Gesualdi v. S. Di Fazio & Sons Constr., Inc.

United States District Court for the Eastern District of New York

December 12, 2017, Decided; December 12, 2017, Filed

16-CV-5209 (SJF) (ARL)

 

Reporter

2017 U.S. Dist. LEXIS 205202 *

THOMAS GESUALDI, et al., Plaintiffs, -against- S. DI FAZIO AND SONS CONSTRUCTION, INC., et al., Defendants.

Counsel:  [*1] For Thomas Gesualdi, Louis Bisignano, Anthony D’Aquila, Michael O’Toole, Michael Bourgal, Frank H. Finkel, Joseph A. Ferrara, Sr., Marc Herbst, Denise Richardson, 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: Arthur Joseph Muller, Jonathan Michael Bardavid, LEAD ATTORNEYS, Trivella & Forte LLP, White Plains, NY; Christopher A. Smith, LEAD ATTORNEY, Trivella, Forte & Smith, LLP, White Plains, NY.

For S. Di Fazio and Sons Construction, Inc., doing business as DiFazio Environmental Services, Defendant: Richard B. Ziskin, LEAD ATTORNEY, The Ziskin Law Firm, LLP, Commack, NY.

For DiFazio Ind., LLC, doing business as DiFazio Industries, DiFazio Industries, Inc., Defendants: Charles N. Internicola, LEAD ATTORNEY, The Internicola Law Firm, P.C., Staten Island, NY.

For Faztec Industries, Inc., Defendant: Peter R. Sullivan, Sullivan Gardner, New York, NY.

For West Shore Trucking, Inc., jointly and severally, Defendant: Gerald V. Dandeneau, Dandeneau & Lott, Melville, NY.

Judges: ARLENE R. LINDSAY, United [*2]  States Magistrate Judge.

Opinion by: ARLENE R. LINDSAY

Opinion

 

 

 

REPORT AND RECOMMENDATION

LINDSAY, Magistrate Judge:

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 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 bring this action against defendants (1) S. Di Fazio and Sons Construction, Inc. d/b/a DiFazio Environmental Services (“DiFazio Environmental”); (2) DiFazio Ind., LLC d/b/a DiFazio Industries (“DiFazio LLC”) and DiFazio Industries, Inc. (“DiFazio Inc.”) (DiFazio LLC and DiFazio Inc. collectively referred to as “DiFazio Industries”); (3) Faztec Industries, Inc. (“Faztec”); and (4) West Shore Trucking, Inc. (“West Shore”) (collectively, “Defendants”) to collect delinquent employer contributions pursuant to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1132(a)(3) and 1145 and the Labor-Management Relations Act (“LMRA”), 29 U.S.C. § 185. Before the Court, on referral [*3]  from District Judge Feuerstein, are: (1) the joint motion by defendants DiFazio Environmental; DiFazio Industries; and Faztec for judgment on the pleadings pursuant to Federal Rule of Civil Procedure (“Rule”) 12(c); and (2) the motion by defendant West Shore for judgment on the pleadings pursuant to Rule 12(c).1 For the reasons stated below, the Court respectfully reports and recommends that the motions be denied in part and granted in part.

 

BACKGROUND

 

1. The Complaint

The following facts are drawn from the complaint. DiFazio Environmental — an “Employer” within the meaning of ERISA — is engaged in the business of trucking and was at all relevant times a signatory to a series of collective bargaining agreements (“CBAs”) with Local 282. Compl. ¶¶ 11, 13, 34, 84. The CBAs establish the terms and conditions of employment for “all drivers who are employed by the Employer.” Id. ¶ 35. The CBAs expressly provide that the Employer is bound to the Trust Agreement and incorporate the Trust Agreement by reference into the CBAs. Id. ¶ 36. The CBAs, together with the Trust Agreement, require employers to contribute to the Funds, on behalf of workers who performed work covered by the CBAs, at specified rates for each hour of covered work. Id. ¶ 38. The most [*4]  recent contract between DiFazio Environmental and Local 282 covers the period 2012-2016. Id. ¶ 34. Copies of the most recent CBAs between DiFazio Environmental and Local 282 are attached as Exhibits 2 and 3 to the March 20, 2017 Declaration of Peter Sullivan (“Sullivan Decl.”), ECF Nos. 55-4 and 55-5.2

Plaintiffs, the trustees of several employee benefit plans, allege that Defendants constitute a single employer, are alter egos of one another and/or are double breasted entities, such that all Defendants are bound by CBAs to which only DiFazio Environmental is a signatory. More specifically, the complaint alleges that Defendants engaged in a scheme to evade paying contributions to the Funds whereby DiFazio Environmental, DiFazio Industries, Faztec and West Shore all performed covered trucking services at the direction of DeFazio Industries, but the only hours of covered work which were reported to the Plaintiffs and for which contributions were remitted were the hours performed by signatory DiFazio Environmental. Id. ¶¶ 49-56, 72-74, 80. As such, Plaintiffs claim that all Defendants are jointly and severally liable to Plaintiffs for delinquent employer contributions.

 

1. Procedural History [*5]

Plaintiffs commenced this action on September 16, 2016. The complaint asserts four causes of action: (1) breach of contract for unpaid contributions allegedly due from all Defendants under § 502(g) of ERISA, 29 U.S.C. § 1132(g)(2); (2) breach of contract for unpaid contributions under § 301 LMRA, 29 U.S.C. § 185; (3) fraud by all Defendants based on Defendants’ alleged misrepresentations regarding hours worked in covered employment; and (4) an Order against all Defendants compelling a payroll audit. The complaint seeks damages as well as declaratory and injunctive relief.

