09-1802-cv
Reilly v. Reem Plumbing & Heating Corp., et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUM M ARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUM M ARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. W HEN CITING A SUM M ARY ORDER
IN A DOCUM ENT FILED W ITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (W ITH THE NOTATION “SUM M ARY ORDER”). A PARTY CITING A SUM M ARY
ORDER M UST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New
York, on the 2nd day of June, two thousand ten.
1
2 PRESENT:
3 JOHN M. WALKER, JR.
4 DEBRA ANN LIVINGSTON,
5 Circuit Judges,
6 LEWIS A. KAPLAN,*
7 District Judge.
8 ____________________________________________________
9
10 GEORGE W. REILLY, VITO GIACHETTI, as
11 Co-Chairman of the Board of Trustees of the Plumbers
12 Local Union No. 1 Welfare Fund, Additional Security
13 Benefit Fund, Vacation and Holiday Fund, Trade Education
14 Fund and 401k Savings Plan, MARTIN MADDALONI,
15 CHARLES CARLSON, as Co-Chairman of the Board of
16 Trustees of the Plumbers and Pipefitters National
17 Pension Fund, LAWRENCE MAZZOLA, SMITTY BELCHER,
18 as Co-Chairman of the Board of Trustees of the International
19 Training Fund,
20
21 Plaintiffs-Appellees,
22
23 v. 09-1802-cv (L)
*
The Hon. Lewis A. Kaplan, of the United States District Court for the Southern District
of New York, sitting by designation.
1 09-1850-cv (CON)
2
3 REEM CONTRACTING CORP., JONA SZAPIRO,
4 REEM PLUMBING & HEATING CORP.,
5 STEVEN L. STEIN,
6
7 Defendants-Appellants,
8
9 WESTERN SURETY COMPANY,
10
11 Defendant.
12 __________________________________________
13
14 FOR APPELLANTS REEM PLUMBING &
15 HEATING CORP. AND STEVEN L. STEIN : JAMES SCOTT MURPHY, Garrity,
16 Graham, Murphy, Garofalo & Flinn,
17 P.C., New York, N.Y.
18
19
20 FOR APPELLANTS REEM CONTRACTING
21 CORP. AND JONA SZAPIRO: DENNIS J. ALESSI, Mandelbaum
22 Salsburg, P.C., West Orange, N.J.,
23
24
25 FOR APPELLEES: CHARLES R. VIRGINIA, MARC A.
26 TENENBAUM, Virginia &
27 Ambinder, LLP, New York, N.Y.
28
29 Appeal from a judgment of the United States District Court for the Eastern District
30 of New York (Amon, J.).
31 UPON DUE CONSIDERATION IT IS HEREBY ORDERED, ADJUDGED,
32 AND DECREED that the judgment of the district court be AFFIRMED IN PART AND
33 VACATED AND REMANDED IN PART.
34 Defendants-Appellants Reem Plumbing & Heating Corporation (“Plumbing”), Steven
35 L. Stein, Reem Contracting Corporation (“Contracting”), and Jona Szapiro appeal from a March 31,
36 2009 order and April 30, 2009 judgment of the United States District Court for the Eastern District
2
1 of New York (Amon, J.), granting summary judgment in favor of Plaintiffs-Appellees George W.
2 Reilly, Vito Giachetti, Martin Maddaloni, Charles Carlson, Lawrence Mazzola, and Smitty Belcher.
3 The district court held that Plumbing and Contracting, its alter ego, violated Section 515 of the
4 Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1145, by failing to
5 make contributions to certain union benefit funds (“Funds”) between January 1, 2002 and December
6 31, 2004 (the “Audit Period”) as required by collective bargaining agreements (“CBAs”) between
7 the Association of Contracting Plumbers of the City of New York (“ACP”) and Local Union No.
8 1 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry
9 of the United States and Canada (“Union”). It found also that Stein and Szapiro, who were officers
10 of Plumbing and Contracting respectively, breached ERISA fiduciary duties to the Funds and
11 consequently were liable personally for the deficiency. Appellants object to the district court’s
12 conclusions on each parties’ liability and on damages.
13 We assume familiarity with the facts of this case and the prior proceedings. We refer
14 to them only to the limited extent necessary to explication of this ruling.
