Ferrara et al v. Smithtown Trucking Co., Inc.

Filing 28

ORDER terminating 26 Motion to Strike ; granting 16 Motion for Leave to File. For the reasons set forth herein, the Court grants plaintiffs motion to amend to join Concrete and Realty as defendants. Plaintiffs shall file and serve the amended complaint within fourteen (14) days. SO ORDERED. Ordered by Judge Joseph F. Bianco on 7/10/2014. (Chipev, George)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 13-CV-3006 (JFB)(ARL)
_____________________

JOSEPH A. FERRARA, SR., FRANK H. FINKEL, MARC HERBST, DENISE RICHARDSON,
THOMAS F. CORBETT, THOMAS GESUALDI, LOUIS BISIGNANO, ANTHONY D’AQUILA,
MICHAEL O’TOOLE, AND BENEDETTO UMBRA, AS TRUSTEES AND FIDUCIARIES OF
THE LOCAL 282 PENSION TRUST FUND,
Plaintiffs,
VERSUS

SMITHTOWN TRUCKING CO., INC.,
Defendant.
___________________
MEMORANDUM AND ORDER
July 10, 2014
___________________

JOSEPH F. BIANCO, District Judge:
The Trustees (“plaintiffs” or “Trustees”)
of the Local 282 Pension Trust Fund (the
“Fund”) bring this action for withdrawal
liability against defendant Smithtown
Trucking Co., Inc. (“defendant” or
“Trucking”) pursuant to Sections 502, 515,
4212, and 4301 of the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29
U.S.C. §§ 1001 et seq. Plaintiffs presently
move to amend pursuant to Federal Rules of
Civil Procedure 15(a), 20, and 21, to join
Smithtown Concrete Products Corp.
(“Concrete”) and Smithtown Realty Corp.
(“Realty”) as defendants to hold them jointly
and severally liable for Trucking’s
withdrawal liability. Plaintiffs contend both
that the corporate veil among the entities
should be pierced, and that the three
companies are members of a commonly
controlled group under ERISA. For the

following reasons, the Court concludes that
the proposed amendment is not futile, and,
thus, grants plaintiffs’ motion to amend and
join Concrete and Realty.
I.
A.

BACKGROUND
Factual Allegations

The Court takes the following facts from
the proposed amended complaint. These are
not findings of fact by the Court; instead, the
Court assumes these facts to be true for
purposes of deciding the pending motion.
1.

Smithtown Trucking

Trucking is a party to a series of
collective bargaining agreements with the
Building Material Teamsters Local 282
(“Local 282”), which required Trucking to
make contributions to the Fund. (Amended
Complaint (“Am. Compl.”) ¶ 9.) In March

2011, Trucking permanently ceased to have
an obligation to contribute, thereby
withdrawing from the Fund within the
meaning of Section 4203(a) of ERISA, 29
U.S.C. § 1383(a). (Am. Compl. ¶ 10.) In
February 2012, the Fund assessed
withdrawal liability totaling $698,436. (Id.
¶ 11.) As of April 2013, the last month
plaintiffs received a payment, Trucking had
paid $41,790.52, leaving $656,645.48 due in
withdrawal liability.1 (Id. ¶ 30.)
2.

ownership amounts. (Id. ¶¶ 33–34.)
Plaintiffs, however, allege that Spevack
maintains total actual ownership and
operational control over the companies; the
other members of his family have no actual
business relationship with the companies (as
owners, directors, officers, or employees),
other than nominal involvement for
purposes of obtaining bank accounts and
other formalities. (Id. ¶¶ 36–37.) Plaintiffs
further allege that shareholder meetings and
formal voting are not conducted, Spevack
has total voting power, and Spevack is the
principal and sole officer and director of all
three companies. (Id. ¶¶ 40–42.)

The Proposed Defendants

Trucking, Concrete, and Realty are
owned by the same family, including Neil
Spevack (“Spevack”); his sister, Sue Graze
(“Graze”); and their respective children. (Id.
¶ 31.) The companies previously were
owned by Spevack’s grandparents and their
children. (Id. ¶ 32.) According to plaintiffs,
Spevack received sole ownership of
Trucking, while ownership of Concrete and
Realty nominally was transferred to Spevack
and his family in virtually identical
1

According to plaintiffs, the companies
operated out of a single location in
Smithtown, New York; Realty owns a
portion of the property, which consists of a
concrete factory, store, storage buildings,
and yards, and Concrete owns the
remainder. (Id. ¶¶ 44–47.) Trucking stored
its trucks on the property, loaded its trucks
in the yard, and used common fuel tanks
with Concrete. (Id. ¶¶ 48–49.) Plaintiffs
claim there was no written arrangement
among the companies regarding the use of
the property, Trucking almost never paid
rent, and Realty’s sole business purpose was
owning its portion of the property. (Id.
¶¶ 51–54.) In addition, plaintiffs claim that,
while Trucking still operated, it made all of
Concrete’s deliveries, and its only work was
delivering
Concrete’s
materials
to
Concrete’s customers. (Id. ¶ 60.) Relatedly,
plaintiffs claim that customers were led to
believe the two entities were a single
integrated operation, all customer payments
were invoiced and made to Concrete, and
Trucking never received any actual revenue
other than payments from Concrete to cover
Trucking’s costs. (Id. ¶¶ 61–62.) Thus,
plaintiffs allege that, by design, Trucking
never earned a profit. (Id. ¶ 65.)

