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Eusa-Allied Acquisition Corp v. Teamsters Pension Trust Fund of Philadelphia & Vicinity

June 16, 2011

EUSA-ALLIED ACQUISITION CORP., PLAINTIFF,
v.
TEAMSTERS PENSION TRUST FUND OF PHILADELPHIA & VICINITY,
AND LOCAL UNION 312 INTERNATIONAL BROTHERHOOD OF TEAMSTERS, DEFENDANTS.



The opinion of the court was delivered by: Simandle, District Judge:

OPINION

I. INTRODUCTION

This matter comes before the Court on the motion of Plaintiff EUSA-Allied Acquisition Corp. for a temporary restraining order entering a stay of any interim payments or penalties being sought by Defendant Teamsters Pension Trust Fund of Philadelphia and Vicinity under the Multi-employer Pension Plan Amendments Act (MPPAA) of 29 U.S.C. §§ 1381-1453. The Court received briefing in support of the motion from Plaintiff EUSA-Allied [Docket Item 1], and in opposition to the motion from Defendant Teamsters Pension Trust Fund [Docket Item 8] as well as from Defendant Local Union 312, International Brotherhood of Teamsters [Docket Item 13]. In addition, Plaintiff submitted the Declaration of Edward Burke, the Chief Financial Officer of EUSAAllied's parent company, North American Propane, Inc., in support of Plaintiff's contention of irreparable injury. [Docket Item 9.] The Court held a hearing on the motion on Tuesday, June 7, 2011, at which all parties appeared through counsel. The Court reserved decision on the motion at that time. On June 15, 2011, the Court convened a telephone conference and announced its decision to deny the motion on the record, with all parties in attendance. This Opinion sets out the reasoning of that decision.

II. FACTUAL BACKGROUND*fn1

Plaintiff is a subsidiary corporation of North American Propane ("NAP"). In February of 2006, Plaintiff negotiated an acquisition of Allied Propane. As part of its acquisition of Allied Propane, EUSA-Allied agreed to assume Allied's obligations under its collective bargaining agreement (CBA) with Defendant Local Union 312. One of those obligations was to contribute to Defendant Teamsters Pension Trust Fund. Plaintiff alleges that one of the key components of this negotiation was the duration that Plaintiff would be obligated to participate in the Plan and at what point it would face withdrawal liability under the MPPAA. Consequently, as part of the ultimate acquisition, the parties (EUSA-Allied, Allied Propane, Teamsters Pension Trust Fund, and the Local Union 312) drew up an agreement that stated that, pursuant to Article IX, Section G of the Pension Plan, EUSA-Allied would have a "free look" period under the Plan. Specifically, EUSA-Allied would face no withdrawal liability to the Fund under the MPPAA so long as it contributed to the Fund "for no more than five consecutive plan years."

The referenced section of the Plan, Article IX, Section G, governs the "free look" period for all employer contributors. It states that "Pursuant to ERISA Section 4210, 29 U.S.C. Section 1390, an employer who withdraws from the Plan in a complete or partial withdrawal is not liable to the Plan if the employer . . . had an obligation to contribute to the Plan for no more than five consecutive plan years preceding the date on which the employer withdraws." In the Definitions section of the Plan, it states that "[t]he Plan Year shall be the calendar year." (Plan, Art. I, Sec. A.)

The referenced section of the statute, 29 U.S.C. § 1390, is a provision of the MPPAA, which governs permissible "free look" periods under applicable plans (such as Defendant). That section states that "An employer who withdraws from a plan in complete or partial withdrawal is not liable to the plan if the employer . . . (2) had an obligation to contribute to the plan for no more than the lesser of (A) 6 consecutive plan years preceding the date on which the employer withdraws, or; (B) the number of years required for vesting under the plan."

In November of 2010, Plaintiff notified Defendants of their intention to withdraw from the plan on December 31, 2010, and referenced the "free look" agreement as a basis for their claim that the withdrawal should be without liability to the plan. (Cleves Decl. Ex. D.) On December 20, 2010, Defendant Trust Fund replied to Plaintiff's stated intention to withdraw that its interpretation of the "Free Look Agreement," read in conjunction with Article IX Section G of the Plan and the relevant section of the MPPAA, established that the free look period had expired earlier in 2010 because at least one of the Plaintiff's participating employees had fully vested in the plan already and that, therefore, under § 1390(a)(2)(B), the free look period had expired. (Cleves Decl. Ex. E.) Therefore, Defendant explained that if Plaintiff withdrew as announced, it may face withdrawal liability under the MPPAA. On December 31, Plaintiff withdrew from the Plan as announced.

On April 19, 2011, Defendant sent Plaintiff a withdrawal liability letter, stating that it had determined that the Plaintiff had withdrawn from the plan after the expiration of the free look period, and that it therefore had incurred withdrawal liability under the MPPAA. It calculated a full withdrawal liability under the MPPAA at approximately $680,000, and established a quarterly interim payment structure, to begin with a payment of $109,000 on June 18, 2011. (Cleves Decl. Ex. B.)

On June 2, 2011, Plaintiff filed this action with its motion for temporary relief from this repayment schedule. The Complaint, among other relief, seeks (1) a declaratory judgment that, under the "Free Look" agreement, the Plaintiff had no withdrawal liability; and (2) relief from MPPAA withdrawal liability on the grounds that Defendants fraudulently induced Plaintiff into acquiring Allied Propane in February of 2006 with the promise that no withdrawal liability would accrue until after the expiration of the fifth plan year, but that Defendants "had no intention of honoring their express representations of fact" on this point. Plaintiff also seeks contract and other state-law damages.

III. DISCUSSION

A. Standard

When evaluating a motion for a temporary restraining order, the Court must consider four factors: "(1) the likelihood of success on the merits after a full hearing; (2) whether the movant will be irreparably injured without the restraint; (3) whether the party to be enjoined will be irreparably injured if the preliminary relief is granted; and (4) whether the public interest will be served by the preliminary relief." Value Group, Inc. v. Mendham Lake Estates, L.P., 800 F. Supp. 1228, 1231 (D.N.J. 1992) (citing Opticians Ass'n of America v. Independent Opticians of America, 920 F.2d 187, 191-92 (3d Cir.1990)). On the second prong, to warrant granting a TRO, irreparable harm alone is not enough. A plaintiff has the burden of proving a "clear showing of immediate irreparable injury." Continental Group, Inc. v. Amoco Chemicals Corp., 614 F.2d 351, 359 (3d Cir. 1980). The "requisite feared injury or harm must be irreparable--not merely serious or substantial," and it "must ...


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