EUSA-ALLIED ACQUISITION CORP. v. TEAMSTERS PENSION TRUST FUND OF PHILADELPHIA & VICINITY et al
Filing
60
OPINION. Signed by Chief Judge Jerome B. Simandle on 3/26/2012. (dmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
EUSA-ALLIED ACQUISITION CORP.,
Plaintiff,
Civil Action
No. 11-3181 (JBS-AMD)
v.
TEAMSTERS PENSION TRUST FUND
OF PHILADELPHIA & VICINITY,
and LOCAL UNION 312
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS,
OPINION
Defendants.
APPEARANCES:
James P. Anelli, Esq.
Joseph P. Paranac, Esq.
Robert M. Pettigrew, Esq.
LECLAIRRYAN
One Riverfront Boulevard
16th Floor
Newark, NJ 07102
Counsel for Plaintiff
Susan A. Murray, Esq.
FREEDMAN & LORRY, PC
1601 Market Street
2nd Floor
Philadelphia, PA 19103
Counsel for Defendant Local Union 312, International
Brotherhood of Teamsters
SIMANDLE, Chief Judge:
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
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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
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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.
Defendant Pension Fund was present.
Id.
No representative of
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.”)
President Cleaves recalled that
somebody looked me in the eye at that meeting
and said you have five years to participate in
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EUSA
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.
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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.
14.
Def.’s Statement of Undisputed Facts ¶¶ 13-
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.
Decl. Ex. D.
Id. ¶ 18; Cleaves
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.
Undisputed Facts at ¶ 19.
Def.’s Statement of
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).
Item 1.]
[Docket
On that same date, Plaintiff filed a motion for a
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temporary restraining order staying the Pension Fund’s imposition
of interim withdrawal liability payments.
After a hearing and briefing regarding Plaintiff’s motion
for a temporary restraining order, the Court denied Plaintiff’s
motion, concluding that Plaintiff had not shown a likelihood of
success on the merits of its fraudulent inducement claim nor that
Plaintiff had demonstrated sufficient immediate irreparable
injury; the Court also held that it had no discretion to stay the
interim withdrawal liability payments as requested by Plaintiff.
EUSA-Allied Acquisition Corp. v. Teamsters Pension Trust Fund of
Philadelphia & Vicinity, Civ. No. 11-3181, 2011 WL 2457695 at *7
(D.N.J. June 16, 2011).
Plaintiff thereafter moved for a preliminary injunction, and
was granted limited discovery into its claims of fraudulent
inducement.
[Docket Item 20.]
After further briefing and
another hearing on the motion, the Court denied Plaintiff’s
motion, for similar reasons, concluding that the Plaintiff had
not demonstrated a likelihood of success in prevailing on its
claim that the case should not proceed first to statutory
arbitration pursuant to the MPPAA.
EUSA-Allied Acquisition Corp.
v. Teamsters Pension Trust Fund of Philadelphia & Vicinity, Civ.
No. 11-3181, 2011 WL 3651315 *11 (D.N.J. Aug. 18, 2011).
Defendant Local 312 subsequently moved for summary judgment
seeking to be dismissed from the action.
Fund has not joined this motion.
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The Defendant Pension
III. DISCUSSION
A.
Standard of Review
Summary judgment is appropriate “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a).
A fact is “material” only if it might affect the
outcome of the suit under the applicable rule of law.
v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
Anderson
Summary
judgment will not be denied based on mere allegations or denials
in the pleadings; instead, some evidence must be produced to
support a material fact.
Fed. R. Civ. P. 56(c)(1)(A); United
States v. Premises Known as 717 S. Woodward Street, Allentown,
Pa., 2 F.3d 529, 533 (3d Cir. 1993).
However, the Court will
view any evidence in favor of the nonmoving party and extend any
reasonable favorable inferences to be drawn from that evidence to
that party.
Hunt v. Cromartie, 526 U.S. 541, 552 (1999).
Where the nonmoving party bears the burden of persuasion at
trial, the moving party may be entitled to summary judgment
merely by showing that there is an absence of evidence to support
an essential element of the nonmoving party’s case.
Fed. R. Civ.
P. 56(c)(1)(B); Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986).
B.
Dispute Resolution Under the MPPAA
The Court’s previous Opinions in this action have
principally addressed the Court’s jurisdiction to adjudicate
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disputes of withdrawal liability assessment under the MPPAA as
between the employer and the Pension Fund.
In these Opinions,
the Court has explained that under the MPPAA, a dispute over the
assessment of withdrawal liability is governed by the statute’s
mandatory arbitration provision.
“Any dispute between an
employer and the plan sponsor of a multiemployer plan concerning
a determination made under sections 1381 through 1399 of this
title [for withdrawal liability] shall be resolved through
arbitration.”
29 U.S.C. § 1401(a)(1).
The Court held that
disputes regarding the imposition of withdrawal liability are
normally therefore required to first complete the statutory
arbitration before the Court can hear the dispute.
§ 1401(b)(2).
An exception to this general rule, however, was recognized
in Carl Colteryahn Dairy, Inc. v. Western Pennsylvania Teamsters
& Employers Pension Fund, 847 F.2d 113, 118-19 (3d Cir. 1988).
