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Groden v. Reichert & Son Trucking, Inc.

United States District Court, D. Massachusetts

February 12, 2018

EDWARD F. GRODEN, as Executive Director of the New England Teamsters and Trucking Industry Pension Fund, Plaintiff,
v.
REICHERT & SON TRUCKING, INC., et al., Defendants.

          REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

          Judith Gail Dein, United States Magistrate Judge.

         I. INTRODUCTION

         This is an action under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq., as amended by the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C. §§ 1381 et seq. The MPPAA requires employers withdrawing from a multiemployer pension plan to pay a withdrawal fee equal to their proportionate share of the pension fund's vested but unfunded benefits. The defendant Reichert & Son Trucking, Inc. (“Reichert Trucking”) was a participant in such a plan, the New England Teamsters and Trucking Industry Pension Fund (the “Fund” or “Pension Fund”). Reichert Trucking withdrew from the Fund in 2012 without satisfying its withdrawal liability, and ceased doing business in 2014. The plaintiff, Edward F. Groden, is the Executive Director of the Fund. The Fund brought this action against Reichert Trucking seeking to recover its withdrawal liability. (Compl. (Docket No. 1) Count I).

         The stock of Reichert Trucking was owned 100% by Donna Reichert. Her husband, William Reichert, owns 100% of the stock of the defendant, Reichert & Son Fuel Oil, Inc. (“Reichert Fuel”). By this action, the Fund is also seeking to hold Reichert Fuel liable for Reichert Trucking's withdrawal liability under a theory of common control as defined by ERISA § 4001(b)(1), 29 U.S.C. § 1301(b)(1) and relevant regulations. (Compl. Count II).

         This matter is presently before the court on “Plaintiff's Motion for Summary Judgment” (Docket No. 32) whereby the Fund is seeking judgment against both defendants for the withdrawal liability of Reichert Trucking. In response to the motion, the defendants agree that judgment should enter against Reichert Trucking. However, they argue that there is no common control between the companies or, in the alternative, that there are material facts in dispute that preclude summary judgment on the issue of Reichert Fuel's liability.

         After a careful review of the record and oral argument of counsel, this court finds that the material facts are not in dispute, and that Reichert Fuel is liable for Reichert Trucking's withdrawal liability under a theory of common control. Therefore, this court recommends to the District Judge to whom this case is assigned that the Fund's motion for summary judgment be ALLOWED. This court further recommends that the Fund provide an updated calculation of the amount due, and that judgment be entered against all named defendants, which includes aliases used by, or authorized to be used by, Reichert Fuel.[1]

         II. STATEMENT OF FACTS[2]

The following facts are undisputed unless otherwise indicated.

         Overview of the Fund

         Plaintiff Edward F. Groden is the Executive Director of the Pension Fund and a “fiduciary” within the meaning of ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3). (PF ¶ 1). The Fund was established in 1958 pursuant to an Agreement and Declaration of Trust (the “Trust Agree-ment”). (Id. ¶ 4). It is a “multi-employer [pension] plan” within the meaning of ERISA § 3(37)(A), 29 U.S.C. § 1002(37)(A), and an “employee benefit plan” or “plan” within the meaning of ERISA § 3(3), 29 U.S.C. § 1002(3). (Id. ¶ 2). The purpose of the Fund is to receive pension contributions from contributing employers, and to then provide pension benefits to eligible employees of those employers. (Id. ¶ 4). Contributing employers are obligated to make contributions to the Fund on behalf of their employees pursuant to collective bargaining agreements (“CBA”) between the employer and local Teamster union. (Id. ¶ 5). Contributions are based on the hours worked by each employee covered by the CBA, as reflected in monthly remittance reports submitted by the employer. (Id. ¶¶ 6-7). These contributions, in turn, determine the amount of benefits to which employees/participants may be entitled.

         Congress amended ERISA and enacted the MPPAA in 1980 “to protect the viability of defined pension benefit plans, to create a disincentive for employers to withdraw from multiemployer plans, and also to provide a means of recouping a fund's unfunded liabilities.” Sun Capital Partners III, LP v. New England Teamsters & Trucking Indus. Pension Fund, 724 F.3d 129, 138 (1st Cir. 2013) (citing Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 720-22, 104 S.Ct. 2709, 2713-15, 81 L.Ed.2d 601 (1984)). “As such, the MPPAA requires employers withdrawing from a multiemployer plan to pay their proportionate share of the pension fund's vested but unfunded benefits.” Id. (citing 29 U.S.C. §§ 1381, 1391), and cases cited. “An employer withdraws when it permanently ceases its obligation to contribute or permanently ceases covered operations under the plan.” Id. (citing 29 U.S.C. § 1383(a)). If an employer challenges a pension fund's calculation of withdrawal liability, it must file a timely request for arbitration under ERISA § 4221, 29 U.S.C. § 1401. If an employer fails to pay its withdrawal liability, the fund is also entitled to collect interest, liquidated damages, and costs and reasonable attorneys' fees. (See Groden Aff. ¶ 33).

