The Pavers and Road Builders District Council Welfare Fund, Pension Fund, Annuity Fund, Apprenticeship, Skill Improvement and Safety Fund et al v. J. Pizzirusso Landscaping Corp. et al
Filing
36
ORDER granting in part and denying in part 30 Motion to Dismiss for Failure to State a Claim. Ordered by Magistrate Judge Marilyn D. Go on 5/11/2018. (Go, Marilyn)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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THE PAVERS AND ROAD BUILDERS DISTRICT
COUNCIL WELFARE FUND, et al.,
Plaintiffs,
-against-
MEMORANDUM AND ORDER
14-CV-04186 (MDG)
J. PIZZIRUSSO LANDSCAPING CORP., D.
GANGI CONTRACTING CORP., and D. GANGI
CONTRACTING/J. PIZZIRUSSO LANDSCAPING
JV,
Defendants.
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GO, United States Magistrate Judge:
The plaintiffs, consisting of various employee fringe benefit
funds (named in the Complaint as the Pavers and Road Builders
District Council Welfare Fund, the Pension Fund, the Annuity Fund,
the Apprenticeship, Skill Improvement and Safety Fund, the Local
1010 Apprenticeship, Skill Improvement and Training Fund (the
"Funds");1 Joseph Montelle and Keith Loscalzo, in their fiduciary
capacities as Funds Administrators; and the Highway, Road and
1/
In a Collective Bargaining Agreement (the "CBA") pertinent to
the issues raised in this action, as further described below, the
Funds are more specifically identified as the "Pavers and Road
Builders District Council Pension Fund," the "Pavers and Road
Builders District Council Annuity Fund" and the "Pavers District
Council Apprenticeship, Skill Improvement and Safety Fund."
respectively. Art. X, Sec. 1(a), CBA (DE 32-1) at 23. The CBA
also indicates that as of July 1, 2010, the "Local 1010
Apprenticeship, Skill Improvement and Training Fund [] is
substituted for the Pavers District Council Apprenticeship, Skill
Improvement and Safety Fund in all respects." Id.
Street Construction Laborers Local Union 1010 (the "Union")
(collectively called the "Plaintiffs") bring this action pursuant
Sections 502(a)(3) and 515 of the Employee Retirement Income
Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132(a)(3),2 1145 and
section 301 of the Labor Management Relations Act, 29 U.S.C. § 185
against defendants J. Pizzirusso Landscaping Corp. ("Pizzirusso"),
D. Gangi Contracting Corp. ("Gangi") and D. Gangi Contracting/J.
Pizzirusso Landscaping JV (the "JV").
Plaintiffs assert various
claims for relief seeking to recover unpaid benefit contributions
and unpaid dues checkoffs and contributions allegedly owed under a
collective bargaining agreement.
Defendants Pizzirusso and the JV have moved for judgment on
the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil
Procedure, a motion in which defendant Gangi joins.
See DE 31 at 5
(Mem. of Law in Support of Motion).
BACKGROUND
Except as otherwise noted, the following are facts taken from
the factual allegations in plaintiffs' Complaint ("Compl.") (DE 1),
2/
The claims to enforce the terms of the CBA pursuant to ERISA
are presumably brought only by the Funds and individual fund
administrators. However, the Second Circuit takes a narrow view of
the jurisdiction of district courts over ERISA claims brought under
Section 1132 and has held that because employee benefit plans are
not among the enumerated plaintiffs authorized to bring suit under
Section 1132(a), benefit plans are not proper plaintiffs under the
exclusive jurisdictional grant under Section 1132(e), although the
their administrators or trustees are. Dist. Council 1707 Local 389
Home Care Empt.' Pension & Health & Welfare Funds v. Staghorn, No.
11 C.V. 7911 (PAC), 2013 WL 1223362, at *5–6 (S.D.N.Y. Mar. 25,
2013) (citing Pressroom Unions–Printers League Income Sec. Fund v.
Continental Assur. Co., 700 F.2d 889, 891-93 (2d Cir. 1983)).
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which are accepted as true for purposes of this motion.
See
Ashcroft v. Iqbal, 556 U.S. 662. 678 (2009).
Pertinent Facts
The Funds are multi-employer labor-management trust funds
established and maintained pursuant to various collective
bargaining agreements.
Compl. at ¶ 6.
In July 2012, the Union
entered into the CBA with the General Contractors Association of
New York, Inc. ("GCA") and employers who appointed the GCA as their
agent to negotiate the CBA, which covered the period from July 1,
2012 to June 30, 2015).
Id. at ¶ 14; see also DE 32-1 (the CBA,
which is entitled "Agreement Between Members of the General
Contractors Association and the Highway, Road and Street
Construction Laborers Local Union 1010 of the District Council of
Pavers and Road Builders of the Laborers' International Union of
North America, AFL-CIO") at 1.3
Under the CBA, employers
performing covered work within the jurisdiction of the CBA are
required to make fringe benefit contributions to the Funds on
behalf of employees performing certain specified work.
¶¶ 16-17; CBA at Art. II, Sec. 2.
Compl. at
In addition, employers are
required to deduct union dues from the wages of covered employees
and remit those dues to the Union.
Compl. at ¶ 19.
