Gesualdi v. S. DiFazio and Sons Construction
Gesualdi v. S. DiFazio and Sons Construction
2018 WL 11343929 (E.D.N.Y. 2018)
April 30, 2018
Feuerstein, Sandra J., United States District Judge
Summary
The Plaintiffs sought to collect delinquent employer contributions from the Defendants and relied on an alter-ego theory. The Court affirmed a discovery ruling ordering Environmental to produce all documents which reflect the source(s) of funds used to make its withdrawal liability payments to the Local 282 Pension Fund, overruling the Defendants' objection.
THOMAS GESUALDI, LOUIS BISIGNANO, ANTHONY D'AQUILA, MICHAEL O'TOOLE, MICHAEL BOURGAL, FRANK H. FINKEL, JOSEPH A. FERRARA, SR., MARC HERBST, DENISE RICHARDSON, and THOMAS CORBETT, as Trustees and Fiduciaries of the Local 282 Welfare Trust Fund, the Local 282 Pension Trust Fund, the Local 282 Annuity Trust Fund, the Local 282 Job Training Trust Fund, and the Local 282 Vacation and Sick Leave Trust Fund, Plaintiffs,
v.
S. DiFAZIO AND SONS CONSTRUCTION, INC. d/b/a DiFAZIO ENVIRONMENTAL SERVICES, DiFAZIO IND., LLC d/b/a DiFAZIO INDUSTRIES, DiFAZIO INDUSTRIES, INC., FAZTEC INDUSTRIES, INC., and WEST SHORE TRUCKING, INC., jointly and severally, Defendants
v.
S. DiFAZIO AND SONS CONSTRUCTION, INC. d/b/a DiFAZIO ENVIRONMENTAL SERVICES, DiFAZIO IND., LLC d/b/a DiFAZIO INDUSTRIES, DiFAZIO INDUSTRIES, INC., FAZTEC INDUSTRIES, INC., and WEST SHORE TRUCKING, INC., jointly and severally, Defendants
Case No. 16-cv-5209 (SJF)(ARL)
United States District Court, E.D. New York
Signed April 30, 2018
Counsel
Arthur Joseph Muller, Christopher A. Smith, Trivella, Forte & Smith, LLP, White Plains, NY, Jonathan Michael Bardavid, Daniels, Porco and Lusardi, LLP, Carmel, NY, for Plaintiffs.Richard B. Ziskin, Suzanne Harmon Ziskin, Law Offices of Robert M. Ziskin, Commack, NY, for Defendants S. DiFazio and Sons Construction, Inc., Phyllis DiFazio.
Charles N. Internicola, The Internicola Law Firm, P.C., Staten Island, NY, John David Horowitz, Horowitz Law Group PLLC, Jersey City, NJ, for Defendant DiFazio Ind., LLC.
Charles N. Internicola, The Internicola Law Firm, P.C., Staten Island, NY, for Defendant DiFazio Industries, Inc.
Peter R. Sullivan, Sullivan Gardner, New York, NY, for Defendants Faztec Industries, Inc., John DiFazio.
Gerald V. Dandeneau, Dandeneau & Lott, Melville, NY, for Defendant West Shore Trucking, Inc.
Feuerstein, Sandra J., United States District Judge
Order
I. Introduction
*1 Plaintiffs Thomas Gesualdi, Louis Bisignano, Anthony D'Aquila, Michael O'Toole, Michael Bourgal, Frank H. Finkel, Joseph A. Ferrara, Sr., Marc Herbst, Denise Richardson, and Thomas Corbett (collectively, “Plaintiffs”), are Trustees and Fiduciaries of the Local 282[1] Welfare Trust Fund, the Local 282 Pension Trust Fund, the Local 282 Annuity Trust Fund, the Local 282 Job Training Trust Fund, and the Local 282 Vacation and Sick Leave Trust Fund, (collectively, the “Funds”), for the benefit of which they commenced this action seeking to collect delinquent employer contributions pursuant to the Employee Retirement Income Security Act (“ERISA”), 29 U.C.S. §§ 1132(a)(3) & 1145, and the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185 from defendants S. Di Fazio and Sons Construction, Inc. d/b/a DiFazio Environmental Services (“Environmental”), DiFazio Ind., LLC d/b/a DiFazio Industries (“LLC”) and DiFazio Industries, Inc. (“Inc.”) (LLC and Inc. collectively referred to as “Industries”), Faztec Industries, Inc. (“Faztec”), and West Shore Trucking, Inc. (“West Shore”) (collectively, “Defendants”). The Parties are engaged in discovery, the oversight of which was referred to Magistrate Judge Lindsay on March 20, 2017.
Currently before the Court is the Defendants’ objection to one of Magistrate Judge Lindsay's discovery rulings. (See ECF No. 111; hereafter, “Objection”.) The Plaintiffs request the Court affirm the discovery ruling. (See ECF No. 112; hereafter, “Response”.) For the reasons that follow, the Defendants’ objection is overruled and the subject discovery ruling is affirmed.
