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New Jersey Carpenters Pension Fund v. Housing Authority

United States District Court, D. New Jersey

December 17, 2014


Page 546

For Plaintiff: Seth Ptasiewicz, Esq., KROLL, HEINEMAN CARTON LLC, Metro Corporate Campus I, Iselin, N.J.

For Defendants: Susan E. Volkert, Esq., George Gabriel Frino, Esq., DECOTIIS, FITZPATRICK & COLE, LLP, Teaneck, N.J.


Page 547

HONORABLE JEROME B. SIMANDLE, Chief United States District Judge.




A. Rule 56.1 Statements

B. Factual Background

1. Governance Structure of ACHA and ACIC

2. 1994 ACHA Agreement with Local 1578

3. Demand for Payment of Withdrawal Liability

C. Procedural History

D. Parties' Arguments

1. The Pension Fund's Motion for Summary Judgment

2. Defendants' Opposition and Cross-Motion


IV. Discussion

A. Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. § 1381

1. Defendants have Waived their Defense of " Illegality" or

" Ultra Vires"

2. ACHA and ACIC Constitute Statutory Employers under the MPPAA

3. The 1994 Agreement Establishes an Obligation to Contribute



Plaintiff, the New Jersey Carpenters Pension Fund and the Trustees thereof (hereinafter, the " Pension Fund" or " Fund" ), initiated this ERISA action in order to recover unpaid withdrawal liability purportedly due the Fund as a result of Defendants Atlantic City Housing Authority's (hereinafter, " ACHA" or the " Housing Authority" ) and the Atlantic City Improvement Corporation, Inc.'s (hereinafter, " ACIC" and, together with ACHA, " Defendants" )

Page 548

termination of Local Union 1578, Carpenters District Council of South Jersey, United Brotherhood of Carpenters and Joiners of America (hereinafter, " Local 1578" )--a carpenters union comprised of Fund participants and beneficiaries. The Pension Fund specifically alleges in its Complaint that ACIC's termination of Local 1578's members effectuated a complete withdrawal from the Pension Fund, as defined under the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. § § 1381-1405 (hereinafter, the " MPPAA" ), to the Employee Retirement Income Security Program, 29 U.S.C. § § 1001-1461 (hereinafter, " ERISA" ), therefore triggering withdrawal liability in the amount of $517,460. The Pension Fund further alleges that the obligation for the unpaid liability runs to ACHA, particularly because Defendants operate under common control and otherwise demonstrate substantial overlap in governance.

Defendants assert, in response, that they do not constitute statutory employers for the purposes of withdrawal liability, and further argue that no agreement obligates Defendants to make pension benefit contributions. Rather, Defendants assert that a one-page agreement, executed in 1994, governs the prior employment relationship between the parties, but nowhere references pension contributions, nor demonstrates the parties' intention that such relationship be governed by the withdrawal liability provisions of the MPPAA. Defendants also claim that under New Jersey law they are incapable of entering into such a labor agreement and are immune from liability for doing so.

The parties now cross-move for summary judgment, alleging diametrically opposed positons: with the Pension Fund arguing that the " overwhelming and undisputed" evidence demonstrates that both the ACHA and ACIC constitute employers for purposes of assessing withdrawal liability under the federal mandate of the MPPAA, and that the record further reflects that Defendants agreed to remit--and, in fact, remitted contributions to the Pension Fund; and with Defendants asserting that the undisputed record demonstrates that Defendants possess no such contractual obligation, and that neither entity--under any set of circumstances--qualifies as an employer under ERISA. [Docket Items 138 & 142.]

The parties do not, however, dispute that a written agreement, providing for the employment of Local 1578 carpenters and for the payment of fringe benefits, governed the parties' relationship. Nor do the parties dispute that the ACHA remitted periodic sums to the Fund throughout ACIC's employment of Local 1578's carpenters. Rather, the parties dispute the nature and effect of such agreement and, relatedly, challenge whether Defendants' conduct suffices to render them liable as " employers" under the MPPAA.