Employers are
also required to submit their books and records for audit to
3/
The CBA, which plaintiffs attached as an Exhibit to their
opposing memorandum (DE 31-1), may be considered by the Court since
plaintiffs expressly incorporated it by reference in the Compl.
See Compl. at ¶ 14; New York Life Ins. Co. v. United States, 724
F.3d 256, 258 n. 1 (2d Cir. 2013) (citation omitted).
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determine whether proper contributions have been remitted.
Id. at
¶ 20.
Defendant Gangi is a member of the GCA and has agreed to the
terms of the CBA.
Compl. at ¶ 13, 15; DE 20 (Gangi's Answer) at
¶ 13; see also CBA, Art. II, Sec. 2.
Gangi is an employer with
offices at 2642 Coyle Street, Brooklyn, NY.
Compl. at ¶ 10.
The
defendant JV is an unincorporated partnership between Gangi and
Pizzirusso.
Id. at ¶ 12.
Pizzirusso and the JV have offices in
Brooklyn at 2158 East 72nd Street and 2300 East 69th Street,
respectively.
Id.
at ¶¶ 11, 12; but see DE 15 at ¶ 11 (Pizzirusso
Answer stating it has offices at 7104 Avenue W, Brooklyn).
The CBA "covers work performed by the Employer in New York
City on Heavy Construction, Site and Grounds Improvement, Utility,
Paving and Road Building Work," including "Utility, Paving,
Highway, Road and Street Construction Work [] on ... parks, plazas,
malls, housing projects, playgrounds ..."
Art. VII, Sec. 1.
CBA, Art. II, Sec. 2 and
Both Gangi and the JV perform paving work and
road building work in New York City, which plaintiffs contend is
work within the jurisdiction of the CBA.
Compl. at ¶ 33.
In
performing this work, both entities "use[] the same kind of
equipment and the same heavy and highway construction laborers."
Id.
Plaintiffs allege on information and belief4 that Gangi has
4/
Although this and certain other allegations are made "upon
information and belief," a court is not precluded from considering
such allegations and may even find them "sufficient to show an
entitlement to relief." Tr. of Mosaic & Terrazzo Welfare Pension,
Annuity, & Vacation Funds v. Cont'l Floors, Inc., No. 13 CV 1739,
(continued...)
-4-
possession, custody, control and/or a right to access the books and
records of the JV.
Id. at ¶ 43.
In August 2012, the JV began performing a paths and driveway
reconstruction project in Forest Park, Queens for the New York City
Parks Department (the "Forest Park Project").
Id. at ¶ 26; see
also DE 15 at ¶ 26 (Pizzirusso and JV Answer, admitting that "it
performed certain construction work" at Forest Park).
The JV is
also engaged in reconstructing the landscaped malls along Ocean
Parkway in Brooklyn and the nearby Colonel David Marcus Playground
for the New York City Parks Department (the "Ocean Parkway
Project").
Id. at ¶ 27; see also DE 15 at ¶ 27 (admitting that the
JV was contracted to perform work at Ocean Parkway and the
Playground).
Claims Asserted
Although the JV is not a signatory to the CBA, plaintiffs
contend that the JV is obligated to comply with the CBA for work
performed on the two projects, because Gangi's interest in the JV
triggers application of Article IX, Section 1(d) of the CBA:
The Employer stipulates that any firm engaging in Paving
and Road Building Work in which it has or acquires a
financial interest, shall be bound by all of the terms
and conditions of this Agreement. The Employer agrees
that if it forms or acquires an interest (other than
4/
(...continued)
2013 WL 5637492, at *6 (E.D.N.Y. Oct. 15, 2013) (citing Arista
Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010); see also
Trs. of Laborers Union Loc. No. 1298 of Nassau & Suffolk Ctys. Ben.
Funds v. A to E, Inc., 64 F. Supp. 3d 435, 440–41 (E.D.N.Y. 2014)
(the fact that some of the allegations are made upon information
and belief" does not render them implausible).
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financial interest) in an entity that performs work that
is covered by this Agreement, the Employer will give
notice to the Union of the formation or acquisition of
the entity and that the entity will be covered under this
Agreement.
CBA, Art. IX, § 1(d); Compl. at ¶¶ 24-25, 29-30.
Contending that defendants are liable as employers under the
CBA for work performed by the JV on the Forest Park and Ocean
Parkway Projects because of Art. IX, § 1(d) of the CBA, Plaintiffs
assert the following claims in their Complaint:
Claims 1-5 against
Gangi, the JV or both for failing to comply to permit or to
cooperate with an audit and to make requisite payments; Claims 6 to
9 against the JV for failing to pay fringe benefit or trust
contributions and union dues; Claim 11 against the JV for failing
to post a bond required by the CBA; Claim 14 against both Gangi and
Pizzirusso, as members of the JV, for the JV's unpaid obligations
under the CBA; and Claim 16 against only Gangi.
As alternative theories for relief to bind the JV as a nonsignatory to the CBA, plaintiffs assert as their Fifteenth Claim
for Relief that the JV is an alter ego or successor of Gangi, or
that the JV is a single employer with Gangi.
Id. at ¶¶ 31, 32.
