Court Opinion

ID: 4154219
Source: CourtListenerOpinion
Date Created: 2017-03-21 15:00:33.739948+00
Date Added: 2024-06-11T09:36:30.757172
License: Public Domain

15-1029-cv
     Pig Newton, Inc. v. Boards of Directors

                         UNITED STATES COURT OF APPEALS
                             FOR THE SECOND CIRCUIT

                                  SUMMARY ORDER
     RULINGS  BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY 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. WHEN CITING A SUMMARY
     ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX
     OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY
     ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1        At a stated term of the United States Court of Appeals for
 2   the Second Circuit, held at the Thurgood Marshall United States
 3   Courthouse, 40 Foley Square, in the City of New York, on the
 4   21st day of March, two thousand seventeen.
 5
 6   PRESENT: DENNIS JACOBS,
 7            ROBERT D. SACK,
 8                          Circuit Judges,
 9            PAUL A. ENGELMAYER,
10                          District Judge.1
11
12   - - - - - - - - - - - - - - - - - - - -X
13   PIG NEWTON, INC.,
14            Plaintiff-Counter-
15            Defendant-Appellant,
16
17                -v.-                                           15-1029-cv
18
19   BOARDS OF DIRECTORS OF THE MOTION
20   PICTURE INDUSTRY PENSION PLAN, MOTION
21   PICTURE INDUSTRY INDIVIDUAL ACCOUNT
22   PLAN, MOTION PICTURE INDUSTRY HEALTH
23   PLAN,
24            Defendants-Counter-
25            Claimants-Appellees.

     1
       Judge Paul A. Engelmayer, United States District Judge for the
     Southern District of New York, sitting by designation.

                                                1
 1   - - - - - - - - - - - - - - - - - - - -X
 2
 3   FOR APPELLANT:               Ronald E. Richman, Michael E.
 4                                Swartz; Schulte Roth & Zabel LLP,
 5                                New York, NY.
 6
 7                                William E. Zuckerman, Elizabeth
 8                                O’Leary; Kauff McGuire & Margolis
 9                                LLP, New York, NY.
10
11   FOR APPELLEES:               Franklin K. Moss, Gillian
12                                Costello; Spivak Lipton LLP, New
13                                York, NY.
14
15        Appeal from orders of the United States District Court for
16   the Southern District of New York (Failla, J.).
17
18        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND
19   DECREED that the judgment of the district court be AFFIRMED.
20
21        Plaintiff and counter-defendant Pig Newton, Inc. appeals
22   from the judgment of the United States District Court for the
23   Southern District of New York (Failla, J.), granting summary
24   judgment in favor of the administrators of three multiemployer
25   employee benefit plans, which are subject the Employee
26   Retirement Income Security Act (“ERISA”). We review de novo the
27   district court’s grant and denial of motions for summary
28   judgment, viewing the record with respect to each “in the light
29   most favorable to the non-moving party.” See Dillon v. Morano,
30   497 F.3d 247, 251 (2d Cir. 2007). We assume the parties’
31   familiarity with the underlying facts, procedural history, and
32   issues presented for review.

33        Appellant Pig Newton is the producer of the television
34   series “Louie” (and other ventures not at issue here). Louis
35   Szekely, known professionally as Louis C.K., is the sole owner
36   of Pig Newton and is employed by the company as the producer,
37   writer, director, star performer, and editor of “Louie.” The
38   multiemployer benefit plans at issue respectively provide
39   pension, retirement, and health benefits to individuals who work
40   in the motion picture industry. Each plan is governed by a Trust
41   Agreement.

                                    2
 1        At issue in this litigation is Pig Newton’s obligation to
 2   contribute to the plans for Szekely’s work as an editor, which
 3   accounts for only 15% of his work for (and 8% of his compensation
 4   from) the company. Pig Newton brought this action seeking a
 5   declaratory judgment that it is obligated to contribute to the
 6   plans only for hours Szekely actually worked as an editor. The
 7   defendants argue that under the “controlling employee”
 8   provisions of the Trust Agreements, Pig Newton must contribute
 9   for Szekely at a rate of 40 hours per week and 50 weeks per year
10   regardless of how many hours he worked as an editor. (They filed
11   counterclaims seeking delinquent contributions.)

