Summary
holding that an employer manifested an intent to be bound by a CBA where it submitted remittance reports to employee benefit plans and its parent company disclosed in a filing with the Securities and Exchange Commission that it was paying union benefit costs
Summary of this case from Cummings v. City of N.Y.Opinion
10 Civ. 1799 (RMB)
10-25-2011
THOMAS GESUALDI, et al., as Trustees and Fiduciaries of the Local 282 Welfare, Pension, Annuity, Job Training, and Vacation and Sick Leave Trust Funds, Plaintiffs, v. JUDA CONSTRUCTION, LTD., et al., Defendants.
DECISION & ORDER
I. Introduction
On March 8, 2010, Thomas Gesualdi and eight other trustees of the Welfare, Pension, Annuity, Job Training, and Vacation and Sick Leave Trust Funds (collectively, "Plaintiffs" or the "Funds"), which benefit Teamsters Union Local 282 (the "Union"), filed a complaint ("Complaint") against Juda Construction, Ltd. ("Juda"), Pure Earth, Inc. ("Pure Earth"), Pure Earth Materials, Inc. a/k/a South Jersey Development, Inc. ("PE Materials"), Pure Earth Transportation and Disposal, Inc. ("PE Transportation"), PEI Disposal Group, Inc. a/k/a Pure Earth Disposal Group, Inc. ("PEI Disposal" and, together with Juda, Pure Earth, PE Materials, and PE Transportation, the "Pure Earth Defendants"), Whitney Trucking, Inc. ("Whitney Trucking" and, together with the Pure Earth Defendants, the "Corporate Defendants"), Nicholas Paniccia ("Paniccia"), Thomas Attonito ("Attonito"), and Christopher Uzzi ("Uzzi" and, together with Paniccia, Attonito, and the Corporate Defendants, "Defendants"), pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"). Plaintiffs seek recovery of unpaid contributions, interest, attorneys' fees, and costs allegedly owed to the Funds by Defendants for the periods January 1, 2000 through December 31, 2004 and January 19, 2006 through June 30, 2009 (collectively, the "Audit Periods") under certain collective bargaining agreements (the "CBAs"), specifically, the 1999-2002 New York City Heavy Construction & Excavating Contract (the "99-02 CBA"), the 2002-2006 New York City Heavy Construction & Excavating Contract (the "02-06 CBA"), and the 2006-2009 Metropolitan Trucker's Association & Independent Trucker's Contract (the "06-09 CBA"). Plaintiffs allege that the CBAs required Whitney Trucking and Juda to contribute to the Funds for work performed by their subcontractors but that they failed to do so, and that the other Defendants are jointly and severally liable for the unpaid contributions as "alter ego[s]" of Whitney Trucking and Juda. (Compl., dated Mar. 5, 2010, ¶¶ 188, 193, 198, 203, 208, 213, 289, 290.)
On June 18, 2010, the Pure Earth Defendants filed a cross-claim against Paniccia for indemnification under theories of fraudulent inducement and negligent misrepresentation, alleging that, around the time that PE Materials acquired Juda on January 19, 2006, Paniccia, as the President of Juda, failed to disclose "any collective bargaining relationship between Juda or Whitney Trucking and [the Union]," or "the existence of any delinquencies" in contributions for subcontractor work. (Pure Earth Defendants' Am. Answer, dated June 18, 2010, ¶ 345.)
On July 8, 2010, Paniccia filed a cross-claim against Attonito and Uzzi for indemnification, alleging that "[a]ny and all claims against Paniccia arose directly from and as a result of action taken by Attonito and Uzzi." (Paniccia's Answer, dated July 8, 2010, ¶ 386.)
On April 1, 2011, Plaintiffs moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure ("Fed. R. Civ. P."), arguing that "Defendants have systematically failed to report and pay contributions for hours worked in covered employment by . . . [their] subcontractors' employees," and that "Uzzi, Attonito and Paniccia have operated the Corporate Defendants as one integrated entity." (Pls.' Mem. of Law in Supp. of their Mot. for Summ. J. in Lieu of Trial, dated Apr. 1, 2011 ("Pls. Mem."), at 5.)
On July 15, 2011, Defendants opposed Plaintiffs' motion and also cross-moved for summary judgment, arguing that (1) "Juda did not execute" the 06-09 CBA, and Whitney Trucking was dissolved at the time of the 06-09 CBA's execution, and, as a result, no Defendants are liable for the period covered by the 06-09 CBA, i.e., July 1, 2006 through June 30, 2009; (2) the other Corporate Defendants are not alter egos of either Whitney Trucking or Juda, which are the only parties alleged to be directly bound by the CBAs; (3) "piercing the corporate veil" as to Paniccia, Attonito, and Uzzi is inappropriate because Plaintiffs have failed to allege with particularity "where and how [Paniccia, Attonito, and Uzzi] made false representations with the intent to deceive Plaintiffs"; (4) the applicable six-year statute of limitations bars any claims for unpaid contributions arising before February 24, 2004 because "Plaintiffs knew or had reason to know of [such] injury" based upon a payroll audit received by the Funds on that date (the "2004 Payroll Audit"); (5) "any claims to contribution obligations arising before September 29, 2003 were covered by [a] settlement," dated October 29, 2004 (the "2004 Settlement"); and (6) Plaintiffs' audit reports are inadmissible summary evidence under Rule 1006 of the Federal Rules of Evidence ("Fed. R. Evid.") because Plaintiffs allegedly "did not submit backup information." (Defs.' Joint Mem. of Law, dated July 11, 2011 ("Defs. Mem."), at 4, 6, 9, 12, 14-18, 20-23.)