15 Plumbing was a party to four agreements that are at the heart of this case. The first
16 two were CBAs between ACP and the Union and separately governed mechanical and equipment
17 servicing (“MES”) work and new construction (also known as “A”) work. Each required employers
18 to make specified contributions to the Funds for each hour of covered work performed by its
19 employees.
20 The MES Agreement became effective on January 1, 1998 and provided that it would
21 “remain in force until September 30, 2000.” It required a conference for the purpose of
22 consummating a new agreement one hundred twenty days prior to expiration and notice of intent to
23 abrogate one hundred eighty days prior to expiration. No party held a conference or notified of an
3
1 intent to abrogate. The Union and ACP periodically modified the MES agreement between 2001
2 and 2004.
3 The A Agreement became effective on July 1, 1997 and“remain[ed] in force until
4 June 30, 2000.” Subsequently, the Union and ACP entered into two new “A” Agreements with
5 substantially similar terms covering the periods from July 1, 2000 to June 30, 2004 and July 1, 2004
6 to June 30, 2007.
7 The third agreement was an October 27, 1998 “Combination ‘A’ Field and
8 ‘Mechanical Equipment Service’ Division Collective Bargaining Agreement between the Union and
9 Reem Plumbing” (the “Combination Agreement”). Plumbing there “agree[d] to be bound by all
10 provisions of the Collective Bargaining Agreement between” the Union and ACP “and any
11 amendments renewals and extensions that may hereafter be made by the parties to the Agreement.”
12 Plumbing there designated ACP its bargaining representative for negotiations with the Union.
13 The final agreement, which was part of Plumbing’s September 22, 2000 application
14 for ACP membership, provided that Plumbing “agree[d] to comply with the provisions of the
15 . . . agreements and undertakings entered into by [ACP], whether or not [ACP] is a signatory to such
16 undertakings.”
17 Throughout the Audit Period, Plumbing made payments to the Funds with remittence
18 reports certifying that it was “a party to a written agreement requiring contributions.” Plumbing
19 conceded that it once had been bound by the CBAs, but argued that it no longer was bound during
20 the Audit Period. The district court granted summary judgment against it, holding that the language
21 of the agreements and Plumbing’s course of conduct left no genuine issue of material fact and that
22 Plumbing and Contracting, as Plumbing’s alter ego, continued to be bound by the CBAs throughout
4
1 the Audit Period.
2
3 I
4 We review a grant of summary judgment de novo to determine whether the district
5 court correctly concluded that there was no genuine issue as to any material fact and that the moving
6 party was entitled to judgment as a matter of law. See Miller v. Wolpoff & Abramson, L.L.P., 321
7 F.3d 292, 300 (2d Cir. 2003). In determining whether there are genuine issues of material fact, we
8 are “required to resolve all ambiguities and draw all permissible factual inferences in favor of the
9 party against whom summary judgment is sought.” Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir.
10 2003) (quoting Stern v. Trs. of Columbia Univ. in the City of N.Y., 131 F.3d 305, 312 (2d Cir. 1997))
11 (internal quotation marks omitted).
12
13 II
14 A. Liability
15 Appellants object to the district court’s liability determination on three principal
16 grounds. They contend first that there were genuine issues of material fact regarding whether
17 Plumbing was bound by the CBAs during the Audit Period. They next maintain that the district
18 court improperly accepted a stipulation that Plumbing and Contracting were alter egos. Finally they
19 contest whether Stein and Szapiro were ERISA fiduciaries of any of the Funds’ assets and, if so,
20 whether there was any evidence that they breached their duties.
21 Appellants’ contention that the district court overlooked Stein’s sworn statements
22 regarding Plumbing’s intent not to be bound by the CBAs is unpersuasive. Summary judgment is
5
1 inappropriate only if there are genuine issues of material fact. Private, subjective intent, however,
2 is not material to whether a binding agreement existed. See, e.g., Klos v. Polskie Linie Lotnicze, 133
3 F.3d 164, 168 (2d Cir. 1997); Rule v. Brine, Inc., 85 F.3d 1002, 1010 (2d Cir. 1996) (“[T]he question
4 of whether or not a binding contract exists ‘is not dependent on the subjective intent’ of either
5 party.”) (quoting Brown Bros. Elec. Contractors, Inc. v. Beam Constr. Corp., 41 N.Y.2d 397, 399
6 (1977)); see also Robbins v. Lynch, 836 F.2d 330, 332 (7th Cir. 1988).
