SWERDLICK et al v. HERRERA

Filing 12

OPINION. Signed by Judge Claire C. Cecchi on 3/26/15. (DD, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

ALLEN SWERDLICK, JOHN ZAK,
ANTHONY ZAPPULLA, JOHN
SULLIVAN, ANTHONY STORZ, LUIS
HERRERA as TRUSTEES OF THE LOCAL
807 LABOR MANAGEMENT PENSION
FUND, and THE LOCAL 807 LABORMANAGEMENT PENSION FUND,

Civil Action No.: 14-04774 (CCC)(JBC)

OPINION

Plaintiffs,
v.
AMERICAN COMPRESSED GASES, INC.,
TRUCAR LEASING CORP., GOLDFTNCH I
REAL ESTATE CORP., WHITE OAK
REAL ESTATE CORP., and ORIOLE REAL I
ESTATE CORP.,
Defendants.

CECCHI, District Judge.
Before the Court is the Motion of defendants American Compressed Gases, Inc. (“ACG”),

Trucar Leasing Corp. (“Trucar”), Gold Finch Real Estate Corp. (“Gold Finch”), White Oak Real
Estate Corp. (“White Oak”), and Oriole Real Estate Corp. (“Oriole”) (collectively, “Defendants”)
to Dismiss the Complaint pursuant to Rule I 2(b)(6) of The Federal Rules of Civil Procedure for
failure to state a claim upon which relief can be wanted. Also before the Court is the Motion of
plaintiffs Allen Swerdlick, John Zak, Anthony Zappula, John Sullivan, Anthony Storz, Luis

Herrera as Trustees for the Local 807 Labor-Management Pension Fund (the “Trustees”), and the
Local 807 Labor-Management Pension Fund (the “Pension Fund”) (collectively, “Plaintiffs”) for

Preliminary Injunction enjoining Defendants from arbitrating their claims. The Court decides both
Motions without oral argument pursuant to Rule 78.1 Having considered the parties’ submissions
and for the reasons set forth below, the Court grants Defendants’ Motion to Dismiss and denies
Plaintiffs’ Motion for Preliminary Injunction.
1.

BACKGROUND
Plaintiffs commenced this action on July 31, 2014, seeking a Declaratory Judgment and an

Order to Enjoin or Stay Arbitration under the statutes promulgated by the Employee Retirement
Income Security Act of 1974 (“ERISA”). (See eneral1y Compi., ECF. No. 1). Plaintiffs allege
this Court has jurisdiction over the claims pursuant to ERISA

§ 502, 29 U.S.C. § 1132(e), 1132(f),

and 145 1(c). The following facts alleged in the Complaint are largely undisputed.
Prior to 2012, Arthur and Valerie Ramsdell (the “Ramsdells”), who are non-parties to this
action, were the sole shareholders of all Defendants. (Compi. at ¶23). Also during this time, ACG
was the sole shareholder of non-party Dry Ice Corp. (“Dry Ice”). Dry Ice was bound by a collective
bargaining agreement with the Truck Drivers Local 807, IBT of Long Island City, New York under
which Dry Ice was required to make contributions to the Pension Fund on behalf of certain
employees. (See Compl. at ¶12).
On January 1, 2012, ACG divested itself of ownership of Dry Ice by transferring the stock
to the Ramsdells. (Compl. at ¶25). At this point, the Ramsdells were the sole shareholders of all
Defendants and Dry Ice. Although neither the Complaint nor the attached exhibits allege the

