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REICH v. COMPTON

July 21, 1993

ROBERT REICH, Secretary of the United States Department of Labor, Plaintiff
v.
FRED COMPTON, JOSEPH MC HUGH, JOHN NEILSON, FREDERICK HAMMERSCHMIDT, GERSIL N. KAY, ELECTRICAL MECHANICS ASSOC., FIDELITY-PHILADELPHIA TRUST CO., and the INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS,LOCAL 98, Defendants.



The opinion of the court was delivered by: ANITA B. BRODY

 By the accompanying order, I am vacating my February 11, 1993 order denying the summary judgment motion of plaintiff, the Secretary of the Department of Labor ("the Secretary"), on his complaint alleging violations of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. ยง 1001 et seq., by Local Union No. 98 International Brotherhood of Electrical Workers Pension Plan ("the Plan") fiduciaries Fred Compton ("Compton"), Joseph McHugh ("McHugh"), John Neilson ("Neilson"), Frederick Hammerschmidt ("Hammerschmidt"), Gersil Kay ("Kay") and the Fidelity-Philadelphia Trust Company ("Fidelity"), and by Plan non-fiduciaries the International Brotherhood of Electrical Workers Local 98 ("Local 98") and the Electrical Mechanics Association ("EMA").

 I am being called upon to decide whether ERISA allows me to pierce the corporate veil of a corporation that is not a "party in interest" to the plan as defined by the statute but which is closely related to -- but not co-extensive with -- a labor organization that is a "party in interest" to the plan in order to find that the pension plan's loan mortgage and subsequent sale of the mortgage note to the corporation is a prohibited "party in interest" transaction. I find that it does not and enter judgment as a matter of law in favor of the non-moving defendants.

 A. Procedural background.

 The parties had completed briefing the Secretary's summary judgment motion when this case was reassigned to me from the Honorable J. Franklin Van Antwerpen on January 4, 1993. The Secretary identified seventy-two "undisputed" material facts that he contended entitled him to summary judgment. Fidelity and the employer trustees (Hammerschmidt and Kay) admitted most of these facts in their responsive brief.

 The parties were unable to identify any disputed material facts during oral argument on January 14, 1993. Local 98 and EMA, however, asked me to consider additional facts that they considered relevant to the threshold issue of whether EMA is the alter ego of Local 98, a real party in interest to the Plan under the statute. They also argued -- and I was concerned -- that the law of the Third Circuit considers the ability to pierce a corporate veil to be a "fact-intensive question" that requires full factual development at trial. See, e.g., United States v. Pisani, 646 F.2d 83 (3rd Cir. 1981) (district court pierced corporate veil after bench trial).

 I was reluctant to foreclose any opportunity for the parties to present further facts that could impact on my determination of whether EMA is an alter ego of Local 98. Nonetheless, it was apparent that a full bench trial was unnecessary because there were no credibility issues and that the testimony at trial might merely reiterate admissions already in the record.

 I suggested that the parties consider the possibility of my adjudicating the case on the submitted record rather than in the procedural context of a motion for summary judgment. Each party would have an opportunity to amplify the summary judgment record. I also explained that if no party requested cross-examination of any affidavits submitted as part of the record, there would be no need to present live testimony. When the parties responded that they had no objection to my proposal, I issued the following order:

 
AND NOW, this 11th day of February, 1993, it is ORDERED that plaintiff's motion for summary judgment is DENIED.
 
It is further ORDERED that the trial shall proceed as a bench trial on the record submitted by the parties and amplified as follows:
 
1. By February 19, 1993, defendants Compton, McHugh, Neilson, Electrical Mechanics Association and Local 98 shall file and serve responses in numbered paragraphs admitting or denying the numbered paragraphs setting forth the plaintiff Secretary's statement of material facts and the additional material facts identified by Fidelity, Hammerschmidt and Kay.
 
3. By April 30, 1993, each party shall file and serve responses in numbered paragraphs admitting or denying any further proposed findings of fact submitted on April 15, 1993.
 
4. By April 30, 1993, each party shall file and serve its proposed conclusions of law and a statement of any evidentiary objections to the evidence submitted to the Court. The parties shall also identify any areas of cross-examination on the affidavits submitted as part of the record which the Court may consider hearing.

 5. This case shall be stricken from the trial pool.

 The Secretary, Local 98 and EMA submitted additional proposed findings of fact on April 15, 1993. The Secretary subsequently admitted all but one of Local 98 and EMA's proposed findings of fact. *fn1" This exercise confirmed that all of the material facts relevant to the issues before me are undisputed by the parties. *fn2" ...


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