TEAMSTERS LOCAL 945 PENSION FUND v. OMNI WASTE SERVICES, INC.
Filing
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OPINION. Signed by Judge Jose L. Linares on 8/1/11. (jd, )
UNITED STATES DISTRICT COURT
District of New Jersey
CHAM BERS OF
M A R T IN L U T H E R K IN G JR .
F E D E R A L B U IL D IN G & U .S. C O U R T H O U SE
50 W A L N U T ST ., R O O M 5054
P .O . B ox 999
N ewark, N J 07101-0999
973-645-6042
JOSE L. LINARES
JU D G E
NOT FOR PUBLICATION
LETTER OPINION
August 1, 2011
All Counsel of Record
Re:
Teamsters Local 945 Pension Fund v. Omni Waste Services, Inc.
Civil Action No. 11-3077 (JLL)
Dear Counsel:
Plaintiff, Teamsters Local 945 Pension Fund, brings this action pursuant to the
Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C. § 1381, et seq.,
seeking to collect interim withdrawal liability payments from Omni Waste Services, Inc. pending
the outcome of arbitration. Currently before the Court is Plaintiff’s motion for a preliminary
injunction seeking to compel Defendant to make interim withdrawal liability payments pursuant to
29 U.S.C. §§ 1381, 1399(c)(2). The Court has considered the submissions made in support of and
in opposition to the instant motion. No oral argument was heard. Fed. R. Civ. P. 78. Based on the
reasons that follow, Plaintiff’s motion is granted.
BACKGROUND
The following relevant facts are undisputed. Plaintiff, Teamsters Local 945 Pension Fund
(the “Local 945 Fund” or “Fund”), is a multiemployer pension plan within the meaning of Section
3(2) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1002(2).
Defendant, Omni Waste Services, Inc., and Teamsters Local 945 (a labor organization which is not
a party to this action) are signatories to a series of collective bargaining agreements which set forth
the terms and conditions of employment for members of Local 945 employed by Defendant Omni.
(Connaughton Cert., Exs. 1-2). The collective bargaining agreements required, inter alia, that Omni
remit, on a monthly basis, pension contributions to the Local 945 Pension Fund on behalf of all
Local 945 bargaining unit employees performing bargaining unit work at Omni’s facility in Paterson,
New Jersey from July 2004 through at least June 2009. (Connaughton Cert., Ex. 1 at 13-14; 25).
It is Plaintiff’s position that although Defendant was previously obligated to contribute to the
Local 945 Pension Fund under the terms of the relevant collective bargaining agreements,1 as of
August 2009, Defendant was no longer bound by such collective bargaining agreements and thus
ceased to have an obligation to contribute to the Local 945 Pension Fund. By way of letter dated
August 30, 2010, counsel for the Local 945 Pension Fund notified Defendant of its determination
that Defendant had completely withdrawn from the Local 945 Pension Fund as a result of Omni’s
permanent cessation of obligation to remit pension contributions to the Fund. (Connaughton Cert.,
Ex. 3). In the same letter, the Fund advised Defendant of its calculation of Defendant’s withdrawal
liability ($826,441.00). (Id.). Omni has since refused to make withdrawal liability payments.
(Harvey Aff., ¶ 7). On April 4, 2011, the Local 945 Pension Fund filed its Demand for Arbitration
with the American Arbitration Association. (Compl., ¶ 17).
It is Omni’s position that: (1) Omni has not withdrawn from the industry (but rather has
merely reached an “impasse” in its negotiations with Local 945 workers) and therefore no interim
payments, pursuant to 29 U.S.C. §§ 1381, 1399(c)(2), should be required, and (2) should the Court
determine that interim payments are required, Omni will suffer irreparable damage because it will
be forced out of business. (Juchniewicz Aff., ¶ 4); (Def. Opp’n Br. at 4-5).
ANALYSIS
Plaintiff seeks an order compelling Omni to make interim withdrawal liability payments. In
conjunction with this application, Plaintiff seeks an award of reasonable attorney’s fees and costs,
accrued interest, and liquidated damages.
