Trustees of the Metal Trades Branch Local 683 Pension Fund, Metal Trades Branch Local 638 Welfare Fund, and Service Fitters' Industry Educational Fund et al v. Henick-Lane, Inc. et al
Filing
47
OPINION AND ORDER: re: 33 FIRST MOTION to Dismiss First Amended Complaint filed by Vivid Mechanical LLC, Henick-Lane, Inc., Henick-Lane Service Corp. Defendants' motion to dismiss the first amended complaint for lack of subject -matter jurisdiction and failure to state aclaim (Dkt. No. 33) is granted in part and denied in part. The FAC's second, fourth, sixth, eighth, and ninth claims are dismissed for failure to state a claim. In all other respects, the motion is denied. SO ORDERED. (Signed by Judge Louis L. Stanton on 9/02/2016) (ama)
ORIGINAL
USDC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
TRUSTEES OF THE METAL TRADES BRANCH
LOCAL 638 PENSION FUND, METAL TRADES
BRANCH LOCAL 638 WELFARE FUND, AND
SERVICE FITTERS' INDUSTRY
EDUCATIONAL FUND, TRUSTEES OF THE
STEAMFITTERS' INDUSTRY PENSION FUND,
STEAMFITTERS' INDUSTRY SUPPLEMENTAL
RETIREMENT FUND, STEAMFITTERS'
INDUSTRY WELFARE FUND, STEAMFITTERS'
INDUSTRY EDUCATIONAL FUND,
STEAMFITTERS' INDUSTRY SECURITY
BENEFIT FUND, AND STEAMFITTERS'
INDUSTRY VACATION PLAN, and THE
STEAMFITTING INDUSTRY LABOR
MANAGEMENT COOPERATION COMMITTEE,
SD~Y
DOCC\lE~T
ELECTRO:\ICALLY FILED
DOC#: _ _ _ _~--:---DATE FILED:
tj/?..-//6
Plaintiffs,
15 Civ. 1726 (LLS)
- against -
OPINION & ORDER
HENICK-LANE, INC., HENICK-LANE
SERVICE CORP., and VIVID MECHANICAL
LLC,
Defendants.
Defendants move to dismiss the first amended complaint
("FAC")
for lack of subject-matter jurisdiction and failure to
state a claim. For the reasons that follow, the motion is
granted in part and denied in part. There is subject-matter
jurisdiction, but the FAC's second, fourth,
sixth, eighth, and
ninth claims are dismissed for failure to state a claim upon
which relief can be granted.
BACKGROUND
Plaintiffs are the trustees of two groups of multiemployer
labor-management trust funds: the Metal Trades local pension
funds and the Service Fitters' Industry Educational Fund ("Metal
Trades Funds"), and the Steamfitters' Industry Pension,
Supplemental Retirement, Welfare, Educational, and Security
Benefit Funds and Vacation Plan ("Construction Funds").
Plaintiff Steamfitting Industry Labor Management Cooperation
Committee ("LMCC") is a joint committee established under the
Labor-Management Relations Act.
Both groups of funds are affiliated with the non-party
Enterprise Association of Steamfitters Local 638
("Union"), and
benefit the Union's metal trades branch and construction branch
respectively.
Defendants Henick-Lane, Inc.
Corp.
("HLI"), Henick-Lane Service
("HLSC"), and Vivid Mechanical LLC ("Vivid") are related
companies owned and operated by non-party Ernist Henick.
Plaintiffs allege defendants violated collective bargaining
agreements
("CBAs") with the Union by failing to make required
contributions and refusing to permit an audit of their books.
DISCUSSION
Subject-Matter Jurisdiction
The FAC asserts federal-question subject-matter
jurisdiction under section 301(a) of the Labor-Management
Relations Act of 1947 ("LMRA"), 29 U.S.C.
§
185(a), and section
502 of the Employee Retirement Income Security Act of 1974
-2-
("ERISA"),
29 U.S.C. § 1132.
Defendants argue that there is no subject-matter
jurisdiction under ERISA or the LRMA because in fact they are
not parties to collective bargaining agreements with the Union.