12        The Trust Agreements impose that special contribution
13   obligation with respect to certain types of employees, including
14   “controlling employees,” which are defined as employees who are
15   shareholders, members, or officers of the employer (or spouses
16   of such shareholders, members, or officers) who are not the only
17   employee of the employer covered by an applicable collective
18   bargaining agreement (“CBA”). App. 724. The obligations are
19   evidently designed to assure that controlling employees, who
20   may be able to control their own hours, do not assign themselves
21   a minimum number of hours to qualify for benefits, thereby
22   minimizing contributions and maximizing coverage.

23        1. Pig Newton, while represented by counsel, agreed to be
24   bound by the Trust Agreements, and therefore is subject to the
25   controlling-employee provisions. In various “Agreements of
26   Consent” and “Trust Acceptances,” Pig Newton agreed “to become
27   a party to and be bound by . . . the Trust Agreements,” App.
28   1097 at ¶ 3, and to do so “to the same extent as though [it]
29   had executed such Trust Agreements.” App. 1098 at ¶ 7. Pig
30   Newton acknowledged familiarity with their provisions and
31   specifically agreed to their contribution requirements. Id.;
32   see also App. 1123–24, 1151–52, 1180–81.

33        Pig Newton’s arguments that the directors lacked the power
34   to enact the controlling-employee provisions are unpersuasive.
35   It is undisputed that when Pig Newton agreed to be bound by the
36   Trust Agreements (and acknowledged familiarity with their
37   terms), the controlling-employee provisions had been a part of
38   them for decades. In La Barbera v. J. D. Collyer Equip. Corp.,
39   337 F.3d 132 (2d Cir. 2003), we held that trustees of a benefit

                                    3
 1   fund had exceeded their authority by adopting a similar rule
 2   unilaterally without being vested with the power to do so by
 3   the Trust Agreement or any other authority. Id. at 137-39. In
 4   the present case, however, the controlling-employee provisions
 5   are part of the Trust Agreements themselves, and have been since
 6   before Pig Newton agreed to them.

 7        2. Pig Newton argues that the controlling-employee
 8   provisions are contradicted (and effectively overruled) by
 9   Paragraph 6 of the Trust Acceptances, which states that “[t]he
10   required contributions shall be made as [t]o employees only for
11   such services as the employees actually rendered in connection
12   with motion picture productions,” App. 1098, and by Article 7
13   of the CBAs, which sets out contribution rates “for all hours
14   worked or guaranteed.” App. 1109.

15        The interpretation of Paragraph 6 that Pig Newton evidently
16   favors--a one-for-one formula between hours worked and plan
17   contributions--would put these provisions in tension not only
18   with the Trust Agreements but also with each other. It is, as
19   Judge Failla noted below, a “cardinal principle of contract
20   construction[] that a document should be read to give effect
21   to all its provisions and to render them consistent with each
22   other.” Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S.
23   52, 63 (1995). The same reasoning applies across multiple
24   documents that are incorporated by reference. The
25   applicability of rates for “hours worked or guaranteed” compels
26   the interpretation that contributions “only for such services
27   as the employees actually rendered” include contributions for
28   hours guaranteed but not worked. Therefore, the limitation that
29   contributions are “only for such services as the employees
30   actually rendered” does not mandate an hour-for-hour formula.

31        Contributions for guaranteed (though unworked) hours, and
32   for hours set by the controlling-employee rule when the
33   controlling employee does some of the relevant work, are
34   contributions in respect of “such services as the employees
35   actually rendered” notwithstanding that the contribution does
36   not necessarily correspond to the number of hours and weeks that
37   were worked.

38

                                    4
1        Accordingly, and finding no merit in appellant’s other
2   arguments, which we reject substantially for the reasons given
3   by the district court in its thorough decision, we hereby AFFIRM
4   the judgment of the district court.

5                                FOR THE COURT:
6                                CATHERINE O’HAGAN WOLFE, CLERK

                                   5