Plaintiffs also plead as three separate claims the following
requests for relief, which are also repeated in their prayer for
relief:
Claim 10 for payment of damages for interest, statutory
damages, court costs and attorneys' fees; Claims 12 and 13 for
injunctive relief.
Compare Compl. ¶¶ 83-86, 92-97, 99-103 with
Compl. at 22-23 (Prayer for Relief ¶¶ g - k).
This Court views
these "claims" as "demands for judgment" under Rule 8(a)(3) of
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Federal Rules of Civil Procedure, rather than as claims for relief
under Rule 8(a)(2).
See Charles Alan Wright & Arthur R. Miller,
Fed. Prac. & Proc. Civ. § 1255 (3d ed.) ("The sufficiency of a
pleading is tested by the Rule 8(a)(2) statement of the claim for
relief and the demand for judgment is not considered part of the
claim for" determining motions challenging the sufficiency of
claims alleged in a complaint).
Cf. Liberty Mut. Ins. Co. v.
Wetzel, 424 U.S. 737, 742-43 (1976) (a complaint asserting only one
legal right, even if seeking multiple remedies for an alleged
violation of that right, states a single claim for relief).
DISCUSSION
I.
Rule 12(c) Standard
The standard for determining a Rule 12(c) motion for judgment
on the pleadings is identical to that of a Rule 12(b)(6) motion for
failure to state a claim.
See Hayden v. Paterson, 594 F.3d 150,
160 (2d Cir. 2010); Patel v. Contemporary Classics of Beverly
Hills, 259 F.3d 123, 126 (2d Cir. 2001).
The court must accept all
factual allegations in the complaint as true and draw all
reasonable inferences in the plaintiff’s favor.
Wilson v. Merrill
Lynch & Co., Inc., 671 F.3d 120, 128 (2d Cir. 2011).
"Threadbare
recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice," and pleadings that "are no
more than conclusions . . . are not entitled to the assumption of
truth."
Iqbal 556 U.S. at 678-79.
As to factual allegations that
are well-pled, the court must determine whether they "plausibly
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give rise to an entitlement to relief."
Id., 556 U.S. at 679.
After assessing the allegations as a whole, "courts may draw a
reasonable inference of liability when the facts alleged are
suggestive of, rather than merely consistent with, a finding of
misconduct."
Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic
Med. Centers Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d
705, 717–21 (2d Cir. 2013) (quoting N.J. Carpenters Health Fund v.
Royal Bank of Scot. Grp., PLC, 709 F.3d 109, 121 (2d Cir. 2013)).
In resolving a motion under Rule 12(c), a court may consider
"'the complaint, the answer, any written documents attached to
them, and any matter of which the court can take judicial notice
for the factual background of the case.'"
L–7 Designs, Inc. v. Old
Navy, LLC, 647 F.3d 419, 422 (2d Cir. 2011) (quoting Roberts v.
Babkiewicz, 582 F.3d 418, 419 (2d Cir. 2009)).
II.
Anti-dual Shop Clause
Defendants argue that the breach of contract claims based on
Art. IX, § 1(d) of the CBA must be dismissed because that clause is
facially invalid and is unenforceable under the "hot cargo"
prohibition of section 8(e) of the National Labor Relations Act
("NLRA").
Section 8(e) provides:
It shall be an unfair labor practice for any labor
organization and any employer to enter into any contract
or agreement, express or implied, whereby such employer
ceases or refrains or agrees to cease or refrain from
handling, using selling, transporting or otherwise
dealing in any of the products of any other employer, or
to cease doing business with any other person, and any
contract or agreement entered into heretofore or
hereafter containing such an agreement shall be to such
extent unenforceable and void . . . .
-8-
29 U.S.C. § 158(e).
This provision, which was enacted as part of the LandrumGriffin Act of 1959, "outlaws 'hot cargo' clauses, or agreements
prohibiting an employer from doing business with any firm not
affiliated with the contracting union."
Conn. Ironworkers Emp'rs
Assoc., Inc. v. New Eng. Reg'l Council of Carpenters, 869 F.3d 92,
102 (2d Cir. 2017).
The Supreme Court in Connell Const. Co. v.
Plumbers & Steamfitters Loc. Union No. 100, 421 U.S. 616 (1975),
noted, after examination of the legislative history of the
provision, that § 8(e) is intended to invalidate only those
contract clauses with secondary objectives, while those with a
primary purpose, such as work preservation, remained lawful.
See
id. at 629-31, 637–45; see also Sheet Metal Div. of Capitol Dist.
Sheet Metal, Roofing & Air Conditioning Contractors Ass'n, Inc. v.
Loc, 38 of Sheet Metal Workers Int'l Ass'n, 208 F.3d 18, 23 (2d
Cir. 2000) (the section prohibits agreements that have the
objective of affecting the business of secondary or non-contracting
employers).
Agreements "are lawful under § 8(e) [if they] are '(1) aimed
at preserving work that union-represented employees in the
bargaining unit traditionally perform, and (2) directed at work
over which the contracting employer has control.'"
Sheet Metal,
208 F.3d at 22-23 (quoting Bermuda Container Line Ltd. v. Int'l
Longshoremen's Ass'n, 192 F.3d 250, 256 (2d Cir. 1999)); see also
NLRB v. Int'l Longshoremen's Ass'n, 447 U.S. 490, 504 (1980).
