Division 1181 Amalgamated Transit Union - New York Employees Pension Fund et al v. New York City Department of Education

Filing 55

ORDER denying 39 Motion for Certificate of Appealability; granting in part and denying in part 39 Motion for Reconsideration. Having considered all of the arguments advanced by the DOE, its motion for reconsideration is GRANTED with respect to the claim that it was a joint employer with the DOE Contractors and otherwise DENIED. Plaintiffs' claim for withdrawal liability premised on a joint employer theory of liability is dismissed. The DOE's motion for certification pursuant to section 1292(b) is DENIED. SO ORDERED. (Signed by Judge P. Kevin Castel on 11/21/2014) (ajs)

DISCUSSION
I.

Legal Standard for a Motion to Reconsider
Local Civil Rule 6.3, elaborating on Rule 59(e), Fed. R. Civ. P., allows a party to

move for reconsideration as to “matters or controlling decisions which counsel believes the
Court has overlooked.” U.S. Dist. Ct. Rules S. & E.D.N.Y., Civ. R. 6.3; see Truong v. Charles
Schwab & Co., Inc., 07 Civ. 8085 (SHS), 2009 WL 464452, *1 (S.D.N.Y. Feb. 24, 2009)
(internal quotation marks and citations omitted). The standards for granting a motion to
reconsider are strict: “[r]econsideration of a previous order by the court is an extraordinary
remedy to be employed sparingly in the interests of finality and conservation of scarce judicial
resources.” Cordero v. Astrue, 574 F. Supp. 2d 373, 380 (S.D.N.Y. 2008) (internal quotation
marks and citations omitted).
Motions for reconsideration “will generally be denied unless the moving party can
point to controlling decisions or data that the court overlooked—matters, in other words, that
might reasonably be expected to alter the conclusion reached by the court.” Shrader v. CSX
Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995). While a court may grant the motion “to correct a
clear error of law or prevent manifest injustice,” Munafo v. Metro. Transp. Auth., 381 F.3d 99,
105 (2d Cir. 2004) (quotation marks and citations omitted), “a motion to reconsider should not
be granted where the moving party seeks solely to relitigate an issue already decided.” Shrader,
70 F.3d at 257.
II.

The Merits of the Motion to Reconsider
a. Joint Employer Theory
The Court has reviewed the entirety of the DOE’s motion and concludes that

reconsideration and modification is required as to one aspect of the Order. The FAC alleges that

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the DOE qualifies as an “employer” for purposes of withdrawal liability under the Employment
Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., as amended by the
Multiemployer Pension Plan Amendments Act (“MPPAA”), 29 U.S.C. § 1381 et seq., because it
was a joint employer with each of the DOE Contractors. (Compl’t ¶¶ 119-122) In the Order, the
Court concluded that the joint employer doctrine, as applied by the NLRB, is applicable to
claims under the MPPAA and denied the DOE’s motion to dismiss the claim that the DOE was a
joint employer with the DOE Contractors for purposes of withdrawal liability. 2014 WL
4370724 at *7-8. The Court found that the joint employer theory was a viable theory by
construing the Second Circuit’s definition of “employer,” as defined in Korea Shipping Corp. v.
N.Y. Shipping Ass’n-Int’l Longshoremen’s Ass’n Pension Trust Fund, 880 F.2d 1531, 1537 (2d
Cir. 1989) (“the term employer in 29 U.S.C. § 1381(a) means a person who is obligated to
contribute to a plan either as a direct employer or in the interest of an employer of the plan’s
participants”) (quotation marks and citations omitted), as incorporating the MPPAA’s definition
of “obligation to contribute,” which includes both a contractual obligation and an obligation
arising under “applicable labor-management relations law.” 29 U.S.C. § 1392(a). Because the
joint employer doctrine has been applied under “applicable labor-management relations law” to
bind non-signatories to the terms of a CBA, see, e.g., Serv. Emps. Int’l Union, Local 32BJ v.
NLRB, 647 F.3d 435 (2d Cir. 2011), the Court concluded that the joint employer doctrine is
applicable in the ERISA context. Upon reconsideration, the Court now concludes that the joint
employer doctrine is not applicable to the DOE in this case.
The MPPAA defines “obligation to contribute,” in part, as “an obligation to
contribute arising as a result of a duty under applicable labor-management relations law.” 29
U.S.C. § 1392(a)(2). As the Court noted in the Order, the National Labor Relations Act

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(“NLRA”) is an “applicable labor-management relations law” under the MPPAA. See Laborers
Health & Welfare Trust Fund for N. Cal. v. Advanced Lightweight Concrete Co. Inc., 484 U.S.
539, 545-46 (1988). Because the Second Circuit defined “employer” under the MPPAA to be an
entity that “is obligated to contribute to a plan either as a direct employer or in the interest of an
employer of the plans participants,” Korea Shipping, 880 F.2d at 1537, the Court, in the August
27, 2014 Order, concluded that an employer under the MPPAA includes an entity that has an
obligation to contribute arising from a duty under applicable labor-management relations law,
such as the NLRA. 2014 WL 4370724, at *8 (quotation marks and citation omitted). However,
the NLRA states that “[t]he term ‘employer’ . . . shall not include . . . any State or political
subdivision thereof . . . ,” 29 U.S.C. § 152(2), and “[t]he LMRA, in 29 U.S.C. § 142(3),
incorporates the definition of ‘employer’ from the NLRA.” Rodriguez-Rivera v. City of New
York, 05 Civ. 10897 (LAP), 2007 WL 766195, at *3 (S.D.N.Y. March 12, 2007). Moreover,
“the [New York City] Department of Education[] is clearly a political subdivision of the state
and therefore not an ‘employer’ under the NLRA or LMRA.” Gear v. Dep’t of Educ., 07 Civ.
11102 (NRB), 2010 WL 5297850, at *4 (S.D.N.Y. Dec. 21, 2010), aff’d, 472 F. App’x 67 (2d
Cir. 2012).
There are two plausible interpretations of the MPPAA’s reference to a duty
arising under labor-management relations law when determining whether a government entity
has an obligation to contribute under the statute and therefore falls within the Second Circuit’s
definition of “employer.” The first interpretation, which the Court adopts, excludes a
government entity from being considered an “employer” under the MPPAA when imposing an
obligation to contribute under 29 U.S.C. § 1392(a)(2). This interpretation takes the language that
Congress effectuated in the MPPAA at face value. Congress, in amending ERISA through the

