Local No. 171 Pension Fund v. Stone
- Garnett
- 1:24-cv-01769
- U.S. District Court · Southern District of New York
- 5
In Local 171 Pension Fund v. Stone, Judge Garnett denied defendants’ motions to dismiss or transfer claims involving ERISA withdrawal liability.
Local 171 Pension Fund, Jeffrey B. Stone, and Eric D. Stone. The Fund’s claims remain pending, while the defendants’ motions to dismiss or transfer were denied.
What happened
Local 171 Pension Fund sued Jeffrey B. Stone and Eric D. Stone over claims arising from Biehl Cleaners’ withdrawal from an employee-benefit plan and the later sale of property. The Fund alleged breach of fiduciary duty, aiding and abetting, and personal liability for the plan’s withdrawal liability.
The defendants asked the court to dismiss the case as duplicative of an Illinois lawsuit, dismiss it for failure to state a claim, or transfer it to Illinois. The court said the duplicative-action issue was moot because the Illinois case had been dismissed, held that the amended complaint plausibly stated claims, and declined to transfer the case.
Judge Margaret M. Garnett denied the defendants’ motions to dismiss or transfer. The ruling allowed the claims to continue but did not decide whether the Fund would ultimately prevail; the court directed the parties to discuss the effect of a bankruptcy settlement and possible next steps.
The detailed version
- Local No. 171 Pension Fund v. Stone · No. 1:24-cv-01769
- Garnett
- Mar. 27, 2025
Background
Local 171 Pension Fund brought this action against Jeffrey B. Stone and Eric D. Stone. The Fund’s claims concern Biehl Cleaners’ withdrawal in 2019 and 2020 from an employee-benefit plan governed by the Employee Retirement Income Security Act (ERISA), and the defendants’ 2020 sale of real property that Biehl Cleaners had used. The Fund alleged that the sale proceeds were not turned over to the Fund for Biehl Cleaners’ withdrawal liability.
The amended complaint included three counts: breach of fiduciary duty against Jeffrey Stone, who was alleged to have been a plan trustee; aiding and abetting that alleged breach against Eric Stone; and personal liability for both defendants under ERISA based on a theory of disregarding the separation between related entities, commonly called “piercing the corporate veil.”
Motions and Analysis
The defendants moved to dismiss the action as duplicative of a declaratory-judgment action they had filed against the Fund in the Central District of Illinois. They alternatively moved under Rule 12(b)(6), which tests whether a complaint states a legally sufficient claim, and asked the court to transfer the case to the Central District of Illinois under 28 U.S.C. § 1404(a).
The court treated the duplicative-action argument as moot because the Illinois district court had dismissed that action in favor of the case pending in New York. The court therefore declined to dismiss this case on the ground that it duplicated another pending case.
The court also held that the amended complaint stated claims sufficient to survive a Rule 12(b)(6) motion. At that stage, the court had to accept well-pleaded factual allegations as true, draw reasonable inferences for the Fund, and avoid resolving disputed factual issues. The court found that the defendants’ arguments about the first count depended on competing inferences and factual assertions that could not be resolved on a motion to dismiss. It likewise found that the allegations supporting the second and third counts, and the reasonable inferences from them, plausibly stated claims for relief. The court emphasized that the Fund might not ultimately prevail and that the ruling expressed no view about the likely outcome on the merits.
Finally, the court declined to transfer the case. It found that most of the relevant convenience factors were neutral or favored the Fund, including the Fund’s choice of forum, the location of the Fund and several Fund witnesses, and the possibility of remote depositions. The defendants’ arguments concerning their location, the real property’s location, and other events did not outweigh those considerations.
Disposition
The court denied the defendants’ motions to dismiss or transfer. It directed counsel to submit a joint letter by April 17, 2025, addressing the effect of a settlement agreement in the Stone Brothers LLC bankruptcy proceeding concerning the property-sale proceeds and proposing next steps, including possible settlement discussions or discovery.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.