As the Second Circuit has explained:
ERISA was enacted to protect the interests
of employee retirement benefit plan
participants and their beneficiaries. One aim
is to provide for a “sound termination
insurance system” that ensures participants
and beneficiaries will receive their full
benefits even if, for example, their employer
ceases operations. When an employer
“permanently ceases all covered operations
under the plan,” i.e., a “complete
withdrawal,”
an
obligation
called
“withdrawal liability” may be imposed on
that employer. In that event, the plan
sponsor determines the amount of the
employer’s withdrawal liability, notifies that
employer of the amount owed, and collects
the amount of the withdrawal liability from
the employer.

Ret. Plan of UNITE HERE Nat’l Ret. Fund v.
Kombassan Holdings A.S., 629 F.3d 282, 285 (2d
Cir. 2010) (internal citations omitted). For purposes
of this motion, Trucking does not dispute the
adequacy of the allegations against it.

2

In all, plaintiffs allege that there was no
formal
arrangement
governing
the
interactions between the companies,
including employee or vendor sharing,
payments for costs, compensation for
expenditures, revenue sharing, and the
companies’ financial relationships. (Id.
¶¶ 76–79.) Plaintiffs allege that financial
transactions among the companies were
made by their outside accountant, with
Spevack’s consent, solely to reduce the
companies’ and Spevack’s tax burden. (Id.
¶ 80.) Thus, they claim that the companies
were run as a single, fully integrated
operation. They accordingly seek to impose
withdrawal liability on Concrete and Realty
on the theory that the three companies are
members of a single control group (see id. ¶
82); or are a single entity that share an alter
ego, single employer, and/or joint employer
relationship with each other, such that the
corporate veil should be pierced among
them (id. ¶ 84). (See also Am. Compl., at
Prayer for Relief ¶ 1.)
B.

II.

STANDARD OF REVIEW
A.

Motion to Amend

Federal Rule of Civil Procedure 15
applies to motions to amend the pleadings
once the time for amending a pleading as of
right has expired. “The court should freely
give leave [to amend] when justice so
requires,” Fed. R. Civ. P. 15(a); a motion to
amend should be denied “only for reasons
such as undue delay, bad faith, futility of the
amendment or prejudice to the other party.”
Crippen v. Town of Hempstead, No. 07-CV3478 (JFB)(ARL), 2013 WL 2322874, at *1
(E.D.N.Y. May 22, 2013); see Burch v.
Pioneer Credit Recovery, Inc., 551 F.3d
122, 126 (2d Cir. 2008) (per curiam)
(“[M]otions to amend should generally be
denied in instances of futility, undue delay,
bad faith or dilatory motive, repeated failure
to cure deficiencies by amendments
previously allowed, or undue prejudice to
the non-moving party.”). “An amendment to
a pleading is futile if the proposed claim
could not withstand a motion to dismiss
pursuant to Fed. R. Civ. P. 12(b)(6).”
Lucente v. Int’l Bus. Machs. Corp., 310 F.3d
243, 258 (2d Cir. 2002) (citing Dougherty v.
N. Hempstead Bd. of Zoning Appeals, 282
F.3d 83, 88 (2d Cir. 2002)).

Procedural Background

Plaintiffs commenced this action on May
22, 2013. Defendant answered on August 2,
2013. Plaintiffs moved to amend on April
30, 2014. Defendant opposed on May 21,
2014. Plaintiff replied on June 2, 2014. The
Court held oral argument on July 9, 2014.2
The matter is fully submitted.

B.

Joinder of Parties3

Federal Rule of Civil Procedure 21
provides that, “[o]n motion or on its own,
the court may at any time, on just terms, add
or drop a party.” Fed. R. Civ. P. 21. Federal
Rule of Civil Procedure 20(a)(2) permits the
joinder of persons as defendants in an action

2

On July 10, 2014, after the motion had been fully
briefed and oral argument was held, defendant filed a
sur-reply letter. The Court did not request any
additional briefing, and counsel did not request the
opportunity to file any supplemental submission.
Moreover, no issues were raised at oral argument that
defendant had not previously been given the
opportunity to address in its brief. Therefore, there is
no basis for the Court to permit that additional
submission. In any event, as noted infra, even if the
Court were to consider the letter, the arguments
raised therein are without merit, and the cases cited
therein (which the Court has reviewed) are
inapposite.

