Pension Benefit Guaranty Corporation v. Uforma/Shelby Business Forms, Inc. et al

Filing 16

Memorandum Opinion and Order: Defendants' Motion to Dismiss is denied. This case is transferred to the United States District Court for the Southern District of Ohio. Judge Patricia A. Gaughan on 4/9/13. (LC,S) re 5

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

Pension Benefit Guaranty Corporation,
Plaintiff,
vs.
Uforma/Shelby Business
Defendant.

)
)
)
)
)
)
)
)
)

CASE NO. 1:12 CV 2661
JUDGE PATRICIA A. GAUGHAN

Memorandum of Opinion and Order

Introduction
This matter is before the Court upon Motion of Defendants Uforma/Shelby Business
Forms, Inc., Samuel L. Peters, Miami Systems Corporation, Bertek Systems, Inc., Specialty
Envelope, Inc., Trust of Samuel L. Peters, Samuel L. Peters, LLC, Peters Ohio, LLC to
Dismiss the Complaint for Lack of Venue or, in the Alternative, Transfer Venue Pursuant to
28 U.S.C. § 1404(a) (Doc. 5). This is an ERISA case brought by plaintiff to recover statutory
liabilities and enforce statutory liens allegedly due arising out of the termination of two
pension plans. For the following reasons, the motion is granted to the extent that this case is
hereby transferred to the United States District Court for the Southern District of Ohio.

1

Facts
Plaintiff Pension Benefit Guaranty Corporation (plaintiff or PBGC) brought this
Complaint against defendants Uforma/Shelby Business Forms, Inc. (Uforma); Samuel L.
Peters; Miami Systems Corporation; Autron, Inc.; Bertek Systems, Inc.; Specialty Envelope,
Inc.; Trust of Samuel L. Peters; 2840 Sprouse Drive; 10001 Alliance Road; 2322 Clifton
Avenue; Samuel L. Peters, LLC; Peters Ohio LLC; and Unknown Controlled Group Members
of Uforma/Shelby Business Forms, Inc.
Generally, the Complaint alleges the following and plaintiff points to further facts as
supported by exhibits attached to its brief. PBGC is a wholly owned United States
government corporation established under 29 U.S.C. § 1302(a) to administer and enforce the
pension plan termination insurance program established by Title IV of ERISA. As the insurer
of pension plans covered by Title IV of ERISA, plaintiff generally becomes trustee of a
pension plan when a pension plan terminates without sufficient assets to pay benefits and,
subject to certain statutory limitations, pays the plan’s unfunded benefits from PBGC’s
insurance funds. Under applicable ERISA provisions, a contributing sponsor of a pension
plan, on the plan termination date, and members of the contributing sponsor’s “controlled
group” incur joint and several liability to PBGC for the total amount of the plan’s unfunded
benefit liabilities, unpaid pension insurance premiums, and termination premiums, plus
accrued interest. If any of those liable to PBGC neglect or refuse to pay, a lien arises in the
amount of the liability.
Effective June 4, 1979, Uforma established two pension plans to provide retirement
benefits for certain of its employees: (1) the UFORMA/Shelby Business Forms, Inc. Hourly

2

Employees’ Retirement Plan (the Hourly Plan); and (2) the UFORMA/Shelby Business
Forms, Inc. Salaried Employees’ Retirement Plan (the Salaried Plan) (collectively, the
“Plans”). Uforma was the administrator and contributing sponsor of both Plans which are
covered by the pension plan termination insurance program established under Title IV of
ERISA.
On January 12, 2010, PBGC issued notices to Uforma of PBGC’s determinations
pursuant to ERISA that the Plans should be terminated. The termination notices were based
on the fact that PBGC had determined that the Plans would be unable to pay the benefits
when due. By agreements between PBGC and Uforma entered into on April 15, 2010 (the
Trustee Agreements), the Plans were terminated as of March 31, 2006 and PBGC was
appointed trustee. These agreements were executed on behalf of Uforma as Plan
Administrator of the Plans by Samuel L. Peters, President of Uforma. The agreements stated
that on March 31, 2006, Uforma ceased operations and terminated the employment of all its
active participants, and that Uforma’s principal place of business is located in Shelby, Ohio.
As of the date the Plans terminated, Samuel L. Peters owned more than 80% of
Uforma’s stock, which he had acquired on June 27, 1989 through a Stock Purchase
Agreement (SPA). Peters also owned and controlled other defendants identified in the
Complaint which are trades or businesses under his control and, therefore, part of Uforma’s
controlled group.
On October 15, 2012, PBGC sent a letter to each of the defendants demanding
payment of Employer Liability, unpaid Insurance Premiums, and Termination Premiums, plus
accrued interest, by no later than October 19, 2012, but none tendered payment.