In their opposition to Plaintiffs' April 1, 2011 motion, the Pure Earth Defendants also moved for summary judgment on their cross-claim against Paniccia, arguing that Paniccia either fraudulently or negligently failed to disclose "any obligations of Juda or Whitney Trucking to make contributions to the Funds" at the time that PE Materials acquired Juda. (Id. at 24-29.) Paniccia opposed the Pure Earth Defendants' motion, arguing that the "Pure Earth [Defendants] spent several days going through all of Juda's books and records prior to the acquisition of Juda." (Id. at 28-29.)
And, Paniccia moved for summary judgment on his cross-claim against Attonito and Uzzi, arguing that "Attonito owned 100% of Whitney Trucking" and that Attonito and Uzzi made all of the decisions "regarding what jobs [Juda and/or Whitney Trucking would] take." (Declaration of Nicholas Paniccia, dated June 27, 2011, ¶¶ 186-91.) Attonito and Uzzi opposed Paniccia's motion, arguing that "there is no evidence presented that renders Paniccia any less culpable than defendants Attonito and Uzzi." (Defs. Mem. at 30.)
On August 19, 2011, Plaintiffs filed a reply and opposition to Defendants' cross-motion, arguing that (1) "Juda and its principals admitted that during relevant times herein, Juda was bound by the terms of the [06-09 CBA]"; (2) "Juda was Whitney [Trucking's] successor," and the "Pure Earth Defendants are alter egos of each other" and of Whitney Trucking; (3) Paniccia, Attonito, and Uzzi operated a "fraudulent scheme by knowingly submitting false reports omitting hours worked" by Whitney Trucking and Juda's subcontractors; (4) Plaintiffs' claims are timely because subcontracted work "would not have shown up on a routine payroll audit" such as the 2004 Payroll Audit; (5) the 2004 Settlement does not "contain[] a release" of claims for unpaid contributions; and (6) Plaintiffs' audit reports are admissible because "Plaintiffs repeatedly identified the audits' sources" in the audit reports, demand letters, Rule 26(a) disclosures, and electronic spreadsheets. (See Pls.' Mem. of Law in Further Supp. of Pls.' Mot. for Summ. J. in Lieu of Trial and in Opp'n to Defs.' Mot. for Summ. J. in Lieu of Trial, dated Aug. 19, 2011 ("Pls. Reply"), at 3, 4, 8, 9, 11.)
On September 6, 2011, Defendants filed a surreply. (See Defs.' Joint Surreply Mem. of Law, dated Sep. 6, 2011.)
On February 8, 2011, at a conference before the Court, the parties waived their right to a trial of this matter and agreed that the Court's determination of their cross-motions would be dispositive. (See Hr'g Tr., dated Feb. 8, 2011, at 2:2-15 (COURT: "[W]e've agreed that a summary judgment will be dispositive here, that is to say there won't be any further proceedings in the district court after the summary judgment is resolved on the consent of the parties. There won't be a trial or any further proceeding. . . . [I] [j]ust want to confirm that's your understanding, counsel." PLS. COUNSEL: "Yes." DEFS. COUNSEL: "Yes.").)
For the reasons set forth below, Plaintiffs' motion for summary judgment is granted in part and denied in part, Defendants' cross-motion for summary judgment is denied in part and granted in part, the Pure Earth Defendants' motion for summary judgment on their cross-claim is denied, and Paniccia's motion for summary judgment on his cross-claim is denied.
II. Background
The following facts are not in genuine dispute.
The Funds are multiemployer employee benefit plans established by the CBAs for the Union. (See Pls.' Statement of Undisputed Material Facts Pursuant to Local Civ. R. 56.1 or, in the Alternative, Proposed Findings of Fact, dated Apr. 1, 2011 ("Pls. 56.1"), ¶ 6; Defs.' Joint Counterstatement to Pls.' Statement of Undisputed Material Facts Pursuant to Local Civ. R. 56.1, or in the Alternative, Objections to Proposed Findings of Fact, dated July 15, 2011 ("Defs. 56.1 Response"), ¶ 6.)
Until May 2004, Whitney Trucking was a New York corporation that "performed dump trailer work, hauling dirt and debris from construction sites in and around New York City." (Pls. 56.1 ¶ 11, Defs. 56.1 Response ¶ 11.) It was a signatory to the 99-02 CBA and the 02-06 CBA. (Pls. 56.1 ¶ 12; Defs. 56.1 Response ¶ 12.) In May 2004, Whitney Trucking ceased operations and transferred all of its assets and operations to (nonparty) Chatham Construction, Ltd. ("Chatham"), which also was a signatory to the 02-06 CBA. (See Pls. 56.1 ¶¶ 276, 278-83; Defs. 56.1 Response ¶¶ 276, 278-83.) Soon afterwards, Chatham experienced an unspecified "problem" and changed its name to (nonparty) Torretta Trucking, Inc. ("Torretta"), which maintained all of the same assets and operations as Chatham and Whitney Trucking. (Pls. 56.1 ¶¶ 298-311; Defs. 56.1 Response ¶¶ 298-311.) Torretta also was a signatory to the 02-06 CBA. (See Pls. 56.1 ¶¶ 302, 304; Defs. 56.1 Response ¶¶ 302, 304.) Torretta then "added some trucks and changed its name to Juda" when, on January 19, 2006, PE Materials acquired Juda. (Pls. 56.1 ¶¶ 312-39; Defs. 56.1 Response ¶¶ 312-39.)