7 The district court properly determined also that Stein and Szapiro were fiduciaries
8 of the Funds. Moreover, contrary to appellants’ arguments, there was uncontested evidence that they
9 had exclusive control over Plumbing and Contracting, respectively, thus warranting the imposition
10 of personal liability.
11 Finally, the district court was justified in accepting and relying on the parties’ alter
12 ego stipulation. See Fisher v. First Stamford Bank & Trust Co., 751 F.2d 519, 523 (2d Cir. 1984)
13 (“a stipulation of fact that is fairly entered into is controlling on the parties and the court is bound
14 to enforce it”) (citing Stanley Works v. F.T.C., 469 F.2d 498, 506 (2d Cir. 1972)); PPX Enters., Inc.
15 v. Audiofidelity, Inc., 746 F.2d 120, 123 (2d Cir. 1984) (“Under federal law, stipulations . . . are
16 generally binding on the parties and the Court.”) (internal quotation marks omitted).
17
18 B. Damages
19 Appellants object also to the damage award. They argue that the district court erred
20 by (1) shifting to them the burden of proof on damages and (2) concluding that there were no
21 disputed issues of material fact.
22 The district court determined the amount of appellants’ unpaid contributions based
6
1 solely on a Marshall & Moss audit of Plumbing and Contracting. The Contracting audit was
2 premised explicitly on an assumption that all work performed by all Contracting employees at all
3 times was covered by the CBAs. Szapiro, however, testified in his deposition that Contracting did
4 work “other than plumbing,” including sprinkler and air conditioning work. He testified also that
5 plumbing “may be more, may be less” than fifty percent of Contracting’s work, but that the company
6 did “a lot of sprinkler work.” The district court nevertheless granted summary judgment because
7 appellants had failed to adduce documentary evidence contradicting the audit report.
8 In so doing, the district court relied on a line of cases originating with Combs v. King,
9 764 F.2d 818 (11th Cir. 1988). Under this burden-shifting rule, a plaintiff first must show (a)
10 improper record-keeping by the defendants, (b) that employees performed work for which they were
11 improperly compensated, and (c) “the amount and extent of that work as a matter of just and
12 reasonable inference,” before the burden shifts. Id at 826 (quoting Anderson v. Mt. Clemens Pottery
13 Co., 328 U.S. 680, 687 (1946)). If it sustains that burden, the onus shifts to the employer-defendant
14 to disprove damages. Id.
15 We have not addressed whether the Combs burden-shifting rule – as distinguished
16 from the more traditional principle that the plaintiff bears the burden of proving damages – applies
17 in ERISA cases where an employer has not maintained records sufficient to determine whether a
18 CBA covers a given employee’s work at a particular time. See, e.g., La Barbera v. J.D. Collyer
19 Equip. Corp., 337 F.3d 132, 139 n.3 (2d Cir. 2003) (noting other courts’ adoption of burden-shifting
20 in these circumstances). It is unnecessary to resolve that issue in this case, however, because
21 summary judgment was inappropriate as to damages under either the traditional or Combs standard.
22 Szapiro’s testimony that Contracting did non-plumbing, and therefore non-covered,
7
1 work and that the extent of such work may have been more than 50 percent of its business certainly
2 would have precluded summary judgment under the traditional rule. Plaintiffs, after all, offered no
3 evidence as to the amount of covered work, relying instead only on its auditor’s assumption that all
4 of the work had been covered. But summary judgment as to damages would have been unwarranted
5 even if the case were governed by Combs because the burden-shifting rule it adopted does not take
6 effect until “an employee carries his burden . . . [of] produc[ing] sufficient evidence to show that
7 amount and extent of that [covered] work as a matter of just and reasonable inference.” Here,
8 however, plaintiffs offered no evidence from which any inference, let alone a “just and reasonable”
9 one, could be drawn to the effect that all of the work done by Contracting had been covered by the
10 CBAs. They elected to rely exclusively on the auditor’s report, which in turn rested on a bald and
11 unsupported assumption to that effect.
12
13 III
14 We have considered carefully appellant’s remaining arguments and conclude that they are without
15 merit. For the foregoing reasons, the judgment of the district court is hereby AFFIRMED with
16 respect to the issue of liability, but the judgement is VACATED and the case REMANDED for
17 a determination of damages.
18
19 FOR THE COURT:
20 Catherine O’Hagan Wolfe, Clerk
21
22
8