The
rationale for the second prong is that if the contracting employer
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does not have the power to assign the work, it is reasonable to
infer that the agreement has the secondary objective to influence
the person or entity that has such power.
Ass'n, 447 U.S. at 504-05.
Int'l Longshoremen's
A properly drafted "anti-dual shop"
clause is designed to "prevent the signatory employer from
diverting unit work to an entity not formally bound by the
collective-bargaining agreement while continuing to control and
profit from the performance of the work."
Rd. Sprinkler Fitters,
United Ass'n of Journeymen & Apprentices of the Plumbing & Pipe
Fitting Indus. of the U.S. & Canada, AFL CIO, 357 N.L.R.B. 2140,
2141 (2011).
Such an anti-dual shop clause serves the purpose of
prohibiting a unionized employer from affiliating with a nonunion
company in a "double-breasting arrangement" in which a unionized
employer forms, acquires, or maintains a separately managed
nonunion company that performs work of the same type as that
performed by the affiliated union company.
Id.; Carpenters Dist.
Council of Northeast Ohio (Alessio Constr.), 310 N.L.R.B. 1023
(1993).
The determination of whether an agreement is a lawful work
preservation agreement or has an impermissible secondary objective
requires examination of:
[W]hether, under all the surrounding circumstances, the
Union's objective was preservation of work for the
primary employer's employees, or whether the agreements
and boycott were tactically calculated to satisfy union
objectives elsewhere. . . . The touchstone is whether
the agreement or its maintenance is addressed to the
labor relations of the contracting employer vis-a-vis his
own employees.
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Sheet Metal, 208 F.3d at 23 (quoting National Woodwork Mfrs. Assn.,
386 U.S. 612, 644—45 (1967)).
Where the meaning of a disputed
contract clause is plain, the Court may determine its validity
under § 8(e) without resorting to extrinsic evidence.
See R.M.
Perlman, Inc. v. New York Coat, Suit, Dresses, Rainwear & Allied
Workers' Union Local 89-22-1, I.L.G.W.U., AFL-CIO, 33 F.3d 145, 154
(2d Cir. 1994).
The wording of Art. IX, § 1(d) of the CBA plainly provides
that any entity formed by a covered employer or in which a covered
employer holds a financial or any other interest is bound by the
terms of the CBA, if the entity performs the covered work specified
by the CBA.
Clearly, the clause operates to extend the CBA to the
employees of a secondary employer, such as the JV, and ensure that
employers comply with the terms of the agreement.
The clause is
not confined to binding entities over which Gangi or any employer
has the right of control.
All that is required for the CBA to
apply to a secondary employer is for Gangi or a covered employer
have any interest, whether controlling or not, in the non-union
employer.
This Court thus finds that the provision is facially
invalid and violates § 8(e).
The National Labor Relations Board (the "Board") has found
that contract provisions similar to Art. IX, § 1(d) of the CBA
violated § 8(e).
In Alessio Constr., the Board construed a
provision requiring that if the "partners, stock holders or
beneficial owners" of the contracting employer "form or participate
in the formation of another company," that company would be covered
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by the collective bargaining agreement.
310 N.L.R.B. at 1025-26.
In finding that anti-dual shop clause unlawful, the Board held that
the contract clause was calculated to cause Alessio to sever its
relationship with affiliated firms that sought to remain nonunion
and to affect labor relations between the nonunion affiliated
companies and their employees over which Alessio did not control.
See id. at 1026.
Similarly, the Third Circuit in NLRB v. Cent. PA
Reg. Council of Carpenters, 352 F.3d 831 (3d Cir. 2003) affirmed
the ruling of the Board that the proviso did not save a broad antidual shop clause in a collective bargaining agreement, which was
"not limited to the 'contracting or subcontracting of work to be
done at the site of construction,' but, instead, purports to cover
all construction work done by subsidiaries and joint ventures of
the company").
Id. at 836 (quoting Alessio).
In Local 520, Int'l Union of Operating Eng'rs, AFL-CIO
(Massman Constr. Co.), the relevant contract provision stated that
the contracting employer must require as a condition for entering
into any joint venture or joint work undertaking that all parties
agree to be bound by the agreement.
327 N.L.R.B. 1257 n.2 (1999).
There, the Board found that the joint venture provision violated
§ 8(e) since it would affect the signatory employer's business
relationships under circumstances in which the signatory employer
had no power to control the work of the joint venture.
See id. at
1258, 1263.
In the Blasters, Drillrunners and Miners Union, Local 29 of
the Laborers Int'l Union of N. Am. AFL-CIO (RWKS Comstock), the
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Board ordered the Union to cease and desist from enforcing a
provision of its collective bargaining agreement that provided that
the contracting employer agreed that any entity "in which it has or
acquires a financial interest" or "any venture with other
contractors or operators" in which it participates must comply with
the terms of the collective bargaining agreement.
(2005).
344 N.L.R.B. 751
The administrative law judge found that the clause was
illegal "because it does not limit the provision to those
situations where there is both common ownership and control or
where there is a diversion of struck work."
Id. at 754.
