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Eusa-Allied Acquisition Corp v. Teamsters Pension Trust Fund

March 26, 2012

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, Chief Judge:

OPINION

I. INTRODUCTION

This case presents issues arising in a highly regulated area of the law of multi-employer pensions when an employer seeks to withdraw from the fund and the fund assesses a sum for withdrawal liability to assure sufficient funding for any pensions that have vested. Such withdrawal liability is governed by the Multi-employer Pension Plan Amendments Act ("MPPAA") at 29 U.S.C. §§ 1381-1453. Plaintiff EUSA-Allied Acquisition Corp. ("EUSA") sought to withdraw from the Defendant Teamsters Pension Trust Fund of Philadelphia and Vicinity ("Pension Fund") in late 2010, and the Pension Fund determined that the withdrawal occurred too late -- after expiration of a five-year "free look" period defined by the parties' agreement and the relevant Pension Plan -- and the Pension Fund assessed withdrawal liability of approximately $680,000 which Plaintiff contests. Plaintiff has also named Defendant Local Union 312 International Brotherhood of Teamsters ("Local 312"), alleging essentially that Local 312 breached its contract with Plaintiff and mislead or fraudulently induced Plaintiff regarding the meaning of the five-year "free look" component of the Plan. Local 312 is a separate entity from the Pension Fund, and only the Pension Fund asserts that EUSA must pay withdrawal liability.

This matter is currently before the Court on the motion for summary judgment of Defendant Local 312. [Docket Item 47.] Defendant argues that it is entitled to judgment of dismissal as a matter of law because no dispute of fact exists in the record sufficient to establish liability on any of the asserted counts in the Complaint as to Defendant Local 312. Plaintiff EUSA opposes the motion, arguing that disputes of fact exist that require the determination of a factfinder or, alternatively, that Plaintiff should be permitted further discovery to pursue its claim of breach of contract. For the reasons stated below, the Court will stay resolution of the contract dispute, grant Defendant's motion in part and deny it in part.

II. FACTS AND PROCEDURAL HISTORY

The following facts are taken from the parties' statements of undisputed material facts and are, unless otherwise noted, not materially disputed in the record. The basic facts underlying the dispute at issue in this action have been recounted in the Court's two prior Opinions in this matter, first addressing Plaintiff's motion for a temporary restraining order on June 16, 2011 [Docket Item 22], and subsequently addressing Plaintiff's motion for a preliminary injunction on August 18, 2011 [Docket Item 18].

In late 2005, Plaintiff EUSA engaged in negotiations to acquire or purchase substantially all the assets of Allied Propane Company, Urie & Blanton Company ("Allied" or "Seller"). Def.'s Statement of Undisputed Facts ¶ 1. One component of these negotiations was whether or not EUSA would assume the Seller's obligations under the Seller's existing collective bargaining agreement with Defendant Local 312, including the obligation to make employee contributions to the Defendant Teamsters Pension Trust Fund of Philadelphia and Vicinity (the "Pension Fund").

Id. ¶ 2. One key detail in these negotiations was the issue of whether EUSA would be subject to withdrawal liability under the Pension Plan or the collective bargaining agreement pursuant to the MPPAA. Id. ¶ 4. The Seller attempted to mollify Plaintiff's concern with incurring withdrawal liability by notifying Plaintiff that a "free look" provision of Defendants' Pension Plan existed. Id. ¶¶ 2-4.

In December of 2005, Tim Lehman and Ted Uniatowski, representatives of Defendant Local 312, met with officers of Plaintiff EUSA, including President of EUSA Mark Cleaves and Vice President of Operations Russell Lewis, as well as a representative of the Seller. Id. ¶ 5. No representative of Defendant Pension Fund was present. Id. At this meeting, the attendees discussed the Pension Plan's free look provision, and the participants agreed on an interpretation of the free look provision, whereby "the Company [EUSA], once the acquisition closed, would have five years of which they could participate in the Pension Fund and without incurring any withdrawal liability." Lewis Dep. 54:11-15. See also Uniatowski Dep. at 16:5-12 (stating that, while he does not recall the December 2005 meeting specifically, his understanding of the free look agreement and the free look provision of the Plan was that it provided companies with a five year "window where they could be in the pension plan . . . without assuming withdrawal liability.") EUSA President Cleaves recalled that somebody looked me in the eye at that meeting and said you have five years to participate in the plan, and if you get out within five years, that needed to coincide with a Collective Bargaining Agreement, then you are all set, there's no withdrawal liability.

Cleaves Dep. at 78:8-13.

After this meeting, EUSA, through counsel, contacted the Administrator of the Pension Fund to discuss specifics related to the free look provision of the Plan, including reviewing whether companies under EUSA's control would affect EUSA's treatment as a new covered employer under the Plan. Def.'s Statement of Undisputed Facts ¶¶ 9-10; Cleaves Dep. at 80:19-81:1. EUSA's counsel drafted a specific agreement addressing EUSA's treatment as a new covered employer under the Plan and the application of the Plan's free look provision to EUSA. Id. at ¶ 11. This Agreement (the "Free Look Agreement") was signed by Russell Lewis on behalf of EUSA, David Delloso on behalf of Local 312, and Administrator William Einhorn on behalf of the Pension Fund. Cleaves Decl. attached to Compl., Ex. C. The relevant paragraph of the Free Look Agreement states

EUSA will assume the Bargaining Agreement and commence participation in the Pension Plan as a Covered Employer (as defined in the Pension Plan) effective the date of purchase of assets of Allied. EUSA shall be treated as a new Covered Employer under the Pension Plan for all purposes including, without limitation, Article IX, Section G of the Pension Plan which provides new Covered Employers with an opportunity or "free look" under the Pension Plan to contribute to the Plan for no more than five consecutive plan years with no potential for withdrawal liability. Id. ¶ 2.

EUSA completed the acquisition of Seller's assets and, in early 2006, entered into a two-year collective bargaining agreement with Defendant Local 312, scheduled to expire on December 31, 2007. Def.'s Statement of Undisputed Facts ¶¶ 13-14. EUSA and Local 312 then entered into a new three-year collective bargaining agreement, which expired on December 31, 2010. Id. ¶ 17. During the negotiation surrounding the new three-year CBA in 2008, the parties did not discuss the Free Look Agreement or the Pension Plan's free look provision. Id. ¶ 16.

In November of 2010, EUSA sent a letter to the Pension Fund notifying it of EUSA's intention to withdraw from participation in the Pension Plan as of December 31, 2010. Id. ¶ 18; Cleaves Decl. Ex. D. The Pension Fund determined that EUSA's withdrawal on that date was subject to withdrawal liability and assessed EUSA's withdrawal liability at $679,325.13. Def.'s Statement of Undisputed Facts at ¶ 19. The parties do not dispute that Defendant Local 312 is a separate legal entity from the Pension Fund. Id. at ¶ 22.

On June 2, 2011, Plaintiff EUSA filed its Verified Complaint in this Action, seeking a declaratory judgment of no liability (Count One), as well as damages and equitable relief stemming from four other Counts: Fraudulent Inducement (Count Two), Breach of Contract (Count Three), Intentional Misrepresentation (Count Four), and Negligent Misrepresentation (Count Five). [Docket Item 1.] On that same date, Plaintiff filed a motion for ...


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