I

The Court considers any new arguments not presented by the parties to be waived. See
Brenner v, Local 514. United Bhd. of Carpenters & Joiners, 927 F2d 1283. 1298 (3d Cir.
1991) (“it is well established that failure to raise an issue in the district court constitutes a
waiver of the argument.”),

precise date, by December 31, 2012, the Ramsdells had transferred 100% of their ownership
interest in Dry Ice to their adult son Christopher Ramsdell and 100% of their ownership interest in
ACG to their other adult son, Keith Ramsdell. (Compl. at ¶26).
Subsequently. Dry Ice withdrew from the Pension Fund on or about May 20, 2013 and
ceased making payments to the Pension Fund. (Compl. at ¶14). On June 24, 2013, the Pension
Fund served Dry Ice with a Notice and Demand (the “Notice”) for payment of the withdrawal
liability. (Compi. at ¶16). The Notice alleged that Dry Ice incurred a withdrawal liability to the
Pension Fund in the principal amount of $3,084,869. On September 20, 2013, Dry Ice requested
the Pension Fund to review its position regarding the withdrawal liability assessment (“Request
for Review”). (Compi. at ¶19). On October 9, 2013, the Pension Fund denied Dry Ice’s Request
for Review (“Review Denial”). (Compi. at ¶21). Over seven months later, on May 16, 2014, the
Pension Fund notified Defendants that it considered them part of a common control group with
Dry Ice and that they were therefore jointly and severally liable for Dry Ice’s outstanding
contributions. (Compi., Exh. A at *2). Four days later, on May 20, 2014, Defendants submitted a
Request for Review of the Pension Fund’s decision regarding the common control group.

(14i On

June 13, 2014, the Pension Fund denied Defendants’ Request for Review advising them that it still
considered Defendants to be part of the common control group and therefore liable. (Id.)
Defendants subsequently submitted a demand for arbitration on July 7, 2014, claiming that
(1) the Notice to Dry Ice was not effective notice to the Defendants as to their own withdrawal
liability and (2) they were not part of the common control group at the time of withdrawal. (Compi.
at ¶39, Exh. A), Plaintiffs initiated this action on July 31. 2014, asking the Court to enjoin or stay
the arbitration proceeding on the grounds that Defendants purportedly were untimely in bringing
the arbitration demand. (Compl. at ¶41-49). Defendants filed the present Motion to Dismiss on
3

August 8, 2014, and Plaintiffs filed a Motion for Preliminary Injunction on September 8, 2014.
(ECF Nos. 5, 10).
IL

LEGAL STANDARD
A.

Motion to Dismiss

For a complaint to avoid dismissal pursuant to Rule 1 2(b)(6), it “must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.” Ashcroft v.
Tgbal, 556 U.S. 662, 678 (2009) (quoting Bell Ati. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
When evaluating the sufficiency of a complaint, Courts are required to accept all well-pleaded
allegations in the Complaint as true and to draw all reasonable inferences in favor of the nonmoving party. Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008). Furthermore,
“[a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause
of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further
factual enhancement.” Iqbal, 556 U.S. at 678 (internal citations and quotations omitted).
Accordingly, “a complaint must do more than allege the plaintiff’s entitlement to relief. A
complaint has to ‘show’ such entitlement with its facts.” Fowler v. UPMC Shadyside, 578 F.3d
203, 211 (3d Cir. 2009).
Based on this procedural posture, “courts generally consider only the allegations in the
complaint, exhibits attached to the complaint, matters of public record, and documents that form
the basis of a claim.” Lurn v. Bank of Am., 361 F.3d 217, 222 n.3 (3d, Cir. 2004) (citation omitted).
This Compi.aint relies, directly or indirectly, upon a number of documents attached as exhibits and
referenced in the Complaint. The Court will consider these documents about which there is no
dispute as to authenticity, and to the extent they contradict the Complaint’s factual allegations, the
documents will control. See

CCAIR. Inc., 29 F,3d 855, 859 n,8 (3d Cir. 1994)
4

(“Where there is a disparity between a written instrument annexed to a pleading and an allegation
in the pleading based thereon. the written instrument will control.”).
B.