3

Plaintiff thereafter filed this Complaint with five claims for relief seeking to collect
liabilities allegedly due.
This matter is now before the Court upon defendants’ Motion to Dismiss the
Complaint for Lack of Venue or, in the Alternative, Transfer Venue Pursuant to 28 U.S.C. §
1404(a).
Discussion
Defendants seek to dismiss for improper venue asserting that there is no basis for the
suit to have been filed here or, alternatively, to transfer venue to the United States District
Court for the Southern District of Ohio.
Venue of this action is governed by 29 U.S.C. §1303(e)(2) which states:
Except as otherwise provided in this subchapter, where such an action is brought [by
PBGC] in a district court of the United States, it may be brought in the district where
the plan is administered, where the violation took place, or where a defendant
resides or may be found, and process may be served in any other district where a
defendant resides or may be found. (emphasis added)
Plaintiff asserts that venue is proper under the statute.
Plaintiff maintains that the lead defendant, Uforma, resides and may be found in the
Northern District of Ohio. Plaintiff points to the Trustee Agreements, which were signed by
Peters on behalf of Uforma in 2010, and state that Uforma’s principal place of business is in
Shelby, Ohio. (Doc. 12 Ex. 5) Shelby is located in Richland County, within the Northern
District. Additionally, plaintiff points to a Tolling Agreement, signed by Peters on behalf of
Uforma in March 2012, which states that Uforma’s principal place of business is in Shelby,
Ohio. (Id. Ex. 6) Plaintiff also submits a 2013 Ohio Secretary of State listing of Uforma as an
active business with a registered agent in Cleveland. (Id. Ex. 8)

4

Plaintiff additionally asserts that the “violations” occurred in this district. Plaintiff
reasons that the liability results from the underfunding of the pension Plans. Employees of
Uforma worked in Shelby and accrued pension benefits that resulted in the pension liabilities
at issue. The liabilities arose by virtue of Uforma’s agreement to terminate the Plans on
March 31, 2006, in Shelby, Ohio.
Finally, plaintiff contends that when the Plans terminated as of that date, Uforma
ceased being the administrator of the Plans and PBGC became statutory trustee. Thus, the
Plans are not administered in Cincinnati, Ohio where, as discussed below, defendants assert
they are administered.
Defendants assert that venue is not proper under the statute and, alternatively, the case
should be transferred upon consideration of convenience and fairness. Defendants support
their request for dismissal or transfer with the declaration of Samuel Peters who states as
follows.
The June 27, 1989 Stock Purchase Agreement was “an unconventional business
transaction,” occurring in Cincinnati, in which Peters acquired the right to operate Uforma
and purchase its stock if sufficient profits were generated to fund the purchase. The stock was
placed in escrow, but never released because less than 20% of the purchase price was earned
and paid to the seller. Although Uforma had a manufacturing plant in Shelby, Peters ran the
company out of his Miami Systems location in Cincinnati. The Plans were administered in
Cincinnati, and all the associated books and records were located there. Uforma ceased
operations in 2006. At that time, there was a modest deficit in the Plans based on the Plans’
interest rate assumptions. Specialty Envelope, Inc. and Miami Systems are businesses

5

formerly owned and operated by Peters. Autron, Inc. was a Massachusetts corporation that
was headquartered and managed in Cincinnati that has been legally dissolved. Bertek
Systems, Inc. is an active Vermont corporation of which Peters is president and which he runs
out of Cincinnati. Peters is the sole member of Samuel L. Peters, LLC and Peters Ohio, LLC
which are based in and operated out of Cincinnati. The parcels of real estate named as
defendants herein are also owned by Peters and managed from Cincinnati. The Trust of
Samuel L. Peters is a trust established in Cincinnati and has no assets. 2322 Clifton is real
estate which has been sold.
Defendants argue that none of the three statutory bases of venue are present.
First, based on the declaration, defendants contend that both Plans were administered
by Peters in Cincinnati.
Second, defendants assert that the Northern District is not the place where the
violation occurred. Defendants point to the Complaint’s allegation that the Plans were
terminated by agreements between PBGC and Uforma with a termination date of March 31,
2006, and the action was brought to collect the statutory liability for unfunded benefit
liabilities owed PBGC as a result of the termination of the Plans and unpaid pension insurance
premiums and termination premiums. Defendants assert that any alleged underfunding of the
Plans resulted from business operations of Uforma in Cincinnati where the Plans were
managed and administered.
Third, defendants assert that because there is no longer any operation of Uforma in
this district, it no longer may be found here. Defendants point to the Complaint’s allegations
showing that defendants Peters, Specialty Envelope, Peters LLC, Peters Ohio LLC, and

