Division 1181 Amalgamated Transit Union - New York Employees Pension Fund v. New York City Department of Education
1:13-cv-09112
S.D.N.Y.Aug 30, 2017Background
- Division 1181 Amalgamated Transit Union–New York Employees Pension Fund (the Fund) sues the New York City Department of Education (DOE) under ERISA / MPPAA, claiming DOE is liable for withdrawal contributions owed when eleven non-party school-bus contractors left the Fund after DOE did not renew their contracts.
- The Fund alleges the eleven private bus companies were the DOE’s corporate alter egos, making DOE effectively a signatory to the contractors’ collective bargaining agreements (CBAs).
- DOE is a governmental entity that procures bus services through competitive sealed bids; the DOE was not a signatory to the CBAs and did not negotiate them.
- The bus companies are privately owned and operated (family businesses, corporations, or private-equity owned entities), maintained separate management, facilities, tax filings, bank accounts, equipment (buses), and legal/accounting advisors.
- The Fund points to DOE supervision (safety inspections, route software, subsidized insurance, fuel/maintenance support), DOE-set employee standards, and the shared goal of transporting students as evidence of alter-ego status.
- After discovery, DOE moved for summary judgment; the court concluded no reasonable factfinder could find the contractors were DOE alter egos and granted summary judgment for DOE.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DOE is an ERISA alter ego of the eleven bus companies | The companies were functionally controlled by DOE (supervision, insurance, subsidies, route control) so DOE should be bound to CBAs and liable for withdrawal | Companies are independently owned/managed, competitively bid, own equipment, file separate returns; DOE supervision related to safety/regulation not ownership/control | No — summary judgment for DOE; evidence insufficient to find alter-ego relationship |
| Whether DOE’s provision of subsidies/insurance/fuel discounts = ownership/control | Subsidies and operational coordination show DOE dominance and economic dependence | Subsidies, insurance arrangements, and coordination are routine procurement tools and do not prove ownership or common control | No — financial assistance/coordination insufficient to establish ownership or alter ego |
| Whether shared customers/mission (students) and adherence to DOE standards show common business purpose | Both served students; contractors tailored operations to DOE, showing shared business purpose | DOE (a public, non-profit educator) and contractors (for-profit vendors) have distinct business purposes; purchaser–vendor relationship exists | No — different legal status and profit motive weigh against shared business purpose |
| Whether DOE supervision of safety/employee qualifications is evidence of alter-ego status | DOE’s direct supervision of drivers/escorts and inspections demonstrates operational control | Supervision arose from statutory/regulatory safety duties and contract performance; minimal weight for alter-ego analysis | No — supervision related to student safety is insufficient to establish alter-ego status |
Key Cases Cited
- Delaney v. Bank of Am. Corp., 766 F.3d 163 (2d Cir.) (summary-judgment standard; draw inferences for non-movant)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S.) (materiality and genuine dispute standards for summary judgment)
- Ret. Plan of UNITE HERE Nat’l Ret. Fund v. Kombassan Holding A.S., 629 F.3d 282 (2d Cir.) (ERISA alter-ego doctrine; factors: ownership, management, purpose, operations, equipment, customers, supervision)
- Goodman Piping Prods., Inc. v. NLRB, 741 F.2d 10 (2d Cir.) (factors for alter-ego analysis)
- Newspaper Guild of N.Y. v. NLRB, 261 F.3d 291 (2d Cir.) ( purchaser-vendor distinctions; effect of legal status/profit motive )
- Lihli Fashions Corp. v. N.L.R.B., 80 F.3d 743 (2d Cir.) (same-industry operations do not by themselves establish common business purpose)
- United States v. Funds Held in the Name or for the Benefit of Wetterer, 210 F.3d 96 (2d Cir.) (totality-of-the-facts approach to veil-piercing/alter-ego inquiry)