Motion for Preliminary Injunction

“Preliminary injunctive relief is an extraordinary remedy that should be granted only in
limited circumstances. KOS Pharm.. Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004)
(quotation omitted). Plaintiff bears the burden to show: (1) a likelihood of success on the merits;
(2) that it will suffer irreparable harm if the injunction is denied; (3) that granting preliminary relief
will not result in even greater harm to the nonmoving party; and (4) that the public interest favors
such relief. Sypniewski v. Warren Hills Reg’l Bd. of Educ., 307 F.3d 243, 252 (3d Cir. 2002).
Further, “[w]hile all four factors are important, failure to show either likelihood of success on the
merits or irreparable harm must necessarily result in denial of a preliminary injunction.” In re
Arthur Treache?s Franchisee Litig., 689 F.2d 1137, 1143 (3d Cir. 1982).
III.

DISCUSSION

The Court must decide whether arbitration is the proper venue for the parties to litigate
certain threshold issues first. The relief sought in Plaintiffs’ Complaint asks the Court to enjoin or
stay the arbitration proceedings that have already commenced. Defendants’ present Motion to
Dismiss argues that the relief sought cannot be granted because arbitration is mandated by statute,

(b)(6)
2
and therefore dismissal under Rule 1 is warranted. For the reasons set forth below, the
Court agrees with Defendants.
A.

ERISA and MPPAA Legal Framework

The Muitiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C.

§ I 401(b)( I), is a series of amendments to the Employee Retirement Income Security Act of 1974
(“FRISK’). See 29 U.S.C. §1001 et seq. Congress enacted the MPPAA in particular because it

found that existing statutes “did not adequately protect plans from the adverse consequences that
resulted when individual employers terminate[d] their participation in, or withdr[ejw from,
multiemployer plans.” Pension Ben. Guar. Co. v. R.A. Gray & Co., 467 U.S. 717, 722, 104 S.
Ct. 2709, 2714 (1984). The MPPAA addressed this problem by assessing such employers with

withdrawal liability, defined in the statute as the employe?s adjusted ‘allocabIe amount of
unfunded vested benefits.” Flying Tiger Line v. Teamsters Pension Trust Fund of Philadelphia,
830 F,2d 1241, 1243-44 (3d Cir. 1987) (citing 29 U.S.C.

§ 1381(b)(1) (1982)).

Provisions for the quick and informal resolution of withdrawal liability disputes are an
integral part of N PPAA’s statutory scheme. Flying Tiger, 830 F.2d at 1244. The MPPAA requires
a planes trustees to determine initially whether a withdrawal has occurred. 29 U.S.C.

§

1382(1),

1 399(b)( I )(A)(i). When the trustees conclude that a withdrawal has taken place, they must then
notify the employer of the amount of liability and demand payment in accordance with an
amortization schedule. 29 U.S.C.

§ 1382(2), 1382(3), 1399(b)(l)(B). The Notice must include

the amount of liability and a schedule of installment payments, and the withdrawn employer must
begin paying according to the schedule. See Robbins v. Pepsi-Cola Metro. Bottling Co., 800 F.2d
641, 642-43 (7th Cir. 1986)(per curiam); çç also Penske Logistics, LLC v. Freight Drivers &
HpcLoca1Unio5, 2009 WL 1383298, at *2 (E.D. Pa. 2009). Thereafter, the employer
may within ninety (90) day’s ask the trustees to conduct a reasonable review” of the computed
liability. 29 USC.

§

1399(b)(2)(A)(i) (1982). If a dispute remains after the plan sponsor responds,

either party’ may initiate arbitration proceedings within sixty (60) days. The MPPAA provides that
{a]nv dispute between an employer and the plan sponsor of a
muItiemploer plan concerning a determination made under
sections 1381 through 1399 of this title shall be resolved through
arbitration. Either party’ may initiate the arbitration proceeding
within a 60-day period.
..