1.
Interim Withdrawal Liability
“An employer withdraws from a multiemployer pension plan when the employer either
permanently ceases to have an obligation to contribute under the plan or permanently ceases all
covered operations under the plan.” Galgay v. Beaverbrook Coal Co., 105 F.3d 137, 139 (3d Cir.
1997); 29 U.S.C. § 1383(a). “The employer is liable for its share of the plan’s unfunded vested
benefits as calculated at the time of withdrawal.” Galgay, 105 F.3d at 139; 29 U.S.C. §§ 1381, 1383,
1391. “The plan sponsor has the responsibility of determining this withdrawal liability, notifying
the employer and collecting payment.” Galgay, 105 F.3d at 139; 29 U.S.C. § 1382.
1
(Harvey Aff., ¶¶ 4, 5).
2
Section 1399(c)(2), in turn, provides that “[w]ithdrawal liability shall be payable in
accordance with the schedule set forth by the plan sponsor under subsection (b)(1) of this section
beginning no later than 60 days after the date of the demand notwithstanding any request for review
or appeal of determinations of the amount of such liability or of the schedule.” Such payments are
to be made during arbitration; should the arbitrator determine that the plan sponsor erred in assessing
withdrawal liability, the employer is reimbursed for any overpayment. 29 U.S.C. § 1401(d). “If the
employer fails to make timely payment in accordance with such final decision, the employer shall
be treated as being delinquent in the making of a contribution required under the plan (within the
meaning of section 1145 of this title).” Id.
In construing the foregoing sections of the MPPAA, the Third Circuit has explained that:
Congress enacted MPPAA out of concern that multiemployer pension
plans would collapse as employers withdrew if the remaining
contributors became too few in number to pay the unfunded vested
benefits. Congress foresaw that the purpose of MPPAA would be
undermined if employers could postpone paying their debts to
pension funds by engaging in protracted litigation over withdrawal
liability. Therefore, the statute directs employers to begin payments
upon notification of withdrawal liability, whether or not they choose
to dispute the determination
Galgay, 105 F.3d at 139 (internal citations omitted). Thus, “[w]hen an employer fails to make a
withdrawal liability payment within the prescribed time, an action may be brought in federal or state
court to compel payment. Id.; 29 U.S.C. § 1451(b) - (c). “The plan sponsor need show only that it
made a demand for interim payments under 29 U.S.C. § 1382 and that the payments were not made.”
Galgay, 105 F.3d at 139.
As previously stated, Omni disputes that interim payments are required for two reasons: (1)
Omni has not withdrawn from the industry (but rather has merely reached an “impasse” in its
negotiations with Local 945 workers), and (2) should the Court determine that interim payments are
required, Omni will suffer irreparable damage because it will be forced out of business. (Juchniewicz
Aff., ¶ 4); (Def. Opp’n Br. at 4-5).
The Court will consider each of Omni’s arguments but first notes that the traditional fourprong test for a preliminary inunction is “not applicable in this context.” Galgay, 105 F.3d at 140.2
Instead, the Third Circuit has made clear that in order to compel payment of interim withdrawal
liability assessments to a multiemployer pension plan, “the plan sponsor need show only that it made
a demand for interim payments under 29 U.S.C. § 1382 and that the payments were not made.”
Galgay, 105 F.3d at 139. Here, Omni does not dispute that withdrawal liability payment was
demanded or that it has refused to comply with the demand. In any event, the Fund has met its
2
For a more detailed discussion of this issue, see Galgay, 105 F.3d at 140.
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burden of demonstrating that: (1) withdrawal liability was assessed,3 (2) Omni was notified of this
demand,4 and (3) Omni has failed to make the necessary payments.5 Id. at 139-141.
