         09-1802-cv
         Reilly v. Reem Plumbing & Heating Corp., et al.


                              UNITED STATES COURT OF APPEALS
                                  FOR THE SECOND CIRCUIT

                                           SUMMARY ORDER

     RULINGS BY SUM M ARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUM M ARY
     ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
     APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. W HEN CITING A SUM M ARY ORDER
     IN A DOCUM ENT FILED W ITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (W ITH THE NOTATION “SUM M ARY ORDER”). A PARTY CITING A SUM M ARY
     ORDER M UST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.


                At a stated term of the United States Court of Appeals for the Second Circuit, held at
         the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New
         York, on the 2nd day of June, two thousand ten.
 1
 2       PRESENT:
 3                   JOHN M. WALKER, JR.
 4                   DEBRA ANN LIVINGSTON,
 5                               Circuit Judges,
 6                   LEWIS A. KAPLAN,*
 7                               District Judge.
 8       ____________________________________________________
 9
10       GEORGE W. REILLY, VITO GIACHETTI, as
11       Co-Chairman of the Board of Trustees of the Plumbers
12       Local Union No. 1 Welfare Fund, Additional Security
13       Benefit Fund, Vacation and Holiday Fund, Trade Education
14       Fund and 401k Savings Plan, MARTIN MADDALONI,
15       CHARLES CARLSON, as Co-Chairman of the Board of
16       Trustees of the Plumbers and Pipefitters National
17       Pension Fund, LAWRENCE MAZZOLA, SMITTY BELCHER,
18       as Co-Chairman of the Board of Trustees of the International
19       Training Fund,
20
21                     Plaintiffs-Appellees,
22
23                     v.                                                 09-1802-cv (L)


                *
                The Hon. Lewis A. Kaplan, of the United States District Court for the Southern District
         of New York, sitting by designation.
 1                                                                       09-1850-cv (CON)
 2
 3   REEM CONTRACTING CORP., JONA SZAPIRO,
 4   REEM PLUMBING & HEATING CORP.,
 5   STEVEN L. STEIN,
 6
 7                  Defendants-Appellants,
 8
 9   WESTERN SURETY COMPANY,
10
11               Defendant.
12   __________________________________________
13
14   FOR APPELLANTS REEM PLUMBING &
15   HEATING CORP. AND STEVEN L. STEIN :                         JAMES SCOTT MURPHY, Garrity,
16                                                               Graham, Murphy, Garofalo & Flinn,
17                                                               P.C., New York, N.Y.
18
19
20   FOR APPELLANTS REEM CONTRACTING
21   CORP. AND JONA SZAPIRO:                                     DENNIS J. ALESSI, Mandelbaum
22                                                               Salsburg, P.C., West Orange, N.J.,
23
24
25   FOR APPELLEES:                                              CHARLES R. VIRGINIA, MARC A.
26                                                               TENENBAUM, Virginia &
27                                                               Ambinder, LLP, New York, N.Y.
28
29                  Appeal from a judgment of the United States District Court for the Eastern District

30   of New York (Amon, J.).

31                  UPON DUE CONSIDERATION IT IS HEREBY ORDERED, ADJUDGED,

32   AND DECREED that the judgment of the district court be AFFIRMED IN PART AND

33   VACATED AND REMANDED IN PART.

34                  Defendants-Appellants Reem Plumbing & Heating Corporation (“Plumbing”), Steven

35   L. Stein, Reem Contracting Corporation (“Contracting”), and Jona Szapiro appeal from a March 31,

36   2009 order and April 30, 2009 judgment of the United States District Court for the Eastern District


                                                     2
 1   of New York (Amon, J.), granting summary judgment in favor of Plaintiffs-Appellees George W.

 2   Reilly, Vito Giachetti, Martin Maddaloni, Charles Carlson, Lawrence Mazzola, and Smitty Belcher.

 3   The district court held that Plumbing and Contracting, its alter ego, violated Section 515 of the

 4   Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1145, by failing to

 5   make contributions to certain union benefit funds (“Funds”) between January 1, 2002 and December

 6   31, 2004 (the “Audit Period”) as required by collective bargaining agreements (“CBAs”) between

 7   the Association of Contracting Plumbers of the City of New York (“ACP”) and Local Union No.

 8   1 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry

 9   of the United States and Canada (“Union”). It found also that Stein and Szapiro, who were officers

10   of Plumbing and Contracting respectively, breached ERISA fiduciary duties to the Funds and

11   consequently were liable personally for the deficiency. Appellants object to the district court’s

12   conclusions on each parties’ liability and on damages.