6

29 U.S.C.

§ l40l(b)(l). Finally, “[u]pon completion of the arbitration proceedings in favor of one

of the parties.” MPPAA permits “any party thereto” to bring an action to enforce, vacate or
modify the arbitrators award” in the appropriate federal district court. Flying Tiger Line v.

Teamsters Pension Trust Fund of Philadelphia, 830 F.2d 1241, 1244 (3d Cir. 1987) (quoting 29
U.S.C.

§ l401(b)(2) (1982)).
Whether a litigant was an “employer” under the MPPAA and ERISA is a question of law.

See Flying Tiger Line v, Teamsters Pension Trust Fund of Philadelphia, 830 F.2d 1241 (3d Cir,
1987). 29 U.S.C. §4001(b)(l) states that “[fjor the purposes of this title, under regulations
prescribed by the corporation, all employees of trades or businesses (whether or not incorporated)
which are under common control shall be treated as employed by a single employer and all such
trades and businesses as a single employer.” (emphasis added). Determining whether a litigant
was part of a control group for the purposes of employer liability is a question of legal status
measured at the time the actual withdrawal from the pension plan occurred. See Bd. of Trs. of
Trucking Emps. of North Jersey Welfare Fund v. Centra, 983 F.3d 495. 502 (3d Cir. 1992). Thus,
for entities to be part of a control group (and therefore jointly and severally liable for withdrawal
purposes), there must be some measure of ownership commonality between those entities at the
time of withdrawal.
B.

Analysis

With the relevant alleged facts and statutory framework set forth above, Plaintiffs’ claims
for relief rely on the following theory, First, prior to late 2012. Defendants were part of a common
control group with Dry Ice and ACG because the Ramsdeils owned all interest in the Defendants
as well as Dry Ice. Second, even after the Ramsdells divested their interest in Dry Ice to their son
Christopher Rarnsdell. Defendants continued to be part of a common control group with respect to
7

Dry Ice because of numerous factors including, but not limited to 1) Dry Ice and Defendants share

the same counsel and accounting firm, 2) the Ramsdells’ divestment of Dry Ice and ACG to their
two sons kept both corporations “within the same nuclear family,” 3) Dry Ice and ACO have the
same principal business address in Tappan, New Jersey as well as branches at the same address in
Maspeth, New York. and 4) Dry Ice’s website currently links to ACG’s website. (Compi. at ¶36).

Third, as soon as the Pension Fund served Dry Ice with Notice on June 24, 2013,
Defendants had both actual and constructive notice as to their own liability because they were all
part of the same common control group for the reasons stated above. (Pis’ Br. in Opp. at 11-13).
Similarly, Defendants had actual and constructive notice of the Pension Fund’s October 9, 2013
Review Denial, thereby triggering the sixty (60) day period to initiate arbitration. Fourth, because
Defendants had actual and constructive notice of the Pension Fund’s June 24, 2013 Notice and
October 9, 2013 Review Denial, Defendants had until December 8, 2013 to timely initiate
arbitration proceedings under the MPPAA. Because Defendants did not initiate arbitration until
July 7, 2014, they are presently time-barred from compelling Plaintiffs to participate in arbitration.
Defendants assert in their moving papers that the Court should dismiss the Complaint
because, even if Plaintiffs’ factual allegations are true, the applicable law does not permit the Court
to grant the relief sought. (Defs’ Br. in Supp. at 6). Defendants appear to argue, as a threshold
issue. that determining whether Defendants were part of a common control group under the
MPPAA under the present set of facts is exclusively reserved for arbitration. Furthermore.
Defendants arauc that neither the June 24, 2013 Notice to Dry Ice nor the October 9. 2013 Review
Denial provided notice to Defendants because they were no longer part of the same common
control group at the time Dry Ice withdrew from the Pension Fund. (Defs’ Br. in Supp. at 5). As
such, Defendants were not “employers” under ER ISA and the MPPAA when Dry Ice withdrew

8

from the Pension Fund. Defendants conclude that the statutory sixty (60) day time period for them
to commence arbitration did not accrue until May 16,2014 when the Pension Fund sent the Review
Denial to Defendants. (Id. at 6). Because their July 7, 2014 demand for arbitration was timely,
Defendants contend the MPPAA requires this dispute to proceed in that forum instead of federal
court. (Id. at 6-8).
1.