3

“[I]n practical terms there is little difference
between [Rules 15, 20, and 21] in that they all leave
the decision whether to permit or deny amendment to
the district court’s discretion.” Oneida Indian Nation
v. Cnty. of Oneida, 199 F.R.D. 61, 72 (N.D.N.Y.
2000) (internal alterations, quotations, and citations
omitted).

3

if “(A) any right to relief is asserted against
them jointly, severally, or in the alternative
with respect to or arising out of the same
transaction or occurrence or series of
transactions or occurrences; and (B) any
question of law or fact common to all
defendants will arise in the action.” Fed. R.
Civ. P. 20(a)(2). According to the Supreme
Court, “joinder of claims, parties and
remedies is strongly encouraged,” and “the
impulse is toward the broadest possible
scope of action consistent with fairness to
the parties.” United Mine Workers v. Gibbs,
383 U.S. 715, 724 (1966); see also Roll On
Express, Inc. v. Travelers Indem. Co. of
Conn., No. 09-CV-213 (RLM), 2009 WL
1940731, at *2 (E.D.N.Y. July 2, 2009).
Thus, “[l]ike Rule 15, the requirements of
Rule 20(a) should be interpreted liberally in
order to enable the court to promote judicial
economy by permitting all reasonably
related claims for relief by or against
different parties to be tried in a single
proceeding.” Liegey v. Ellen Figg, Inc., No.
02 Civ.1492 JSM JCF, 2003 WL 21361724,
at *3 (S.D.N.Y. June 11, 2003) (internal
quotation marks and citation omitted).
III.

A.
1.

Threshold Issues

Subject Matter Jurisdiction

Trucking, relying on Peacock v. Thomas,
516 U.S. 349 (1996), argues that the Court
lacks subject matter jurisdiction to permit
the proposed amendment to the complaint.
In Peacock, a plaintiff who had obtained
an ERISA judgment against his former
employer filed a second action, purportedly
under ERISA, seeking to pierce his
employer’s corporate veil and hold
personally liable the defendant, an officer
and shareholder of plaintiff’s former
employer. 516 U.S. at 351. The Supreme
Court held, inter alia, that it lacked
jurisdiction to enforce a prior federal
judgment predicated on ERISA violations
against a third party, because there was no
“provision of ERISA that provides for
imposing liability for an extant ERISA
judgment against a third party.” Id. at 353.
The Court further noted that the plaintiff’s
veil-piercing claim does not state a
cause of action under ERISA and
cannot independently support federal
jurisdiction. Even if ERISA permits
a plaintiff to pierce the corporate veil
to reach a defendant not otherwise
subject to suit under ERISA, [the
plaintiff]
could
invoke
the
jurisdiction of the federal courts only
by independently alleging a violation
of an ERISA provision or term of the
plan.

DISCUSSION

Plaintiffs move to join Concrete and
Realty to hold them liable by piercing the
corporate veil and/or as members of a
commonly controlled group under ERISA.
Trucking does not argue that the amendment
is untimely, brought in bad faith, or
prejudicial, or that plaintiffs cannot satisfy
the precepts of Federal Rule of Civil
Procedure 20. Instead, it argues that the
Court would lack subject matter jurisdiction
over Concrete and Realty, the motion is
deficient because it lacks evidentiary
support, and the amendment is futile. The
Court addresses each contention, in turn.

Id. at 353–54. The Court rejected the notion
that the “subsequent suit arose under
§ 502(a)(3) of ERISA, which authorizes
civil actions for ‘appropriate equitable
relief’ to redress violations of ERISA or the
terms of an ERISA plan [because the]
complaint in [the subsequent] lawsuit
alleged no violation of ERISA or of the
plan.” Id. at 353. Lastly, it held that there
4

obtained judgment against defendant’s
alleged predecessor and accordingly
dismissing said claim for lack of subject
matter jurisdiction); see also Labarbera v.
United Crane & Rigging Svcs., Nos. 08 Civ.
3274(DLI), 08 Civ. 3983(DLI), 2011 WL
1303146 (E.D.N.Y. Mar. 2, 2011) (same).
Peacock does not stand for the proposition
that a plaintiff cannot join parties to a
pending ERISA action in order to hold them
liable under an alter ego/single employer
veil-piercing theory or a common control
theory. See, e.g., Ellis v. All Steel Constr.,
Inc., 389 F.3d 1031, 1033–34 (10th Cir.
2004) (“If an alter-ego claim is asserted in
conjunction with the underlying federal
cause of action, the latter may provide the
basis for ancillary jurisdiction over the alterego claim, obviating Peacock concerns; it is
only when an alter-ego claim is asserted in a
separate judgment-enforcement proceeding
that Peacock requires an independent basis
for federal jurisdiction.” (citing Bd. of Trs.,
Sheet Metal Workers, Nat’l Pension Fund v.
Elite Erectors, Inc., 212 F.3d 1031, 1037
(7th Cir. 2000)));4 N.Y. Dist. Council of
Carpenters Pension Fund v. KW Constr.,
Inc., No. 07 Civ. 8008(RJS), 2010 WL
3958799, at *3 (S.D.N.Y. Sept. 8, 2010)
(“The rule in Peacock has no bearing on this
case because an independent basis for
federal
jurisdiction
exists—namely,
Plaintiffs’ claims for ERISA violations,
which are brought pursuant to 29 U.S.C.
§§ 1145 and 1132. Plaintiffs are not merely
seeking to enforce the 2005 judgment
against Whyte personally.”); Labarbera,
2011 WL 1303146, at *12 (noting that
jurisdiction exists where parties that

