20-4012-cv Div. 1181 Amalgamated Transit Union-New York Emps. Pension Fund v. New York City Dep't of Educ., et al.

In the United States Court of Appeals for the Second Circuit

AUGUST TERM 2020

No. 20-4012-cv

DIVISION 1181 AMALGAMATED TRANSIT UNION-NEW YORK EMPLOYEES PENSION FUND, AND ITS BOARD OF TRUSTEES, Plaintiff-Appellant,

v.

NEW YORK CITY DEPARTMENT OF EDUCATION, JOFAZ TRANSPORTATION, INC., ALLIED TRANSIT CORP., PRIDE TRANSPORTATION SERVICES, INC., QUALITY TRANSPORTATION CORP., Defendants-Appellees.

On Appeal from the United States District Court for the Eastern District of New York

ARGUED: JUNE 24, 2021 DECIDED: AUGUST 13, 2021

Before: LEVAL, CABRANES, and PARK, Circuit Judges. This case principally presents one question: Whether Plaintiff- Appellant Division 1181 Amalgamated Transit Union-New York Employees Pension Fund and its Board of Trustees (the “Fund”) plausibly stated a claim for delinquent contributions under the Employee Retirement Income Security Act of 1974. In a comprehensive and well-reasoned opinion and order dated November 2, 2020, the United States District Court for the Eastern District of New York (Edward R. Korman, Judge) held that the Fund had failed to do so and dismissed the Amended Complaint with prejudice. We adopt in full the reasoning of the District Court, as set forth in its opinion, and we hold that the District Court did not err in dismissing the Amended Complaint pursuant to Rule 12(b)(6) with prejudice. Accordingly, we AFFIRM the judgment of the District Court.

JEFFREY S. SWYERS (Richard Scott Siegel, on the brief), Slevin & Hart, P.C., Washington, DC, for Plaintiff-Appellant.

MELISSA D. HILL (Michael Fleming and Hanna Martin, on the brief), Morgan, Lewis & Bockius LLP, New York, NY, for Defendant-Appellee New York City Department of Education.

RICHARD I. MILMAN (Netanel Newberger, on the brief), Milman Labuda Law Group, PLLC, Lake Success, NY, for Defendants-

2 Appellees Jofaz Transportation, Inc. and Allied Transit Corp.

MICHAEL A. KAPLAN (Robert J. Kipnees, on the brief), Lowenstein Sandler LLP, Roseland, NJ, for Defendants-Appellees Pride Transportation Services, Inc. and Quality Transportation Corp.

PER CURIAM:

This case principally presents one question: Whether Plaintiff-

Appellant Division 1181 Amalgamated Transit Union-New York

Employees Pension Fund and its Board of Trustees (the “Fund”)

plausibly stated a claim for delinquent contributions under the

Employee Retirement Income Security Act of 1974 1 (“ERISA”). In a

thorough and well-reasoned opinion and order dated November 2,

2020, the United States District Court for the Eastern District of New

York (Edward R. Korman, Judge) held that the Fund had failed to do

so and dismissed the Amended Complaint with prejudice. 2 We adopt

1

et seq.

Amalgamated Transit Union-New York Emps. Pension Fund v. New York City Dep't of Educ. et al., No. 14-cv-7405, ___ F. Supp. 3d ___,

(E.D.N.Y. Nov. 2, 2020).

3 in full the reasoning of the District Court, as set forth in its opinion and

order, and we hold that the District Court did not err in dismissing the

Amended Complaint pursuant to Rule 12(b)(6) with prejudice.

Accordingly, we AFFIRM the judgment of the District Court.

I. BACKGROUND

We include here only so much of the background of this matter

as is necessary to explain our decision to affirm; a comprehensive

discussion of the facts, statutes, and contractual terms at issue can be

found in the District Court’s excellent opinion. 3

The Fund is an ERISA-governed, multiemployer, defined

benefit pension plan, with participants that include employees of

companies that provide school bus transportation to schools in New

York City. The members of the Board of Trustees are fiduciaries of the

Fund.

Defendant-Appellee the New York City Department of

Education (the “DOE”) operates the public schools in New York City.

For decades, the DOE has contracted with private companies to

3See id.; see also In re Bankers Tr. Co.,

, 123 (2d Cir. 2006) (on appeal, referring to, and relying on, the district court’s recitation of facts and survey of the pertinent law).

4 provide transportation services for students who attend school in New

York City. 4 Defendants-Appellees Jofaz Transportation, Inc., Allied

Transit Corp., Pride Transportation Services, Inc., and Quality

Transportation Corp. (together, the “Contractors,” and with the DOE,

“Defendants”) are companies that provide school bus services

pursuant to contracts with the DOE. These contracts contain a

provision called an Employee Protection Provision (the “EPP”), which

governs how the Contractors fill certain employee vacancies that arise.

Specifically, the EPP requires the Contractors to fill vacancies in

coordination with the DOE through what are called “Master Seniority

Lists,” and requires the Contractors to follow certain rules about

wages and benefits for employees who are hired to fill those

vacancies. 5 The Fund is not a party to the school bus services contracts

between the DOE and the Contractors.