Defendants’ Legal Status Is Properly Decided by Arbitration

The Third Circuit has held the MPPAA’s dispute resolution procedures mandating
arbitration must be followed when 1) there is no question that the party against which withdrawal
liability is being asserted was part of the commonly controlled group of an employer subject to the
MPPAA at some point in time, and 2) where the disputed issues fall within the purview of MPPAA
provisions that are expressly reserved for arbitration.

$ Flying Tiger Line v. Teamsters Pension

Trust Fund of Philadelphia, 830 F.2d 1241, 1247, 1250 (3d Cir. 1987) (holding that whether the
purpose of the sale of the fund employer was “to evade or avoid withdrawal liability” is properly
decided through arbitration). The Flying Tiger Court articulated a clear distinction between cases
where the question of a party’s legal status as employer should be decided by a district court and
when that party’s status should be determined through arbitration. The Court stated, in relevant
part:
The issue of whether one remains an employer on the date of
withdrawal is not the same issue as whether one ever became an
‘employer’ for the purposes of ERISA generally and MPPAA in
particular. The latter is an issue for the court since its resolution
determi.nes the arbi.trator’ s authority over t].e dispute. The former is
an issue for the arbitrator since its resolution turns on the
applicability of MPPAA provisions relating to employer
withdrawals-provisions Congress specifically placed within the
purview of the arbitrator.
830 F.2dat 1250-51
9

Pension Fund, 657 F. Supp. 875, 882 (N.D. Ill. 1987)). The Third Circuit again articulated the
same reasoning in Doherty v. Teamsters Pens. Trust Fund of Philadelphia and Vicinity, 16 F.3d
1386 (3d Cir. 1994), as amended on reh’g (Mar. 17. 1994). In Doherty, the Third Circuit held that
whether

two

individual stockholders were subject to withdrawal liability as alter egos of a plan

employer was for the district court to decide, not arbitration. Id. at 1 39O9 1. The court reasoned
that because the liability determination rested on whether the defendants were ever part of a
common control group, the district court needed to determine whether the MPPAA’s dispute
resolution procedures apply to them. Id. It is well settled law under Doherty that district courts
retain jurisdiction over cases where there is a dispute regarding whether the defendants were ever
part of a commonly controlled group. However, the Flying Tiger Court makes clear that the
MPPAA requires the timely initiation of arbitration when it is undisputed that the defendants were
part of a commonly controlled group at some point in time, but there is a dispute regarding the
legal status of the defendants at the time of withdrawal.
The facts of the present case fit squarely within the criteria set forth by the Court in Flying
Tiger. The undisputed facts as to the Ramsdells ownership interests and the corporate structure of
their holdings clearly establishes that Defendants were part of a commonly controlled group prior
to 2012. See IUE AFLCIO Pension Fund v. Barker & Williamson, Inc., 788 F.2d 118, 130 (3d
Cir. I 986). This chronology of events establishes that Defendants and Dry Ice were under common
control “at some point in time” under fypgji en 830 F.2d at 1247.
The second criteria in yjgjjgr requires that the disputed issues fall within the purview
of MPPAA provisions that are expressly reserved for arbitration, 830 F.2d at 1247. The MPPAA

explicitly provides that any transaction designed to “evade or avoid” withdrawal liability should
be ignored—that is, it should be presumed that the purportedly “sham” transaction did not occur—
10

in determining a party’s legal status as an employer. 29 U.S.C. 1392(c). The Flying Tigcj Court
stated that “the central dispute between [the partiesj concerns whether the sale must be ignored
under the MPPAA’s ‘evade or avoid’ provision” and was therefore subject to arbitration. 830 F.2d
at 1247-48. The Court notes that while the present Plaintiffs discuss the MPPAA “evade or avoid”
provision in both the complaint and its brief in opposition to this Motion, they do not appear to
allege that the Ramsdells’ divestment of Dry Ice or ACG was executed for this purpose. (çç
Compi. at ¶29-30). Instead, Plaintiffs argue that the burden was on Defendants to timely raise the
“evade or avoid” issue in arbitration. (Pls’ Br. in

Opp. at 20-22).