was no ancillary enforcement jurisdiction
over the plaintiff’s action, because courts
may not “exercise . . . ancillary jurisdiction
in a subsequent lawsuit to impose an
obligation to pay an existing federal
judgment on a person not already liable for
that judgment.” Id. at 357.
In the instant case, this Court has federal
subject matter jurisdiction over this lawsuit
because a cause of action indisputably exists
under ERISA against Trucking. Joining
Concrete and Realty would not and cannot
destroy
that
jurisdiction.
Moreover,
Trucking has not shown that a separate
jurisdictional basis is required to join
Concrete or Realty. Unlike the plaintiffs in
Peacock and the other cases Trucking cites,
the Trustees are not seeking to enforce an
extant judgment against Concrete or Realty;
this is a lawsuit seeking to impose liability
in the first instance. See, e.g., Romita v.
Anchor Tank Lines, LLC, No. 11 Civ.
9641(DAB), 2013 WL 432903, at *3
(S.D.N.Y. Feb. 1, 2013) (granting motion to
dismiss for lack of subject matter
jurisdiction where plaintiffs previously
obtained judgment against predecessor
entities of defendants and brought suit under
ERISA claiming that defendants were liable
for judgment obtained against predecessor
entities on grounds that (1) ERISA did not
provide court with jurisdiction to impose
liability for extant ERISA judgment against
third party; (2) plaintiffs failed to allege that
defendants committed any independent
violation of ERISA or terms of employee
benefit plan; and (3) ancillary jurisdiction
was improper because lawsuit sought to
impose obligation to pay existing federal
judgment on defendants, who were not
already liable for that judgment); Gesualdi
v. Danielle Rigging, Inc., No. 09 Civ.
2124(NGG), 2011 WL 2516521, at *2
(E.D.N.Y. June 23, 2011) (holding that
Peacock applied to successor liability claim
brought under ERISA to enforce previously

4

According to the Tenth Circuit, “it seems to be
commonplace for federal courts to exercise
jurisdiction over alter-ego or veil-piercing claims
against additional defendants in conjunction with
federal causes of action against primary defendants—
often without hint of any jurisdictional issue.” Ellis,
389 F.3d at 1033 n.2 (citing cases).

5

committed
ERISA
violations
were
defendants in the actions). Moreover, in the
instant case, in addition to seeking to hold
Concrete and Realty liable under an alterego claim, plaintiffs assert a claim against
them directly under ERISA, namely, a single
control group under 29 U.S.C. § 1301.

allegations in the complaint state a claim
upon which relief can be granted.” Crippen
v. Town of Hempstead, No. 07-CV-3478
(JFB)(ARL), 2009 WL 803117, at *1 n.1
(E.D.N.Y. Mar. 25, 2009); see also Panther
Partners Inc. v. Ikanos Comm’cns, Inc., 347
F. App’x 617, 622 (2d Cir. 2009) (“Granting
leave to amend is futile if it appears that
plaintiff cannot address the deficiencies
identified by the court and allege facts
sufficient to support the claim. . . . [C]ourts
may consider all possible amendments when
determining futility.” (internal citations
omitted)). Therefore, plaintiffs’ motion is
not deficient for want of declarations,
affidavits, or factual evidence to support the
amendment. Trucking also cannot rely on
the declarations of Neal Spevack and Sue
Graze to demonstrate futility. The Court’s
focus must be on the pleading’s adequacy.

Accordingly, the Court has federal
subject matter jurisdiction over the proposed
claims against Concrete and Realty.5
2.

Procedural Deficiencies

Trucking next argues that the motion is
deficient because plaintiffs proffered no
admissible statement of facts in the form of
declarations or affidavits, and cite no factual
bases upon which to grant the motion.
Nothing in Rule 15 (or Rules 20 and 21,
for that matter) requires a party to support a
motion to amend through affidavits or other
evidence. Crago v. Capital Advantage Fin.
& Dev., Inc., 242 F.R.D. 341, 344 n.3
(D.S.C. 2007); see Fed. R. Civ. P. 15, 20,
21. As here, where a defendant argues that a
proposed amendment should be denied
because it would be futile, “the standard for
futility with respect to a motion to amend
under Rule 15 is identical to the standard for
a Rule 12(b)(6) motion to dismiss—namely,
the court must determine whether the

B.