         Reichert Trucking's Participation in the Pension Fund

         Defendant Reichert Trucking was organized as a Rhode Island corporation in 2005. (DF ¶ 17). It was in the business of renting trucks and it owned two dump trucks. (D. Reichert Dep. (Docket No. 36-2) at 22). Donna Reichert was the owner of 100% of the stock in that company. (See DF ¶¶ 18-19). As detailed below, however, it is undisputed that William Reichert was officially an employee of Reichert Trucking, and was actively involved in, if not primarily responsible for, the management and operation of the trucking company's business.

         In October 2005, William Reichert made the decision for Reichert Trucking to enter into a CBA with Teamster Local 251 (the “Union”), a participating union in the Pension Fund. (PF ¶ 12; W. Reichert Aff. ¶ 8).[3] From October 2005 through January 2012, Reichert Trucking made contributions to the Pension Fund for hours worked by the trucking company's three employees who were covered by the CBAs, specifically William Reichert, the Reicherts' son, and a third employee. (PF ¶ 13; W. Reichert Dep. (Docket No. 36-3) at 46-47). William Reichert prepared the remittance reports with respect to the hours worked by these employees. (PF ¶ 15). Based upon the contributions paid and hours worked by the employees, all three of Reichert Trucking's employees have earned “pension credits” and two of the three employees are vested and eligible for a pension benefit from the Fund. (Groden Aff. ¶ 22).

         Reichert Trucking “permanently ceased to have an obligation to contribute to the Pension Fund or permanently ceased covered operations under the Pension Fund as of February 1, 2012.” (PF ¶ 18). The company ceased operations in 2014. (DF ¶ 31). The Pension Fund notified Reichert Trucking that it had withdrawn from the Fund and demanded payment of its proportionate share of the Fund's unfunded vested benefit liability ($252, 115.00) by letter dated May 21, 2015. (PF ¶¶ 19-22). Receiving no response to the demand for payment, or, in the alternative, a payment plan, the Fund sent Reichert Trucking a notice entitled “Failure to Pay Withdrawal Liability” on October 15, 2015, followed by a “Notice of Default” dated November 3, 2015. (Id. ¶¶ 23-26). Reichert Trucking made no payments, took no steps to challenge the demand for withdrawal liability and did not request arbitration. (Id. ¶¶ 29-30). In response to the present motion for summary judgment, the defendants have taken the position that they “do not dispute that judgment should enter against the defendant[] Trucking Company for the withdrawal liability pursuant to 29 U.S.C. § 1399(B)(1).” (Defs. Mem. (Docket No. 40) at 1). Thus, the sole issue before the court is whether Reichert Fuel is also liable.

         Donna's husband, William, owns 100% of the stock in Reichert Fuel. (DF ¶¶ 4-5). Organized as a Rhode Island corporation in 1989, Reichert Fuel is in the business of delivering heating fuel and servicing heating systems. (Id. ¶¶ 6-7). It is operated out of the same location as Reichert Trucking - the Reicherts' home. (W. Reichert Dep. (Docket No. 36-3) at 11).

         William's Involvement with Reichert Trucking

         William was an employee of Reichert Trucking. (PF ¶ 40; DF ¶ 25). The undisputed facts establish that while William did not own any stock of Reichert Trucking, and was not an official officer or director, he was actively involved in, if not primarily responsible for, the operation of the company. As Donna explained in her deposition, she was the owner and officer of Reichert Trucking but had no other position in the company, and while she oversaw the company she was not “as hands on, ” instead giving a variety of responsibilities to William. (See D. Reichert Dep. (Docket No. 36-2) at 19-20). Thus, when a truck or driver was needed, William was the one who was called. (Id.).

         It was William's idea for Reichert Trucking to sign the collective bargaining agreement with Local 251. (W. Reichert Dep. (Docket No. 43-3) at 26-27, 29-30). William was Reichert Trucking's main contact with the Union. (See id. at 34-35). He determined what work would be done to account for the weekly hours remitted to the Fund on behalf of Reichert Trucking, and he prepared the remittance reports to be submitted to the Fund in return for union benefits. (PF ¶ 15; W. Reichert Dep. (Docket No. 36-3) at 37-38, 42). As noted above, William, the Reicherts' son, and a third employee were the ones who participated in the Pension Fund. (W. Reichert Dep. (Docket No. 36-3) at 46-47). On occasion, William signed some checks in Donna's name on behalf of Reichert Trucking. (Id. ...


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