Plaintiffs appear to conflate the burden to timely initiate arbitration proceedings with the
burden to establish a transaction was executed to “evade or avoid” withdrawal liability. First, the
MPPAA clearly states that “the plan sponsor shall have the burden to establish, by a
preponderance of the evidence, the elements of the claim under section 1392(c) of this title that a
principal purpose of the transaction was to evade or avoid withdrawal liability under this subtitle.”
29 U.S.C.

§ 140 1(e)(2)(A)(ii) (emphasis added). Therefore, it is Plaintiffs that must establish that

the purpose of divesting Dry Ice was to “evade or avoid” liability, not Defendants. Based on the
widespread discussion of “evade or avoid” in the pleading and submissions of both parties, it is
clear to the Court that whether the Ramsdells’ divestment of Dry Ice and ACG was for the purpose
of evading or avoiding withdrawal liability is central to the resolution of this dispute. Therefore,
the second criteria set forth in

gTigç—that the disputed issues fall within the purview of

.MPPAA provisions that are expressly reserved for arbitration—is satisfied in this case.
2,

Arbitration Was Presumptively Commenced Timely

Plaintiffs frame the bulk of their argument on the theory that the Notice and Review Denial
served upon Dry Ice were effective as to Defendants primarily because I) the Ramsdells had only
Ii

recently divested their ownership interests in Dry Ice and ACG to their sons and 2) all the entities
at issue were owned by the same “nuclear family” that maintains “close business associations with
each other (i.e. sharing a website, counsel, accountant, officers, etc.).” (Pis’ Br. in Opp. at 16). In
essence, Plaintiffs argue that because Defendants were or should have been aware of the Notice of
withdrawal liability as to Dry Ice, Defendants had actual notice of a potential claim against
Defendants. As Plaintiffs contend, once the Pension Fund served Dry Ice with its Review Denial
on October 9, 2013, the sixty (60) day time period for Defendants to initiate arbitration began to
run. (Id. at 13).

According to Plaintiffs, because Defendants did not initiate arbitration by

December 8, 2013, commencing arbitration on July 7, 2014 is barred under the MPPAA as
untimely.
As a threshold issue, the Court notes that because there is a dispute regarding Defendants’
legal status at the time Dry Ice withdrew from the Pension Plan, there is a presumption that the
sixty (60) day period for Defendants to commence arbitration did not begin to accrue until June
13, 2014 when the Pension Fund sent Defendants the Review Denial. See Doherty v. Teamsters
Pens. Trust Fund of Philadelphia & Vicinity, 16 F.3d 13 86-1390 (3d Cir. 1994), as amended on
reh’g (Mar. 17, 1994) (calculating the period to initiate arbitration based on the date the plaintiff
notified the former members of the control group, not the date the plaintiff notified the withdrawn
employer), Based on this time frame, Defendants appear to have timely begun the arbitration on
July 7, 2014, less than thirty (30) days after the period began. By arguing that the arbitration was
untimely based on Defendants’ legal status at the time Dry Ice withdrew from the Pension Fund,
Plaintiffs would have the Court collapse the “evade or avoid” and arbitration timeliness issues into
one inquiry. This result would obviate the MPPAA’s clearly articulated purpose of allowing
parties first to arbitrate whether a defendant was an “employer” as part of a commonly controlled
12