Futility

Turning to the merits, Trucking only
argues that the motion should be denied
because the Trustees’ claims are futile. The
Court therefore need not consider other
factors that may justify denying the motion
(and, in any event, concludes that none of
those factors apply in this case).
1.

Piercing the Corporate Veil

Plaintiffs claim the proposed amendment
adequately alleges that the three companies
are a single employer and/or alter egos,
making them jointly and severally liable for
each other’s debts and obligations.6

5

Defendant’s supplemental authority, Greater New
York Nursing Home Division of the 1199/SEIU
Greater New York Benefit Fund v. Verrazano
Staffing, Inc., No. 05-CV-4116 (JG)(RER), 2007 WL
1480777 (E.D.N.Y. Mar. 28, 2007) (Report &
Recommendation), is not to the contrary. There, the
entity that actually was required to make the
contributions to funds pursuant to a collective
bargaining agreement was not a party to the action,
and there were no allegations of fraud or piercing the
corporate veil, rendering the joint employer theory of
liability asserted by the plaintiff insufficient to
establish subject matter jurisdiction. See id. at *4–5.
That case neither addresses Peacock nor the
circumstances at issue here, where the entity actually
required to make the contributions is a party.

6

Defendant’s sur-reply letter does not address the
viability of plaintiff’s “single employer” allegations;
rather, it focuses on the joint employer and alter ego
theories of liability. The Court notes that plaintiff’s
briefs (and defendant’s opposition) do not address the
joint employer theory of liability. (See, e.g., Motion
Brief, at 7 (“[T]he three companies are a single
entity, single employer, and/or alter egos. . . .”).)
Accordingly, the Court assumes that plaintiffs are not
asserting a joint employer theory of liability.

6

a.

(N.L.R.B. Jan. 17, 1989)). “[N]ot every
factor need be present, and no one particular
factor is controlling.” Id. “‘Ultimately,
single employer status depends on all the
circumstances of the case and is
characterized by absence of an ‘arm’s length
relationship found among unintegrated
companies.’” Id. (quoting NLRB v. Al
Bryant, Inc., 711 F.2d 543, 551 (3d Cir.
1983)).

Single Employer Doctrine

The single employer and alter ego
doctrines are “conceptually distinct.” Lihli
Fashions Corp., Inc. v. N.L.R.B., 80 F.3d
743, 748 (2d Cir. 1996) (quoting Truck
Drivers Local Union No. 807 v. Regional
Import & Export Trucking Co., 944 F.2d
1037, 1046 (2d Cir. 1991)). Under the single
employer doctrine, separate companies will
be jointly and severally liable under a
collective bargaining agreement signed by
the other if they are part of a “single
integrated enterprise.” Id. at 747–48
(holding that the status of two companies as
a single employer “is enough to hold them
jointly and severally liable for each other’s
debts and obligations, including financial
obligations under [a] collective bargaining
agreement,” even if the non-signatory may
not be bound by the agreement); Ferrara v.
Oakfield Leasing Inc., 904 F. Supp. 2d 249,
260 (E.D.N.Y. 2012) (“Under the single
employer doctrine, two nominally distinct
enterprises will be joint and severally liable
under the CBA signed by only one when the
two act as a ‘single integrated enterprise.’”);
Labarbera v. Cretty Enters., Inc., Nos. 03
Civ. 6112, 04 Civ. 5178, 2007 WL 4232765,
at *5 (E.D.N.Y. Nov. 28, 2007) (same). The
factors to be considered in determining
whether separate entities act as a single
integrated
enterprise
are
the
“interrelationship of operations, common
management, centralized control of labor
relations and common ownership,” as well
as “the use of common office facilities and
equipment and family connections between
or among the various enterprises.” Lihli, 80
F.3d at 747 (citing Radio & Television
Broad. Tech. Local Union 1264 v. Broad.
Serv. of Mobile, Inc., 380 U.S. 255, 256
(1965) (per curiam); Three Sisters
Sportswear Co., 312 N.L.R.B. 853, 1993
WL 398465, at *15 (N.L.R.B. Sept. 30,
1993); Goodman Investment Co., 292
N.L.R.B. 340, 1989 WL 223774, at *10–11

Here, with respect to the single employer
allegations, plaintiffs allege that the
companies are an integrated, overlapping
family enterprise characterized by an
absence of an arm’s length relationship.
Specifically, they allege that the companies
have overlapping ownership and control,
and shared facilities, equipment, suppliers
and vendors, management, and office
employees; that Trucking has no customers
other than Concrete’s and that all of
Concrete’s deliveries were made by
Trucking; that Trucking never received any
revenue; and that Realty’s sole business
purpose was owning the property. (See Am.
Compl. ¶¶ 31–80.) Given these allegations,
the Court concludes that the proposed
amendment sufficiently alleges that the
companies are a single employer. See, e.g.,
Lihli, 80 F.3d at 747 (upholding NLRB’s
conclusion that two companies were single
employer and jointly and severally liable
under collective bargaining agreement
because, inter alia, operations were
functionally integrated, companies provided
services and products solely to each other
and had overlapping ownership and control,
and there was evidence of centralized
control of labor relations); Ferrara, 904 F.
Supp. 2d at 261–63 (finding single employer
status where, inter alia, operations of
companies were interrelated; and companies
shared substantially same business purpose,
vehicles, and employees; had same
customers; and were owned by members of
same immediate family); Finkel v.
7