On March 6, 2017, defendants DiFazio Environmental, DiFazio Industries and Faztec served a motion for partial summary judgment and judgment on the pleadings on Plaintiffs. ECF No. 48. By Order dated March 20, 2017, Judge Feuerstein ruled that “any motions for summary judgment that defendants have served upon plaintiffs are denied as premature without prejudice to refiling upon the close of discovery.” ECF No. 47. Thereafter, defendants DiFazio Environmental, DiFazio Industries and Faztec amended their motion to convert their arguments for summary judgment into arguments for dismissal under Rule 12(c). ECF No. 48. Defendants DiFazio Environmental, DiFazio Industries and Faztec filed their [*6]  fully briefed motion for judgment on the pleadings on April 13, 2017. ECF No. 55. The motion was referred to the undersigned on April 14, 2017. West Shore filed its fully briefed motion for judgment on the pleadings on April 25, 2017. ECF No. 61. The motion was referred to the undersigned on May 2, 2017.

 

DISCUSSION

 

1. Standard of Review

A motion for judgment on the pleadings under Rule 12(c) is reviewed under the same standard as a motion to dismiss under Rule 12(b)(6). See Hogan v. Fischer, 738 F.3d 509, 514-15 (2d Cir. 2013). The Supreme Court clarified the appropriate pleading standard in Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009), in which the court set forth a two-pronged approach to be utilized in analyzing a motion to dismiss. District courts are to first “identify [ ] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id. at 679. Though “legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id. Second, if a complaint contains “well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable [*7]  inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a [d]efendant has acted unlawfully.” Id. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556-57, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007) (internal citations omitted)).).

 

1. Analysis

 

1. Materials the Court may Consider on this Rule 12(c) Motion

“The purpose of Rule 12(b)(6) [or Rule 12(c)] is to test, in a streamlined fashion, the formal sufficiency of the plaintiff’s statement of a claim for relief without resolving a contest regarding its substantive merits. The Rule thus assesses the legal feasibility of the complaint, but does not weigh the evidence that might be offered to support it.” Global Network Commc’ns, Inc. v. City of New York, 458 F.3d 150, 155 (2d Cir. 2006). Thus, in adjudicating a motion under Rule 12(c), “a district court must confine its consideration to facts stated on the face of the complaint, in documents appended to the complaint or incorporated by reference, and to matters of which judicial notice may be taken.” Serdarevic v. Centex Homes, LLC, 760 F. Supp. 2d 322, 328 (S.D.N.Y. 2010) (citation and internal quotation marks omitted); see Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002). In addition, “in some cases, a document not expressly incorporated by reference in the complaint is nevertheless ‘integral’ to the complaint and, accordingly, a fair object of consideration on a motion to dismiss.” Goel v. Bunge, Ltd., 820 F.3d 554, 559 (2d Cir. 2016). “A document is integral [*8]  to the complaint ‘where the complaint relies heavily upon its terms and effect.'” Id. (citation and internal quotation marks omitted). “Merely mentioning a document in the complaint will not satisfy this standard; indeed, even offering ‘limited quotation[s]’ from the document is not enough.” Id. (quoting Global Network, 458 F.3d at 156). “‘In most instances where this exception is recognized, the incorporated material is a contract or other legal document containing obligations upon which the plaintiff’s complaint stands or falls, but which for some reason — usually because the document, read in its entirety, would undermine the legitimacy of the plaintiff’s claim — was not attached to the complaint.” Id. (quoting Global Network, 458 F.3d at 157)). In addition, “‘[a] court may take judicial notice of a document filed in another court not for the truth of the matters asserted in the other litigation, but rather to establish the fact of such litigation and related filings.'” Global Network, 458 F.3d at 157 (quoting Int’l Star Class Yacht Racing Ass’n v. Tommy Hilfiger U.S.A., Inc., 146 F.3d 66, 70 (2d Cir. 1998)).

In support of their motions, Defendants rely on several documents outside of the complaint.3 For example, West Shore relies on the declaration of its principal, Joseph Eugenio, and the declaration of Gerald S. Dandeneau, attorney of record for West Shore. To the extent these [*9]  declarations raise matters outside of the complaint which are not integral thereto, the Court will not consider them. See Goel, 820 F.3d at 559-60 (finding that affidavit which was not integral to the complaint could not be considered on motion to dismiss).

The Defendants also submit several CBAs. The CBAs between Local 282 and DiFazio Environmental are obviously integral to the complaint since this action seeks to recover contributions due thereunder; accordingly, the Court will consider them. The CBA between Faztec and Local 447 as well as the CBA between West Shore and Local 447, however, are not referenced in the complaint and are not integral thereto. Although Defendants argue that these CBAs preclude the instant claims against West Shore and Faztec because they conflict with Defendants’ purported obligations under Local 282’s CBAs, the Local 447 CBAs were neither mentioned nor relied upon by Plaintiffs in drafting the complaint. Moreover, they open the door to further factual inquiry which is inappropriate at this procedural posture.