Moreover, Art. IX, § 1(d) of the CBA is not limited to joint
ventures.5
Even if it the clause were limited to joint ventures,
such a clause would also be invalid because it would apply even
where the signatory employer does not control the work of the joint
venture, as discussed.
See Massman, 327 N.L.R.B. at 1258, 1263.
Cf. Rd. Sprinkler, 357 N.L.R.B. at 2142 (finding that a provision
that bound non-signatories that "are established or maintained by a
signatory employer . . . indicates that the signatory employer
exercises control over covered operations").
Although plaintiffs
are correct that the contract does not expressly require Gangi to
cease doing business with any entity, the purpose of such contract
clauses is to force a signatory to sever its affiliate relationship
with a non-signatory that does not want to abide by the terms of a
5/
The case cited by plaintiffs for the proposition that a joint
venture clause is a lawful accretion clause is not applicable since
the court did not address § 8(e). See Mason Tenders Dist. Council
Welfare Fund v. Kan Klean Indus., Inc., No. 92 Civ. 7688, 1996 WL
447751, 1996 U.S. Dist. LEXIS 11295 (S.D.N.Y. 1996).
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collective bargaining agreement.
1026.
See Alessio, 310 N.L.R.B. at
Such a provision is "unenforceable and void."
See 29 U.S.C.
§ 158(e).
Plaintiffs argue that even if the contract provision violates
§ 8(e), the "construction industry proviso" exempts such agreements
made in the construction industry.
The construction industry
proviso states that "nothing in § 8(e) shall apply to an agreement
between a labor organization and an employer in the construction
industry relating to the contracting or subcontracting of work to
be done at the site of construction, alteration, painting, or
repair of a building, structure, or other work."
§ 158(e).
29 U.S.C.
While plaintiffs are correct that certain agreements
made in the construction industry are exempt from the prohibition
of "hot cargo" agreements in § 8(e), Conn. Ironworkers, 869 F.3d at
102, plaintiffs cite no authority to support their claim that the
proviso applies to the circumstances here.
The Supreme Court has recognized that Congress intended the
construction industry proviso "to preserve the status quo"
regarding agreements between unions and employers in the
construction industry.
See Woelke & Romero Framing, Inc. v. NLRB,
456 U.S. 645, 657 (1982).
"[T]he test for the permissibility of
any particular practice under the construction industry proviso is
whether or not the practice is consistent with 'Congress'
perceptions regarding the status quo in the construction industry
[in 1959].'"
Local 210, Laborers' Int'l Union of N. Am. v. Labor
Relations Div. Associated General Contractors of Am., 844 F.2d 69,
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75 (2d Cir. 1988) (quoting Woelke, 456 U.S. at 657).
Those
practices that were not part of the status quo in the construction
industry in 1959 are not protected by the construction industry
proviso.
Id. at 76; see Woelke, 456 U.S. at 657.
Consistent with
"traditional notions" of statutory construction and Congress'
purpose, the National Labor Relations Board has cautioned against
an expansive reading of the proviso, but, instead, has limited
protection to only "those subjects expressly exempted by the
proviso."
Spectacor Mgmt. Grp. v. NLRB, 320 F.3d 385, 395–96 (3d
Cir. 2003) (citations omitted).
As the Supreme Court made clear in Connell Constr., "Congress
intended the construction industry proviso to apply only to
agreements 'in the context of collective-bargaining relationships
and ... possibly to common-situs relationships on particular
jobsites as well.'"
Conn. Ironworkers, 869 F.3d at 102–03.
Thus,
"Congress limited the construction-industry proviso to that single
situation, allowing subcontracting agreements only in relation to
work done on a jobsite."
Connell Constr., 421 U.S. at 630.
For
example, in Woelke, the Supreme Court found that Congress believed
that contract clauses in which an employer agreed not to
subcontract work on a construction site to a nonunion employer were
part of the pattern of collective bargaining at the time the
statute was enacted in 1959 and were therefore permissible under
the proviso.
Id. at 655-660.
In contrast, the contract provision at issue here is not a
subcontracting clause and binds a non-signatory employer that is
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simply affiliated with a signatory employer through common
ownership to the CBA.
The Board has found that similar contract
clauses are not protected by the construction industry proviso,
confirming the finding of the Supreme Court in Connell Constr. that
the proviso applies only in the subcontracting situation.
The
Board's interpretation of the proviso is entitled to considerable
deference.
See R.M. Perlman, 33 F.3d at 153; see also Elec.
Contractors, Inc. v. NLRB, 245 F.3d 109, 116 (2d Cir. 2001)
(quoting NLRB v. Loc. Union No. 103, Int'l Assoc. of Bridge,
Structural & Ornamental Iron Workers, 434 U.S. 335, 350 (1978) that
the Board's interpretation of NLRA is "entitled to considerable
deference" when it "represents a defensible construction of the
statute").
In Alessio, the Board found that "double breasting
arrangements" were not an industry practice in 1959, and as a
result, anti-dual shop clauses were not part of the pattern of
collective bargaining in the construction industry at the time.
See 310 N.L.R.B. at 1027.
Construing the construction industry
proviso narrowly and finding that Congress could not have intended
to protect anti-dual shop clauses in the proviso, the Board held
that the anti-dual shop clause was not protected by the proviso.
