Trustees of the New York City District Council of Carpenters Pension Fund v…
Trustees of the New York City District Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund, and Apprenticeship, Journeyman Retraining, Educational and Industry Fund v. Showtime on the Piers, LLC
- Valerie Caproni
- 1:19-cv-07755
- U.S. District Court · Southern District of New York
- 13
In Trustees of Carpenters Funds v. Showtime, Judge Caproni partly granted and partly denied dismissal, dismissing Newman’s claim with leave to amend and some employee-benefit claims with prejudice.
The ruling affected the Funds, Showtime on the Piers, LLC, and Charles Newman. The claims against Newman were dismissed with leave to amend; the Charity Fund and Labor Management Corporation could pursue Labor-Management Relations Act claims but could not pursue the specified ERISA claims; and the motion was denied in part as to the allegations that Showtime adopted the collective-bargaining agreement.
What happened
In Trustees of the Carpenters Funds v. Showtime, the Funds sued Showtime on the Piers, LLC and Charles Newman over unpaid benefit contributions under the Employee Retirement Income Security Act and a labor agreement. They alleged that Showtime adopted the agreement through oral promises and conduct, including using union workers, submitting to an audit, and making some payments.
The defendants sought dismissal, arguing that Showtime never agreed to the labor agreement, that the claims against Newman were too late, and that two plaintiffs lacked standing to sue. The court found that the allegations adequately supported an agreement between the Funds and Showtime. It also ruled that some claims against Newman were time-barred but that later unpaid contributions could support an amended claim, and that the two challenged plaintiffs could pursue labor-law claims but not employee-benefit claims.
Judge Valerie Caproni granted the motion to dismiss in part and denied it in part. She dismissed the claim against Newman with leave to amend and dismissed with prejudice the first cause of action under the employee-benefit law insofar as it was brought by the Charity Fund and the Labor Management Corporation.
The detailed version
- Trustees of the New York City District Council of Carpenters Pension Fund v… · No. 1:19-cv-07755
- Valerie Caproni
- May 26, 2020
Background
The plaintiffs, referred to as the Funds, brought claims under the Employee Retirement Income Security Act of 1974 (ERISA) and Section 301 of the Labor-Management Relations Act. They sought unpaid benefit contributions from Showtime on the Piers, LLC and Charles Newman.
According to the complaint, Newman previously operated Port Parties Ltd., which had signed labor agreements with the New York District Council of Carpenters. After Port Parties stopped operating, Newman operated the same trade-show business through Showtime, using the same equipment, customers, office, address, and union labor. The Funds alleged that Showtime agreed in September 2015 to follow the 2011–17 collective-bargaining agreement retroactively to January 1, 2015. Showtime then made some payments under that agreement and submitted to an audit. The audit identified $597,500.88 in unpaid contributions for January 1 through July 26, 2015. The Funds alleged that additional contributions remained unpaid for later work and that Showtime did not permit a later audit.
The complaint asserted three causes of action. The first and second were against Showtime for violating the collective-bargaining agreement and were based on ERISA and the Labor-Management Relations Act. The third was against Newman for breach of fiduciary duty under ERISA, based on allegations that he directed Showtime to withhold required contributions.
Motion to Dismiss
The defendants moved under Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). Rule 12(b)(1) concerns the court’s authority to hear a claim, while Rule 12(b)(6) tests whether the complaint alleges enough facts to support a legally plausible claim.
Agreement to the Collective-Bargaining Agreement
The court held that the Funds adequately alleged that Showtime agreed to be bound by the 2011–17 collective-bargaining agreement. The complaint alleged that Showtime orally agreed to follow the agreement, submitted to an audit, made contributions according to its terms, and continued using union labor covered by the agreement.
The court rejected the argument that Showtime could not be bound because it had not signed the agreement. It explained that an employer may show its intent to adopt a collective-bargaining agreement through its conduct, including following the agreement’s terms or receiving its benefits. The court also relied on the alleged continuity between Port Parties and Showtime, including their common ownership, work, union employees, location, equipment, and customers.
The court also rejected the defendants’ judicial-estoppel argument. Judicial estoppel is a doctrine that can prevent a party from taking a factual position inconsistent with one it successfully advanced in an earlier proceeding. The court found that the Funds’ current position could be reconciled with their position in the earlier related proceeding and that the defendants had not shown prejudice warranting estoppel.
Claims Against Newman and Statute of Limitations
The court held that ERISA’s three-year limitations period applied to the fiduciary-duty claim against Newman because the Funds had actual knowledge of the alleged breach in 2015 and had not alleged fraud or concealment. The court concluded that a claim based on Newman’s decision not to pay the amount identified in the audit was time-barred. Continued refusal to pay that same amount did not restart the limitations period.
The court distinguished later decisions not to pay contributions for work performed after the audit period. The complaint alleged that employees submitted complaints about additional post-audit shortages exceeding $250,000. The court stated that it could infer separate decisions concerning those later contributions and that claims based on contributions accruing from August 19, 2016, through the present were not barred at the pleading stage. The court dismissed the claim against Newman but granted leave to amend it to allege a breach of fiduciary duty based on decisions that were not time-barred.
Standing of the Charity Fund and Labor Management Corporation
The parties agreed that the Trustees of the New York City Carpenters Relief and Charity Fund and The New York City and Vicinity Carpenters Labor-Management Corporation lacked standing to bring ERISA claims. The dispute concerned whether they could bring claims under Section 301 of the Labor-Management Relations Act.
The court held that the two plaintiffs adequately alleged standing for the Labor-Management Relations Act claims. The complaint alleged that they were labor organizations and third-party beneficiaries of the collective-bargaining agreement, created for the benefit of union employees and entitled to receive contributions. The court therefore found that they could sue under Section 301.
Disposition
The court granted in part and denied in part the defendants’ motion to dismiss. It dismissed the third cause of action against Charles Newman with leave to amend. It dismissed with prejudice the first cause of action for ERISA claims insofar as it was asserted by the Charity Fund and the Labor Management Corporation. The order did not dismiss the Labor-Management Relations Act claims of those two plaintiffs on standing grounds.
Read the full 13-page opinion on CourtListener, the free public archive maintained by the Free Law Project.