II. Background
The Court assumes the Parties’ familiarity with the factual and procedural background of this case. (See ECF No. 82 (Report and Recommendation[2]) at 2-4.) The limited background discussed is provided as context to the instant matter.
As noted, by this action the Plaintiffs are seeking, inter alia, delinquent contributions from Environmental, as a signatory employer to a collective bargaining agreement, and from the other Defendants, as alter-ego companies of Environmental, which together allegedly engaged in a double-breasted scheme to avoid making requisite Funds contributions. Relying on an alter-ego theory, Plaintiffs seek a judgment finding the Defendants liable individually and jointly and severally for the delinquent contributions and associated obligations. In that regard, Plaintiffs are seeking discovery relevant to its alter-ego theory of liability.
It is undisputed that in this action there are no claims regarding Environmental's withdrawal liability obligations to Local 282, which withdrawal liability was assessed after Environmental's February 2017 termination of its collective bargaining relationship with Local 282. However, for purposes of the current objection, that obligation comes into play.
*2 On or about January 8, 2018, [ ] Environmental submitted its first payment for withdrawal liability to the Local 282 Pension Fund. The payment was submitted by [ ] Environmental's attorney, Richard Ziskin, and was made from Mr. Ziskin's IOLA account. During the recent deposition of Phyllis DiFazio, the Federal Rule of Civil Procedure (“Rule”) 30(b)(6) corporate designee of [ ] Environmental, Mrs. DiFazio was questioned as to what entity or individual(s) were providing the funds for [ ] Environmental's withdrawal liability. In response[,] [Mrs.] DiFazio indicated that she did not know and would have to check her records. Her attorney, Mr. Ziskin, confirmed that she would “check and get back to [Plaintiffs].” ECF No. 97-2 at 147. [ ] Environmental has since refused to produce the information. (ECF No. 103 (“Compel Order”) at 1.) In their motion to compel (see ECF No. 97), the Plaintiffs argued that “the requested information [wa]s highly relevant to the alter-ego allegations in this action,” because if “one of the other Defendants or owners of one of the Defendants are making payments to the Local 282 Pension Fund on behalf of [ ]Environmental, it would indicate that Defendants were intertwined financially and thus are later egos.” (Id. at 2.) In opposition, Environmental “argue[d] that the fact that the payments are being made after [ ] Environmental's collective bargaining agreement was terminated is of great consequence. Pursuant to § 301 of the Labor Management Relations Act, 29 U.S.C.S. § 185, ... the District Court lacks subject matter jurisdiction to hear Plaintiffs’ claim for any period of time that follows the termination of [ ] Environmental's collective bargaining agreement with non-party Local Union 282.” (ECF No. 99 (“Compel Opposition) at 2 (emphasis added).)
Magistrate Judge Lindsay was unpersuaded by the Defendants’ jurisdiction argument stating, inter alia, “Plaintiffs’ motion to compel is made pursuant to Rule 37 and has nothing to do with whether the Court has jurisdiction over claims for benefit contributions post-termination of the collective bargaining agreement – damages which are not even sought in Plaintiffs’ lawsuit.” (Compel Order at 2 (emphasis added).) Rather, the Magistrate Judge found the information sought to be “relevant to Plaintiffs’ case, proportional to the needs of the case, and [was not] burdensome on [ ]Environmental.” (Id. (citing Fed. R. Civ. P. 26(b)(1)).) This objection followed. (See ECF No. 111 (“Objection”).)
III. Discussion
A. Standard of Review
Pursuant to Federal Rules of Civil Procedure 72(a), a party has the option of objecting to a magistrate judge's order concerning any nondispositive pretrial matter. See Fed. R. Civ. P. 72(a). The district judge “must consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law.” Id. “Under this highly deferential standard of review, a district court may reverse the order only if ‘on the entire evidence,’ the district court is ‘left with the definite and firm conviction that a mistake has been committed.’ ” Gray v. City of N.Y., No. 10-cv-3039, 2013 WL 3093345, at *2 (E.D.N.Y. June 18, 2013)(quoting Easley v. Cromartie, 532 U.S. 234, 242 (2001)); see also Kindle v. Dejana, No. 14-cv-6784, 2015 WL 5117797, at *1 (E.D.N.Y. Aug. 27, 2015)(same). “[A] party seeking to overturn a discovery order bears a heavy burden.” AP Links, LLC v. Global Golf, Inc., No. 08-cv-1730, 2011 WL 888261, at *4 (E.D.N.Y. Mar. 14, 2011); see also Mental Disability Law Clinic v. Hogan, 739 F. Supp.2d 201, 203-04 (E.D.N.Y. 2010) (same).