From at least January 1, 2000 through December 31, 2004, Whitney Trucking, Chatham, and Torretta hired subcontracted trucks to perform work "[f]or all their job sites," but failed to pay the Funds for subcontracted hours and submitted reports to the Funds that failed to include "hired truck reports or subcontractor reports." (Pls. 56.1 ¶¶ 359-65, 522-24, 530, 557-58, 569; Defs. 56.1 Response ¶¶ 359-65, 522-24, 530, 557-58, 569.)
Juda is a New York corporation that also performed trucking work. (See Pls. 56.1 ¶¶ 26, 28; Defs. 56.1 Response ¶¶ 26, 28.) It is a signatory to the 02-06 CBA. (Pls. 56.1 ¶ 29; Defs. 56.1 Response ¶ 29). Juda did not sign the 06-09 CBA (id.), but from at least January 19, 2006 through June 30, 2009, it "submitted remittance reports to the Funds stating hours it claimed were worked." (Pls. 56.1 ¶ 390; Defs. 56.1 Response ¶ 390.)
Pure Earth wholly owns PE Materials and PEI Disposal. (See Pls. 56.1 ¶¶ 39, 45, 149; Defs. 56.1 Response ¶¶ 39, 45, 149.) PE Materials, in turn, as of January 19, 2006, wholly owns PE Transportation and Juda. (See Pls. 56.1 ¶¶ 27, 32, 45; Defs. 56.1 Response ¶¶ 27, 32, 45.) PE Transportation was formerly known as American Transportation and Disposal Systems, Inc. ("American Transportation"), and there was "virtually no difference" between American Transportation and (nonparty) Whitney Contracting, Inc. ("Whitney Contracting"). (Pls. 56.1 ¶¶ 34, 107; Defs. 56.1 Response ¶¶ 34, 107.) Whitney Contracting "would get projects and hire Whitney Trucking to do the trucking," and shared office space with Whitney Trucking in Yonkers, New York. (Pls. 56.1 ¶¶ 101, 103-04; Defs. 56.1 Response ¶¶ 101, 103-04.) Just as Whitney Contracting "brokered" jobs for Whitney Trucking, PE Transportation brokered jobs for Juda. (See Pls. 56.1 ¶¶ 31-34; Defs. 56.1 Response ¶¶ 31-34.) All of the Corporate Defendants were in the business of "transportation of contaminated and clean soils" from construction sites. (See Pls. 56.1 ¶¶ 11, 28, 200-07; Defs. 56.1 Response ¶¶ 11, 28, 200-07.) From at least January 19, 2006 through June 30, 2009, Juda's "sister" companies, the (other) Pure Earth Defendants, subcontracted trucking work to other companies. (See Pls. 56.1 ¶¶ 367-89; Defs. 56.1 Response ¶¶ 367-89.)
Before 2008, Juda and PE Transportation shared "the same plot" in Bronx, New York, which Pure Earth listed as the Pure Earth Defendants' "New York Office." (Pls. 56.1 ¶¶ 230-32; Defs. 56.1 Response ¶¶ 230-32.) In 2008, Juda, PE Transportation, and PE Materials moved to Lyndhurst, New Jersey, where they shared office space with PEI Disposal. (See Pls. 56.1 ¶¶ 236-238; Defs. 56.1 Response ¶¶ 236-38.) The same employees worked for several of the Corporate Defendants. For example, the same drivers who worked for Whitney Trucking worked for Chatham, and then for Torretta, and then for Juda. (See Pls. 56.1 ¶¶ 279, 307, 312, 314, 334; Defs. 56.1 Response ¶¶ 279, 307, 312, 314, 334.) Whitney Trucking, Chatham, Torretta, and Juda also all had the same customers. (See Pls. 56.1 ¶¶ 291, 308, 324, 341; Defs. 56.1 Response ¶¶ 291, 308, 324, 341.) Until Whitney Trucking ceased operations in May 2004, Juda leased trucks to Whitney Trucking, which had no assets of its own. (See Pls. 56.1 ¶¶ 105, 443; Defs. 56.1 Response ¶¶ 105, 443.)
At various times throughout the Audit Periods, Attonito was Owner of Whitney Trucking and a "consultant" for Juda. (Pls. 56.1 ¶¶ 10, 193; Defs. 56.1 Response ¶¶ 10, 193.) At various relevant times, Uzzi was Owner and President of Whitney Contracting and American Transportation, President of PE Transportation, and President and a Director of Pure Earth. (See Pls. 56.1 ¶¶ 18-21; Defs. 56.1 Response ¶¶ 18-21.) At various relevant times, Paniccia was Owner, Director, and President of Juda. (See Pls. 56.1 ¶¶ 24-25; Defs. 56.1 Response ¶¶ 24-25.)
On February 24, 2004, the Funds completed the 2004 Payroll Audit, i.e., a payroll compliance audit of Whitney Trucking for the period December 30, 1999 through September 29, 2003. (Pls. 56.1 ¶¶ 393-95, Ex. 7; Defs. 56.1 Response ¶¶ 393-95.) Plaintiffs' accountants have testified that such routine payroll compliance audits do not cover work done by subcontractors. (Declaration of Stephen Bowen, dated Aug. 5, 2011 ("Aug. 5 Bowen Decl."), ¶ 2; Declaration of Philip Vivirito, dated Aug. 4, 2011 ("Aug. 4 Vivirito Decl."), ¶¶ 2-3.) The 2004 Payroll Audit resulted in the 2004 Settlement, an out-of-court settlement agreement, dated October 29, 2004, in which Whitney Trucking and Juda agreed to pay the Funds $74,638.59 in order to "resolv[e] the disputes and disagreement which exist between [the parties] pertaining to the delinquent contributions and attendant damages owing pursuant to [the 2004 Payroll Audit]." (Pls. 56.1, Ex. 7, at 1.)
