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Central Pennsylvania Teamsters Pension Fund v. Bear Distributing Co.

March 26, 2009

CENTRAL PENNSYLVANIA TEAMSTERS PENSION FUND, ET AL., PLAINTIFFS
v.
BEAR DISTRIBUTING COMPANY, INC., ET AL., DEFENDANTS



The opinion of the court was delivered by: Stengel, J.

MEMORANDUM

The Central Pennsylvania Teamsters Pension Fund*fn1 and its Administrator, Joseph J. Samolewicz,*fn2 bring this case against Bear Distributing Co., Inc., and Sheffer Beer Distribution Co., Inc., pursuant to the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. § 1381, et seq., a statutory amendment to ERISA. In the first count of the complaint, the plaintiffs allege a claim against Bear for failure to pay the withdrawal liability. In Count II, the plaintiffs seek judgment against Sheffer Beer for failing to respond to the Pension Fund's request for information under Section 4219(a) of the MPPAA, 29 U.S.C. § 1399(a). In Count III, the plaintiffs seek to hold Sheffer Beer jointly and severally liable for Bear's withdrawal liability because it continued Bear's business after Bear ceased operations. The plaintiffs seek $18,229 in withdrawal liability, prejudgment interest, liquidated damages, attorney's fees, and costs.

The plaintiffs filed a motion for summary judgment to which the defendants have responded. For the following reasons, I will grant the motion in its entirety. I will also grant the plaintiffs' uncontested motion for sanctions.

I. BACKGROUND

Mr. Clair E. "Sam" Sheffer and his family have been in the beer distribution business since 1956, when he opened Sheffer Beer. See Clair Sheffer Dep. at 10. Sheffer Beer has the territory rights for the distribution of certain brands of beer in York, Adams, Franklin, Fulton, and Lancaster Counties in Pennsylvania. Id. at 11. Sam Sheffer is the sole shareholder of Sheffer Beer. Id. at 16. He is also the sole shareholder of S.A.S., Inc., a leasing company which leases trucks, forklifts, and other equipment to Sheffer Beer. Id. While Clair Sheffer considers himself semi-retired and spends much of his time in Florida, Clint Sheffer, his son, runs the day-to-day operation at Sheffer Beer.

In 1976, Susan Sheffer-Renoll, Clair Sheffer's daughter, purchased Bear Distributing Company, Inc., an existing beer distributorship, and became a sub-distributor of brewed beverages for Sheffer Beer in Lancaster County where it serviced about three hundred customers. Id. at 20, 29. "The good graces of her grandfather helped her out considerably" in the purchase of the company. Id. at 22. For the period July 1, 2001 through June 30, 2002, Bear posted $6.22 million in sales which represented about thirty-two percent of Sheffer's total sales of $19.65 million for the same period. See Gettys Dep. at 28-29.

For many years, Local 771 represented all of Bear's employees except Ms. Sheffer-Renoll. See Sheffer-Renoll Dep. at 39. The collective bargaining agreement between Bear and Local 771 obligated Bear to make contribution payments to the Pension Fund on behalf of the employees covered by the labor contract. Id. at 90. The final collective bargaining agreement between Bear and Local 771 was in effect from February 1, 2001 through January 31, 2003. Id. at 86.

On November 21, 2002, a fire destroyed Bear's offices and part of its warehouse. Id. at 12, 14. At the time of the fire, Bear had fifteen employees, including Ms. Sheffer-Renoll, its sole owner and President. Id. at 11-12, 39. Bear also employed warehouse workers, drivers, and clerical personnel. Id. at 39. The day of the fire, Ms. Sheffer-Renoll told her employees that Bear would "temporarily discontinue operations." Id. at 66-67. Ms. Sheffer-Renoll was hired the following day by S.A.S., Inc., her father's leasing company. Id. at 7. In addition to her work at S.A.S., Ms. Sheffer-Renoll provides management services to Sheffer Beer and also serves as its Vice President of Administration. See Gettys Dep. at 7, 45. Sheffer Beer pays thousands of dollars in management consulting fees to S.A.S. Id.

Because in effect Bear's customers were Sheffer Beer's customers, it was imperative for Sheffer Beer that its customers continued to be serviced even after the fire. Accordingly, Clint Sheffer informed his sister that any Bear employee who wanted to work "temporarily" at Sheffer Beer, could report to Sheffer Beer the following day, fill out an application, and perform the same job. Sheffer Beer hired twelve of Bear's fifteen employees. See Clint Sheffer Dep. at 37.

