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

August 18, 2011


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



This matter is before the Court on Plaintiff EUSA-Allied Acquisition Corp.'s motion for a preliminary injunction. [Docket Item 40.] Plaintiff seeks entry of a stay of interim payments and arbitration being sought by Defendant Teamsters Pension Trust Fund of Philadelphia and Vicinity (hereafter the "Fund") under the Multi-employer Pension Plan Amendments Act (MPPAA) at 29 U.S.C. §§ 1381-1453. This motion comes after the Court denied Plaintiff's prior application for a temporary restraining order in this matter on June 15, 2011. [Docket Items 22 & 23.] The parties have conducted expedited discovery, taken several depositions, and briefed the issue thoroughly. The Court again heard oral argument on the motion at a hearing pursuant to Rule 65(a), Fed. R. Civ. P. on August 3, 2011, and subsequently accepted supplemental briefing by the parties, as well as a further telephonic hearing on August 17, 2011. After considering the factual material presented by the parties and the arguments made in support of their positions, the Court concludes that entry of preliminary relief is not warranted at this time because Plaintiff has not demonstrated a likelihood of success on the merits of its claims, nor of irreparable harm.

The following are the Court's findings pursuant to Rule 52(a)(2), Fed. R. Civ. P.


This matter arises within the heavily regulated area of employee pension plans, which, since at least 1974, has been the subject of comprehensive federal legislation in the form of the Employee Retirement Income Security Act (ERISA) and its subsequent amendment, the MPPAA. These statutes established an "intricate" dispute resolution scheme and provided only limited avenues for judicial intervention and review. I.A.M. Nat'l Pension Fund, Plan A, A Benefits v. Clinton Engines Corp., 825 F.2d 415, 416 (D.C. Cir. 1987). See generally Flying Tiger Line v. Teamsters Pension Trust Fund of Philadelphia, 830 F.2d 1241, 1243-44 (3d Cir. 1987) (describing background and purposes of ERISA and MPPAA). The Court is, consequently, mindful of the preferences expressed by Congress in this area when confronted with a party seeking preliminary relief from the statutory dispute resolution structure created by Congress.

Plaintiff EUSA-Allied began contributing to Defendant Teamsters Pension Trust Fund in February of 2006, after signing an agreement with Defendant Fund that recognized a "free look" period under the Pension Trust Fund Plan (hereafter the "Plan").*fn1

During this free look period, Plaintiff would be free to cease contributing to the Fund without incurring any withdrawal liability under the MPPAA, a specific provision of ERISA governing multi-employer pension plans such as Defendant Teamsters Pension Trust Fund. Specifically, the Agreement states that EUSA-Allied would face "no potential for withdrawal liability" to the Fund under the MPPAA so long as it contributed to the Fund "for no more than five consecutive plan years." Anelli Cert Ex. G. at ¶ 2. Plaintiff claims to have understood that agreement (and the language of the Trust Fund Pension Plan on which it was based and which it references) to guarantee that Plaintiff could withdraw from the Fund up to five calendar years, as much as 60 months, after its initial contributions in February of 2006.

Instead, when Plaintiff withdrew on December 31, 2010 (approximately four years and eleven months after beginning contributions), Defendant Trust Fund concluded that Plaintiff's free look period had expired several months earlier and assessed withdrawal liability of approximately $680,000. Plaintiff alleges that Defendants fraudulently misrepresented the period of time in which Plaintiff could withdraw under the Agreement and Pension Plan, and did so with the intent of inducing Plaintiff to enter into a collective bargaining agreement with Defendant Teamsters Union Local 312 and to begin making contributions to the Pension Trust Fund.

The Court denied Plaintiff's application for a temporary restraining order in June for three reasons. First, Plaintiff had not made a showing of a likelihood of success on the merits of its fraudulent inducement claim. EUSA-Allied Acquisition Corp. v. Teamsters Pension Trust Fund of Philadelphia & Vicinity, Civ. No. 11-3181, 2011 WL 2457695 at *3-4 (D.N.J. June 15, 2011). Second, the Court found that it lacked the authority to stay interim withdrawal payments under the MPPAA, as the Third Circuit has recognized no discretion or equitable exception to enter a stay. Id. at *5-6. Third, the Court found that Plaintiff's showing of irreparable harm was not sufficiently immediate to warrant temporary restraints, because the accelerated payment schedule of default would not be triggered until, at the earliest, August 17, 2011.*fn2 Id. at *7.

In Plaintiff's new application for a preliminary injunction, Plaintiff renews its request to stay the MPPAA statutory arbitration procedure and the payment of interim withdrawal liability payments, and also asks the Court to take jurisdiction of the dispute and schedule briefing for summary judgment motions on the question of whether the Fund's assessment of withdrawal liability is proper under the Free Look Agreement and the statute. Plaintiff argues that it has shown a likelihood of success on the question of assessing withdrawal liability under the Free Look Agreement, and a likelihood of success on the fraudulent inducement claim as well, in addition to showing the requisite immediate and irreparable harm it will suffer if not granted the injunction.

Defendants both point out that this Court has already held that it lacks the authority to stay the interim withdrawal payments. Additionally, Defendants state that the evidence put forward by Plaintiff does not amount to a showing of likely success on the fraudulent inducement claim. As explained below, the Court will deny Plaintiff's application for preliminary injunctive relief.


A. Standard of Review

In order to obtain a preliminary injunction, the moving party must establish that "(1) it has a likelihood of success on the merits, (2) it will suffer irreparable harm if the injunction is denied, (3) granting preliminary relief will not result in even greater harm to the nonmoving party, and (4) the public interest favors such relief." Rogers v. Corbett, 468 F.3d 188, 192 (3d Cir. 2006) (internal quotations and citations omitted). "All four factors should favor preliminary relief before the injunction will issue." S & R Corp. v. Jiffy Lube Intern., Inc., 968 F.2d 371, 375 (3d Cir. 1992). As the Court of Appeals has recognized:

The grant of injunctive relief is an extraordinary remedy which should be granted only in limited circumstances. This proposition is particularly apt in motions for preliminary injunctions, when the motion comes before the facts are developed to a full extent through the normal course of discovery.

American Tel. and Tel. Co. v. Winback and Conserve Program, Inc., 42 F.3d 1421, 1426-27 (3d Cir. 1994) (internal quotations and citations omitted). In the present action, to be granted the preliminary injunction Plaintiff seeks, it must demonstrate likelihood of success on the merits of both its claim that the Court has authority to enter a stay of MPPAA interim withdrawal payments ...

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