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WILHELM v. McANN'S W. 48th STREET RESTAURANT CORP.

October 13, 2004.

JOHN W. WILHELM, et al., Plaintiff,
v.
McANN'S W. 48TH STREET RESTAURANT CORP., A NEW YORK CORPORATION, et al., Defendant.



The opinion of the court was delivered by: MARVIN ASPEN, Chief Judge, District

MEMORANDUM OPINION AND ORDER

The Hotel Employees and Restaurant Employees International Union Pension Plan (the "Fund") and the trustees of the Fund (collectively the "Plaintiffs") filed this action for collection of withdrawal liability payments allegedly due under the Employee Retirement Income Security Act ("ERISA") as amended by the Multiemployer Pension Plan Amendment Act of 1980, 29 U.S.C. §§ 1001-1453. While Plaintiffs brought this action against over two dozen corporate entities and several individuals, Joseph Spadafina ("Defendant") is now the only remaining defendant.*fn1 Presently before us is Plaintiffs' Motion for Summary Judgment. Plaintiffs have also moved to strike portions of Defendant's response to its Local Rule 56.1(a) Statement of Facts. For the reasons stated below, Plaintiffs' Motion to Strike is granted in part and denied in part. Plaintiffs' Motion for Summary Judgment is denied. I. PLAINTIFFS' OBJECTIONS AND MOTION TO STRIKE

Before reaching the merits of Plaintiffs' Motion for Summary Judgment, we first address their objections and Motion to Strike. On a motion for summary judgment in this District, the moving party must submit a statement of material facts. L.R. 56.1(a)(3). Each fact in this statement must be supported by "specific references to the affidavits, parts of the record, and other supporting materials. . . ." L.R. 56.1(a)(3). The non-moving party then must file a response as well as a statement of any additional facts. L.R. 56.1(b)(3). In its response, the non-moving party must either admit or deny each fact presented by the movant. See Brasic v. Heinemann's, Inc., 121 F.3d 281, 284 (7th Cir. 1997). Any other response may be deemed an admission. See id. Thus, a response asserting that the party lacks information sufficient to form a belief is treated as an admission. See Williams v. Elyea, 163 F.Supp.2d 992, 994 (N.D. Ill. 2001). In addition, denials or additional facts presented in the non-moving party's response must likewise be supported by specific references to the record or affidavits. L.R. 56.1(b)(3). The Seventh Circuit has repeatedly upheld a district court's strict enforcement of Local Rule 56.1. Bordelon v. Chicago Sch. Reform Bd. of Trustees, 233 F.3d 524, 527 (7th Cir. 2000).

  At the outset, we observe that Defendant did not respond to Plaintiffs' Statement of Facts, paragraphs 1-7, 9-13, and 18-22. Therefore, the facts in these paragraphs are deemed admitted. See Brasic, 121 F.3d at 284. Plaintiffs next object to Defendant's response to paragraph 8 on the grounds that Defendant's denial of paragraph 8 is based on an inaccurate and irrelevant citation to Plaintiffs' Statement of Facts. However, Defendant's denial is supported by an accurate citation to a separate exhibit.*fn2 Paragraph 8 of Plaintiffs' Statement of Facts is therefore deemed denied. Plaintiffs also object to and move to strike Defendant's response to paragraphs 14-17 and 23-41 of Plaintiffs' Statement of Facts. Paragraphs 14-17 and 23-41 of Plaintiffs' Statement are supported by citations to Exhibit E. This Exhibit is a previous stipulation between Plaintiff and certain stipulating defendants, none of whom are still involved in this action.*fn3 Defendant's response to these paragraphs states two objections: (1) Exhibit E was not attested to by a witness; and (2) Exhibit E was not adopted by the Defendant. Defendant's arguments both miss the mark. Defendant's first objection is simply irrelevant as it deals with the sufficiency of an affidavit under Federal Rule of Civil Procedure 56(e). Exhibit E is a stipulation, not an affidavit; therefore, Exhibit E need not be attested to by a witness. The thrust of Defendant's second objection is that since he was not a party to this stipulation, Plaintiffs cannot use Exhibit E to support his statement of facts. However, Defendant need not have adopted Exhibit E, through stipulation or otherwise, in order for Plaintiffs to cite it in support of their Statement of Facts. Defendant, of course, is not bound by the stipulation, but is free to deny the facts in Plaintiffs' Statement that are supported by Exhibit E. Defendant's objections to Plaintiffs' reliance on Exhibit E are therefore dismissed.