See id. at 1029; see also RWKS Comstock, 344 N.L.R.B. at 751 n.2
(relying on Alessio to find that an anti-dual shop clause "is not
saved by the construction industry proviso").
Similarly, in
Massman, the Board found that a joint venture clause like the one
at issue here was not part of the pattern of collective bargaining
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in the construction industry at the time of the proviso's
enactment.
See 327 N.L.R.B. at 1258.
Accordingly, the Board held
that the disputed joint venture clause violated § 8(e) and was not
protected by the construction industry proviso.
Id.
This Court finds persuasive the Board's conclusion in Alessio
and Massman that clauses like the one at issue here, which extend
obligations under a collective bargaining agreement to joint
ventures, were not part of the pattern of collective bargaining in
the construction industry when the proviso was enacted.
Unlike the
subcontracting clauses discussed in Woelke, the anti-dual shop
clause here restricts Gangi's relationships with joint venture
partners and entities under common ownership, rather than just
subcontractors.
The horizontal business relationships targeted by
the joint venture clause here were not intended by Congress to be
encompassed within the construction industry proviso.
See Alessio,
310 N.L.R.B. at 1029; see also Cent. Pa., 352 F.3d at 836
(affirming Board decision that subcontracting and joint venture
clause was not protected by construction industry proviso).
Plaintiffs also contend that defendants' arguments regarding
§ 8(e) is better addressed in a proceeding before the Board.
However, section 301 provides for district court jurisdiction over
suits for violation of collective bargaining agreements and has
been interpreted as permitting district court review of 8(e)
violations.
Conn. Ironworkers, 869 F.3d at 104; see also Kaiser
Steel Corp. v. Mullins, 455 U.S. 72, 86 (1982) (holding in a case
brought under section 301, that a district court must entertain a
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§ 8(e) defense when it is "raised by a party which § 8(e) was
designed to protect, and where the defense is not directed to a
collateral matter but to the portion of the contract for which
enforcement is sought").
Since the construction industry proviso does not operate to
exempt the CBA clause at issue here from the prohibition in § 8(e),
this Court grants the defendants' motions for judgment on the
pleading and dismisses all the claims based on breach of the CBA
arising from application of Art. IX, § 1(d) of that agreement.6
III. Alter Ego/Single Employer/Successor
Defendants move to dismiss the Fifteenth Claim for Relief on
the ground that plaintiffs do not adequately plead that the JV is
an alter ego or successor of defendant Gangi and/or that they
collectively constitute a single employer.
6/
Defendants argue that
Defendants also argue that the proviso exempts work only on
"a building, structure, or other work," and does not extend to the
work covered by the CBA, which pertains only to the "edge of the
building structure." DE 33 at 5 (Reply Mem.). However, the cases
cited by defendants concern delivery of materials to a construction
site, which the Board and courts have found, in light of the
legislative history, is work that does not fall within the so
called "on-site" proviso to Section 8(e). Int'l Bhd. of Teamsters,
Loc. 251, 356 N.L.R.B. 1061, 1067 (2011); see also NLRB v. Int'l
Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am., Local
294, 342 F.2d 18, 21–22 (2d Cir. 1965). Rather, the Board and
courts have applied the proviso to work on highways, as well as to
structures. United Rentals Highway Techs., Inc. v. Indiana
Constructors, Inc., 518 F.3d 526, 528 (7th Cir. 2008) (citing
Spectacor Mgmt., 320 F.3d at 395) (noting proviso applies to
construction of streets, sewers, gutters, and utility
installations); Int'l Union of Operating Eng'rs, Loc. Union No. 12,
AFL–CIO, 131 N.L.R.B. 520, 526–27 (1961) (noting that when enacting
the proviso, Congress did not intend to exclude "such projects as
the Federal highway program, pipelines, and tunnels").
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the relevant allegations are conclusory and lack sufficient
supporting facts.
Under the single employer doctrine, "[a] collective bargaining
agreement binding on one employer may be enforced against a nonsignatory employer if (1) the two employers constitute a single
employer and (2) the employees of the companies constitute a single
appropriate bargaining unit."
United Union of Roofers, 547 Fed.
Appx. at 19; see also Brown v. Sandimo Materials, 250 F.3d 120, 128
n.2 (2d Cir. 2001).
"Separate companies are considered a 'single
employer' if they are part of a single integrated enterprise."
Lihli Fashions Corp. v. NLRB, 80 F.3d 743, 747 (2d Cir. 1996); see
Brown, 250 F.3d at 128 n.2.
In determining whether two entities
constitute a single employer, a court considers four factors, none
of which are controlling or need to be present: "(1) interrelations
of operations, (2) common management, (3) centralized control of
labor functions, and (4) common ownership."
Brown, 250 F.3d at 128
n.2; see United Union of Roofers, 574 Fed. App'x at 19.
Family
connections and the common use of facilities and equipment are also
relevant.
Brown, 250 F.3d at 128 n.2; see United Union of Roofers,
574 Fed. App'x at 19.
"Ultimately, single employer status depends
on all the circumstances of the case and is characterized by
absence of an arm's length relationship among unintegrated
companies."
Lihli, 80 F.3d at 747.
