Opinion
5:01-CV-562 (FJS/GJD)
February 3, 2004
GARY HALL, ESQ., BLITMAN KING LLP, Syracuse, New York, of counsel for Plaintiffs
SUSAN OTTO, ESQ., MELVIN MELVEV PLLC, Syracuse, New York, of counsel for Defendants
MEMORANDUM-DECISION AND ORDER
I. INTRODUCTION
The present action arises under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and Section 301(a) of the Labor Management-Relations Act of 1947 ("LMRA"), as amended, 29 U.S.C. § 185(a). It is an action to collect delinquent fringe benefit contributions and deductions due under the terms of a Collective Bargaining Agreement and Agreements and Declarations of Trust.
II. BACKGROUND
The Roofers Local 195 Pension, Health and Accident, Annuity and Joint Apprenticeship Training Funds (collectively referred to as the "Funds" or "Plaintiff Funds") are multi-employer plans, as defined in Section 3(37) of ERISA, and are employee benefit plans, as defined in Section 3(3) of ERISA, which receive contributions on behalf of employees to provide health, pension, annuity and training benefits to those employees. The United Union of Roofers, Waterproofers and Allied Local Union 195 ( "Union" or "Plaintiff Union") is authorized by its members to receive a portion of their wages, known as dues deductions, from their employers. James Milligan is the Business Manager of the Union and is also a Trustee of the Funds. Defendant Shue Roofing, Inc. ("Shue Roofing") is an employer "in an industry affecting commerce" and is a signatory to a collective bargaining agreement ("CBA") with the Union. Accordingly, Defendant Shue Roofing is obligated to remit contributions to the Funds and dues deductions to the Union in accordance with 29 U.S.C. § 1145.
Plaintiffs assert that Defendant SBR Roofing, Inc. ("SBR Roofing"), although not a signatory to the CBA between Shue Roofing and the Union, is liable for delinquent contributions and dues deductions under an alter-ego analysis. The Court will address this issue infra.
Presently before the Court are Plaintiffs' motion for summary judgment and Defendants' cross-motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.
III. DISCUSSION
As a preliminary matter, the Court addresses the issue of whether SBR Roofing is the alter ego of Shue Roofing.
Courts consider several factors, such as "whether the two entities have substantially identical management, business purpose, operation, equipment, customers, supervision and ownership, and whether the decision to change companies was motivated by anti-union sentiment," to determine alter ego status. A P Brush Mfg. Corp. v. NLRB, 140 F.3d 216, 219 (2d Cir. 1998) (citations omitted). Applying these factors to the present case, the Court concludes that SBR Roofing is the alter ego of Shue Roofing. Both companies install roofing. Both companies have been owned, in some capacity, by one or more of the Shue brothers. Moreover, one or more of the Shue brothers has or had managerial responsibilities at some point in both companies. Both Shue Roofing and SBR Roofing employ several of the same employees, including Mary Shue, bookkeeper for both companies. Once Shue Roofing closed its business in February 1998, SBR Roofing opened its business at the same location, using the same vehicles. The $20,000.00 promissory note, whatever its purpose, indicates financial overlap between the two companies. Finally, SBR Roofing performed work for customers who formerly contracted with Shue Roofing.
Since breach of contract actions under ERISA allow courts to extend application of collective bargaining agreements to non-signatories based on the alter-ego doctrine, see Plumbers, Pipefitters Apprentices Local Union No. 112 Pension, Health Educ. Apprenticeship Plans v. Mauro's Plumbing, Heating Fire Suppression Inc., 84 F. Supp.2d 344, 349 (N.D.N.Y. 2000) (citations omitted), the Court concludes that, because SBR Roofing is the alter ego of Shue Roofing, which is a signatory to the CBA, obligations under the CBA to which Plaintiffs and Defendant Shue Roofing are signatories extend to Defendant SBR Roofing for purposes of justifying an imposition of liability under ERISA. See id. at 351.
Alternatively, non-signatories to a collective bargaining agreement may be held liable under a theory of successor liability. See Bd. of Trustees of Sheet Metal Workers Local Union No. 137 Ins., Annuity Apprenticeship Training Funds v. Silverstein, No. 92 Civ. 8519, 1995 WL 404873, *3 (S.D.N.Y. July 6, 1995). Applying the factors as set forth in Silverstein to the facts of the present case, the Court concludes that SBR Roofing is Shue Roofing's "successor" for purposes of imposing liability under ERISA. See id.
Plaintiffs assert (1) that Defendants hope to enforce arbitration to dispute their claims for interest and liquidated damages only and (2) that such claims are against Plaintiff Funds, a non-party to the CBA and, therefore, are not subject to the grievance procedure set forth therein. Defendants, on the other hand, argue that Plaintiffs' failure to comply with the CBA's arbitration provision evidences that the CBA is not the written agreement reached between the parties.