The Funds hired the auditing firm of Bond Beebe to perform a subsequent series of audits of Whitney Trucking's subcontracted work for the period January 1, 2000 through December 31, 2004 (the "First Audits"). (See Pls. 56.1 ¶ 514, Exs. 40-42; Defs. 56.1 Response ¶ 514.) The Funds also hired the auditing firm of Schultheis & Panettieri, LLP to perform audits of PE Transportation and PEI Disposal for the period January 19, 2006 through June 30, 2009 (the "Second Audits"). (See Pls. 56.1 ¶¶ 557-58, Ex. 153, 155; Defs. 56.1 Response ¶¶ 557-58.) As part of the First Audit, Bond Beebe analyzed, among other things, accounting records and invoices, including trip tickets detailing "the date, job location, customer, disposal facility, driver, and truck number" of Whitney Trucking's jobs. (See Pls. 56.1 ¶ 513; Defs. 56.1 Response ¶ 513.) For the Second Audit, Schultheis & Panettieri, LLP also analyzed, among other things, trip tickets of PE Transportation's and PEI Disposal's jobs. (See Pls. 56.1 ¶¶ 531-32; Defs. 56.1 Response ¶¶ 531-32.) Defendants never requested to see the documents and records upon which Bond Beebe or Schultheis & Panettieri, LLP relied. (See Declaration of Erinn Weeks Waldner, dated Aug. 19, 2011 ("Waldner Decl."), ¶¶ 16-19.) The First Audits reported an aggregate of $1,355,378.13 in unpaid contributions, $1,829,833.95 in interest due on the unpaid contributions through April 1, 2011, and $602.40 in per diem interest from April 1, 2011 through the date of judgment. (See Pls. 56.1. ¶¶ 522-27, Exs. 40-42; Defs. 56.1 Response ¶¶ 522-27.)
The Second Audits reported an aggregate of $2,872,007.47 in unpaid contributions, $1,590,936.60 in interest due on the unpaid contributions through April 1, 2011, and $1,416.34 in per diem interest from April 1, 2011 through the date of judgment. (See Pls. 56.1. ¶¶ 557-58, Exs. 153, 155; Defs. 56.1 Response ¶¶ 557-58.)
III. Legal Standard
Rule 56(a) of the Federal Rules of Civil Procedure provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). On cross-motions for summary judgment, "[t]he court must consider each motion independently of the other and, when evaluating each, the court must consider the facts in the light most favorable to the non-moving party." Palmiotti v. Metro. Life Ins. Co., 423 F. Supp. 2d 288, 297 (S.D.N.Y. 2006) (internal quotation marks omitted).
Section 515 of ERISA provides:
Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.29 U.S.C. § 1145. The court may grant summary judgment in an ERISA contract dispute "when the contractual language on which the moving party's case rests is found to be wholly unambiguous and to convey a definite meaning." Gesualdi v. Laws Constr. Corp., 759 F. Supp. 2d 432, 439-40 (S.D.N.Y. 2010).
"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." Ret. Plan of Unite Here Nat'l Ret. Fund v. Kombassan Holding A.S., 629 F.3d 282, 288 (2d Cir. 2010) (internal quotation marks omitted). The alter ego doctrine "provide[s] an analytical hook to bind a non-signatory to a collective bargaining agreement." Id. (internal quotation marks omitted).
IV. Analysis
This Court has subject matter jurisdiction pursuant to 29 U.S.C. § 1132(e) because Plaintiffs assert direct ERISA violations against each Defendant via their common ownership and control. See Ellis v. All Steel Constr., Inc., 389 F.3d 1031, 1033 (10th Cir. 2004).
(1) Whitney Trucking and Juda Are Bound by the CBAs
Defendants concede that Whitney Trucking is a signatory to the 99-02 CBA and the 02-06 CBA (Pls. 56.1 ¶ 48; Defs. 56.1 Response ¶ 48), but they contend that Juda "did not execute" the 06-09 CBA and is, therefore, not bound by it. (Defs. Mem. at 6.) Plaintiffs respond persuasively that "Juda and its principals admitted that during relevant times herein, Juda was bound by the terms of the [06-09 CBA]." (Pls. Reply at 3 (internal quotation marks omitted).)
The Pure Earth Defendants, which include Juda, expressly admitted in their amended answer, filed on June 18, 2010, that Juda "was bound by the terms of the [06-09 CBA]." (Compl. ¶ 21; Pure Earth Defendants' Amended Answer, dated June 18, 2010, ¶ 21.) This "formal judicial admission is conclusive" against Defendants, especially where Defendants "at no time moved to amend [their] amended answer and [they do] not now claim fraud or mistake." W. World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121-22 (2d Cir. 1990).
Juda's conduct also "establish[es] as a matter of law [Juda's] intent to adopt the [06-09 CBA]." Brown v. C. Volante Corp., 194 F.3d 351, 355 (2d Cir. 1999); see Fishbein v. Miranda, 670 F. Supp. 2d 264, 272 (S.D.N.Y. 2009) ("[A]n obligation to make plan contributions under ERISA is not dependent on the obligee having signed the relevant CBA."). Juda submitted remittance reports to the Funds from at least January 19, 2006 through June 30, 2009, and, in a Form 10/A filed with the United States Securities and Exchange Commission (the "SEC") on October 8, 2008, Juda's parent company, Pure Earth, stated that its union benefits costs "consist[] primarily of union wages for our drivers at Juda." (Pls. 56.1 ¶ 263, 390; Defs. 56.1 Response ¶ 263, 390). This conduct evinces an intent to be bound to the 06-09 CBA. See, e.g., Brown, 194 F.3d at 354-55 (finding that employer's submission of "sixty-one remittance reports," among other things, "establish as a matter of law appellant's intent to adopt . . . unsigned CBAs").