Lastly, Defendants rely on several documents emanating out of a 2009 litigation in this District (the “2009 Action”) in which Plaintiffs sued DiFazio Environmental for unpaid [*10]  contributions allegedly owed under a CBA between DiFazio Environmental and Local 282 for work performed by Faztec, alleging that Faztec was an “affiliated company” of DiFazio Environmental. These documents include (1) the complaint filed in the 2009 Action; (2) a Stipulation and Order of Settlement filed in the 2009 Action which was so ordered by District Judge Gleeson on June 6, 2011 and contains a release; and (3) a July 2, 2012 agreement between DiFazio Environmental and Local 282 wherein Local 282 acknowledges the 2011 Stipulation and agrees that as of the date of the agreement, there is no evidence of double breasting, alter ego, affiliate, or single employer status between DiFazio Environmental, DiFazio Industries and Faztec. Although the complaint in this action does not attach, mention, rely or incorporate by reference any of these documents, because the complaint and Stipulation are publically filed court documents, the Court can take judicial notice of them. See Berlin v. Meijias, No. 15-CV-5308, 2017 U.S. Dist. LEXIS 162417, 2017 WL 4402457, at *3 (E.D.N.Y. Sept. 30, 2017) (“On a motion to dismiss, the Court may take judicial notice of public records, such as state court proceedings.”) (quoting Blue Tree Hotels Inv. (Canada), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 217 (2d Cir. 2004)); see also Ranta v. City of New York, No. 14-CV-3794, 2015 U.S. Dist. LEXIS 137178, 2015 WL 5821658, at *9 (E.D.N.Y. Sept. 30, 2015) (“[A] court may take judicial notice of a general release and consider it on [*11]  a motion to dismiss where the general release has been filed with a court and is a matter of public record.”) (citation and internal quotation marks omitted); Waters v. Douglas, No. 12 Civ. 1910, 2012 U.S. Dist. LEXIS 165151, 2012 WL 5834919, at *2 (S.D.N.Y. Nov. 14, 2012) (“Publicly filed stipulations of settlement are subject to judicial notice.”). The 2012 agreement, however, was not publically filed and is not integral to the complaint and will not be considered.

 

1. Whether the Instant Claims are Barred by the Release from the 2009 Action

On August 21, 2009, Plaintiffs brought an action against DiFazio Environmental for unpaid contributions allegedly owed under the CBA for work performed by Faztec, alleging that Faztec was an “affiliated company” of DiFazio Environmental. Ferrara v. S. Di Fazio and Sons Constr. Corp., No. 09-CV-3649 (JG) (E.D.N.Y. 2009). A copy of the 2009 complaint is attached to the Sullivan Decl. as Exhibit 4, ECF No. 55-6.4 Two years later, on June 1, 2011, the parties reached a settlement. A copy of the Stipulation and Order of Settlement, which was so ordered by District Judge Gleeson on June 6, 2011, is attached to the Sullivan Decl. as Exhibit 5, ECF No. 55-7 (the “2011 Stipulation”). According to the 2011 Stipulation, Plaintiffs determined to withdraw their claim with [*12]  prejudice that:

DiFazio [Environmental] and Faztec are affiliates, as defined in the Trust Agreement; that DiFazio [Environmental] and Faztec are otherwise affiliates such that Faztec may be obligated under DiFazio[ Environmental’s] Teamster collective bargaining agreement; that DiFazio [Environmental] may otherwise be responsible to Plaintiffs for Faztec’s operations; or that Faztec may otherwise be responsible for DiFazio[ Environmental’s] obligations to Plaintiffs.

2011 Stipulation at 2-3. The Stipulation contained a release (the “Release”), which provides in pertinent part as follows:

[t]he Trustees and their successors and assigns, and, collectively, their past, present and future trustees, fiduciaries, administrators, employees, agents, and representatives (“Releasors”) discharge and release all claims, obligations, demands and judgments, causes of action and charges, of whatever kind or nature, whether known or unknown, which they now may have against: DiFazio [Environmental] and Faztec and each of their owners, officers, directors, employees, shareholders, affiliates, agents or any of their successors or assigns (“Releasees”) for all periods prior to August 31, 2008. For periods up [*13]  to the date of this Stipulation, Releasors specifically release Releasees from any claim, obligation, demand, judgment, cause of action or charge of whatever kind, whether known or unknown, which they now have that Faztec is an alter ego, single employer, controlled group member or is otherwise affiliated with DiFazio [Environmental] such that Faztec is responsible for any benefit fund contribution, delinquency liability or obligated under any labor agreement between DiFazio [Environmental] and Teamsters Local 282 or any trust document attendant thereto. Releasees expressly acknowledge that Faztec is a separate corporation which shall not be deemed liable, in any of the aforementioned regards or otherwise, for the obligations of DiFazio [Environmental]. . . .

Id. ¶ 3.

It is undisputed that the first part of the Release — which explicitly releases both DiFazio Environmental and Faztec from all claims for all periods prior to August 31, 2008 — does exactly what it purports to do, viz. release both of these Defendants for all claims for this pre-August 31, 2008 time period. Plaintiffs, however, concede that they are not asserting any claim for unpaid contributions which may have accrued [*14]  prior to August 31, 2008. See ECF No. 55-10 at 9.