4 See generally Div. 1181 A.T.U.-New York Emps. Pension Fund By Cordiello v. City of New York Dep't of Educ.,

(2d Cir. 2018). 5 The Fund alleges the EPP states, inter alia, that, [t]he Contractor shall sign an agreement with Division 1181 A.T.U.—New York Employees Pension Fund and Plan to participate in such plan on behalf of all operators (drivers), mechanics, dispatchers and escorts (matrons-attendants), in the event the Contractor employs escorts, who appear

5 In 2014 the Fund filed this action against Defendants, bringing

numerous claims under ERISA as well as related state law contract

claims. In 2018 the Fund filed an Amended Complaint, which is the

operative pleading. The Fund alleged that the Contractors were

required to contribute to the Fund, based principally on provisions in

the school bus service contracts entered into by the DOE and the

Contractors, and that the Contractors failed to make the required

contributions. Defendants moved to dismiss the Amended Complaint

under Federal Rule of Civil Procedure 12(b)(6) for failure to state a

claim upon which relief can be granted. 6

In a comprehensive and well-reasoned opinion and order dated

November 2, 2020, the District Court principally held that the Fund

failed to plausibly allege that the Contractors had obligations to

contribute to the Fund under the terms of an ERISA pension plan. 7 The

District Court granted Defendants’ motions and dismissed the

on the Master Seniority Lists and who participated in the Fund and Plan. App’x 27-28 (Amended Complaint ¶ 44). 6The Contractors also moved to dismiss the Amended Complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction, which was granted by the District Court but which is not the subject of this appeal. 7Div. 1181 Amalgamated Transit Union-New York Emps. Pension Fund, ___ F. Supp. 3d at ___,

, at *5.

6 Amended Complaint with prejudice. 8 Judgment in favor of

Defendants entered November 4, 2020, and the Fund timely appealed.

II. DISCUSSION

“[W]e review de novo a district court’s dismissal of a complaint

pursuant to Rule 12(b)(6).” 9 It is well established that “[t]o survive a

motion to dismiss, a complaint must contain sufficient factual matter,

accepted as true, to state a claim to relief that is plausible on its face.” 10

When ruling on a motion to dismiss, “documents that are attached to

the complaint or incorporated in it by reference are deemed part of the

pleading and may be considered.” 11 In reviewing on appeal the

dismissal of a complaint pursuant to Rule 12(b)(6), we not only “accept

all factual allegations as true” but also “draw all reasonable inferences

in the plaintiff’s favor.” 12

An ERISA plan trustee, like the Fund, may bring a civil suit

against employers who are delinquent in making contributions. 13 To

8

. 9 Austin v. Town of Farmington,

(2d Cir. 2016). 10 Ashcroft v. Iqbal,

(2009) (quotation marks omitted). 11 Beauvoir v. Israel,

, 248 n.4 (2d Cir. 2015). 12 Austin,

. 13

.

7 be liable for delinquent contributions under Section 515 of ERISA, a

defendant must (1) have contribution obligations that arise from either

a “plan” or a “collectively bargained agreement” and (2) be an

“employer” within the meaning of ERISA. 14 A plan trustee may also

bring a claim under Section 409 of ERISA for a breach of fiduciary

duty 15 or pursue a claim under Section 406 of ERISA if a fiduciary

knowingly participates in a transaction prohibited by the statute. 16

The Fund advances several arguments as to why Defendants are

liable under ERISA. The Fund argues that the Contractors are liable for

delinquent contributions under ERISA, principally taking the position

that the Contractors were obliged to contribute to the Fund under the

terms of the school bus service contracts entered into by the DOE and

the Contractors. The Fund also argues that all Defendants are liable

under ERISA under a breach-of-fiduciary-duty theory of liability or, in

the alternative, a non-fiduciary theory of liability premised on

allegedly prohibited transactions.

14

§ 1145; see also Cement & Concrete Workers Dist. Council Welfare Fund, Pension Fund, Legal Servs. Fund & Annuity Fund v. Lollo,

(2d Cir. 1994) (“[Section] 1145 permits recovery only against those employers who are already obligated, in the absence of ERISA, to make ERISA contributions.”). 15

. 16

§ 1106.

8 After reviewing the record de novo, we reject the Fund’s

contentions. We adopt in full the reasoning of the District Court, as set

forth in its opinion dated November 2, 2020. Specifically, we hold that

the Fund failed to plausibly allege that the Contractors had obligations

to contribute to the Fund, as would be required for a delinquent

contribution claim under ERISA. Neither the contracts for school bus

services nor the Fund’s governing documents required the Contractors

to make the contributions demanded. Further, the EPP did not

constitute either an ERISA pension plan or a collectively bargained

agreement. Finally, we agree with the District Court that the Fund

failed to plausibly allege that Defendants are liable under ERISA as

fiduciaries or by participating in prohibited transactions. In sum, we

hold that the District Court did not err in dismissing the Amended

Complaint pursuant to Rule 12(b)(6) with prejudice.

III. CONCLUSION

We have considered all of the arguments raised by the Fund on

appeal and find them to be without merit. For the foregoing reasons,

we adopt the November 2, 2020 opinion and order of the District Court

as our own, and therefore we AFFIRM the November 4, 2020

judgment of the District Court.

9