Factors to consider in
determining whether the defendants' employees constitute a single
bargaining unit include "'bargaining history, operational
integration, geographic proximity, common supervision, similarity
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of job functions and degree of employee interchange.'"
Brown, 250
F.3d at 128 n.2 (quoting Brown v. Dominic Prisco Transport, Inc.,
CV–95–1121, 1997 WL 1093463, at *3 (E.D.N.Y. 1997)).
Although the alter ego doctrine may also bind a non-signatory
to an agreement, it "is conceptually distinct" from the single
employer/single unit doctrine. Truck Drivers Loc. Union No. 807 v.
Reg'l Imp. & Exp. Trucking, 944 F.2d 1037, 1046 (2d Cir. 1991).
"The purpose of the alter ego doctrine in the ERISA context is to
prevent an employer from evading its obligations under the labor
laws 'through a sham transaction or technical change in
operations.'"
Ret. Plan of UNITE HERE Nat'l Ret. Fund v. Kombassan
Holding A.S., 629 F.3d 282, 288 (2d Cir. 2010) (quoting Newspaper
Guild of N.Y., Loc. No. 3 of the Newspaper Guild, AFL–CIO
v. NLRB, 261 F.3d 291, 298 (2d Cir. 2001)).
"The hallmarks of the
alter ego doctrine include whether the two enterprises have
substantially identical management, business purpose, operation,
equipment, customers, supervision, and ownership."
Id.
Although
the alter ego doctrine is often applied in situations involving
successor entities, it also applies to parallel companies.
See id.
The determination that an entity is an alter ego "signifies that,
for all relevant purposes, the non-signatory is legally equivalent
to the signatory and is itself a party to the [collective
bargaining agreement]."
Loc. Union No. 38, Sheet Metal Workers'
Int'l Ass'n, AFL-CIO v. Custom Air Sys., Inc., 357 F.3d 266, 268
(2d Cir. 2004).
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Contrary to defendants' argument, plaintiffs made allegations
in the Complaint that are factual, rather than conclusory.
Plaintiffs allege that the JV is "an unincorporated partnership
between Gangi and Pizzirusso doing business in the State of New
York ..."
Compl. at ¶ 12.7
Although this bare allegation does not
describe the nature of the relationship between that Gangi and
Pizzirusso, it is sufficient to support an inference, in light of
other allegations in the complaint regarding identical work
performed and use of the same workers, that these two defendants
had an agreement to create a joint venture.8
Plaintiffs further allege that all the defendants do business
in New York and have principal places of business in Brooklyn, New
York.
Id. at ¶¶ 10-12.
Although, as defendants point out, the
defendants have different business addresses, this Court takes
judicial notice of the fact that the business addresses of the
defendants are not far from each other in the southern part of
7/
This Court accepts the allegations in the Compl. regarding the
JV, but notes that the two defendants have markedly different
responses to the allegation -- the JV and Pizzirusso defendants
admit that the JV is an unincorporated partnership that performed
or was contracted to perform work, while Gangi denies all
allegations regarding the JV. Compare DE 15 (Answer of Pizzirusso
and JV) at ¶¶ 12, 26, 27 with DE 20 (Answer of Gangi) ¶¶ 12, 26,
27.
8/
Under New York law, "'[n]o particular form of expression is
required to create ... (a joint venture) agreement apart from the
requirements generally applicable to simple contracts." Yonofsky v.
Wernick, 362 F.Supp. 1005, 1025 (S.D.N.Y. 1973) (quoting Wooten v.
Marshall, 153 F.Supp. 759, 763 (S.D.N.Y.1957)); see also Canet v.
Gooch Ware Travelstead, 917 F. Supp. 969, 988 (E.D.N.Y. 1996).
Because the "statute of frauds is generally inapplicable to a joint
venture agreement[,] ... an agreement may be inferred from the
conduct of the parties in performance of the joint venture."
Chalmers v. Eaton Corp., 71 A.D.2d 721, 722 (1979).
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Brooklyn.
Plaintiffs' allegation that the JV "listed its address
as a shop yard," suggesting that administrative operations may be
elsewhere.
Id. at ¶ 12.
Plaintiffs further allege that Gangi and the JV have "both
performed work within the jurisdiction of the [CBA and} use[] the
same kind of equipment and the same heavy and highway construction
laborers."
Id. at ¶ 33.
In fact, plaintiffs allege that the JV
performed work on a project in Queens and is involved in one in
Brooklyn which includes paving and road building work, which
clearly is within the coverage of the CBA, as plaintiffs allege.
Id. at ¶ 26-28, 60-61.
In addition, Plaintiffs allege that Gangi
has possession, custody and control and/or a right of access to the
books and records of the JV.
Id. at ¶ 43.
The allegations that
Gangi has possession or a right of access to the books of the JV,
that the two entities "share substantially the same business
purpose" in the same geographical area, and that they use the same
employees demonstrates some degree of interrelationship of
operations.
See Finkel v. Frattarelli Bros., Inc., No. 05 Civ.
1551, 2008 WL 2483291, at *10
(E.D.N.Y. June 17, 2008) ("[b]oth
Podesta Trucking and Frattarelli Brothers are in the business of
picking up construction materials from New York City job sites");
LaBarbera v. Cretty Enterprises, Inc., Nos. 03 Civ. 6112,
04Civ.5178, 2007 WL 4232765, at *5 (E.D.N.Y. Nov. 28, 2007); cf.