80 F.3d at 748. Courts also typically look to
the following factors: “(1) the absence of the
formalities which are part and parcel of
normal corporate existence, i.e., the issuance
of stock, the election of directors, the
keeping of corporate records, etc., (2)
inadequate capitalization, (3) personal use of
corporate funds, and (4) the perpetration of
fraud by means of the corporate vehicle.”
Ferrara, 904 F. Supp. 2d at 268 (citation
and internal quotation marks omitted).

Frattarelli Bros., Inc., No. 05-CV-1551
(JFB)(AKT), 2008 WL 2483291, at *10–12
(E.D.N.Y. June 17, 2008) (finding single
employer status where, inter alia, there was
no arm’s length business relationship
between parties, trucking operations of one
company
were
almost
completely
intertwined with other company, and one of
companies had no customers other than
those of other company).
b.

Alter Ego Doctrine

In its opposition, Trucking argues that
the amendment is futile because (1) the alter
ego allegations are conclusory; and (2) the
companies were engaged in different lines of
business, weighing against a finding of a
shared
business
purpose
even
if
management personnel overlapped.7 Even
though the amendment does not allege
personal use of corporate funds or the
perpetration of fraud, Trucking’s cursory
contention that the allegations are
conclusory is belied by a review of the
complaint, which, as noted supra, includes
extensive allegations about the commonality
of management (Spevack); supervision and
ownership (Spevack); Trucking’s lack of
revenue and profit; and Concrete’s and
Trucking’s shared operations, equipment,

As the Second Circuit has explained,
“[t]he 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,
629 F.3d at 288 (quoting Newspaper Guild
of N.Y., Local No. 3 of the Newspaper Guild,
AFL–CIO v. NLRB, 261 F.3d 291, 298 (2d
Cir. 2001)). Specifically, “ERISA was
enacted to promote the interests of
employees and their beneficiaries in
employee benefit plans and to protect
contractually defined benefits.” Id. (quoting
Leddy v. Standard Drywall, Inc., 875 F.2d
383, 388 (2d Cir. 1989)). Thus, “[t]o protect
employee benefits, courts observe ‘a general
federal policy of piercing the corporate veil
when necessary.’” Id. (quoting N.Y. State
Teamsters Conference Pension & Ret. Fund
v. Express Servs., Inc., 426 F.3d 640, 647
(2d Cir. 2005)).

7

Trucking’s argument mostly overlaps with its
contention that plaintiffs will be unable to show the
companies are part of a “commonly controlled trade
or business” as defined by the Treasury Department.
(See Opp’n, at 5.) In Retirement Plan, however,
where the court concluded that the entities’ single
employer or alter ego status established common
control, see 629 F.3d at 289, the Second Circuit did
not imply that the entities must fall within the
definition of “common control” under the Treasury
regulations to impose liability under a single
employer or alter ego theory. Cf. Lowen v. Tower
Asset Mgmt., Inc., 829 F.2d 1209, 1220 (2d Cir.
1987) (“Courts have without difficulty disregarded
form for substance where ERISA’s effectiveness
would otherwise be undermined.”); Ferrara, 904 F.
Supp. 2d at 259–71 (addressing joint and several
liability without considering Treasury regulations).

According to the Second Circuit, “the
test of alter ego status is flexible,” allowing
courts to “weigh the circumstances of the
individual case,” while recognizing that the
following factors are important: “whether
the two enterprises have substantially
identical management, business purpose,
operation,
equipment,
customers,
supervision, and ownership.” Id. (quoting
Goodman Piping Prods., Inc. v. NLRB, 741
F.2d 10, 11 (2d Cir. 1984)); see also Lihli,
8

and customers. Further, the argument that
the amendment would be futile because the
companies “were engaged in different lines
of business, which weighs against finding a
shared
business
purpose,
even
if
management personnel overlapped” (Opp’n,
at 4) ignores the substantial allegations that
the companies operated in concert (e.g.,
Concrete manufactured a product on land
owned in part by Realty, and Trucking
delivered Concrete’s product and parked and
fueled its trucks on the other entities’ land
(see Am. Compl. ¶¶ 45–50)) and incorrectly
implies that plaintiffs must prove, rather
than simply allege, the existence of alter ego
liability at this juncture.

that the proposed amendment adequately
alleges that the companies are alter egos of
each other. See Trs. of Local 7 Tile Indus.
Welfare Fund v. Amarko Marble & Granite
Co., Inc., No. 13-CV-2779 (FB)(CLP), 2014
WL 1622098, at *6 (E.D.N.Y. Apr. 22,
2014)
(adopting
Report
&
Recommendation) (finding that plaintiff
adequately alleged elements necessary to
pierce corporate veil under alter ego theory
where plaintiff alleged that defendants
shared an address, identical management,
ownership, equipment, customers, business
purpose, and supervision, intermingled
financial books and records, and failed to
deal with each other at arm’s length).