That conflates the merits of plaintiffs' claims with the
existence of jurisdiction.
There is a "very low threshold required to support federalquestion jurisdiction." Gallego v. Northland Grp. Inc., 814 F.3d
123, 128
(2d Cir. 2016). "The jurisdictional inquiry is rather
straightforward and depends entirely upon the allegations in the
complaint." Carlson v. Principal Fin. Grp.,
320 F.3d 301, 306
(2d Cir. 2003). "Under the longstanding well-pleaded complaint
rule, however, a suit 'arises under'
federal law 'only when the
plaintiff's statement of his own cause of action shows that it
is based upon [federal law].'" Vaden v. Discover Bank, 556 U.S.
49, 60, 129 S. Ct. 1262, 1272
(2009)
(brackets in Vaden)
(quoting Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149,
152, 29 S. Ct. 42, 43
(1908)).
Under section 301(a) of the LMRA, there is jurisdiction
over "Suits for violation of contracts between an employer and a
labor organization representing employees," and under ERISA
section 515, there is jurisdiction over actions brought by ERISA
fiduciaries alleging violation of an obligation to make
contributions under the terms of an ERISA plan or CBA,
-3-
Greenblatt v. Delta Plumbing & Heating Corp.,
68 F.3d 561, 568
(2d Cir. 1995).
The parties agree that the Metal Trades Funds and
Construction Funds are ERISA fiduciaries.
Plaintiffs allege,
relying on several theories described in detail below, that
defendants are bound by CBAs which they violated by refusing to
grant plaintiffs access to their books and by failing to make
contributions required by the CBAs and the funds' documents.
Accordingly, there is jurisdiction under ERISA and the LMRA.
Defendants' arguments that the claims against them fail
because they did not sign the CBA their agent produced for them
must await proof: it does not arise on the face of the FAC.
The motion to dismiss the FAC for lack of subject-matter
jurisdiction is denied.
Failure to State a Claim
1.
The FAC's first claim alleges that HLI breached its
collective bargaining agreement with the Union's metal trades
branch ("Metal Trades CBAn) by refusing to allow the Metal
Trades Funds to inspect its books and records.
Defendants argue that the complaint fails to allege that
HLI is bound by the Metal Trades CBA.
According to the FAC, in March 2010, HLI's owner and CEO,
Ernest Henick, signed a bargaining authorization appointing the
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Mechanical Service Contractors Association of New York
("MSCANY") as its agent to execute a new CBA with the Union's
metal trades branch. MSCANY then entered into CBA with the metal
trade branch, binding HLI to its terms. The Metal Trades CBA
authorizes the Metal Trade Funds to audit HLI to insure it has
made all required contributions to the funds. The Metal Trade
Funds have repeatedly requested access to HLI's books, but HLI
has refused. That is sufficient to state a claim for breach of
the Metal Trades CBA.
Defendants also argue that the FAC does not allege that the
Union obtained majority support from HLI's employees and that,
without majority support, it would have been illegal for HLI to
enter into the CBA. Illegality is an affirmative defense. Fed.
R. Civ. P. 8(c) (1). "The pleading requirements in the Federal
Rules of Civil Procedure, however, do not compel a litigant to
anticipate potential affirmative defenses, such as the statute
of limitations, and to affirmatively plead facts in avoidance of
such defenses." Abbas v. Dixon, 480 F.3d 636,
640
(2d Cir.
2007) .
The motion to dismiss the first claim of the FAC for
failure to state a claim upon which relief can be granted is
denied.
2.
In the FAC's second claim, the Metal Trades Funds seek
-5-
delinquent contributions from HLI, stating: "HLI failed, or upon
completion of an audit may be determined to have failed, to
remit contributions it was required to make to the Metal Trades
Funds for Service Work performed by employees of HLI from
January 1, 2012 to date." FAC
CJ[
30
(Dkt. No. 28).