13                  We assume familiarity with the facts of this case and the prior proceedings. We refer

14   to them only to the limited extent necessary to explication of this ruling.

15                  Plumbing was a party to four agreements that are at the heart of this case. The first

16   two were CBAs between ACP and the Union and separately governed mechanical and equipment

17   servicing (“MES”) work and new construction (also known as “A”) work. Each required employers

18   to make specified contributions to the Funds for each hour of covered work performed by its

19   employees.

20                  The MES Agreement became effective on January 1, 1998 and provided that it would

21   “remain in force until September 30, 2000.”          It required a conference for the purpose of

22   consummating a new agreement one hundred twenty days prior to expiration and notice of intent to

23   abrogate one hundred eighty days prior to expiration. No party held a conference or notified of an
                                                      3
 1   intent to abrogate. The Union and ACP periodically modified the MES agreement between 2001

 2   and 2004.

 3                    The A Agreement became effective on July 1, 1997 and“remain[ed] in force until

 4   June 30, 2000.” Subsequently, the Union and ACP entered into two new “A” Agreements with

 5   substantially similar terms covering the periods from July 1, 2000 to June 30, 2004 and July 1, 2004

 6   to June 30, 2007.

 7                    The third agreement was an October 27, 1998 “Combination ‘A’ Field and

 8   ‘Mechanical Equipment Service’ Division Collective Bargaining Agreement between the Union and

 9   Reem Plumbing” (the “Combination Agreement”). Plumbing there “agree[d] to be bound by all

10   provisions of the Collective Bargaining Agreement between” the Union and ACP “and any

11   amendments renewals and extensions that may hereafter be made by the parties to the Agreement.”

12   Plumbing there designated ACP its bargaining representative for negotiations with the Union.

13                    The final agreement, which was part of Plumbing’s September 22, 2000 application

14   for ACP membership, provided that Plumbing “agree[d] to comply with the provisions of the

15   . . . agreements and undertakings entered into by [ACP], whether or not [ACP] is a signatory to such

16   undertakings.”

17                    Throughout the Audit Period, Plumbing made payments to the Funds with remittence

18   reports certifying that it was “a party to a written agreement requiring contributions.” Plumbing

19   conceded that it once had been bound by the CBAs, but argued that it no longer was bound during

20   the Audit Period. The district court granted summary judgment against it, holding that the language

21   of the agreements and Plumbing’s course of conduct left no genuine issue of material fact and that

22   Plumbing and Contracting, as Plumbing’s alter ego, continued to be bound by the CBAs throughout


                                                      4
 1   the Audit Period.

 2

 3                                                     I

 4                  We review a grant of summary judgment de novo to determine whether the district

 5   court correctly concluded that there was no genuine issue as to any material fact and that the moving

 6   party was entitled to judgment as a matter of law. See Miller v. Wolpoff & Abramson, L.L.P., 321

 7   F.3d 292, 300 (2d Cir. 2003). In determining whether there are genuine issues of material fact, we

 8   are “required to resolve all ambiguities and draw all permissible factual inferences in favor of the

 9   party against whom summary judgment is sought.” Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir.

10   2003) (quoting Stern v. Trs. of Columbia Univ. in the City of N.Y., 131 F.3d 305, 312 (2d Cir. 1997))

11   (internal quotation marks omitted).

12

13                                                    II

14          A.      Liability

15                  Appellants object to the district court’s liability determination on three principal

16   grounds. They contend first that there were genuine issues of material fact regarding whether

17   Plumbing was bound by the CBAs during the Audit Period. They next maintain that the district

18   court improperly accepted a stipulation that Plumbing and Contracting were alter egos. Finally they

19   contest whether Stein and Szapiro were ERISA fiduciaries of any of the Funds’ assets and, if so,

20   whether there was any evidence that they breached their duties.

21                  Appellants’ contention that the district court overlooked Stein’s sworn statements

22   regarding Plumbing’s intent not to be bound by the CBAs is unpersuasive. Summary judgment is


                                                      5
 1   inappropriate only if there are genuine issues of material fact. Private, subjective intent, however,

 2   is not material to whether a binding agreement existed. See, e.g., Klos v. Polskie Linie Lotnicze, 133

 3   F.3d 164, 168 (2d Cir. 1997); Rule v. Brine, Inc., 85 F.3d 1002, 1010 (2d Cir. 1996) (“[T]he question

 4   of whether or not a binding contract exists ‘is not dependent on the subjective intent’ of either

 5   party.”) (quoting Brown Bros. Elec. Contractors, Inc. v. Beam Constr. Corp., 41 N.Y.2d 397, 399

 6   (1977)); see also Robbins v. Lynch, 836 F.2d 330, 332 (7th Cir. 1988).