Finally, in its sur-reply, Trucking argues
that plaintiffs have not alleged that there was
a sham transaction and/or technical change
in operations in an attempt for Trucking to
avoid the obligations of the collective
bargaining agreement. The Second Circuit,
however, is clear that “the test of alter ego
status is flexible,” and, “[a]lthough perhaps
a ‘germane’ or ‘sufficient basis for imposing
alter ego status,’ an ‘anti-union animus or an
intent to evade union obligations,’” such as
those in a collective bargaining agreement,
“is not a necessary factor” to impose alter
ego liability. Retirement Plan, 629 F.3d at
288 (quoting Goodman Piping Prods., 741
F.2d at 11–12) (alterations omitted)
(emphasis in original). Relatedly, “[p]arallel
existence . . . [also] is not an impediment to
imposing alter ego status.” Id. Thus,
“[c]onsidering
the
important
policy
considerations for employing a flexible alter
ego test in the ERISA context, and the
interlocked relationship of the entities in this
case,” id. at 289, the fact that the entities
have existed simultaneously and that
plaintiffs have not alleged (and do not
contend) that Realty and Concrete engaged
in transactions to evade or avoid withdrawal
liability is not fatal to their alter ego
allegations. Therefore, the Court concludes

In sum, plaintiffs’ single employer and
alter ego allegations would survive a motion
to dismiss pursuant to Rule 12(b)(6).
Therefore, the Court concludes that it would
not be futile to amend the complaint to
include these allegations, and no other
grounds exist to deny leave to amend.
Accordingly, the Court grants the motion to
amend to add these theories of liability.
2.

Single Control Group

Plaintiffs also argue that the amendment
adequately alleges that Concrete and Realty
are liable as members of Trucking’s control
group. Trucking argues that the amendment
is futile because plaintiffs cannot show the
entities are under “common control,”
because, although Spevack owns all of
Trucking, he only owns 46 percent of
Concrete and 66 percent of Realty, thus
“failing to meet the threshold of a parentsubsidiary group of trades or business under
common control.” (Opp’n, at 7.)
As the Second Circuit has recognized, “a
showing that multiple corporations are under
‘common control,’ within the meaning of
specified Treasury regulations (i.e., 26
C.F.R. §§ 1.414(c)–1 through 1.414(c)–5),
will suffice to make each entity in that
9

‘controlled group’ responsible for the
withdrawal liability of any of the entities so
obligated.”8 Trs. of the Local 813 Pension
Trust Fund v. Canal Carting, Inc., No. 12CV-0060 (CBA)(RLM), 2014 WL 843244,
at *11 (E.D.N.Y. Mar. 3, 2014) (Report &
Recommendation) (citing Corbett v.
MacDonald Moving Servs., Inc., 124 F.3d
82, 86 (2d Cir. 1997)). Under the applicable
regulations, businesses are under common
control if they are members of a “parentsubsidiary” or “brother-sister” groups of
businesses. 26 C.F.R. § 1.414(c)–2. Parentsubsidiary corporations are defined as one or
more “businesses connected through
ownership of a controlling interest with a
common parent organization if (i) [a]
controlling interest in each of the
organizations, except the common parent
organization, is owned . . . by one or more of
the other organizations; and (ii) [t]he
common parent organization owns . . . a
controlling interest in at least one of the
other organizations, excluding, in computing
such controlling interest, any direct
ownership interest by such other
organizations.” Id. § 1.414(c)–2(b). Brothersister corporations are defined as two or
more corporations (i) where the same five or
fewer persons own a controlling interest in
each organization, and (ii) such persons are
in effective control of each organization,
taking into account the ownership of each
person only to the extent such ownership is
identical with respect to each such
organization. Id. § 1.414(c)–2(c). A
“combined group of trades or businesses
under common control” is defined as any

