 1998, the Trustees filed a motion for summary judgment and for sanctions.

II. DISCUSSION

A. AMENDING THE CAPTION

In their reply brief, the Trustees ask the Court for leave to amend their complaint to change the caption from "Crown Clothing, Inc." to "Crown Clothing Company." See Reply Brief Submitted by Plaintiff in Support of its Motion for Summary Judgment and for Sanctions ("Reply Brief") at 10. Fed. R. Civ. P. 15(a) provides that, after a responsive pleading has been served, a party may amend its pleading by leave of court which "shall be freely given when justice so requires." This rule reflects a general presumption in favor of permitting parties to amend their pleadings. See Commodity Futures Trading Comm'n v. Am. Metal Exchange Corp., 693 F. Supp. 168, 189 (D.N.J. 1988). Permission should be denied only where a clear reason exists for doing so: [Such reasons include] undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. Foman v. Davis, 371 U.S. 178, 182 (1962).

Crown has failed to produce any evidence that these adverse effects would result if the Court were to grant the Trustees' request to amend their pleadings. According to the Trustees, Crown has not been prejudiced by the Trustees' error. The notices the Trustees sent to inform Crown of its failure to make timely withdrawal liability payments were all addressed to Crown Clothing Company. See Warbet Aff., ¶ 4. Crown filed an answer to the complaint which named Crown Clothing, Inc. as the defendant. Crown also filed a response to the Trustees' summary judgment motion which named Crown Clothing, Inc. as a defendant. These actions indicate that Crown knew that the Trustees intended to sue Crown Clothing Company despite the fact that the name on the Trustees' pleadings was Crown Clothing, Inc. Because Crown Clothing Company responded to the Trustees' pleadings which incorrectly named Crown Clothing, Inc. as a defendant, it is clear that Crown suffered no harm as a result of the Trustees' error. Therefore, the Court gives the Trustees leave to amend their complaint as requested. The defendant in this matter will hereafter be known as Crown Clothing Company.

B. STANDING

In opposing the Trustees' motion for summary judgment, Crown argues that the Trustees lack standing to bring this lawsuit. See Opposition Brief at 14-17. This action is governed by the Employee Retirement Income Security Act of 1974, 19 U.S.C. § 1001, et seq. ("ERISA"), as amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C., § 1381, et seq. ("MPPAA"). Pursuant to 29 U.S.C. § 1132(a)(3) (West 1985), a fiduciary may sue to enforce the statute's provisions regarding withdrawal liability. *fn4 ERISA defines fiduciary as follows:

[A] person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, . . . or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. 29 U.S.C.A. § 1002(21)(A) (West Supp. 1998).

The Third Circuit has found that under this definition "fiduciary status is not an all or nothing concept . . . . [A] court must ask whether a person is a fiduciary with respect to the particular activity in question." Moench v. Robertson, 62 F.3d 553, 561 (3rd Cir. 1995), cert. denied, 516 U.S. 1115 (1996) (citations omitted).

In their complaint, the Trustees allege that they are multiemployer plan sponsors. See Complaint, ¶ 5. The Third Circuit has found that plan sponsors are fiduciaries to the extent that they act in a fiduciary capacity. See Bollman Hat Co. v. Root, 112 F.3d 113, 115 (3rd Cir.), cert. denied, 118 S.Ct. 373 (1997). Plan sponsors act in a fiduciary capacity when executing the statute's withdrawal liability provisions. ERISA requires that upon an employer's withdrawal from a multiemployer plan, the plan sponsor must determine the amount of the employer's withdrawal liability, notify the employer of this amount, and collect it. See 29 U.S.C.A. § 1382 (West 1985). Although the plan sponsor's determination of the liability amount is constrained by the statute, the Third Circuit has found that plan sponsors have "wide and significant discretion" in this regard. United Retail & Wholesale Employees Teamsters Union Local No. 115 Pension Plan v. Yahn & McDonnell, Inc., 787 F.2d 128, 140 (3rd Cir. 1986), aff'd, 481 U.S. 735 (1987) (finding that plan sponsors have discretion to pick among the four suggested methods for determining withdrawal liability, to determine the appropriate discount rates, and to decide whether an employer falls under one of several statutory exemptions); see also Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., Inc., 118 S.Ct. 542, 550 (1997) (describing the discretion a plan sponsor has with regard to the time frame in which they must calculate the employer's withdrawal liability). It is this discretion which makes plan sponsors fiduciaries for the purpose of executing the statute's withdrawal liability provisions. Because the Trustees brought the instant lawsuit to ask the Court for assistance with this function, they have standing as fiduciaries.

C. MOTION FOR SUMMARY JUDGMENT

1. Standard for Summary Judgment

The standard for granting a motion for summary judgment is a stringent one, but it is not insurmountable. Fed. R. Civ. P. 56 provides that summary judgment may be granted only when materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Serbin v. Bora Corp., 96 F.3d 66, 69 n.2 (3d Cir. 1996). In deciding whether there is a disputed issue of material fact, the court must grant all reasonable inferences from the evidence to the non-moving party. The threshold inquiry is whether there are "any genuine factual issues that properly can be ...


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