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MPPAA, chose to define an obligation to contribute as an obligation arising in one of two ways:
(1) “under one or more collective bargaining (or related) agreements or (2) as a result of a duty
under applicable labor-management relations law.” 29 U.S.C. § 1392(a). Thus, in enacting
section 1392(a)(2), Congress chose to incorporate labor law principles. Controlling precedent
establishes that the NLRA is an “applicable labor-management relations law.” See Laborers
Health & Welfare Trust Fund for N. Cal., 484 U.S. at 545-46. Although the NLRB has used the
joint employer doctrine to bind non-signatories to CBAs, the NLRA and the LMRA contain a
statutory exemption for “any State or political subdivision thereof” from the term “employer,” 29
U S.C. § 152(2), and the DOE is covered by that exemption. Therefore, the DOE is not an
“employer” under the NLRA and cannot have an obligation to contribute arising from a duty
under applicable labor-management relations law which would thereby subject it to withdrawal
liability under ERISA and the MPPAA.
In contrast, plaintiffs emphasize the language of ERISA and the MPPAA that
does not explicitly exempt government entities from the definition of “employer.” Although
ERISA and the MPPAA do not exclude government entities from the definition of “employer”
under the statute, the statute exempts from coverage pension plans “established and maintained
for its employees” by government subdivisions. 29 U.S.C. § 1321(b)(2). The argument is that
when Congress wanted to exclude government pension plans from coverage under the statute it
did so explicitly; however, Congress chose not to explicitly exclude government entities from the
definition of “employer.” Because Congress specifically exempted government funded and
maintained pension plans from coverage under the statute, plaintiffs argue that Congress’s failure
to exclude government entities from the definition of “employer” indicates that government

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entities are subject to liability under ERISA and the MPPAA where a government entity is
involved with a private, non-governmental plan.
This interpretation, however, does not give full meaning to the MPPAA’s
incorporation of labor law principles through the language that reads “as a result of a duty arising
under applicable labor-management relations law.” 29 U.S.C. § 1392(a)(2). Applicable labormanagement relations law imposes no duty on a government entity as an employer. Therefore,
the joint employer doctrine, as applied to impose an obligation to contribute on an employer
through 29 U.S.C. § 1392(a)(2), does not apply to the DOE for purposes of withdrawal liability
under ERISA and the MPPAA.
b. Alter Ego Theory
Defendant also argues that the DOE, as a governmental entity, cannot be subject
to withdrawal liability as the alter ego of its contractors. The Second Circuit has explicitly held
that the alter ego doctrine is applicable in ERISA cases. See Ret. Plan of the UNITE HERE
Nat’l Ret. Fund v. Kombassan Holding A.S., 629 F.3d 282 (2d Cir. 2010). Although the Second
Circuit acknowledged that the alter ego doctrine was developed in a labor law context, Id., 629
F.3d at 288 (citing Massachusetts Carpenters Cent. Collection Agency v. Belmont Concrete
Corp., 139 F.3d 304, 305-06 (1st Cir. 1998)), the statutory exemptions of the NLRA do not
necessarily apply. Rather than applying the alter ego theory in cases arising under ERISA
through specific statutory language therein incorporating applicable labor-management relations
law, the Second Circuit merely looked to NLRA jurisprudence for guidance in determining
whether the alter ego doctrine is applicable in ERISA cases. Id. Thus, the specific statutory
exemptions contained within the NLRA or the LMRA do not apply with equal force in the alter

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ego context. Accordingly, plaintiffs’ claim for withdrawal liability premised on the theory that
the DOE was an alter ego of the DOE Contractors survives.
III.

Section 1292(b) Certification
In the event the Court were to deny any portion of the motion to reconsider,

defendant seeks to have the Court certify the question to the United States Court of Appeals for
the Second Circuit pursuant to 28 U.S.C. § 1292(b). Thus, the Court construes the motion as
applying to the alter ego theory of liability. Section 1292(b) permits an interlocutory appeal
when a district judge “shall be of the opinion that such order involves a controlling question of
law as to which there is substantial ground for difference of opinion and that an immediate
appeal from the order may materially advance the ultimate termination of the litigation . . . .”
Section 1292(b) “is a rare exception to the final judgment rule that generally prohibits piecemeal
appeals” and is to be granted sparingly. Koehler v. Bank of Bermuda Ltd., 101 F.3d 863, 865-66
(2d Cir. 1996).
Defendant fails to meet this standard. First, as noted, the Second Circuit has
determined that the alter ego doctrine is applicable in the ERISA context. Kombassan, 629 F.3d
at 288-89. Second, discovery and an eventual summary judgment motion by the DOE may
eliminate the need for any appellate review of the issue. Therefore, defendant’s motion for
certification pursuant to section 1292(b) is DENIED.
CONCLUSION
Having considered all of the arguments advanced by the DOE, its motion for
reconsideration is GRANTED with respect to the claim that it was a joint employer with the
DOE Contractors and otherwise DENIED. Plaintiffs’ claim for withdrawal liability premised on

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