The next part of the Release is in dispute and provides, in pertinent part, as follows: “For periods up to the date of this Stipulation,” viz. June 1, 2011, Plaintiffs release DiFazio Environmental, Faztec and all of their affiliates from any claim “that Faztec is an alter ego, single employer, controlled group member or is otherwise affiliated with DiFazio [Environmental] such that Faztec is responsible for any . . . contribution . . . under any labor agreement between” DiFazio Environmental and Local 282. Release ¶ 3. It further provides that Plaintiffs “expressly acknowledge that Faztec is a separate corporation which shall not be deemed liable, in any of the aforementioned regards or otherwise, for the obligations of DiFazio [Environmental].” Id. While Plaintiffs agree that this language releases Faztec for any September 1, 2008 — June 1, 2011 delinquency, they contend that this language does not release any claims for contribution as against any Defendant other than Faztec for this time period. ECF No. 55-10 at 10. The Court agrees. By its plain language, the Release for this time period is limited to all claims against DiFazio [*15]  Environmental and Faztec that Faztec is liable for DiFazio Environmental’s obligations.5 The Release does not release DiFazio Environmental for contributions post-August 31, 2008. This interpretation is consistent with the rest of the 2011 Stipulation which provides: (1) a general release for all claims against DiFazio Environmental and Faztec only for periods prior to August 31, 2008, Stipulation ¶ 3; (2) that an audit of DiFazio Environmental’s books and records from September 1, 2007 — August 31, 2008 reflect contributions due and owing limited to that time period, id. at 2; and (3) a mutual release whereby DiFazio Environmental releases Plaintiffs from claims for covered work performed by DiFazio Environmental only for the period August 1, 2007 — August 31, 2008 but releases Plaintiffs from “any claims concerning DiFazio [Environmental’s] relationship with Faztec,” through the date of the Stipulation,”id. ¶ 5.

As for the remaining Defendants, the Court cannot state as a matter of law that the Release applies to West Shore and DiFazio Industries for post-August 31, 2008 delinquencies because they are affiliates of Faztec and/or DiFazio Environmental. Although the Release defines “Releasees” [*16]  to include “affiliates” of either DiFazio Environmental and Faztec, as noted above, the post-August 31, 2008 Release is limited to claims that Faztec is liable for DiFazio Environmental’s obligations. Moreover, there is no mention of either DiFazio Industries or West Shore in the Release. Thus, even if the Release was not so limited, whether these Defendants are “affiliates” is not sufficiently clear from the face of the Release so as to warrant a Rule 12(c) dismissal. See Peterson v. Regina, 935 F. Supp. 2d 628, 635 (S.D.N.Y. 2013) (“[C]ourts must look to the language of a release — the words used by the parties — to determine their intent, resorting to extrinsic evidence only when the court concludes as a matter of law that the contract is ambiguous.”).6

In sum, the Court finds that Plaintiffs’ claims against Faztec for unpaid contributions accruing from September 1, 2008 – June 1, 2011 are barred by the Release. Accordingly, the Court respectfully reports and recommends dismissal of Plaintiffs’ claims against Faztec to the extent they seek to recover for delinquent contributions accruing pre-June 1, 2011.7

 

1. Whether Plaintiffs’ pre-2011 Claims are Barred by Res Judicata

Defendants also argue that in addition to the claims expressly released by the 2011 Release, [*17]  Plaintiffs’ pre-2011 claims against DiFazio Environmental and Faztec are also barred by res judicata because they were litigated or could have been litigated in the 2009 Action. Because the Court has already found that all claims for contributions for the period of September 1, 2008 – June 1, 2011 are barred as against Faztec under the Release, the Court need not address this argument as to Faztec.8

As for DiFazio Environmental, Plaintiffs argue that the doctrine of res judicata “does not operate to bar Plaintiffs’ claims through the date the settlement agreement was executed.” See ECF No. 55-10 at 13. Rather, Plaintiffs contend, the “operative date to determine preclusion is the date the [2009] action [wa]s commenced — not when it [wa]s settled or otherwise disposed of.” Id. Plaintiffs are correct.

Under the doctrine of res judicata, or claim preclusion, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.” TechnoMarine SA v. Giftports, Inc., 758 F.3d 493, 499 (2d Cir. 2014) (internal citation and quotation marks omitted). “Claims arising subsequent to a prior action, based on conduct occurring after the commencement of the earlier suit, and sufficient [*18]  to state a cause of action without the need to incorporate facts preceding the first suit need not, and often perhaps could not, have been brought in that prior action, and so are not barred by res judicata regardless of whether they are premised on facts representing a continuance of the same course of conduct.” Id. at 500 (citation and internal quotation marks omitted) (emphasis added). “If a defendant engages in actionable conduct after a lawsuit is commenced, the plaintiff may seek leave to file a supplemental pleading [under Rule 15(c)] to assert a claim based on the subsequent conduct. But the plaintiff is not required to do so, and his election not to do so is not penalized by application of res judicata to bar a later suit on that subsequent conduct.” Id. at 501 (citation and internal quotation marks omitted). In TechnoMarine, the Second Circuit clarified that “the res judicata bar is normally inoperative with regard to the defendant’s actionable conduct occurring after an earlier suit commences, provided that the plaintiff does not act to bring post-commencement claims within the scope of his earlier suit.” Id. at 502 n.7 (emphasis in original). Although the court held that in that case that “the operative date for [*19]  res judicata purposes [wa]s the date of the settlement,” the court explained that was only the case because there, unlike here, “the parties’ Settlement Agreement br[ought] within its ambit (and thus the ambit of the first litigation) claims existing as of the date of settlement.” Id. (citing Greenberg v. Bd. of Governors of Fed. Reserve Sys, 968 F.2d 164, 169 (2d Cir. 1992) (noting that a settlement agreement “can only have the preclusive [e]ffect that the parties to the settlement intended to give it”)).

Here, the 2009 Action was filed on August 21, 2009. Thus, the Court finds that res judicata bars Plaintiffs’ claims against DiFazio Environmental for the period up to August 21, 2009, and not June 1, 2011 as urged by Defendants. However, as noted above, the complaint, seeks contributions for the six-year period prior to the commencement of this action, viz. September 16, 2010 – September 16, 2016. Thus, the doctrine of res judicata does not operate here to bar any of Plaintiffs’ claims against DiFazio Environmental.