Although the Court notes Defendants' position with respect to the enforceability of the CBA and whether or not it accurately reflects the parties' agreed-upon terms, it declines to address the issue at this juncture.
Article Xin of the CBA states that "any dispute or claimed violation of this Agreement by either party shall be determined and resolved" by an arbitrator. See Collective Bargaining Agreement ("CBA"), attached as Exhibit "B" to the Reply Affidavit of Warner Shue, sworn to June 13, 2003 ("Warner Reply Aff") (emphasis added). This language clearly makes arbitration of the present claims mandatory. The CBA could have used such other language as "may" or "at the election of the parties;" however, it explicitly states that any dispute shall be submitted to arbitration. See id.
Accordingly, the Court holds that the Union, a party to the CBA, is obligated by the terms of the CBA to submit its present claims to arbitration. That being said, however, there is a question as to whether the Funds, which are not a party to the CBA, are also bound by the CBA's arbitration provision.
To determine whether an employee benefit fund is bound to an arbitration provision in a collective bargaining agreement, the court must analyze the collective bargaining agreement and the trust agreements to see whether they mandate arbitration of such claims. See O'Hare v. Gen. Marine Transp. Corp., 740 F.2d 160, 168 (2d Cir. 1984) (citation omitted). Courts have generally required a fund to submit to arbitration where (1) the CBA expresses an intention to require arbitration of disputes brought by the fund against the employer and (2) the fund is aware of the collective bargaining agreement's terms requiring such arbitration. See, e.g., Schneider Moving Storage Co. v. Robbins, 466 U.S. 364, 375 (1984); O'Hare, 740 F.2d at 168.
In determining whether a fund was aware of the terms of the collective bargaining agreement, courts consider it significant if a party to the collective bargaining agreement, i.e. a union representative, is also a trustee of the fund. See Central States, Southeast Southwest Areas Pension Fund v. Goggin Truck Line, Inc., 140 F.R.D. 362, 365 (N.D. Ill. 1991). Under such circumstances, the courts have found that the fund is aware of the terms of the collective bargaining agreement even though it is not technically a party to the agreement. See id.
In the present case, the CBA references the Trust Fund Agreement and states that the employer party to the CBA agrees to become a signatory to the respective Trust Fund Agreements. See CBA at 44. In fact, the CBA provides that "the signing of this Agreement shall constitute an obligation to be bound by the terms and conditions . . . of said Agreements and Declarations of Trust . . . as if said Agreement and Declarations of Trust were fully set forth herein and made a part hereof." See CBA at 32. Moreover, the Declaration of Trust agreement states that the CBA is to provide for the payment of contributions from the employer to the trustees of the funds. See Affidavit of Patricia Redhead, sworn to February 20, 2003 ("Redhead Aff"), at Exhibit "A." Thus, the Funds are not only aware of the CBA's mandatory arbitration clause, as evidenced by the explicit reference to and reliance upon the CBA in its Declaration of Trust agreement, but the Funds agreement is treated, under the terms of the CBA, as being a part of the CBA.
Furthermore, Patricia Redhead, Plan Manager of the Plaintiff Funds, stated that the Funds were to receive contributions under the CBA. See Redhead Aff. at ¶ 7. Most significantly, the Union's business manager, James Milligan, is also a trustee of the Funds and was signatory to the CBA between Plaintiff Union and Defendant Shue Roofing and, therefore, "cannot now plead ignorance of those terms [of the CBA]" mandating arbitration. See Goggin Truck Line, 140 F.R.D. at 365. Thus, Plaintiffs' argument that Defendants' claims are only against the Funds, a non-party to the CBA, and are, therefore, not subject to the arbitration provision in the CBA is unavailing.
Based on the foregoing analysis, the Court concludes that the CBA requires arbitration of the claims presently before this Court.
Arbitrators do not exceed their authority by determining the enforceability of an oral agreement. See Concourse Beauty Sch., Inc. v. Polakov, 685 F. Supp. 1311, 1316 (S.D.N.Y. 1988) (holding that the oral agreement between the parties regarding additional work was a modification of the written contract and therefore arbitrable. Accordingly, the Court concludes that the alleged oral modifications of the collective bargaining agreement in the instant action are arbitrable.
IV. CONCLUSION
Accordingly, after carefully considering the file in this matter, the parties' submissions, and the applicable law, and for the reasons stated herein, the Court herebyORDERS that Plaintiffs' motion for summary judgment is DENIED as moot; and the Court further
ORDERS that Defendants' motion for summary judgment is DENIED as moot; and the Court further
ORDERS that the parties are to submit these claims to arbitration pursuant to the provisions of the CBA.