Lihli Fashions, 80 F.3d at 749 (reversing NLRB finding of alter
egos where companies did not have same business purpose).
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Although there are no facts alleged in the complaint regarding
centralized control of labor relations, joint control over hiring
or firing decisions, the allegation that the JV and Gangi employer
used the same employees weighs in favor of a finding of centralized
control of labor relations.
See Bourgal v. Robco Contracting
Enters., Ltd., 969 F. Supp. 854, 864 (E.D.N.Y. 1997) (finding that
there was sufficient evidence of centralized labor relations in
part because "the corporate defendants employed the same truck
drivers" in three related companies owned by husband and wife).
Tellingly, since Gangi admits in its answer that it performed work
on the Forest Park Project and was contracted to perform work on
the Ocean Parkway Project, DE 20 (Gangi Answer) at ¶¶ 26, 27, the
allegations support that inference that Gangi was present at the
same two projects as the JV and that Gangi may have had some sort
of arrangement for common operations and joint management of the
business necessary for a joint venture.
See USAirways Group, Inc.
v. British Airways PLC, 989 F. Supp. 482, 492 (S.D.N.Y. 1997).
For the same reasons, the allegations concerning operational
integration, geographical proximity, and common employees suffice
to establish that the two entities constitute a single bargaining
unit.
See LaBarbera v. C. Volante Corp., 164 F. Supp. 2d 321, 326
(E.D.N.Y. 2001) (finding an appropriate bargaining unit because "it
is undisputed that the companies exchanged employees . . . and the
employees performed the same job of driving trucks"); Bourgal, 969
F. Supp. at 863 ("contributions sought are for the same job
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classification – truck driver - and for the same type of work driving a dump truck to transport excavated material").
Therefore, while the allegations here are thin, I follow the
reasoning of many other courts in finding that such allegations
sufficient to state a claim against Gangi and the JV under an alter
ego or single employer theory.
See Ferrara v. Smithtown Trucking
Co., Inc., 29 F. Supp. 3d 274, 283-85 (E.D.N.Y. 2014) (finding that
alter ego and single employer allegations would survive motion to
dismiss); Trs. of Laborers Union Local No. 1289 of Nassau and
Suffolk Counties Ben. Funds v. A to E, Inc., 64 F. Supp. 3d 435,
440 (S.D.N.Y. 2014) (finding "somewhat sparse" allegations state a
plausible claim of alter ego or single employer); Trs. of Empire
State Carpenters Annuity v. John J. Paulsey, Inc., No. 13–CV–1629,
2014 WL 2711914, at *6 (E.D.N.Y. 2014) (finding that plaintiffs
alleged enough to survive motion to dismiss where allegations
"track relevant factors"); Trs. of Empire State Carpenters Annuity,
Apprenticeship v. Syracuse Floor Sys., Inc., 2013 WL 7390601, at
*5-*6 (E.D.N.Y. Dec. 16, 2013) ("allegations in the Complaint,
although lean, are sufficient to state a plausible claim" for alter
ego or single employer); Trs. of Hollow Metal Trust Fund v. FHA
Firedoor Corp., No. CV 13–1509, 2013 WL 1809673, at *4 (S.D.N.Y.
Apr. 30, 2013) (denying motion to dismiss where plaintiffs
"summarily pleaded each of" the factors of the alter ego test);
Cont'l Floors, Inc., 2013 WL 5637492 ("weight of authority compels
the conclusion taht the allegations in the Complaint, although
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lean, are sufficient"); Ferrara v. Oakfield Leasing Inc., 904 F.
Supp. 2d 249, 265 (E.D.N.Y. 2012).
To establish successor liability, plaintiffs must show that
the JV had notice of its predecessor's liability under the CBA and
a "sufficient continuity of identity" exists between the two
companies."
Stotter Div. of Graduate Plastics Co. v. Dist. 65,
UAW, 991 F.2d 997, 1002-03 (2d Cir. 1993).
This determination is
"primarily factual in nature and is based upon the totality of the
circumstances of a given situation . . . and whether the new
company has acquired substantial assets of its predecessor and
continued, without interruption or substantial change, the
predecessor's business operations."
Fall River Dyeing & Finishing
Corp. v. NLRB, 482 U.S. 27, 43 (1987).
Plaintiffs have failed to allege any facts that would support
a claim for successor liability.
There are no allegations in the
complaint that the JV is the result of a merger, acquisition or
consolidation.
In addition, plaintiffs do not allege that the JV
had notice of Gangi's liability under the CBA.
Likewise,
plaintiffs have not alleged that the JV acquired Gangi's assets or
that the JV continued without substantial change Gangi's business.
Therefore, defendants' motion is granted on the issue of successor
liability.
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CONCLUSION
For the foregoing reasons, defendants' motion is granted in
part and denied in part.
All of the claims
are dismissed without
prejudice, except for the claims of alter ego or single employer
liability asserted in the Fifteenth Claim.
SO ORDERED.
Dated:
Brooklyn, New York
May 11, 2018
/s/
MARILYN D. GO
UNITED STATES MAGISTRATE JUDGE
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