As for the remaining Defendants which were not parties to the 2009 Action, i.e., West Shore and DiFazio Industries, although “the principle of privity bars relitigation of the same cause of action against a new defendant known by a plaintiff at the time of the first suit where [*20]  the new defendant has a sufficiently close relationship to the original defendant to justify preclusion,” Cent. Hudson Gas & Elec. Corp. v. Empresa Naviera Santa S.A., 56 F.3d 359, 367-68 (2d Cir. 1995), the Court cannot resolve that issue on this Rule 12(c) motion. See TechnoMarine, 758 F.3d at 498 (“A court may consider a res judicata defense on a Rule 12(b)(6) motion to dismiss when the court’s inquiry is limited to the plaintiff’s complaint, documents attached or incorporated therein, and materials appropriate for judicial notice.”). Moreover, even assuming privity was present, as noted above, res judicata would only operate to bar pre-August 21, 2008 claims and no such claims are asserted in the present action. Accordingly, to the extent Defendants move to dismiss the complaint on the grounds that West Shore and DiFazio Industries are in privity with Faztec or DiFazio Environmental, the Court respectfully reports and recommends that Defendants’ motion be denied.

 

1. West Shore and Faztec’s CBAs with Local 447

Both Faztec and West Shore move for dismissal on the grounds that they are signatories to CBAs with a different union, Local 447, requiring them to pay benefit contributions to the Local 447 benefit funds. According to Defendants, Plaintiffs’ argument would have them exposed to conflicting CBAs that purport to impose a [*21]  duty to “double pay” for the same job. In response, Plaintiffs argue, inter alia, that Defendants rely on facts outside of the complaint — that West Shore and Faztec used only Local 447 members as truckers and that they actually paid into the Local 447 funds. Because the Court has already found that the Local 447 CBAs are outside the purview of the Court’s review on this Rule 12(c) motion, and because this argument raises factual issues, the Court reports and recommends that this branch of Defendants’ motion be denied.

 

1. Plaintiffs’ Claims of Affiliate Liability

Plaintiffs allege that Defendants constitute a single employer, are alter egos of one another and/or are double breasted entities such that all Defendants are jointly and severally liable for unpaid fringe benefit contributions owed to Plaintiffs. Defendants argue that these claims should be dismissed because the complaint fails to allege nonconclusory facts to support these theories of affiliate liability.

 

1. The Single Employer Doctrine

Under the single employer doctrine, a collective bargaining agreement binding on one employer may be enforced against a non-signatory employer if (1) the two employers constitute a “single employer” and [*22]  (2) the employees of the companies constitute a single appropriate bargaining unit. See Brown v. Sandimo Materials, 250 F.3d 120, 128 n.2 (2d Cir. 2001). “Separate companies are considered a single employer if they are part of a single integrated enterprise.” Lihli Fashions Corp. v. NLRB, 80 F.3d 743, 747 (2d Cir. 1996) (citation and internal quotation marks omitted). In determining whether two entities constitute a “single employer,” courts examine four factors enumerated by the Supreme Court: “[1] interrelation of operations, [2] common management, [3] centralized control of labor relations, and [4] common ownership.” See Radio & Television Broad. Technicians Local Union 1264 v. Broad. Serv. of Mobile, Inc., 380 U.S. 255, 256, 85 S. Ct. 876, 13 L. Ed. 2d 789 (1965) (per curiam); see also Brown, 250 F.3d at 128 n.2. In the Second Circuit, two additional factors are relevant: “the use of common office facilities and equipment and family connections between or among the various enterprises.” Lihli Fashions, 80 F.3d at 747. No single factor is dispositive and not every factor need be present. Id. “Ultimately, single employer status depends on all the circumstances of the case and is characterized by absence of an arm’s length relationship found among unintegrated companies.” Id. (citation and internal quotation marks omitted). Whether two companies constitute a single employer is a question of fact. Id.

A finding that separate companies are a “single employer is not enough to bind all the separate companies [*23]  to the collective bargaining agreements of any one of the companies.” Lihli, 80 F.3d at 747. To hold one company to a collective bargaining agreement made by another company, it must also be shown that they “represent an appropriate employee bargaining unit.” Id. “When assessing the appropriate bargaining unit, attention ‘shifts from the control, structure and ownership of the employer to the community of interests of the employees.'” Ferrara v. Oakfield Leasing Inc., 904 F. Supp. 2d 249, 264 (E.D.NY. 2012) (quoting Cuyahoga Wrecking Corp. v. Laborers Int’l Union of North Am., 644 F. Supp. 878, 882 (W.D.N.Y. 1986)). “‘The reason for the appropriate bargaining unit requirement is to protect the rights of non-union employees to representatives of their choice, or to not have union representation at all.'” Id. (quoting LaBarbera v. C. Volante Corp., 164 F. Supp. 2d 321, 326 (E.D.N.Y. 2001). In determining whether companies constitute an appropriate bargaining unit, courts look for a “‘community of interests’ among the relevant employees, and ‘factors such as bargaining history, operational integration, geographic proximity, common supervision, similarity in job function and degree of employee interchange.'” Ferrera v. Professional Players Corp., No. 11-CV-1433, 2013 U.S. Dist. LEXIS 45944, 2013 WL 1210522, at *4 (E.D.N.Y. Feb. 15, 2013) (quoting La Barbera v. Les Sub—Surface Plumbing, Inc., No. 06—CV—3343, 2008 U.S. Dist. LEXIS 27047, 2008 WL 906695, at *4 (E.D.N.Y. Apr. 3, 2008)), report and recommendation adopted by, 2013 U.S. Dist. LEXIS 40907, 2013 WL 1212816 (E.D.N.Y. Mar. 23, 2013).