There, the Third Circuit held that claims of fraudulent
inducement and misrepresentation can be adjudicated by the
district court without first requiring statutory arbitration.
In
the instant matter, the Court, in its prior Opinions, also
recognized that, as between an employer and a pension fund,
general contract or statutory disputes are not generally entitled
to circumvent the statutory arbitration process.
EUSA-Allied
Acquisition Corp., 2011 WL 3651315 *6 (D.N.J. Aug. 18, 2011).
As a result, when resolving the instant motion, the Court
cannot, consistent with its prior Opinions, resolve disputes
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regarding whether withdrawal liability was properly assessed in
this case prior to the completion by EUSA and the Pension Fund of
the mandatory arbitration.
Accordingly, the Court cannot
interpret the Free Look Agreement as it relates to the assessment
of withdrawal liability in this case.
Indeed, the Court has
previously held that, at least as between EUSA and the Pension
Fund, “[a]ny interpretation of the Free Look Agreement
necessarily involves an interpretation of the referenced portions
of the Plan and Statute” and therefore the Court has determined
that it cannot resolve the dispute of contract liability under
the Free Look Agreement prior to the completion of the statutory
arbitration.
C.
Id. at *10.
Breach of Contract Claim
Defendant Local 312 moves for summary judgment against
Plaintiff’s breach of contract claim, arguing that no dispute of
fact exists as to whether Local 312 breached any term of the Free
Look Agreement.
Plaintiff opposes on the ground that the
contract is ambiguous as to whether Defendant Local 312 intended
to indemnify Plaintiff from any withdrawal liability that might
be assessed within five years of the agreement.
At this point, before EUSA and the Pension Fund have
completed the mandatory arbitration required under the MPPAA, the
Court declines to resolve the dispute.
The contract claim at
issue necessarily involves interpretation of the Free Look
Agreement, which the Court has previously held is intertwined
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with an evaluation of whether Defendant Pension Fund properly
assessed withdrawal liability in this case.
Even if the Court
could resolve the contract dispute between Defendant Local 312
and Plaintiff EUSA on summary judgment at this time without
violating the mandatory arbitration provision of § 1401(a)(1) or
contradicting its prior Opinions in this action, doing so at this
stage would potentially be premature, as resolution of Plaintiff
EUSA’s withdrawal liability claim through arbitration with the
Pension Fund may moot its contract claim with Defendant Local 312
if Plaintiff eventually prevails in its interpretation of the
Plan, the statute and the Free Look Agreement.
Accordingly, the
Court will stay determination of Defendant Local 312's motion for
summary judgment against the contract claim pending arbitration
of the withdrawal liability between EUSA and the Pension Fund.
D.
Fraudulent Inducement Claim
By contrast, the Third Circuit has held that a claim of
fraudulent inducement can be adjudicated by the district court
prior to the completion of the statutory arbitration.
The Third
Circuit in Carl Colteryahn held that § 1401 of the statute does
not bar the district court’s adjudication of such claims because
it “provide[s] no basis for either adjusting or eliminating an
assessment based on fraud or misrepresentation.”
Colteryahn, 847 F.2d at 119.
Carl
Consequently, the Court will
consider and, for the following reasons, grant the motion for
summary judgment as to Defendant Local 312 against Count Two.
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The Court has previously held that, to prevail on a claim of
fraudulent inducement in this action, Plaintiff must prove
(1) a misrepresentation, (2) a fraudulent
utterance thereof, (3) an intention by the
maker that the recipient will thereby be
induced to act, (4) justifiable reliance by
the recipient upon the misrepresentation, and
(5) damage to the recipient as the proximate
result.
EUSA-Allied at *6 (quoting Carl Colteryahn Dairy, Inc. v. Western
Pennsylvania Teamsters & Employers Pension Fund, 1993 WL 120457
at *2 (W.D. Pa. Feb. 9, 1993).
Defendant argues that no dispute of fact exists in the
record establishing that any representative of Defendant Local
312 expressed a fraudulent misrepresentation, or that Plaintiff
EUSA justifiably relied on any such expression by any
representative of Local 312.
The Court agrees in part.
As to Defendant’s argument that no dispute of fact exists as
to Plaintiff’s justifiable reliance on Defendant’s
representatives’ statements, the Court finds that this element of
the claim is not properly decided on a motion for summary
judgment because whether a plaintiff’s reliance was “reasonable”
is a question of fact for the jury.
Angrisani v. Capital Access
Network, Inc., 175 F. App’x 554, 557 (3d Cir. 2006) (holding that
question of whether reliance was reasonable or justifiable
“presents a factual issue that is more properly left to the
judgment of the jury.”) (citing Jewish Ctr. of Sussex County v.
Whale, 86 N.J. 619, 626 (1981)).
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However, the Court agrees with Defendant that no dispute of
fact exists as to whether Defendant’s representatives knew of any
alleged falsity of their statements in the December 2005 meeting.