Consequently, the issues before the Court are whether ACHA and AICI constitute employers subject to withdrawal liability, as contemplated by the MPPAA, 29 U.S.C. § 1381, and whether, if so, an agreement existed by and between the parties sufficient to trigger Defendants' liability for a withdrawal penalty associated with AICI's termination of Local 1578's employment.[1] For the reasons that follow, the Court will grant in part the Fund's motion for summary judgment as stated

Page 549

below, and will deny Defendants' motion for summary judgment in its entirety, entering judgment for Plaintiff.[2]


A. Rule 56.1 Statements

Plaintiff accompanied its summary judgment motion with a statement of material facts not in disputed as required by L. Civ. R. 56.1(a). (Pl.'s SMF [Docket Item 38-2].) Defendants failed to furnish a response to the statement of undisputed material facts in connection with the Fund's motion for summary judgment. Rather, Defendants filed a ten-paragraph statement of undisputed materials facts--to which the Fund furnished a response--in connection with Defendants' cross-motion for summary judgment. (Defs.' SMF [Docket Item 42-5].) Defendants' statement, however, substantially fails to respond to the Fund's statement and to provide detailed citations to affidavits and/or other documents in the record in order to substantiate the statement's factual basis. (Id.)

In addition, much of Defendants' statement concerns the legal relevancy of such facts, the inclusion of which the Court finds inappropriate in connection with a Rule 56.1 statement. See L. Civ. R. 56.1(a) (" Each statement of material facts shall be a separate document (not part of a brief) and shall not contain legal argument or conclusions of law." ). Defendants' submission will therefore be disregarded to the extent it states legal arguments or conclusions of law, and to the extent Defendants failed to make clear any dispute with respect to the material facts set forth in the Fund's statement. Rather, the Court will deem any such fact undisputed for purposes of the pending motion. See L. Civ. R. 56.1(a) (" [A]ny material fact not disputed shall be deemed undisputed for purposes of the summary judgment motion." ). Consequently, though the Court will not ignore counter-stated facts that are readily apparent from Defendants' submissions, the Court need not comb the record in search of disputed facts that should have been part of Defendants' response to the Fund's Rule 56.1 statement. That is the duty of a party opposing summary judgment. Indeed, where, as in this case, a party fails to respond to the movant's statement of undisputed material facts with a point-by-point indication whether the stated fact is undisputed or, if disputed, with a citation to the factual record where contrary evidence exists, and where no contrary fact is readily apparent in the opponent's evidence, then the Court assumes that the opponent has no evidence raising a genuine dispute with the movant's stated fact for purposes of this motion.

B. Factual Background

The Pension Fund constitutes a multi-employer benefit plan governed by ERISA, 29 U.S.C. § § 1002(3), 1301(a)(3), and the Trustees thereof act as fiduciaries on behalf of the Fund and its participants and beneficiaries. (Pl.'s SMF at ¶ ¶ 1-2.) ACHA, a " body corporate and politic" statutorily created by the City of Atlantic City" and funded by the United States Department of Housing and Urban Development, owns and operates low incoming housing facilities in the City of Atlantic City. (Defs.' SMF at ¶ 1; Pl.'s SMF at ¶ ¶ 3, 8; Pl.'s Resp. SMF at ¶ 1.) ACHA maintains its office and principal place of business at 227 North Vermont Avenue, Atlantic City, New Jersey 08404. (Pl.'s SMF at ¶ 2; Defs.' Answer & Countercl. at

Page 550

¶ 2.) ACIC, a non-profit corporation formed for the purposes of employing union members and apprentices on ACHA's behalf, maintains its office and principal place of business in the same facility. (Pl.'s SMF at ¶ 3; Def.'s SMF at ¶ ¶ 2, 7; Defs.' Answer & Countercl. at ¶ 1.)

1. Governance Structure of ACHA and ACIC

During the relevant period, ACIC operated at the behest of and out of the same office as ACHA, in order to assist in the fulfillment of ACHA's public purpose and, principally, in order to form an apprentice training program. (Pl.'s SMF at ¶ 46.) Indeed, ACIC's Amended and Restated Bylaws filed January 27, 2005 conferred on ACHA broad authority over ACIC's day-to-day operations, including: the right to appoint ACIC's entire five (5) member Board of Trustees; the right to remove any ACIC Trustee " without assignment" of cause; and the authority to veto " [a]ny action" taken by ACIC's Board, " which in the opinion of [] ACHA violates the principles and purposes of [ACHA] or detrimentally impacts" its operations. (Ptasiewicz Cert., Ex. H at 1, 3.) In addition, the governing bodies of both entities overlapped to a substantial degree during the relevant period, with various individuals serving on the Boards of both entities, and with the Executive Director of ACHA " [t]raditionally" also serving as the Secretary of ACIC. (Id. at Ex. G at 18:25-20:14, 56:12-16.)