B. The Parties’ Arguments
1. The Defendants’ Objection
The crux of the Defendants’ objection is that Magistrate Judge Lindsay “did not cite to relevant statutes and/or case law and that the [Compel] Order compelling the production of documents was contrary to established law,” thereby making it “clearly erroneous.” (Objection at 4-5.) Defendants continue to press their temporal argument, i.e., because the withdrawal liability obligation arose after the termination of Environmental's collective bargaining relationship with Local 282, this Court “lacks subject matter jurisdiction to hear Plaintiffs’ claim for any period of time that follows the termination of [ ] Environmental's collective bargaining agreement with non-party Local Union 282.” (Id. at 5 (emphasis added).) Rather, Defendants imply this discovery dispute should go before the National Labor Relations Board as it “has exclusive jurisdiction to impose terms upon an employer after the collective bargaining agreement has expired.” (Id. at 5-6.) They conclude that “[a]s both ERISA and the LMRA do not permit the Court to impose post-contract expiration obligations upon employers, Plaintiffs’ request for post-contract documents is irrelevant to Plaintiffs’ claims.” (Id. at 6.)
2. The Plaintiffs’ Response
*3 The Plaintiffs counter that “[t]he issue before Magistrate Judge Lindsay was not whether the Court had jurisdiction over claims for benefits contributions post-expiration of the collective bargaining agreement. The issue was whether the information sought was ‘relevant to any party's claim or defense and is proportional to the needs of the case,’ ” (Response at 3 (quoting Buck v. CompleteLAW-Web, LLC, No. 16-cv-402, 2016 WL 9408628, at *2 (E.D.N.Y. Oct. 5, 2016)).) Because knowing whether one of the other Defendants or owners of one of the Defendants are making payments to Local 282 could indicate that the Defendants are financially intertwined, that would be relevant to Plaintiffs’ alter-ego theory which they must prove to hold Environmental's co-Defendants jointly and severally liable for the claimed delinquent contributions.
C. Analysis
“The purpose of the alter ego doctrine in the ERISA context is to prevent an employer from evading its obligations under the labor laws,” consistent with “a general federal policy of piercing the corporate veil when necessary.” Ret. Plan of UNITE HERE Nat'l Ret. Fund v. Kombassan Holdings A.S., 629 F.3d 282, 288 (2d Cir. 2010). Thus, courts are to employ a flexible alter ego test in the ERISA context. See id. at 289 (“[T]he test of alter ego status is flexible, allowing courts to weigh the circumstances of the individual case ...” (further citation and internal quotation marks omitted)); see also Trustees of the New City Dist. Council of Carpenters Pension Fund v. Integrated Structures Corp., 595 F. App'x 15, 17 (2d Cir. 2014) (instructing that a court's determination whether one company is the alter ego of another “depends on ‘the totality of the facts’ ” (quoting United States v. Funds Held in the Name or for the Benefit of Wetterer, 210 F.3d 96, 106 (2d Cir. 2000))). “The analysis ‘focuses on commonality of (i) management, (ii) business purpose, (iii) operations, (iv) equipment, (v) customers, and (vi) supervision and ownership.’ ” Id. (quoting N.Y. State Teamsters Conference Pens. & Ret. Fund. v. Express Servs., Inc., 426 F.3d 640, 649 (2d Cir. 2005)).
Given this backdrop, Magistrate Judge Lindsay's ruling regarding the withdrawal liability payments was neither clearly erroneous nor contrary to law. It is of no moment that the subject withdrawal liability payments occurred after the expiration of Environmental's collective bargaining relationship with Local 282 for a post-collective bargaining obligation because the Plaintiffs’ purpose in seeking to discover the funding sources of those payments is to prove its alter-ego theory, which, in turn, would support a finding that Environmental's co-Defendants are jointly and severally liable for claims which arose during the existence of that collective bargaining relationship, i.e., the delinquent contribution obligations to the Funds. Evidence of the source(s) of the withdrawal liability payments could establish a continuing alter-ego relationship between the Defendants, which is relevant to Plaintiffs’ claim for delinquent contributions as against all Defendants, is proportional to the needs of the case, and is not burdensome for Environmental to produce such information. See Fed. R. Civ. P. 26(b)(1). The Defendants have failed to overcome their “heavy burden” of proving that Magistrate Judge Lindsay's Compel Order was clearly erroneous or contrary to law.
V. Conclusion
Accordingly, IT IS HEREBY ORDERED that Defendants’ Objection is overruled, the Compel Order is affirmed, and within ten (10) days from the date of this Order, Environmental is to produce all documents which reflect the source(s) of funds used to make its withdrawal liability payments to the Local 282 Pension Fund.
Dated this 30th day of April 2018 at Central Islip, New York.
Footnotes
All references to “Local 282” or “282” herein refer to a Teamsters union, representing various truck drivers, which operates in New York City and on Long Island. See Teamsters Union Local 282: Home, “Welcome to Teamsters Local 282,” available at http://www.teamsterslocal282.com.
Terms of art defined in the Report and Recommendation and in the Court's order adopting the Report and Recommendation (see ECF No. 102) are used herein.