The Court has already held, in fact, that the statements of Local
312's representatives in December 2005, which are the only
statements by Local 312 in the record other than the Free Look
Agreement itself (which was drafted by EUSA’s counsel and only
signed by Defendants), are not fraudulent misrepresentations.
“[T]hey cannot be fraudulent inducement by Defendant Local Union
312 because there is no evidence of intent to mislead. . . .”
Id. at *7.
Indeed, Mr. Uniatowski stated in his deposition for
this action that he understood the free look provision of the
plan to extend for a full five years, consistent with what he or
his Local 312 colleague represented to Plaintiff in December of
2005.
Uniatowski Dep. at 16:5-12.
Therefore the Court will
grant Defendant’s motion for summary judgment as to Count Two.
E.
Misrepresentation Claims
Finally, Defendant moves for summary judgment as to
Plaintiff’s Counts Four and Five: intentional misrepresentation
and negligent misrepresentation.
The Court concludes, based on
the reasoning of Carl Colteryahn, that these claims of
misrepresentation are sufficiently removed from the arbitrable
issues of assessing withdrawal liability that the Court is able
to address the claims prior to arbitration.
847 F.2d at 119.
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See Carl Colteryahn,
Plaintiff’s claim for intentional misrepresentation,
construed by the Court as common law fraud,1 requires that
Plaintiff prove
(1)
a
material
misrepresentation
of
a
presently existing or past fact; (2) knowledge
or belief by the defendant of its falsity; (3)
an intention that the other person rely on it;
(4) reasonable reliance thereon by the other
person; and (5) resulting damages.
Banco Popular N. Am. v. Gandi, 184 N.J. 161, 173 (2005) (quoting
Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997)).
The
Court finds that, as with the fraudulent inducement claim, no
dispute of fact exists that the Union representatives’ statements
were intentionally false.
Thus, the Court will grant Defendant’s
motion for summary judgment as to Count Four of the Complaint.
The Court must deny, however, Defendant’s motion for summary
judgment as to Count Five, the negligent misrepresentation claim.
Defendant argues, interchangeably with the intentional
misrepresentation claim, that no dispute of fact exists as to
whether Defendant’s representatives knew of any falsehood they
allegedly expressed, or as to whether any reliance by Plaintiff
on such statements was justifiable.
The Court concludes that it
cannot grant summary judgment on this claim based on these two
arguments.
1
“The Court construes a claim of ‘intentional
misrepresentation’ as one for fraud.” Boyko v. Am. Int’l Group,
Inc., Civ. No. 08-2214, 2009 WL 5194425, at *3 (D.N.J. Dec. 23,
2009) (citing Jewish Ctr. of Sussex County v. Whale, 86 N.J. 619
(1981)).
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First, the Court reiterates that the reasonableness or
justifiability of a plaintiff’s reliance is not a question
properly decided on summary judgment.
Second, the Court notes
that Plaintiff need not prove the intent to mislead in a
negligent misrepresentation claim.
To prove a claim of negligent
misrepresentation under New Jersey law, Plaintiff must
demonstrate that
1) the defendant negligently provided false
information; 2) the plaintiff was a reasonably
foreseeable recipient of that information; 3)
the plaintiff justifiably relied on the
information; and 4) the false statements were
a proximate cause of the plaintiff's damages.
McCall v. Metropolitan Life Ins. Co., 956 F. Supp. 1172, 1186
(D.N.J. 1996) (citing Karu v. Feldman, 119 N.J. 135, 146-47
(1990)).
Thus, the Court finds that whether or not Defendant’s
representatives’ statements were knowingly false is not material
to Plaintiff’s claim.
On a motion for summary judgment, it is
the moving party’s initial burden to “show[] that there is no
genuine dispute as to any material fact.”
Fed. R. Civ. P. 56(a).
The Court concludes that Defendant has not met this burden in the
instant motion, and will therefore deny Defendant’s motion as to
Count Five.
IV.
CONCLUSION
The Court concludes that it will prudentially stay
determination of the contract claim until the dispute over
withdrawal liability has first been resolved through the
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statutory arbitration mandated in § 1401 of the MPPAA.
However,
as explained above, the Court will grant Defendant’s motion as to
Counts Two and Four, the claims of fraudulent inducement and
intentional misrepresentation.
Finally, the Court concludes that
Defendant Local 312 has not met its burden of showing that no
dispute of fact exists as to any element of Plaintiff’s negligent
misrepresentation claim in Count Five.
The Court will,
therefore, deny the motion as to this Count.
Finally, the Court requests the Parties’ views on the proper
route for resolving those remaining issues in this action that
need not be arbitrated, and whether entry of an Order staying the
remaining arbitrable issues pending arbitration is warranted.
Consequently, the Court requests that the parties confer through
counsel and submit by letter their recommendations for how this
case should next proceed no more than fourteen (14) days after
the entry of the accompanying Order.
These letters should merely
outline in brief whether further dispositive motions are
necessary, whether entry of a stay is appropriate, and a
suggested briefing schedule.
The Court will hold a
teleconference shortly after the receipt of these letters to set
a scheduling order.
The accompanying Order will be entered.
March 26, 2012
Date
s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge
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