Unlike Bear, Sheffer Beer is a non-union shop. Its decision to hire Bear's employees after the fire created tension with Local 771. On March 7, 2003, the Union filed an unfair labor practice charge with the National Labor Relations Board. See Sheffer-Renoll Dep. at 74-75. Local 771 also filed a grievance against Bear under the collective bargaining agreement seeking severance pay and benefits for its members. Id. at 86. When the grievance went to arbitration on November 17, 2003, Ms. Sheffer-Renoll had already decided not to resume operations at Bear. Id. at 93. Bear and Local 771 settled the grievance, with Bear agreeing, among other things, to: (1) pay the employees the difference in the hourly rate that they earned at Bear and the lesser amount that they earned per hour at Sheffer Beer for the period from November 22, 2002 through January 31, 2003; (2) pay severance to the employees; and (3) make contributions to the Pension Fund for the months of December 2002 and January 2003. Id. at 88-92. The Pension Fund was not a party to the arbitration and did not participate in the settlement discussions. See Samolewicz Dep. at 10. The resulting amount due the affected employees totaled approximately $100,000. See Sheffer-Renoll Dep. at 122. Because Bear did not have the cash on hand to pay the settlement, Mr. Clair Sheffer authorized S.A.S. to extend a loan to Bear for that amount. Id. Ms. Sheffer-Renoll also made her brother, Clint Sheffer, aware of the grievance and showed him the written settlement agreement between Bear and the Union. Id. at 92, 94-95.

II. LEGAL STANDARD

Title 29 of the United States Code § 1132(e)(1) provides district courts with exclusive jurisdiction over ERISA actions. Section 4301(b) of the MPPAA, 29 U.S.C. § 1451(b), and Sections 502(e) and 515 of ERISA, 29 U.S.C. § 1132(e)(2) and § 1145, provide jurisdiction over this action by the Pension Fund and its Administrator to recover withdrawal liability from Bear and Sheffer Beer.

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). An issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is "material" if it might affect the outcome of the case under governing law. Id.

A party seeking summary judgment always bears the initial responsibility for informing the court of the basis for its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the movant's initial Celotex burden can be met simply by "pointing out to the district court that there is an absence of evidence to support the non-moving party's case." Id. at 325. After the moving party has met its initial burden, "the adverse party's response, by affidavits or otherwise as provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e).

That is, summary judgment is appropriate if the non-moving party fails to rebut by making a factual showing "sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. at 322. Under Rule 56, the court must view the evidence presented on the motion in the light most favorable to the opposing party. Anderson v. Liberty Lobby, Inc., 477 U.S. at 255. The court must decide not whether the evidence unmistakably favors one side or the other but whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. Id. at 252. If the non-moving party has exceeded the mere scintilla of evidence threshold and has offered a genuine issue of material fact, then the court cannot credit the movant's version of events against the opponent, even if the quantity of the movant's evidence far outweighs that of its opponent. Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir. 1992).

III. DISCUSSION

Congress enacted ERISA to protect participants in employee benefit plans and their beneficiaries. 29 U.S.C. § 1001(b). The statute comprehensively regulates, among other things, employee welfare benefit plans that, through the purchase of insurance or otherwise, provide medical, surgical, or hospital care, or benefits in the event of sickness, accident, disability, or death. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44 (1987).

The MPPAA amended ERISA, and was enacted "out of a concern that ERISA did not adequately protect multiemployer pension plans from the adverse consequences that result when individual employers terminate their participation or withdraw." Supervalu, Inc. v. Board of Trustees, et al., 500 F.3d 334, 336 (3d Cir. 2007) (citing Warner-Lambert Co. v. United Retail & Wholesale Employee's Teamster Local No. 115 Pension Plan, 791 F.2d 283, 284 (3d Cir. 1986)). The amendments to ERISA were designed to prevent employers from withdrawing from a multiemployer pension plan without paying their share of unfunded, vested benefit liability, thereby threatening the solvency of such plans. Id. (citing Mfrs. Indus. Relations Ass'n v. E. Akron Casting Co., 58 F.3d 204, 205-06 (6th Cir. 1995)). At the time the MPPAA was enacted, many employers were withdrawing ...


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