As to Omni’s first argument, it is irrelevant whether Omni has, in fact, withdrawn from the
“industry” or simply reached an “impasse” in its negotiations with Local 945, as it maintains. It is
clear that Omni disputes the Local 945 Pension Fund’s assessment and imposition of withdrawal
liability all together. This issue will presumably be resolved in arbitration.6 Section 1399(c)(2)
makes clear, however, that “[w]ithdrawal liability shall be payable . . . beginning no later than 60
days after the date of the demand notwithstanding any request for review or appeal of
determinations of the amount of such liability or of the schedule.” 29 U.S.C. § 1399(c)(2)
(emphasis added). To the extent the arbitrator determines that the Local 945 Pension Fund, in fact,
erred in assessing withdrawal liability, Omni will be reimbursed accordingly. See 29 U.S.C. §
1401(d). Thus, because the statute directs employers to begin interim payments upon notification
of withdrawal liability, “whether or not they choose to dispute the determination,” Omni’s first
argument is rejected without further discussion. Galgay, 105 F.3d at 139.
Next, Omni argues that, notwithstanding any withdrawal liability obligations, the Court
should deny Plaintiff’s motion to compel interim payments because Omni will suffer irreparable
harm if it is forced to make such payments. In support of its position, Omni urges the Court to apply
an equitable exception to the statutory provisions on interim payments. In Galgay, the Third Circuit,
while recognizing the irreparable injury exception adopted by the Fifth and Seventh Circuits, made
clear that:
We have never held that there are any equitable exceptions to the
statutory provisions on interim payments and we decline to do so
now. Congress has clearly indicated its intent in this matter. The
plain language of the statute declares, “Withdrawal liability shall be
payable in accordance with the schedule set forth by the plan
3
(Connaughton Cert., Ex. 3).
4
(Connaughton Cert., Ex. 3).
5
(Connaughton Cert., Exs. 3, 4); (Harvey Aff., ¶ 7). .
6
See, e.g., Galgay, 105 F.3d at 141 (“[D]isputes over whether an entity has ceased to be an
employer within the meaning of MPPAA . . . must be resolved in arbitration.”). To be clear,
however, the Court makes no finding as to whether the underlying dispute is one that is appropriately
resolved in arbitration. Suffice it to say that: (1) Plaintiff has indicated that it initiated arbitration
proceedings, and (2) Plaintiff’s Verified Complaint seeks only an order compelling Defendant to
make interim withdrawal liability payments pending the outcome of such arbitration. Thus, the only
issue currently before this Court is whether Omni should be compelled to make interim withdrawal
liability payments pursuant to 29 U.S.C. § 1399(c)(2).
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sponsor....” 29 U.S.C. § 1399(c)(2) (emphasis added). No exceptions
are provided. Our jurisdiction is limited to ordering the employer to
make interim payments once the pension fund has demonstrated that
it complied with the statutory requirements for calculating liability
and notifying the employer. 29 U.S.C. § 1382.
Galgay, 105 F.3d at 140. In light of the foregoing, and absent a contrary directive from the Court
of Appeals for the Third Circuit, the Court declines to apply an equitable exception to the statutory
provisions on interim payments.7
Suffice it to say that the Local 945 Pension Fund has demonstrated that it complied with the
statutory requirements – assessing Omni’s withdrawal liability and notifying Omni of such an
assessment – and that Omni has failed to make the interim payments. “That is all the statute
requires.” Galgay, 105 F.3d at 141. Plaintiff’s motion for a preliminary injunction to compel
Omni’s interim withdrawal liability payments is therefore granted.8
7
Even assuming, arguendo, that an irreparable injury exception were applicable, Omni has
failed to convince the Court that Plaintiff’s claim is frivolous or non-colorable. Nor has Omni
submitted any specific evidence to support its claim of irreparable harm. At most, Omni has
demonstrated that it is a financially troubled company. Such a showing, without more, is insufficient
to warrant equitable relief from interim payment liability. See Galgay, 105 F.3d at 141 (“We believe
that it would contort the law if we were to allow the undercapitalized or financially precarious
companies that pose the very risk to pension funds that MPPAA was designed to correct to defer
payment because they pose that risk.”); Trustees of Amalgamated Ins. Fund v. Crown Clothing, Inc.,
27 F. Supp.2d 507, 515 (D.N.J. 1998) (“[E]ven if the Court found that Crown would suffer such
harm were it forced to make interim payments, it could not relieve Crown from its obligation” where
Crown had otherwise failed to provide evidence that the Trustees’ claim was non-colorable).