 7                   The district court properly determined also that Stein and Szapiro were fiduciaries

 8   of the Funds. Moreover, contrary to appellants’ arguments, there was uncontested evidence that they

 9   had exclusive control over Plumbing and Contracting, respectively, thus warranting the imposition

10   of personal liability.

11                   Finally, the district court was justified in accepting and relying on the parties’ alter

12   ego stipulation. See Fisher v. First Stamford Bank & Trust Co., 751 F.2d 519, 523 (2d Cir. 1984)

13   (“a stipulation of fact that is fairly entered into is controlling on the parties and the court is bound

14   to enforce it”) (citing Stanley Works v. F.T.C., 469 F.2d 498, 506 (2d Cir. 1972)); PPX Enters., Inc.

15   v. Audiofidelity, Inc., 746 F.2d 120, 123 (2d Cir. 1984) (“Under federal law, stipulations . . . are

16   generally binding on the parties and the Court.”) (internal quotation marks omitted).

17

18           B.      Damages

19                   Appellants object also to the damage award. They argue that the district court erred

20   by (1) shifting to them the burden of proof on damages and (2) concluding that there were no

21   disputed issues of material fact.

22                   The district court determined the amount of appellants’ unpaid contributions based



                                                        6
 1   solely on a Marshall & Moss audit of Plumbing and Contracting. The Contracting audit was

 2   premised explicitly on an assumption that all work performed by all Contracting employees at all

 3   times was covered by the CBAs. Szapiro, however, testified in his deposition that Contracting did

 4   work “other than plumbing,” including sprinkler and air conditioning work. He testified also that

 5   plumbing “may be more, may be less” than fifty percent of Contracting’s work, but that the company

 6   did “a lot of sprinkler work.” The district court nevertheless granted summary judgment because

 7   appellants had failed to adduce documentary evidence contradicting the audit report.

 8                  In so doing, the district court relied on a line of cases originating with Combs v. King,

 9   764 F.2d 818 (11th Cir. 1988). Under this burden-shifting rule, a plaintiff first must show (a)

10   improper record-keeping by the defendants, (b) that employees performed work for which they were

11   improperly compensated, and (c) “the amount and extent of that work as a matter of just and

12   reasonable inference,” before the burden shifts. Id at 826 (quoting Anderson v. Mt. Clemens Pottery

13   Co., 328 U.S. 680, 687 (1946)). If it sustains that burden, the onus shifts to the employer-defendant

14   to disprove damages. Id.

15                  We have not addressed whether the Combs burden-shifting rule – as distinguished

16   from the more traditional principle that the plaintiff bears the burden of proving damages – applies

17   in ERISA cases where an employer has not maintained records sufficient to determine whether a

18   CBA covers a given employee’s work at a particular time. See, e.g., La Barbera v. J.D. Collyer

19   Equip. Corp., 337 F.3d 132, 139 n.3 (2d Cir. 2003) (noting other courts’ adoption of burden-shifting

20   in these circumstances). It is unnecessary to resolve that issue in this case, however, because

21   summary judgment was inappropriate as to damages under either the traditional or Combs standard.

22                  Szapiro’s testimony that Contracting did non-plumbing, and therefore non-covered,



                                                       7
 1   work and that the extent of such work may have been more than 50 percent of its business certainly

 2   would have precluded summary judgment under the traditional rule. Plaintiffs, after all, offered no

 3   evidence as to the amount of covered work, relying instead only on its auditor’s assumption that all

 4   of the work had been covered. But summary judgment as to damages would have been unwarranted

 5   even if the case were governed by Combs because the burden-shifting rule it adopted does not take

 6   effect until “an employee carries his burden . . . [of] produc[ing] sufficient evidence to show that

 7   amount and extent of that [covered] work as a matter of just and reasonable inference.” Here,

 8   however, plaintiffs offered no evidence from which any inference, let alone a “just and reasonable”

 9   one, could be drawn to the effect that all of the work done by Contracting had been covered by the

10   CBAs. They elected to rely exclusively on the auditor’s report, which in turn rested on a bald and

11   unsupported assumption to that effect.

12

13                                                   III

14   We have considered carefully appellant’s remaining arguments and conclude that they are without

15   merit. For the foregoing reasons, the judgment of the district court is hereby AFFIRMED with

16   respect to the issue of liability, but the judgement is VACATED and the case REMANDED for

17   a determination of damages.

18
19                                                 FOR THE COURT:
20                                                 Catherine O’Hagan Wolfe, Clerk
21
22




                                                      8