  Plaintiffs next contend that Defendant's response to paragraphs 14-17 and 23-41 fails to cite specific portions of the record or affidavits as required by Local Rule 56.1(b)(3)(A). We agree. Moroever, Defendant did not admit or deny the statement of facts contained in these paragraphs but only denied having knowledge or information sufficient to form a belief as to their truth. As stated earlier, such responses are deemed admissions under Local Rule 56.1. See Williams, 163 F.Supp.2d at 994. Therefore, for the purpose of this summary judgment motion, the Defendant has admitted the facts in paragraphs 14-17 and 23-41 of Plaintiffs' Statement of Facts. In their response to Defendant's Statement of Additional Facts, Plaintiffs object to paragraphs 42-44 and 46-52 of Defendant's Statement on the grounds that the facts contained in these paragraphs are irrelevant and immaterial. A statement of additional facts under 56.1(b)(3)(B) should be limited to material facts. See Malec v. Sanford, 191 F.R.D. 581, 583 (N.D. Ill. 2000). Paragraphs 42-44 and 46-52 of Defendant's Statement all relate generally to Defendant's level of involvement in 11 Stone Street Corp. ("Stone Street"), one of the corporate defendants no longer in this action. For reasons we discuss in the Part II(C) below, we find that the facts in these paragraphs are material to the action. Therefore, Plaintiffs' Motion to Strike paragraphs 42-44 and 46-52 of Defendant's Statement is denied. Furthermore, Plaintiffs did not admit or deny paragraphs 42-44 and 46-52 of Defendant's Statement, but rather asserted a lack of knowledge sufficient to admit or deny. Paragraphs 42-44 and 46-52 are, therefore, deemed admitted. See Williams, 163 F.Supp. 2d at 994.

  Finally, Plaintiffs move to strike paragraph 45 of Defendant's Statement because it is inconsistent with other evidence in the record.*fn4 Paragraph 45 asserts that the Defendant was never an officer or director of Stone Street and is supported by citation to Exhibit O, an affidavit sworn to by the Defendant. Plaintiffs argue that this paragraph should be stricken because it is inconsistent with the evidence they present in Exhibit E. Plaintiffs argument misplaced. The fact that the non-movant presents evidence that conflicts with that provided by the movant does not mean that a court must disregard or strike the non-movant's evidence in deciding a motion for summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (noting that judges should not weigh the evidence or make credibility determinations in deciding a motion for summary judgment). If this were the case, summary judgment would always be granted so long as the movant could establish its prima facie case or defense by citations to the record. This, of course, is not the law. Therefore, Plaintiffs' Motion to Strike paragraph 45 of Defendant's Statement is denied.

  II. PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

  A. Background*fn5

  Plaintiffs are the Trustees of the Hotel Employees and Restaurant Employees International Union Pension Fund (the "Fund"). (Pls.' Statement of Material Facts ¶ 6.) Stone Street Corp. ("Stone Street") was a New York corporation engaged in the restaurant business. (Pls.' Statement of Material Facts ¶¶ 10-11.) Defendant was a shareholder in Stone Street. (Pls.' Statement of Material Facts ¶ 12.) Every three years beginning in 1981 and ending in 1990, Stone Street entered into a collective bargaining agreement ("CBA") with various local units of the Hotel Employees and Restaurant Employees International Union. (Pls.' Statement of Material Facts ¶¶ 14-17.) Under these agreements, Stone Street was to pay monthly pension contributions to the Fund on behalf of employees covered under the CBA.

  On December 24, 1991, Stone Street was dissolved by the state of New York for failure to pay franchise taxes. (Pls.' Statement of Material Facts ¶¶ 18-19.) Despite its dissolution, Stone Street continued its restaurant operations. (Pls.' Statement of Material Facts ¶ 23.) In addition, Stone Street continued to submit monthly contributions to the Fund through April 1992. (Pls.' Statement of Material Facts ¶¶ 25-26.) After Stone Street failed to make its contribution payments for several months, however, Plaintiffs terminated Stone Street from the Pension Plan in December 1992. (Pls.' Statement of Material Facts ¶ 26.)

  Stone Street was part of a larger network of restaurants in New York City. (Pls.' Statement of Material Facts ¶ 29.) Collectively, these restaurants were called the McAnn's Control Group ("Control Group"). (Pls.' Statement of Material Facts ¶ 29; Pls.' Ex. E ¶ 451.) The Control Group was also a participating employer under the Pension Plan. (Pls.' Statement of Material Facts ¶ 29.) The Control Group, however, made a complete withdrawal from the Pension Plan, as defined in ERISA, on April 5, 1999. 29 U.S.C. § 1383(a); (Pls.' Statement of Material Facts ¶ 31.) As a result of this withdrawal, the Control Group incurred approximately $3 million in withdrawal liability to the Pension Plan.*fn6 (Pls.' Statement of Material Facts ¶ 32.) Other shareholders of Stone Street have admitted that members of the Control Group, including Stone Street, are jointly and severally liable for the Control Group's withdrawal liability. (Pls.' Statement of Material Facts ¶ 33.) Defendant does not deny this.*fn7

  Defendant was a minority shareholder of Stone Street. In 1972, he invested $6,000 in Stone Street (Pls.' Statement of Material Facts ¶ 12)*fn8 and received 25 percent of its shares (Defendant's Counterstatement ¶ 43). While the parties dispute whether Defendant was actually an officer or director of Stone Street, the record shows that Defendant was not engaged in the management of Stone Street and conducted no business on behalf of Stone Street. (Def.'s Counterstatement ¶¶ 44, 46.) Ultimately, Defendant lost his entire $6,000 investment in Stone Street. (Def.'s Counterstatement ¶ 49.) B. Standard of Review

  Summary judgment is appropriate only when "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed.R. Civ. P. 56(c). The moving party bears the initial burden of identifying portions of the record which demonstrate the "absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (citations omitted). If the moving party satisfies this burden of production, the non-movant must "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ. P. 56(e). In considering a motion for summary ...


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