8
See, e.g., Einhorn v. Kaleck Bros., Inc., 713 F. Supp.2d 417, 424- 425 (D.N.J. 2010)
(granting summary judgment in favor of the pension fund, ordering payment of interim withdrawal
liability payments, and noting that “Defendant offers no legal authority which would abrogate the
right of the Fund to make a determination as to whether an employer permanently withdraws or
which would allow this Court to determine an issue which must be resolved in arbitration.”).
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2.
Attorney’s Fees and Costs; Accrued Interest; and Liquidated Damages
In conjunction with its motion to compel interim payments, Plaintiff seeks an award of
reasonable attorney’s fees and costs, accrued interest and liquidated damages.
Section 1132(g)(2) provides that:
In any action under this subchapter by a fiduciary for or on behalf of
a plan to enforce section 1145 of this title in which a judgment in
favor of the plan is awarded, the court shall award the plan –
(A)
(B)
(C)
the unpaid contributions,
interest on the unpaid contributions,
an amount equal to the greater of –
(i)
interest on the unpaid contributions, or
(ii)
liquidated damages provided for under the plan in an
amount not in excess of 20 percent (or such higher
percentage as may be permitted under Federal or State
law) of the amount determined by the court under
subparagraph (A),
(D)
reasonable attorney's fees and costs of the action, to be paid
by the defendant, and
such other legal or equitable relief as the court deems
appropriate.
(E)
29 U.S.C. § 1132(g)(2) (emphasis added). Sections 8.6-8.9 of the Withdrawal Liability Rules
adopted by the Board of Trustees of the Local 945 Pension Fund provide that if an employer fails
to make withdrawal liability payments when due, the employer must pay the delinquent sum plus
interest, plus the greater of interest on the delinquent sum or liquidated damages of 20 percent (or
such higher percentage as the law allows) of the delinquent sum. (Connaughton Cert., ¶ 7; Ex. 5).
In addition, the Resolution Regarding Collection of Delinquent Contributions from
Participating/Contributing Employers provides for the assessment of accrued interest on delinquent
benefit contributions at a rate of 15% per year. (Connaughton Cert., ¶ 8; Ex. 6 at 2).
Omni does not dispute the applicability of Section 1132(g)(2) or that, in the event the Court
grants Plaintiff’s motion to compel interim withdrawal liability payments pursuant to 29 U.S.C. §§
1381, 1399(c)(2), Plaintiff would be entitled to reasonable attorney’s fees and costs, accrued interest
and liquidated damages, as set forth above. Nor does Omni dispute the authenticity or applicability
of the documents submitted by Plaintiff – namely, the Withdrawal Liability Rules adopted by the
Board of Trustees of the Local 945 Pension Fund and Resolution Regarding Collection of Delinquent
Contributions from Participating/Contributing Employers, attached as Exhibits 5 and 6 to the
Connaughton Certification.
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In light of the foregoing, and pursuant to 29 U.S.C. 1132(g)(2), the Court grants Plaintiff’s
request for reasonable attorney’s fees and costs, accrued interest and liquidated damages. Plaintiff
is hereby directed to submit a detailed certification in support of any specific amounts sought, as well
as a proposed order, within thirty (30) days.
CONCLUSION
Based on the reasons set forth above, Plaintiff’s motion for a preliminary injunction seeking
to compel Defendant to make interim withdrawal liability payments pursuant to 29 U.S.C. §§ 1381,
1399(c)(2) is granted, as is Plaintiff’s request for reasonable attorney’s fees and costs, accrued
interest and liquidated damages pursuant to 29 U.S.C. 1132(g)(2). Plaintiff shall submit a detailed
certification and proposed order in support of any specific amounts sought within thirty (30) days.
An appropriate Order accompanies this Letter Opinion.
/s/ Jose L. Linares
JOSE L. LINARES,
UNITED STATES DISTRICT JUDGE
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