6

Miami Systems all reside or have their principal place of business in Cincinnati. Of the
remaining defendants, UForma is no longer in business and was managed out of Cincinnati,
Autron is a former Massachusetts corporation that was headquartered and managed in
Cincinnati, Bertek
is a Vermont corporation which is actively doing business in Vermont and of which Peters is
president, the Trust is established in Cincinnati and currently has no assets, 2840 Sprouse
Drive is a property owned and managed through Samuel L. Peters, LLC that is based in
Cincinnati, 10001 Alliance Road is a property owned and managed by Peters and serves as
his business address in Cincinnati, and 2322 Clifton Avenue is a piece of real property that is
no longer owned by Peters or any of his corporations, trusts or LLCs.
For the following reasons, the Court disagrees with plaintiff that venue is proper here.
Plaintiff contends that Uforma resides and may be found in this district based on
documents that Peters signed in 2010 and 2012 acknowledging that Uforma’s principal place
of business is in Shelby. But, Peters’s declaration testimony is undisputed that although
Uforma had a manufacturing plant in Shelby, Peters ran the company out of his Miami
Systems location in Cincinnati, and Uforma ceased operations in 2006. As such, there is no
longer any operation of Uforma in this district. Additionally, defendants note, and it appears
to be undisputed, that PBGC prepared the Trustee Agreements and Tolling Agreement which
identify Shelby as Uforma’s principal place of business. Defendants assert that after it ceased
operations in 2006, Uforma had no reason to dispute that the prior location of its factory was
its principal place of business while the business was operating. But, defendants maintain,
these documents do not establish that Uforma presently does business in Shelby or that the

7

Plans were ever administered there.
Next, plaintiff contends that the violations occurred here given that the employees
working at the plant in Shelby accrued benefits there which resulted in the liabilities at issue
here. But, Peters’s declaration testimony is undisputed that he operated Uforma’s business
from Cincinnati, and administered the Plans from there. Peters declares that administration
included the payroll, mailing paychecks and the Plan’s benefit checks, as well as making
decisions regarding the Plans. Thus, decisions concerning funding of the Plans were made
there, including any underfunding which resulted in the liabilities, not at the location of the
manufacturing plant.
Finally, plaintiff cannot dispute Peters’s declaration that the Plans were administered
in Cincinnati. Plaintiff states in a footnote that when the Plans terminated, Uforma ceased
being the administrator of the Plans and that PBGC became the statutory trustee. While the
latter is true, even plaintiff’s evidence shows that PBGC maintains the records of the Plans, as
statutory trustee, at is headquarters in Washington, D.C. (Jeanette Pittman decl).
For these reasons, plaintiff has not established that venue is proper in this district.
However, the Court will transfer the case to the Southern District of Ohio rather than dismiss
it. Plaintiff states in a footnote that the Court should transfer the case rather than dismiss it if
it finds that the case was brought in the wrong district. Plaintiff points out that transfer is
favored over dismissal because it facilitates adjudication of a dispute on the merits.
Additionally, defendants request in the alternative that the case be transferred. Accordingly,

8

defendants’ request to transfer venue to the Southern District of Ohio is granted.1
Having found that venue is improper but that transfer is appropriate, the Court need
not consider defendants’ alternative argument seeking a transfer of this case to the Southern
District of Ohio pursuant to 28 U.S.C. § 1404(a) which allows such “for the convenience of
parties and witnesses, in the interest of justice” so long as the action might have been brought
there. In fact, that statute is utilized where, unlike here, venue is initially proper. Assuming
the Court were to consider a transfer under the statute, it would be appropriate.
Defendants assert that because PBGC is a Washington, D.C. entity with no unique
contacts with this district, its choice of forum is entitled to little weight. Defendants maintain
that the Plans were administered exclusively out of Cincinnati, and all of the evidence
regarding the Plans and their administration is located there. Additionally, defendants point
out that no witnesses are located in this district.
Plaintiff asserts that its choice of venue is given great weight, and that it has a field
office in Richmond Heights. Plaintiff also maintains that it has an interest in this district
where it is or will be paying the pension benefits of the more than 400 former Uforma
employees who are Plan participants and many of whom live in this district. As to witnesses,
plaintiff maintains that testimony regarding the history of the Plans’ administration is

1

Both parties refer to this Court’s 2000 decision in the case of Frederick Richmond
v. Uforma/Shelby Business Forms, Inc., et al., Case No. 1:99 CV 2552 (July 27,
2000). The Court does not find that the decision dictates its actions here. That
case involved a dispute over the Stock Purchase Agreement between Richmond
and Peters. This Court ultimately transferred the case to the Southern District of
Ohio given that an earlier lawsuit had been adjudicated there involving those
same parties over the SPA and the judge had “devoted substantial judicial
resources to interpreting the” SPA and had presided over a trial.
9

immaterial and if depositions are necessary, witnesses can be accommodated. Concerning
evidence, records are located in Washington, D.C. and Richmond Heights.
While plaintiff’s choice of forum should normally not be disturbed, this is not a
typical case involving two private litigants. Plaintiff is a federal government corporation
headquartered in Washington, D.C. Although it maintains a field office in Richmond
Heights, its records are maintained in Washington. Furthermore, the Court does not give the
location of the retirees great weight given that their rights and benefits are not involved here,
and the outcome of this dispute will not affect them. Moreover, it is not disputed that
Uforma’s records and witnesses are located in Cincinnati, and that the 12 other defendants are
mostly based in Cincinnati. That would be a more convenient forum.
Conclusion
For the foregoing reasons, defendants’ Motion to Dismiss is denied. This case is
transferred to the United States District Court for the Southern District of Ohio.
IT IS SO ORDERED.

/s/ Patricia A. Gaughan
PATRICIA A. GAUGHAN
United States District Judge
Dated: 4/9/13

10

11