Defendants' argument that, because Juda did not sign the 06-09 CBA, the CBA is not a "written agreement" under Section 302(c)(5)(B) of the Labor Management Relations Act of 1947, 29 U.S.C. § 186(c)(5)(B), fails because "Section 302(c)(5)(B) does not require that an agreement be signed, only that it be 'written.'" Brown, 194 F.3d at 355. And, contrary to Defendants' claim, the New York Statute of Frauds does not apply because either party could have terminated the 06-09 CBA before one year. See Riley v. N.F.S. Servs., Inc., 891 F. Supp. 972, 977 n.4 (S.D.N.Y. 1995) ("When both parties to a contract . . . can terminate the contract rightfully . . . , the contract, even though it can last indefinitely by its terms, can be performed within one year and thus falls outside of the Statute of Frauds.").
Accordingly, the Court concludes that Whitney Trucking and Juda are bound to the CBAs.
(2) The Pure Earth Defendants Are Alter Egos of Juda and Whitney Trucking
Defendants contend that "[t]he Pure Earth [Defendants] did not have notice of Juda's liabilities to [the Union,]" and that there is "no evidence of continuity of operations between Juda and the Pure Earth [Defendants]." (Defs. Mem. at 20-21.) Defendants also claim that "Plaintiffs failed to establish that any Corporate Defendant is an alter ego of Whitney Trucking," arguing that "Attonito transferred Whitney Trucking to non-party Chatham" and that "the Pure Earth companies did not exist as . . . entit[ies] at the time of the alleged initial ERISA violations by Whitney Trucking in 2000-2004." (Defs. Mem. at 15-16.) Plaintiffs counter that "[t]he Pure Earth Defendants are alter egos of each other [and, therefore, of Juda] because they are commonly owned, managed, and supervised, perform the same type of business, share equipment and customers, and engage in common operations." (Pls. Mem. at 5.) Plaintiffs also contend that "[t]he Pure Earth Defendants are successors to and alter egos of Whitney Trucking," and that "there is substantial continuity of operations from Whitney Trucking to Juda and PE Transportation." (Pls. Mem. at 21-24.)
"The test of alter ego status is flexible, allowing courts to weigh the circumstances of the individual case." Kombassan, 629 F.3d at 288 (internal quotation marks omitted). Courts consider "'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)). "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." Id. (internal quotation marks omitted).
The Court finds that the Corporate Defendants are each alter egos of one another and that each is, therefore, bound by the CBAs. First, the Corporate Defendants all shared common ownership, management, and supervision. See, e.g., id. at 289. Pure Earth wholly owns PE Materials and PEI Disposal, and PE Materials wholly owns Juda and PE Transportation. (See Pls. 56.1 ¶¶ 27, 32, 39, 45, 149; Defs. 56.1 Response ¶¶ 27, 32, 39, 45, 149.) Brent Kopenhaver (a nonparty) is CFO, Chairman, and Executive Vice President of Pure Earth; he is also the Treasurer and a Director of all the Pure Earth Defendants; and he is the President of Juda. (See Pls. 56.1 ¶¶ 173-77; Defs. 56.1 ¶¶ 173-77.) Paniccia, Attonito, and Uzzi each held significant ownership, officer, and director positions with the Corporate Defendants, and they "ran the day to day operations" of all Corporate Defendants, each having the authority to hire, fire, and discipline employees. (Pls. 56.1 ¶¶ 10, 181-99, 286-87, 305, 321-22, 456-60, 471-91; Defs. 56.1 Response ¶¶ 10, 181-99, 286-87, 305, 321-22, 456-60, 471-91.)
Second, the Corporate Defendants shared the common business purpose of "transportation of contaminated and clean soils" from construction sites. (See Pls. 56.1 ¶¶ 11, 28, 200-07, 292, 303; Defs. 56.1 Response ¶¶ 11, 28, 200-07, 292, 303); see, e.g., Newspaper Guild of New York, Local No. 3 of the Newspaper Guild, AFL-CIO v. N.L.R.B., 261 F.3d 291, 299 (2d Cir. 2001).
Third, the Pure Earth Defendants shared common operations, equipment, and employees. For example, the same drivers who worked for Whitney Trucking worked for (nonparty) Chatham, and then for (nonparty) Torretta, and then for Juda. (See Pls. 56.1 ¶¶ 279, 307, 312, 314, 333-34; Defs. 56.1 Response ¶¶ 279, 307, 312, 314, 333-34); see, e.g., LaBarbera v. C. Volante Corp., 164 F. Supp. 2d 321, 327 (E.D.N.Y. 2001). PE Materials "used Juda and subcontracted trucking companies to deliver [its] stone aggregate," and PEI Disposal, PE Materials, PE Transportation, and Juda shared office space at relevant times. (See Pls. 56.1 ¶¶ 230-32, 236-238; Defs. 56.1 Response ¶¶ 230-32, 236-38.) Michael Murphy, a (nonparty) bookkeeper and manager, worked for PE Materials, PEI Disposal, and Juda but was paid only by PE Transportation, and Bill Levan was a (nonparty) consultant for Pure Earth, PE Transportation, and PE Materials but was paid by Pure Earth. (See Pls. 56.1 ¶¶ 244, 248-52; Defs. 56.1 Response ¶¶ 244, 248-52.)