 

2. The Alter Ego Doctrine

“The alter ego doctrine, while having the same binding effect on a non-signatory as the single employer/single [*24]  unit doctrine, is conceptually distinct.” Truck Drivers Local Union No. 807 v. Reg’l Import & Export Trucking Co., 944 F.2d 1037, 1046 (2d Cir. 1991). “The purpose of the alter ego doctrine in the ERISA context is to prevent an employer from evading its obligations under the labor laws ‘through a sham transaction or technical change in operations.'” Ret. Plan of UNITE HERE Nat’l Ret. Fund v. Kombassan Holding A.S., 629 F.3d 282, 288 (2d Cir. 2010) (quoting Newspaper Guild of N.Y. v. NLRB, 261 F.3d 291, 298 (2d Cir. 2001)). Specifically, “‘ERISA was enacted to promote the interests of employees and their beneficiaries in employee benefit plans and to protect contractually defined benefits.'” Id. (quoting Leddy v. Standard Drywall, Inc., 875 F.2d 383, 388 (2d Cir. 1989)). Thus, “[t]o protect employee benefits, courts observe ‘a general federal policy of piercing the corporate veil when necessary.'” Id. (quoting N.Y. State Teamsters Conference Pension & Ret. Fund v. Express Servs., Inc., 426 F.3d 640, 647 (2d Cir. 2005)).

According to the Second Circuit, “‘the test of alter ego status is flexible,’ allowing courts to ‘weigh the circumstances of the individual case,’ while recognizing that the following factors are important: ‘whether the two enterprises have substantially identical management, business purpose, operation, equipment, customers, supervision, and ownership.'” Id. (quoting Goodman Piping Prods., Inc. v. NLRB, 741 F.2d 10, 11 (2d Cir. 1984)). “Although perhaps a ‘germane’ or ‘sufficient basis for imposing alter ego status,’ an ‘anti-union animus or an intent to evade union obligations’ is not a necessary factor.” Id. (quoting Goodman, 741 F.2d at 12). In addition, “‘[a]lthough the alter ego doctrine is primarily applied [*25]  in situations involving successor companies, where the successor is merely a disguised continuance of the old employer, it also applies to situations where the companies are parallel companies.'” Id. (quoting Mass. Carpenters Cent. Collection Agency v. Belmont Concrete Corp., 139 F.3d 304, 307 (1st Cir. 1998)).

 

3. Double Breasting

“In the construction industry, and elsewhere, there is a practice generally referred to as ‘double breasting’ pursuant to which a single commercial complex functions through two corporate entities; one, a corporation which is a party to a collective bargaining agreement and subject to its provisions; a second non-union entity which is not subject to such an agreement.” Grodotzke, 17 F. Supp. 3d at 191 (citations and internal quotation marks omitted); see also Local One, Amalgamated Lithographers of America v. Stearns & Beale, Inc., 812 F.2d 763, 770 (2d Cir. 1987)) (“A double-breasted operation is one in which a single entity “operates a union company that bids on union contracts and a nonunion company that bids on nonunion contracts.”). Pursuant to section 31 of DiFazio Environmental’s CBA with Local 282, DiFazio agreed not to “establish or participate in a double breasted operation within the geographical jurisdiction of Local 282.” ECF 55-4 at 22 § 31; see also Compl. ¶ 46.

 

4. Application

The complaint alleges that the Defendants engaged in a common business enterprise under the direction of John DiFazio — who managed and controlled all four Defendants [*26]  — whereby all Defendants performed covered trucking services under DiFazio Environmental’s CBA with Local 282 but the only hours of covered work which were reported to the Plaintiffs were the hours performed by signatory DiFazio Environmental. Compl. ¶¶ 49-55, 73. Plaintiffs allege that the Defendants were designed to defeat DiFazio Environmental’s obligations under the CBA. Id. ¶ 77.

Under this alleged scheme, Faztec operated a recycling facility used by all Defendants and began using its own trucks and employees to perform covered work under the CBA. Id. ¶ 51. DiFazio Environmental acted as the union trucking spoke and West Shore as the non-union trucking spoke. Id. ¶¶ 52-53. DiFazio Industries acted as the broker bidding on various construction projects for the enterprise, id. ¶ 50, and moved work from DiFazio Environmental to West Shore with the purpose to evade paying contributions to Plaintiffs, id. ¶ 56.

It is further alleged that all Defendants were part of the heavy construction industry and were engaged in the business of trucking; had centralized and common control of labor relations; shared a common business purpose and common equipment, including fuel trucks, water trucks, [*27]  a Zinn mixer truck, and office equipment and supplies; hired drivers who worked out of the same location; shared similar working conditions, job classifications and job functions; and shared employees and used the same bookkeeper. Id. ¶¶ 12, 20, 24, 30, 60-71, 95-97. In addition, Defendants allegedly shared common management and supervision as John DiFazio made management decisions and oversaw operations for all Defendants. Plaintiffs also identify seven specific street addresses where Defendants allegedly performed work in Local 282’s jurisdiction but failed to omit reports for or pay contributions. Id. ¶ 115.