There is no factual support for that conclusion. The FAC
does not allege specific work performed by HLI for which
contributions are owed or what the amount of delinquent
contributions might be. There is no pleaded basis for
plaintiffs' suspicion other than HLI's refusal to submit to an
audit.
Defendants' characterization is correct: "it is rank
speculation--maybe money is owed, and maybe not." Defs.' Br. 11
(Dkt. 35). It presents no more "than a sheer possibility that a
defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S.
662,
678, 129 S. Ct. 1937, 1949 (2009). Accordingly, "it 'stops
short of the line between possibility and plausibility of
"entitlement to relief."'" Id.
(quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 557, 127 S. Ct. 1955, 1966 (2007)).
The motion to dismiss the second claim for failure to state
a claim is granted.
The same defect requires dismissal of the fourth,
sixth,
eighth, and ninth claims.
3.
In the FAC's third claim, the Metal Trades Funds seek
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delinquent contributions from HLSC for work performed in 2012
and 2013.
Defendants argue that HLSC never signed the Metal Trades
CBA. However, their Reply Brief at 27
(Dkt. No. 45) acknowledges
that plaintiffs allege, based on a letter from defendants'
attorney, that HLSC has been a signatory to the Metal Trades
CBAs for the last 40 years: "Plaintiffs rely heavily on Ex. 4 to
the FAC (Ex. E to the Markowski Aff.), which states
(incorrectly) that HLSC is a signatory to the MTB CBA." Whether
defendants' counsel was mistaken goes to the merits of the case,
not whether plaintiffs' assertions state a claim.
Plaintiffs allege that HLSC made certain contributions to
the Metal Trades Funds in accordance with the terms of the CBAs
but that it is delinquent in the amount of $42,073.69 for 2012
and 2013. That total is broken down by union member, month, and
category of fringe benefit in a spreadsheet attached to the FAC
as exhibit 7.
That suffices to state a claim for delinquent
contributions. The motion to dismiss the third claim is denied.
4.
In the fifth claim, the Metal Trades Funds seek to audit
all defendants on the theory that they are alter-egos of each
other.
"A district court's independent determination of alter ego
-7-
signifies that, for all relevant purposes, the non-signatory is
legally equivalent to the signatory and is itself a party to the
CBA.u Local Union No. 38, Sheet Metal v. Custom Air Sys., 357
F.3d 266, 268
(2d Cir. 2004). "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.'u UNITE HERE Nat.
Ret. Fund v. Kombassan Holding, 629 F.3d 282, 288
(2d Cir. 2010)
(quoting Newspaper Guild v. NLRB, 261 F.3d 291, 298 (2d Cir.
2001). "'[T]he 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.'u Id.
(brackets in UNITE HERE)
(quoting Goodman Piping Prods., Inc. v. NLRB, 741 F.2d 10, 11
(2dCir. 1984)).
The FAC alleges that Ernest Henick owned, managed, and
operated HLI, HLSC, and Vivid and used them interchangeably when
dealing with plaintiffs and third parties; that Mr. Henick bid
on construction projects with HLI and performed the work with
Vivid; that HLI, HLSC, and Vivid had the same address, telephone
number, and attorney; that HLI's website described HLSC as an
arm of HLI; that certain project managers were employed by both
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HLI and Vivid; that HLI or HLSC vans appeared at Vivid jobsites;
that HLSC's comptroller had access to Vivid's payroll records;
and that Mr. Henick used the three defendants to avoid
contributing to plaintiffs.
Defendants argue that the alter ego doctrine is
inapplicable because each defendant has existed in parallel with
the other defendants and no defendant is a continuation of
another. Defendants also argue that the FAC alleges Mr. Henick's
intent to evade labor obligations in a conclusory fashion,
unsupported by factual allegations. However, the Second Circuit
has held that neither parallel existence nor a lack of antiunion animus forecloses the finding that entities are alter
egos:
Although perhaps a "germane" or "sufficient basis for imposing
alter ego status," an "anti-union animus or an intent to evade
union obligations" is not a necessary factor. [Goodman Piping
Prods., Inc., 741 F.2d] at 12 (internal quotation marks
omitted). Accordingly, Kombassan's argument that it cannot be
an alter ego because there were no facts establishing that the
assignment was done with an anti-union animus or an intent to
evade the obligations of the collective bargaining agreement
is without merit.