group of three or more organizations, if (1)
each such organization is a member of either
a parent-subsidiary or brother-sister group of
trades or businesses under common control
and (2) at least one such organization is the
common parent organization of a parentsubsidiary group of trades or businesses
under common control and is also a member
of a brother-sister group of trades or
businesses under common control. Id.
§ 1.414(c)–2(d).
A “controlling interest” is defined as
ownership of stock possessing at least 80
percent of the total combined voting power
of all classes of stock entitled to vote of such
corporation, or at least 80 percent of the
total value of shares of all classes of stock in
such corporation. Id. § 1.414(c)–
2(b)(2)(i)(A). “Effective control” is defined
as ownership of “stock possessing more than
50 percent of the total combined voting
power of all classes of stock entitled to vote
or more than 50 percent of the total value of
shares of all classes of stock of such
corporation.” Id. § 1.414(c)–2(c)(2)(i).
Therefore, a “brother-sister” group of
businesses under common control must be
controlled by the same five or fewer persons
owning at least 80 percent of the shares of
each corporation, with at least 50 percent of
the shareholder’s ownership interests in each
corporation identical. Ret. Plan of Nat’l Ret.
Find v. Lackmann Culinary Servs., Inc., No.
7:10-cv-06316 (VB), 2011 WL 3366354, at
*4 (S.D.N.Y. July 29, 2011).
According to Trucking, the proposed
amendment is futile because Spevack owns
all of Trucking but only 46 percent of
Concrete and 66 percent of Realty. (Opp’n,
at 7.) The amendment, however, alleges that,
of the shareholders in all of the companies,
only Spevack exercises voting power. (Am.
Compl. ¶¶ 33–34, 37, 40–43.) Thus, under
the alleged facts and circumstances,
including Spevack’s alleged control of the

8

Section 4001(b)(1) of ERISA provides that “all
employees of trades or businesses . . . which are
under common control shall be treated as employed
by a single employer and all such trades and
businesses as a single employer,” with the meaning
of that term to be construed as “consistent and
coextensive with regulations prescribed for similar
purposes by the Secretary of the Treasury under
section 414(c) of Title 26.” 29 U.S.C. § 1301(b)(1).

10

companies and his family members’ almost
non-existent involvement, the actual voting
power rests with Spevack. (Id. ¶¶ 37–38,
40–43, 82.) Plaintiffs, therefore, adequately
allege that Spevack is the 100 percent owner
of each of the companies and that, therefore,
the companies constitute a “brother-sister”
group of trades or business under common
control, because Spevack (the only of “the
same five or fewer persons” in the group)
owns a controlling interest (more than 80
percent of voting power) and is in effective
control (holding more than 50 percent of
voting power) of each of the companies. See
26 C.F.R. § 1.1563-1(a)(6);9 Achiro v.
Comm’r of Internal Revenue, 77 T.C. 881,
905–06 (1981) (considering 26 C.F.R.
§ 1.1563-1(a)(6) and finding brother-sister
controlled group where holder of 52 percent
of company’s voting shares implicitly
agreed not to vote his stock or agreed to vote
stock in manner specified by brother, and
therefore, holder’s voting rights could be
9

disregarded or attributed to his brother); cf.
Trs. of Plumbers & Pipefitters Nat’l Pension
Fund v. Mar-Len, Inc., 864 F. Supp. 599,
608 (E.D. Tex. 1994) (“Courts must keep in
mind Congress’ purpose for enacting section
1301, that is, to prevent employers from
avoiding
withdrawal
liability
by
fractionizing their operations or ‘selling off’
assets.”). Trucking’s reliance on matters
outside of the pleadings to demonstrate
otherwise, including Spevack’s and Graze’s
affidavits, is not permissible at this stage.
Therefore it would not be futile to
amend the complaint to include the single
control group allegations, and no other
grounds exist to deny leave to amend.
Accordingly, the Court also grants plaintiffs’
motion to amend on that theory of liability.
IV.

CONCLUSION

For the foregoing reasons, the Court
grants plaintiffs’ motion to amend to join
Concrete and Realty as defendants. Plaintiffs
shall file and serve the amended complaint
within fourteen (14) days.

Regulation 1.1563-1(a)(6) provides, in relevant part:
A share of stock will generally be
considered as possessing the voting power
accorded to such share by the corporate
charter, by-laws, or share certificate. On the
other hand, if there is any agreement,
whether express or implied, that a
shareholder will not vote his stock in a
corporation, the formal voting rights
possessed by his stock may be disregarded
in determining the percentage of the total
combined voting power possessed by the
stock owned by other shareholders in the
corporation, if the result is that the
corporation becomes a component member
of a controlled group of corporations.
Moreover, if a shareholder agrees to vote his
stock in a corporation in the manner
specified by another shareholder in the
corporation, the voting rights possessed by
the stock owned by the first shareholder may
be considered to be possessed by the stock
owned by such other shareholder if the
result is that the corporation becomes a
component member of a controlled group of
corporations.

SO ORDERED.

______________________
JOSEPH F. BIANCO
United States District Judge
Dated:

July 10, 2014
Central Islip, NY

***
Plaintiffs are represented by Joseph J.
Vitale, Zachary N. Leeds, and Tzvi N.
Mackson of Cohen, Weiss and Simon LLP,
330 West 42nd Street, New York, NY
10036. Trucking is represented by Richard
B. Ziskin and Suzanne Harmon Ziskin of
The Ziskin Law Firm, LLP, 6268 Jericho
Turnpike, Suite 12A, Commack, NY 11725.
11