.oup.
The Third Circuit articulated the same reasoning when it held that providing notice to the
withdrawn employer is effective on the defendants only after a determination is made that the
defendants were part of a commonly controlled oup. ç Bd. of Trustees of Trucking Employees
of N. Jersey Welfare Fund, Inc,-Pension Fund v. Kero Leasing Co., 377 F.3d 288, 298-99 (3d
Cir. 2004) (holding the doctrine of “notice to one is notice to all” is applicable only after the

Defendant’s legal status is determined). In Kero Leasing, the participating employer was sold by
its founder and sole shareholder several years before it ceased making payments to the pension
plan. 377 F.3d at 291-92. The plaintiffs argued that the notice to the plan employer was effective

on the founder, even though he had no ownership in that business for years. The Court disaeed,
holding that “notice to one” is not necessarily “notice to all” because “an ‘evade or avoid’
determination must be asserted, allowing for the necessary arbitration proceedings that would be
governed entirely by provisions of the MPPAA.

.

.

.“

Kero Leasing Con., 377 F.3d 288, 30 1-02

(3d Cir. 2004).
Plaintiffs argue against following Kero Leasing because, among other reasons, it appears
as though more time elapsed between when the defendant sold his interest in the employer and
when the employer withdrew from the pension plan than in the present case, However, both the
rationale and rule of law established by

and other Third Circuit cases are applicable

and binding. The Kero Leasing Court did not determine whether the transaction was executed in
an attempt to “evade or avoid” liabilit. only that arbitration was the proper venue to litigate that
issue.

The same question is presently before this Court. The purpose of the MPPAA is to

facilitate arbitration to decide certain disputes that arise under ERISA before proceeding to federal
court. See Flying Tiier Line v. Teamsters Pension Trust Fund of Philadelphia, 830 F.2d 1241.
13

1248 (3d Cir, 1987). One of the clearly enumerated disputes under the

purview of

the MPPAA

and subject to arbitration is whether a transaction was executed for the purpose to “evade or avoid”
withdrawal liability. Id. Plaintiffs cannot now rely on the Notice served on Dry Ice to avoid
arbitration with Defendants as mandated by the MPPAA. Accordingly, the arbitration must be
allowed to proceed to determine the “evade or avoid” question first.
IV.

PRELIMINARY INJUNCTION
The Court notes that Plaintiffs’ Motion for Preliminary Injunction appears to seek the same

relief requested in the Complaint. In particular, both the Complaint and Motion for Preliminary
Injunction ask this Court to enjoin the arbitration proceedings. Injunctive relief is an extraordinary
remedy and should only be granted in limited circumstances. Novartis Consumer Health, Inc. v.
Johnson & Johnson-Merck Consumer Pharms. Co., 290 F.3d 578, 586 (3d Cir. 2002). In order to
obtain this extraordinary preliminary relief, the moving party must demonstrate a likelihood of
success on the merits, the probability of irreparable harm, absence of greater harm to the nonmoving party, and that public interest favors granting the injunction.

KOS Pharm., Inc. v.

Andrx Corp., 369 F.3d 700 (3d Cir. 2004); Shire U.S. Inc. v. Barr Labs, Inc., 329 F.3d 348 (3d
Cir. 2003); Hoxworth v. Blinder, Robison & Co., 903 F.2d 186 (3d Cir. 1990). Plaintiffs fail to
show any of these four factors, and therefore the Court denies the Motion for Preliminary
Injunction.
First, Plaintiffs cannot demonstrate a likelihood of success on the merits because, as
discussed at length above, the .1PPAA requires the arbitration to proceed. Therefore, this Court
cannot enjoin the proceedings as Plaintiffs request because arbitration is obligatory.

EUSA
No. CIV.A.