Lastly, it is alleged that DiFazio Environmental is owned by Phyllis and Salvatore DiFazio, the parents of John, Marc and Jeffery DiFazio; DiFazio Industries is owned by John DiFazio; and Faztec is owned by Mark DiFazio. Id. ¶¶ 14, 21, 26. All three of these Defendants have offices at 38 Kinsey Place, Staten Island, New York. Id. ¶¶ 11, 16, 23. While it is alleged that West Shore is managed and controlled by John DiFazio and Joseph Eugenio, id. ¶ 32, the Complaint is silent on who owns West Shore. In addition, West Shore allegedly has offices at 2 Kinsey Place, Staten Island, [*28]  New York. Id. ¶ 29.

Taken as true, the Court finds that the relevant allegations state a plausible claim that the Defendants are alter egos, constitute a single employer and/or engaged in double breasting. Although the allegations may be sparse, courts in this District have found similar allegations sufficient. See Trs. of the Local 7 Tile Industry Welfare Fund v. Sesso Tile & Stone Contractors, Inc., No. 15 CV 6124, 2016 U.S. Dist. LEXIS 111004, 2016 WL 4597481, at *2-3 (E.D.N.Y. Aug. 17, 2016), Report and Recommendation Adopted by, 2016 U.S. Dist. LEXIS 119066, 2016 WL 4595692 (E.D.N.Y. Sept. 2, 2016); Grodotzke v. Seaford Avenue Corp., 17 F. Supp. 3d 185, 191 (E.D.N.Y. 2014); Trs. of Empire State Carpenters Annuity v. Dykeman Carpentry, Inc., No. 13-CV-1508, 2014 U.S. Dist. LEXIS 32251, 2015 WL 976822, at *4 (E.D.N.Y. Mar. 12, 2014). Indeed, much of Defendants’ arguments rely on documents outside the pleading, which the Court has already found may not be considered on this Rule 12(c) motion. Accordingly, the Court respectfully reports and recommends that Defendants’ motions to dismiss Plaintiffs’ claims of affiliate liability be denied.9

 

1. Ripeness

Defendants argue that Plaintiffs’ claims, other than the claim seeking an audit, are not ripe because the underlying debt has not yet been established. According to Defendants, because no audit has yet occurred, “Plaintiffs do not know and cannot allege any facts that could underlie a claim to be paid money.” ECF No. 55-1 at 18. Defendants’ argument is without merit. The complaint alleges that Defendants have failed to omit required contributions under the governing CBAs. There is no requirement that Plaintiffs also must identify [*29]  their specific damages and make a demand for payment before collecting same. Accordingly, the Court respectfully reports and recommends that the branch of Defendants’ motions which seeks dismissal based upon a purported lack of ripeness be denied.

 

1. The Second Cause of Action

Defendants argue that the second cause of action, which asserts a claim for breach of contract under § 301 of the LMRA, 29 U.S.C. § 185, should be dismissed because the Plaintiffs lack standing to assert such a claim. “Section 301 authorizes suits for the violation of a contract between an employer and a labor organization representing employees in an industry affecting commerce.” Cement & Concrete Workers Dist. Council Welfare Fund, Pension Fund, Legal Services Fund and Annuity Fund v. Lollo, 35 F.3d 29, 34 (2d Cir. 1994) (citing 29 U.S.C. § 185(a)). While unions are clearly authorized to sue under § 301, the Second Circuit has held that the administrators of ERISA funds may sue on behalf of the funds as third-party beneficiaries of a CBA. Id. at 34-35. In their reply, Defendants concede as much. See ECF No. 55-11 at 20. Defendants nonetheless argue that Plaintiffs lack standing because the complaint does not allege that Defendants breached a CBA or that Plaintiffs are third-party beneficiaries thereof. Defendants’ argument is unavailing. The entire thrust of the complaint is that Defendants breached CBAs between DiFazio Environmental [*30]  and Local 282 by failing to remit contributions — contributions which Plaintiffs were established by the CBAs to collect. Accordingly, to the extent Defendants move to dismiss the majority of Plaintiffs’ claims based upon a lack of standing, the Court respectfully reports and recommends that Defendants’ motion be denied.

 

1. Plaintiffs’ Fraud Claim

Defendants argue that the third cause of action for fraud is facially deficient under both Rules 12(c) and 9(b). “To state a claim for fraud under New York law, a plaintiff must allege (1) a material misrepresentation or omission of fact; (2) which the defendant knew to be false; (3) which the defendant made with the intent to defraud; (4) upon which the plaintiff reasonably relied; and (5) which caused injury to the plaintiff.” Fin. Guar. Ins. Co. v. Putnam Advisory Co., LLC, 783 F3d 395, 402 (2d Cir. 2015). On a motion to dismiss, allegations of fraud must satisfy the heightened pleading standards of Rule 9(b) by stating the circumstances constituting the fraud “with particularity.” Fed. R. Civ. P. 9(b). The Second Circuit reads Rule 9(b) to require that a complaint “‘(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.'” Rombach v. Chang, 355 F.3d 164, 170 (2d Cir. 2004) [*31]  (quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993)). Moreover, “though mental states may be pleaded ‘generally,’ Plaintiffs must nonetheless allege facts ‘that give rise to a strong inference of fraudulent intent.'” Loreley Fin. No. 3 Ltd. v. Wells Fargo Sec., LLC, 797 F.3d 160, 171 (2d Cir. 2015) (quoting Lerner v. Fleet Bank, N.A., 459 F.3d 273, 290-91 (2d Cir. 2006)). Generally, “[w]here multiple defendants are asked to respond to allegations of fraud, the complaint should inform each defendant of the nature of his alleged participation in the fraud.” DiVittorio v. Equidyne Extractive Indus., 822 F.2d 1242, 1247 (2d Cir. 1987). However, “[w]here a complaint alleges a legal relationship between fraud defendants that makes the acts of one attributable to each, ‘Rule 9(b) does not require Plaintiffs to allege a ‘specific connection between fraudulent representations . . . and particular defendants . . .’.” United States v. TEVA Pharms. USA, Inc., No. 13 Civ.3702, 2016 U.S. Dist. LEXIS 22554, 2016 WL 750720, at *12 (S.D.N.Y. Feb. 22, 2016) (quoting Luce v. Edelstein, 802 F.2d 49, 55 (2d Cir. 1986)). The purposes of Rule 9(b)’s particularity requirements are “to provide a defendant with fair notice of a plaintiff’s claim, to safeguard a defendant’s reputation from improvident charges of wrongdoing, and to protect a defendant against the institution of a strike suit.” O’Brien v. Nat’l Prop. Analysts Partners, 936 F.2d 674, 676 (2d Cir. 1991) (citations and internal quotation marks omitted).