Furthermore, Kombassan's argument that alter ego status
cannot apply where the entities exist simultaneously is also
incorrect. "Although the alter ego doctrine is primarily
applied in situations involving successor companies, where the
successor is merely a disguised continuance of the old
employer, it also applies to situations where the companies
are parallel companies." Mass. Carpenters, 139 F.3d at 307
(internal quotation marks and citations omitted). Parallel
existence, therefore, is not an impediment to imposing alter
ego status.
UNITE HERE Nat. Ret. Fund, 629 F.3d at 288
-9-
(emphasis in
original).
The allegations of alter ego liability are sufficient to
survive a motion to dismiss. See, e.g., Gesualdi v. Baywood
Concrete Corp., No. 11-cv-4080(DRH) (AKT), 2014 WL 4659265, at *6
(E.D.N.Y. Sept. 17, 2014); Trs. of Hollow Metal Tr. Fund v. FHA
Firedoor Corp., No. 12 Civ. 7069 (PAC), 2013 WL 1809673, at *4
(S.O.N.Y. Apr. 30, 2013).
As discussed above, plaintiffs have stated a claim that HLI
and HLSC are bound by the Metal Trades CBAs. As alter egos, all
defendant are bound by the CBAs' provisions granting the Metal
Trades Funds access to their books. Plaintiffs allege they have
demanded access to each defendants' books and have been denied,
except by HLSC which provided incomplete access.
The FAC's fifth claim states a claim for violation of the
Metal Trade CBAs by all defendants. The motion to dismiss it is
denied.
5.
In the FAC's seventh claim, plaintiffs allege HLI and Vivid
are liable as alter egos of HLSC for HLSC's $42,073.69 in
delinquent contributions to the Metal Trades Funds in 2012 and
2013 that are the subject of claim three. As plaintiffs have
stated a claim against HLSC for those delinquent contributions
and that HLI and Vivid are alter egos of HLSC, the motion to
dismiss this claim is denied.
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6.
In the FAC's tenth claim, plaintiffs allege that, in
January 2013, HLSC entered into a letter of compliance with the
Union prescribing terms and conditions for HLSC to perform
construction work on a certain project in Brooklyn, New York.
The letter of compliance incorporated by reference the terms of
a working agreement between the Union and the Mechanical
Contractors Association of New York. Pursuant to the letter of
compliance and the working agreement, HLSC was obligated to make
hourly contributions to the Construction Funds and the LMCC for
all construction work performed by its employees on the Brooklyn
project. Plaintiffs allege that HLSC failed to make $18,914.90
in required contributions as calculated in exhibit 10 of the
FAC, a spreadsheet which breaks down that total by union member,
month, and category of fringe benefit.
That is sufficient to state a claim for delinquent
contributions. Accordingly, the motion to dismiss the tenth
claim is denied.
7.
In the FAC's eleventh and final claim, plaintiffs allege
that, as alter egos of HLSC, HLI and Vivid are vicariously
liable for HLSC's delinquent contributions to the Construction
Funds and the LMCC.
Plaintiffs have stated a claim that HLSC failed to make
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those contributions and that HLI and Vivid are alter egos of
HLSC. Accordingly, plaintiffs motion to dismiss the eleventh
claim for failure to state a claim is denied.
CONCLUSION
Defendants' motion to dismiss the first amended complaint
for lack of subject-matter jurisdiction and failure to state a
claim (Dkt. No. 33) is granted in part and denied in part. The
FAC's second, fourth, sixth, eighth, and ninth claims are
dismissed for failure to state a claim. In all other respects,
the motion is denied.
So ordered.
Dated:
New York, New York
September 2, 2016
l.w L. , $t.-tn..
LOUIS L. STANTON
u.s.D.J.
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