The BIC found that Juda "was a reincarnation of Whitney." (Pls. 56.1 Ex. 39, at 18.) The Court independently finds, consistent with the factual findings of the BIC, that the Corporate Defendants are alter egos of each other. See Astoria Fed. Sav. and Loan Ass'n v. Solimino, 501 U.S. 104, 107-08 (1991); Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 331 (1979); see also Chauffeur's Training School, Inc. v. Spellings, 478 F.3d 117, 132 (2d Cir. 2007).
Fourth, PE Materials, Juda, and Whitney Trucking shared the same primary customers, Laquila Group and Civetta Cousins, through the brokering activities of PE Transportation and (nonparty) Whitney Contracting. (See Pls. 56.1 ¶¶ 254-58, 291, 308, 324, 341; Defs. 56.1 Response ¶¶ 254-58, 291, 308, 324, 341); see, e.g., LaBarbera, 164 F. Supp. 2d at 327.
In light of "the purpose of the alter ego doctrine in the ERISA context . . . to prevent an employer from evading its obligations under the labor laws through a sham transaction or technical change in operations," the Court concludes that the Corporate Defendants are alter egos of each other, and, therefore, each is bound by the CBAs. Kombassan, 629 F.3d at 288 (internal quotation marks omitted). "[A]n anti-union animus or an intent to evade union obligations is not a necessary factor," but it may be "a germane or sufficient basis for imposing alter ego status." Kombassan, 29 F.3d at 288 (emphasis in original) (internal quotation marks omitted). The Court notes that the Pure Earth Defendants' express decision "to utilize subcontracted third parties, instead of internal labor and unionized employees," suggests an anti-union animus. (Pls. 56.1 ¶¶ 261-63; Defs. 56.1 Response ¶¶ 261-63.)
(3) Piercing the Corporate Veil Is Unwarranted as to Paniccia, Attonito, and Uzzi
Defendants argue that the Court may not pierce the corporate veil of the Corporate Defendants to hold Paniccia, Attonito, and Uzzi individually liable because Plaintiffs have failed to allege with particularity "where and how [Paniccia, Attonito, and Uzzi] made false representations with the intent to deceive Plaintiffs." (Defs. Mem. at 9.) Plaintiffs contend that Paniccia, Attonito, and Uzzi operated a "fraudulent scheme by knowingly submitting [to the Funds] false reports omitting hours" worked by subcontractors. (Pls. Reply at 11.)
Under New York law, a court may pierce the corporate veil where "1) the owner exercised complete domination over the corporation with respect to the transaction at issue, and 2) such domination was used to commit a fraud or wrong that injured the party seeking to pierce the veil." MAG Portfolio Consultant, GMBH v. Merlin Biomed Group LLC, 268 F.3d 58, 63 (2d Cir. 2001). Fraud under New York law requires "1) a material false representation or omission of an existing fact, 2) made with knowledge of its falsity, 3) with an intent to defraud, and 4) reasonable reliance, 5) that damages plaintiffs." Cement and Concrete Workers Dist. Council Welfare Fund, Pension Fund, Legal Servs. Fund and Annuity Fund v. Lollo, 35 F.3d 29, 33 (2d Cir. 1994) (internal quotation marks omitted).
Plaintiffs' argument that Paniccia, Attonito, and Uzzi must have known "that the [subcontracted] driving work was covered by the CBAs" but nevertheless submitted reports that "grossly underreport[ed] benefit fund contributions" (Pls. Mem. at 20), while it may be suggestive of fraudulent intent, does not give rise to a conclusive inference that the unpaid contributions were the result of a deliberate attempt to defraud Plaintiffs. See Caputo v. Pfizer, Inc., 267 F.3d 181, 191 (2d Cir. 2001) (holding that, in order to plead fraud under Fed. R. Civ. P. 9(b), plaintiffs must "plead those events which give rise to a strong inference that the defendant[s] had an intent to defraud" (internal quotation marks omitted)).
(4) Plaintiffs' Claims Are Timely
Defendants contend that the applicable six-year statute of limitations bars Plaintiffs' claims of unpaid contributions arising before February 24, 2004 (which is the date of the 2004 Payroll Audit), arguing that "Plaintiffs knew or had reason to know of [such] injury" based on the 2004 Payroll Audit. (Defs. Mem. at 4.) Plaintiffs respond that subcontracted work "would not have shown up on a routine payroll audit," and that they did not receive the records necessary until "sometime after November 6, 2007." (Pls. Reply at 9-10.)
"Employee benefit plans are contracts[;] accordingly, under New York law, the applicable statute of limitations is six years." In re J.P. Morgan Chase Cash Balance Litig., 460 F. Supp. 2d 479, 483 (S.D.N.Y. 2006) (citing N.Y. C.P.L.R. § 213(2)). "[A] plaintiff's cause of action accrues when he discovers, or with due diligence should have discovered, the injury that is the basis of the litigation." Guilbert v. Gardner, 480 F.3d 140, 149 (2d Cir. 2007).
"As ERISA does not prescribe a limitations period for actions under § 1132, the controlling limitations period is that specified in the most nearly analogous state limitations statute." Miles v. New York State Teamsters Conference Pension and Ret. Fund Emp. Pension Ben. Plan, 698 F.2d 593, 598 (2d Cir. 1983).