2. 1994 ACHA Agreement with Local 1578

On August 26, 1994, then-Executive Director of the ACHA, John J. McAvaddy, entered into a one-page agreement with Local 1578 (hereinafter, the " agreement" ), which provided:

1. The Housing Authority intends to hire workers directly from Local Union 1578 to complete work associated with the repair and renovation of units owned and/or managed by the Housing Authority. The scope of work shall cover all phases of the carpentry craft previously awarded to Local Union 1578, including lead paint abatement and asbestos abatement.
2. The Housing Authority agrees to pay the current Wage Rates and all the fringe benefits set forth in the Agreement, including any increases that are currently being negotiated which may be agreed upon during the term of this Agreement.
3. The Union agrees that the members hired by the Housing Authority will sign a stipulation that they do not wish to participate in the health and welfare plan currently providing coverage to Housing Authority employees, to wit: the New Jersey State Health Benefits Plan.

(Pl.'s SMF at ¶ 9; Ptasiewicz Cert., Ex. L [Docket Item 38-4]; Defs.' SMF at ¶ 3.) In accordance with the agreement, from " about 1996 to February 25, 2011," ACIC operated " a carpentry apprentice" program in which ACIC hired Local 1578 members " to perform carpentry tasks." (Ptasiewicz Cert., Ex. G at 48:14-22; Pl.'s SMF at ¶ ¶ 10-11 (citing Defs.' Answer & Counterclaim at ¶ ¶ 9-10).)

Though ACIC issued the paychecks, ACHA directly supervised the union carpenters, prescribed the terms and conditions of the " Local 1578 members 'employed' by the" ACIC, and directed the employees to complete projects on behalf of both entities. (Pl.'s SMF at ¶ ¶ 14; Defs.' SMF at ¶ 8; Ptasiewicz Cert., Ex. W at 10:8-14.) Indeed, Ira Fornorow, ACHA's Acting Director of Redevelopment and the ACHA employee formerly responsible for the " maintenance of the ACIC," oversaw and assigned the union employees, maintained their pay sheets,

Page 551

time, and other payroll information, and " deal[t]" with " any issues" that arose in the course of such activity. (Ptasiewicz Cert., Ex. W at 8:3-12, 15:10-17.) Local 1578 further provided members' salary information directly to ACHA for payroll purposes. (Defs.' SMF at ¶ 9; Ptasiewicz Cert., Ex. G at 87:15-88:14 (noting that " the carpenters union" transmitted wage and benefit rate statements directly to the ACHA accounting department).) ACHA, accordingly, provided the funds necessary for the Local 1578 employees' biweekly pay checks, and reimbursed ACIC for all other expenses and costs incurred in connection with their employment (Defs.' SMF at ¶ 8), including, " checks, forms, envelopes, postage, telephone, liability and workers' compensation insurance," and certain taxes. (Ptasiewicz Cert., Ex. R.) ACHA also remitted " payment[s] reflecting" fringe benefit contributions due to the Pension Fund on behalf of the Local 1578 employees, and resolved, on occasion, " discrepancies" that arose concerning the amount of the contribution owed to the Fund. (Pl.'s SMF at ¶ 16; Ptasiewicz Cert., Exs. M (setting forth payments from ACHA to the Pension Fund), U (enclosing by letter from ACHA to the Fund a check in the amount of $26,117.50).)

On February 15, 2011, however, ACIC issued termination notices to all Local 1578 carpentry employees, purportedly on the basis of " 'budgetary constraints.'" (Pl.'s SMF at ¶ ¶ 19-20; Defs.' SMF at ¶ 10.) ACHA thereafter issued an " Invitation for Bids for 'On-Call Carpentry Repairs/Services[,]'" and ultimately accepted the bid from Althea Property Services, LLC, an entity that " neither employs Local 1578 employees" nor contributes to the Fund. (Pl.'s SMF at ¶ ¶ 21-22.)

3. Demand for Payment of Withdrawal Liability

As a result of Defendants' " 'complete[] withdrawal'" from the Fund, on July 27, 2011, the Fund prepared a payment schedule, and demanded payment of withdrawal liability in the amount of $517,460, payable in seventeen (17) quarterly payments of $33,278.75. (Ptasiewicz Cert., Ex. A.) ACHA, by various written correspondence, disputed its obligation to remit any such payment on the basis that the Local 1578 members acted as employees of ACIC, not ACHA. (See id. at Exs. B, D.) By letter dated March 22, 2012, however, ACHA indicated that it intended to initiate arbitration pursuant to 29 U.S.C. ยง 1401(a)(1)(A), notwithstanding its continuing challenge to its identification as an employer under the applicable provisions of ERISA. (Ptasiewicz Cert., Ex. F.) During the ...

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