11-3181 JBS, 2011 WL 3651315, at *91o (DNJ. Aug. 18, 2011) (stating the mandatory
14

arbitration of withdrawal liability dispute under the MPPAA foreclosed any likelihood of success
on the merits). Therefore. Plaintiffs cannot show a reasonable probability of success on the merits
because the Court grants Defendants’ Motion to Dismiss.
Plaintiffs argue that they will suffer irreparable harm if forced to arbitrate when they did
not previously agree to do so. (Pis’ Br. in Sup. at 10-1 1, ECF No. 10-1). To support this argument

Plaintiffs rely on PaineWebber Inc. v. Hartmann, 921 F.2d 507. 515 (3d Cir. 1990). overruled on
other grounds by Howsam v. Dean Witter Reynolds, 537 U.S. 79, 85, 123 S. Ct. 588 (2002). The
Hartmann parties disagreed about whether they agreed to binding arbitration as part of a purported
contract. Id. This case is distinguishable from Hartmann because arbitration is mandated by
federal statute, not by agreement of the parties.
Furthermore, Plaintiffs cannot show that resolving certain aspects of this dispute through
arbitration will cause irreparable harm because Dry Ice continues to make its required interim
payments for its withdrawal liability. See EUSA-Allied Acquisition, 2011 WL 3651315, at
11 (D.N.J. Aug. 18, 2011) (stating that “Plaintiff’s apparent ability to make its initial interim
withdrawal payment raises doubts about the immediacy of the harm and whether any such harm
would truly be irreparable.”). As such, no injunction appears necessary to preserve Plaintiffs’
ability to receive the required payments, Because Plaintiffs have failed to establish a reasonable

likelihood of success and irreparable harm. the motion should be denied. See Shire US. Inc. v,
Barr 1.1nc.. 329 F.3d 348 (3d Cir. 2003) (holding the district court did not abuse its discretion
by denying motion for preliminary injunction solely because plaintiff failed to demonstrate

likelihood of success on the merits).
Even if Plaintiffs’ failure to demonstrate the first two factors is not dispositive, the third

and fourth Kos factors used in determining whether to grant preliminary injunctive relief also
15

weigh in favor of denying the motion.

The moving party must demonstrate that granting

preliminary relief will not result in even greater harm to the non-moving party. KOS Pharm., Inc.
v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004). Enjoining or staying the arbitration proceedings
would deny Defendants the speedy and efficient resolution of this matter through mandated
arbitration. See Goldman, Sachs & Co. v. Golden Empire Sch. Fin. Auth., 922 F. Supp. 2d 435,
444 (S.D.N.Y. 2013) affd sub nom, Goldman. Sachs & Co. v. Golden Empire Sch. Fin. Auth., 764
F.3d 210 (2d Cir. 2014). Lastly, Plaintiff must also show that public interest favors enjoining the
arbitration. KOS Pharm., Inc., 369 F.3d at 708. The Third Circuit has recognized “the strong
public and private interest in maintaining an effective grievance/arbitration process to settle
disputes

.

.

.

.“

Dykes v. Se. Pennsylvania Transp. Auth., 68 F.3d 1564, 1572 (3d Cir. 1995)

(quoting Armstrong v. Meyers, 964 F.2d 948, 951(9th Cir. 1992). Plaintiffs have not, therefore,
established that public interest favors enjoining the arbitration.
Plaintiffs have not demonstrated that any of the four Kos factors weigh in favor of granting
the motion for preliminary injunction. A party’s failure to establish any element in its favor renders
a preliminary injunction inappropriate. Nutrasweet Co. v. Vit—Mar Enters., Inc., 176 F.3d 151, 153
(3d Cir. 1999). Therefore, the Court denies the Motion for Preliminary Injunction.
V.

CONCLUSION
For the foregoing reasons, Defendants’ Motion to Dismiss is granted and Plaintiffs’ Motion

for Preliminary Injunction is denied. An appropriate Order accompanies this Opinion.

DATED: March 26, 2015
CLAIRE C. CECCHI, U.S,D.J.

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