Plaintiffs' accountants have given unrebutted testimony that "the underpayment of contributions by Whitney Trucking [for subcontracted work] . . . based on the records obtained from third parties would not have been picked up in a routine payroll compliance audit." (Aug. 4 Vivirito Decl., ¶¶ 2-3; see also Aug. 5 Bowen Decl., ¶ 2.) Plaintiffs did not receive the information necessary to perform the audits of Defendants' subcontracted work until sometime after November 6, 2007. (See Declaration of Robert Machado, dated Mar. 24, 2011 ("Machado Decl."), ¶ 5.) Plaintiffs' claims are timely because Plaintiffs did not "know[] or [have] reason to know of the injury" until at least November 6, 2007, less than three years before Plaintiffs filed their Complaint and well within the six-year limitations period. La Barbera v. A. Morrison Trucking, Inc., No. 08-CV-3095, 2011 WL 703859, at *5 (E.D.N.Y. Feb 18, 2011) (citing Guilbert, 480 F.3d., at 149.)
(5) The 2004 Settlement Does Not Bar Plaintiffs' Claims
Defendants argue that "any claims to contribution obligations arising before September 29, 2003 were covered by [the 2004 Settlement]." (Defs. Mem. at 4.) Plaintiffs argue that the 2004 Settlement does not "contain[] a release" of claims for subcontracted work. (Pls. Reply at 11.)
The 2004 Settlement covers "the disputes and disagreements which exist between [the parties] pertaining to the delinquent contributions and attendant damages due and owing pursuant to [the 2004 Payroll Audit]." (Pls. 56.1 Ex. 7, at 1.) As discussed previously, see supra Section IV.4, "the underpayment of contributions by Whitney Trucking [for subcontracted work] . . . based on the records obtained from third parties would not have been picked up" in the 2004 Payroll Audit. (Aug. 4 Vivirito Decl., ¶¶ 2-3; see also Aug. 5 Bowen Decl., ¶ 2.) Accordingly, the 2004 Settlement does not bar Plaintiffs' current claims.
(6) Plaintiffs' Audit Reports Are Admissible and Conclusive of Damages
Defendants argue that Plaintiffs' audit reports are inadmissible because (1) Plaintiffs allegedly "did not submit their backup information" as required by Fed. R. Evid. 1006, and (2) the backup information is "inadmissible hearsay." (Defs. Mem. at 12-13.) Plaintiffs respond that (1) they "repeatedly identified the audits' sources" in the audit reports, demand letters, Rule 26(a) disclosures, and electronic spreadsheets, and (2) the underlying documents "are admissible under the business records exception." (Pls. Reply at 8-9.)
The audit reports are admissible under Rule 1006. Plaintiffs specifically identified and made available the audits' sources in the audit reports, demand letters, Rule 26(a) disclosures, and electronic spreadsheets. (See Pls. 56.1 Exs. 106-07; Waldner Decl., Exs. J, L, M.); see also U.S. for Use & Benefit of Evergreen Pipeline Const. Co., Inc. v. Merritt Meridian Const. Corp., 95 F.3d 153, 163 (2d Cir. 1996) (holding summary evidence admissible under Rule 1006 where underlying documents "had been made available to defendant or had been available if defendant had requested them"). And, Defendants never requested to see the documents and records upon which Plaintiffs' auditors relied, nor did they ever file or request to file a discovery motion with the Court. (See Waldner Decl., ¶¶ 16-19.) Further, during discovery, Defendants themselves provided the underlying documents necessary to prepare the Second Audit to Plaintiffs, contradicting any argument that they were unavailable. (See Pls. 56.1 ¶¶ 531-32; Defs. 56.1 Response ¶¶ 531-32.)
The underlying documents that Plaintiffs' auditors used to perform the audits are admissible as business records under Fed. R. Evid. 803(6). "To establish a proper foundation for a document offered into evidence as a business record, the custodian or other qualified witness must testify that the document was kept in the course of a regularly conducted business activity and also that it was the regular practice of that business activity to make the record." Kombassan, 629 F.3d at 289. Plaintiffs' accountants testified (without rebuttal) that they received the documents for the First Audit from the Union's court-appointed investigations officer, who had subpoenaed them directly from Whitney Trucking's customers. (See Declaration of Philip Vivirito, dated Mar. 25, 2011 ("Mar. 25 Vivirito Decl."), ¶ 5; Machado Decl., ¶ 3.) The subpoenaed documents included invoices, which were "bills from Whitney [Trucking] seeking payment from the contractors . . . [and] showing the amount of work (as evidence[d] by the attached trip tickets) that they and their subcontractors performed on each job." (Aug. 4 Vivirito Decl., ¶ 4.) For the Second Audit, Defendants' office manager provided Plaintiffs' accountants with a "general ledger show[ing] financial activity," as well as 125 boxes of documents including "invoices to its customers and from their subcontractors for covered work performed along with support back up documentation." (Declaration of Stephen Bowen, dated Mar. 24, 2011 ("Mar. 24 Bowen Decl."), ¶¶ 8-11.) The Court is satisfied that the records were produced in the ordinary course of business and "have sufficient indicia of trustworthiness to be considered reliable." Saks Int'l, Inc. v. M/V Export Champion, 817 F.2d 1011, 1013 (2d Cir. 1987).
On or about July 10, 1995, a consent decree between the Government, the Union, and the International Brotherhood of Teamsters established the Union's independent, court-appointed investigations officer. During the course of his investigative duties, the investigations officer subpoenaed certain of Whitney Trucking's customers and received "documents, including, but not limited to, accounts payable and receivables, invoices, and trip tickets." (Machado Decl., ¶¶ 2-4.)