Here, the complaint alleges that the Defendants knowingly misrepresented to Plaintiffs the hours worked in covered employment by Defendants’ employees and the contributions owed to the Plaintiffs. Compl. ¶¶ 104, 128. More specifically, it is alleged that “DiFazio Environmental failed to report the work performed by drivers hired by DiFazio Industries, Faztec and West Shore to the [Plaintiffs] and failed to remit contributions to the [Plaintiffs] for the hours worked in covered employment by drivers.” Id. ¶ 74. The complaint further alleges that this underreporting was done intentionally to avoid Defendants’ obligations under the CBAs, id. ¶¶ 56, 72, 77, 79, 131, and that Plaintiffs reasonably relied on these misrepresentations to their detriment, id. ¶ 128. Lastly, the complaint alleges injury to Plaintiffs in the form of missing contributions. Based on these allegations, the Court respectfully reports and recommends that Defendants’ motion to dismiss the third cause of action for fraud be denied. See Finkel v. Lite Tron ltd., No. 09CV-1253, 2010 U.S. Dist. LEXIS 115385, 2010 WL 4392723, at *8 (E.D.N.Y. Oct. 29, 2010) (finding that employer was “obliged by the terms of the CBA to account for the hours of electrical [*32]  work performed by its alter ego’s employees” and thus employer’s “failure to account for those hours . . . constituted omissions of fact and rendered statements on those reports false representations”).

 

1. Plaintiffs’ Claims for Declarative and Injunctive Relief

Defendants move to dismiss Plaintiffs’ demands for declarative and injunctive relief to the extent they are duplicative of other relief sought in the complaint. Plaintiffs seek a declaratory judgment that “Defendants engaged in a scheme to avoid paying contributions to [Plaintiffs]” as well as an injunction “ordering Defendants to pay all unpaid delinquencies owed to Plaintiffs[] . . . in an amount to be determined at trial.” Compl. ¶ 139(c)-(d). Insofar as these claims essentially seek money damages, they are legal claims and should be dismissed. See Cent. States, Se. and Sw. Areas Health and Welfare Fund v. Gerber Life Ins. Co., 771 F.3d 150, 154 (2d Cir. 2014) (finding that claims seeking a declaration that defendant has “primary responsibility for paying the claimants’ future and past expenses and injunctive ‘relief’ compelling the payments” were properly dismissed; “‘[A]lmost invariably . . . suits seeking (whether by judgment, injunction, or declaration ) to compel the defendant to pay a sum of money to the plaintiff are suits for “money [*33]  damages,” as that phrase has traditionally been applied, since they seek no more than compensation for loss resulting from the defendant’s breach of legal duty.'”) (quoting Great West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210, 122 S. Ct. 708, 151 L. Ed. 2d 635 (2002) (quoting Bowen v. Massachusetts, 487 U.S. 879, 918-919, 108 S. Ct. 2722, 101 L. Ed. 2d 749 (1988)). Accordingly, to the extent Plaintiffs’ “equitable” claims seek money damages, the Court respectfully reports and recommends that they be dismissed.10

 

CONCLUSION

For the foregoing reasons, the Court respectfully reports and recommends that Defendants’ motions for judgment on the pleadings be denied in part and granted in part. The Court recommends that the motions be granted only to the following extent: (1) Plaintiffs’ claims against Faztec for delinquent contributions accruing prior to June 1, 2011 should be dismissed as barred by the 2011 Release; and (2) Plaintiffs’ claims for declarative and injunctive relief should be dismissed to the extent these claims essentially seek money damages.

 

OBJECTIONS

Pursuant to 28 U.S.C. § 636(b)(1)(C) and Rule 72 of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from service of this Report and Recommendation to file written objections. Such objections shall be filed with the Clerk of the Court via ECF. Any requests for an extension of time for filing objections must be directed to Judge Feuerstein prior to [*34]  the expiration of the fourteen (14) day period for filing objections. Failure to file objections will result in a waiver of those objections for purposes of appeal. Thomas v. Arn, 474 U.S. 140, 155, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985); Beverly v. Walker, 118 F.3d 900, 901 (2d Cir. 1997); Savoie v. Merchants Bank, 84 F.3d 52, 60 (2d Cir. 1996).

Dated: Central Islip, New York

December 12, 2017

SO ORDERED:

/s/ ARLENE R. LINDSAY

United States Magistrate Judge