Defendants do not dispute the substantive findings of the audit reports in their briefs. Because Plaintiffs "have produced sufficient evidence to show the amount and extent of the work for which employees were not properly compensated," Defendants bear the "burden of coming forward with evidence either of the precise number of hours worked or [of] negat[ing] the reasonableness of the inferences to be drawn from the employee representative's evidence." Mason Tenders Dist. Council Welfare Fund v. M.A. Angeliades, Inc., No. 05-CV-8211, 2007 WL 4208587, at *3 (S.D.N.Y. Nov. 20, 2007); see LaBarbera v. A. Morrison Trucking, Inc., 197 F. App'x 18, 21 (2d Cir. 2006) ("When a fund seeks delinquent contributions, it has the initial burden of showing that the employer's records are inadequate. If it makes this showing, it is entitled to damages unless the employer offers proof of the exact hours of work performed or evidence that negatives the reasonableness of the inference to be drawn from the funds' evidence."). Defendants' argument that some of the trip tickets contained partial or blank names for the truck driver, and that "[t]he use of an incomplete trip ticket as the primary evidence of an alleged liability is without merit" is unpersuasive. (Declaration of Gregory Polvere, dated May 24, 2011, ¶ 15; see also Declaration of Scott Argenta, dated May 24, 2011, ¶ 8.) Indeed, courts have squarely rejected the argument that "Plaintiffs have a duty to identify the specific drivers for whom the benefit contributions are intended," and this Court rejects that position as well. Gesualdi v. Laws Const. Corp., 759 F. Supp. 2d 432, 442 (S.D.N.Y. 2010). Defendants have not carried their burden of rebutting Plaintiffs' evidence of damages.
Accordingly, the Corporate Defendants are jointly and severally liable to the Funds for the unpaid contributions and interest pursuant to 29 U.S.C. § 1132(g)(2) in the amounts of $4,227,385.60 in unpaid contributions, $3,420,770.55 in interest on unpaid contributions through April 1, 2011, and $2,018.74 in per diem interest from April 1, 2011 until the date of judgment. (See Pls. 56.1 Exs. 40-42; 153, 155.) The Corporate Defendants are also jointly and severally liable for an additional award of interest on unpaid contributions pursuant to 29 U.S.C. § 1132(g)(2)(C) in the amount of $3,420,700.55 through April 1, 2011, and $2,018.74 in per diem interest from April 1, 2011 through the date of judgment. Plaintiffs may also file a petition for reasonable attorneys' fees and costs within 14 days of the entry of judgment in accordance with Fed. R. Civ. P. 54(d).
(7) The Pure Earth Defendants' Cross-Claim Fails
The Pure Earth Defendants argue that Paniccia should indemnify them against any judgments for unpaid contributions because "Paniccia failed to disclose any relationship between Juda and Whitney Trucking, any collective bargaining agreement with the Funds, and any obligations or delinquencies that Pure Earth would be assuming." (Defs. Mem. at 27.) Paniccia responds that the Pure Earth Defendants cannot establish reliance because they "possessed all information about Whitney Trucking" and "spent several days going through all of Juda's books and records prior to the acquisition." (Defs. Mem. at 27-28.)
The Court's finding that the Corporate Defendants are each alter egos of one another, and that their management was inextricably intertwined, demonstrates that they could not possibly have been unaware of the collective bargaining obligations of Juda and Whitney. See Schlaifer Nance & Co. v. Estate of Warhol, 119 F.3d 91, 98 (2d Cir. 2007) ("[I]f the plaintiff has the means of knowing, by the exercise of ordinary intelligence, the truth, or the real quality of the subject of the representation, he must make use of those means, or he will not be heard to complain that he was induced to enter into the transaction by misrepresentations." (internal quotation marks omitted)). Accordingly, the Pure Earth Defendants' cannot have reasonably relied on Paniccia's representations, and their claims for fraudulent inducement and negligent misrepresentation fail. See Ashland Inc. v. Morgan Stanley & Co., Inc., 652 F.3d 333, 339 (2d Cir. 2011); Crigger v. Fahnestock and Co., Inc., 443 F.3d 230, 234-35 (2d Cir. 2006).
(8) Paniccia's Cross-claim against Attonito and Uzzi Is Moot
Because Paniccia is not being found personally liable, either through piercing the corporate veil or under the Pure Earth Defendants' cross-claim for indemnification, his cross-claim against Attonito and Uzzi is denied as moot. See Fox v. Bd. of Trs. of State Univ. of New York, 42 F.3d 135, 140 (2d Cir. 1994).
V. Conclusion & Order
For the foregoing reasons, Plaintiffs' motion for summary judgment [#57] is granted in part and denied in part as follows:
(i) Summary judgment as to the Corporate Defendants' liability is GRANTED;Defendants' cross-motion for summary judgment [#75] is denied in part and granted in part as follows:
(ii) Summary judgment as to the individual liability of Paniccia, Attonito, and Uzzi is DENIED;
(i) Summary judgment as to the Corporate Defendants' liability is DENIED;The Pure Earth Defendants' motion for summary judgment [#75] is DENIED; and Paniccia's motion for summary judgment on his cross-claims [#75] is DENIED.
(ii) Summary judgment as to the individual liability of Paniccia, Attonito, and Uzzi is GRANTED;
The Clerk of the Court is respectfully requested to enter judgment in Plaintiffs' favor in the following amounts: (1) $4,227,385.60 in unpaid contributions, (2) $3,420,770.55 in interest on unpaid contributions through April 1, 2011, (3) $417,879.18 in interest on unpaid contributions (representing $2,018.74 in per diem interest from April 1, 2011 until the date of judgment), (4) $3,420,770.55 in additional interest pursuant to 29 U.S.C. § 1132(g)(2)(C), and (5) $417,879.18 in additional interest pursuant to 29 U.S.C. § 1132(g)(2)(C) (representing $2,018.74 in per diem interest from April 1, 2011 until the date of judgment).
The Clerk is further directed to close this case. Dated: New York, New York
October 25, 2011
/s/ _________
RICHARD M. BERMAN, U.S.D.J.