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Case 2:13-cv-01995-MMM-PJW Document 16 Filed 06/11/13 Page 1 of 9 Page ID #:53

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BRYAN CAVE LLP
Julie E. Patterson, California Bar No. 167326
Candice F. Boyd, California Bar No. 246289
3161 Michelson Drive, Suite 1500
Irvine, California 92612-4414
Telephone: (949) 223-7000
(949) 223-7100
Facsimile:
[email protected]
E-Mail:
[email protected]


BRYAN CAVE LLP
Jay P. Warren, New York Bar No. 1159169
– Admitted Pro Hac Vice
New York, NY 10104
Telephone: (212) 541-2000
Facsimile:
(212) 541-4630
[email protected]

Attorneys for Defendant
JAFACO HOLDING, INC.


UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Plaintiffs,

THE BOARD OF TRUSTEES, in their
capacities as Trustees of the
BUTCHER AND PROVISION
WORKERS PENSION FUND OF
SOUTHERN CALIFORNIA,




SPECIALTY MEATS, INC.; JAFACO
HOLDING, INC.; DOES 1 through 10,




Defendants.

v.

Case No. CV13-01995-MMM (PJWx)

Hon. Margaret M. Morrow
Courtroom 780


DEFENDANT JAFACO HOLDING,
INC.’S AMENDED ANSWER TO
PLAINTIFFS THE BOARD OF
TRUSTEES’ COMPLAINT FOR
WITHDRAWAL LIABILITY


Complaint Filed: March, 20, 2013
Trial Date:

Not Assigned





624907.2\0352454

JAFACO’S AMENDED ANSWER TO PLAINTIFFS’ COMPLAINT



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Case 2:13-cv-01995-MMM-PJW Document 16 Filed 06/11/13 Page 2 of 9 Page ID #:54

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For its Amended Answer to the Complaint for Withdrawal Liability

(“Complaint”) of Plaintiffs The Board of Trustees (“Plaintiffs”), Defendant Jafaco
Holding, Inc. (“Jafaco”), and no other entity, responds to the allegations contained
in the Complaint as follows:

JURISDICTION AND INTRADISTRICT ASSIGNMENT
In response to the allegations in Paragraph I of the Complaint, Jafaco

1.

avers that the allegations in the first sentence of Paragraph I of the Complaint
constitute legal argument not requiring a response, and otherwise denies the
allegations in the first sentence of Paragraph I with respect to Jafaco. Jafaco denies
knowledge or information sufficient to form a belief as to the truth of the allegations
in the second sentence of Paragraph I of the Complaint.

PARTIES

2.

In response to the allegations in Paragraph II of the Complaint, Jafaco

denies knowledge or information sufficient to form a belief as to the truth of the
allegations in Paragraph II of the Complaint.

3.

In response to the allegations in Paragraph III of the Complaint, Jafaco

denies the allegations in Paragraph III of the Complaint, except Jafaco admits that
Specialty Meats, Inc. (“Specialty”) was an employer in the period January 2008
through October 2011.

4.

In response to the allegations in Paragraph IV of the Complaint, Jafaco

denies the allegations in Paragraph IV of the Complaint, except Jafaco admits that
Jafaco is a Delaware corporation and that Jafaco owned shares of Specialty. Jafaco
avers that the allegations in the first sentence of Paragraph IV constitute legal
argument not requiring a response.

5.

In response to the allegations in Paragraph V of the Complaint, Jafaco

denies the allegations in Paragraph V of the Complaint, and avers that the
allegations in Paragraph V constitute legal argument not requiring a response.




624907.2\0352454

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Case 2:13-cv-01995-MMM-PJW Document 16 Filed 06/11/13 Page 3 of 9 Page ID #:55

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CLAIM FOR RELIEF

6.

In response to the allegations in Paragraph VI of the Complaint, Jafaco

7.

denies the allegations in Paragraph VI of the Complaint, except Jafaco admits that
Specialty was incorporated on December 10, 2007, and that Jafaco owned 100% of
the shares of Specialty at that time. Jafaco avers that the allegations in the first
sentence of Paragraph VI constitute legal argument not requiring a response.
In response to the allegations in Paragraph VII of the Complaint,
Jafaco, (1) admits that Jafaco sold 50% of the shares of Specialty to 6796702
Canada, Inc. (“Canada”) on May 31, 2008, and that Jafaco repurchased 50% of the
shares of Specialty from Canada in 2010; (2) denies that Specialty was
contemplating participation in a mass withdrawal from the Pension Fund at any time
during the period from February 2008 through November 7, 2008, which was the
period that Specialty was a contributing employer to the Pension Fund; (3) denies
knowledge or information sufficient to form a belief as to the truth of the allegations
that contributing employers to the Pension Fund other than Specialty were
contemplating a mass withdrawal from the Pension Fund in May 2008 or at any
other time; (4) avers that the allegations in the first sentence of Paragraph VII
constitute legal argument not requiring a response; and (5) otherwise denies the
allegations in Paragraph VII of the Complaint.

8.

In response to the allegations in Paragraph VIII of the Complaint,

Jafaco refers to the Collective Bargaining Agreement and the Trust Agreement for
the terms thereof, and otherwise denies the allegations in Paragraph VIII of the
Complaint.

9.

In response to the allegations in Paragraph IX of the Complaint, Jafaco

refers to the Collective Bargaining Agreement and the Trust Agreement for the
terms thereof, and otherwise denies the allegations in Paragraph IX of the
Complaint.


624907.2\0352454

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Case 2:13-cv-01995-MMM-PJW Document 16 Filed 06/11/13 Page 4 of 9 Page ID #:56



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10.

In response to the allegations in Paragraph X of the Complaint, Jafaco

refers to the Collective Bargaining Agreement and the Trust Agreement for the
terms thereof, and otherwise denies the allegations in Paragraph X of the Complaint.
In response to the allegations in Paragraph XI of the Complaint, Jafaco
avers that the allegations in Paragraph XI constitute legal argument not requiring a
response, and otherwise denies the allegations in Paragraph XI of the Complaint.

11.

12.

In response to the allegations in Paragraph XII of the Complaint, Jafaco
avers that the allegations in Paragraph XII constitute a legal argument not requiring
a response. Jafaco otherwise denies the allegations in Paragraph XII of the
Complaint.
13.

In response to the allegations in Paragraph XIII of the Complaint,

Jafaco denies knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph XIII of the Complaint.

14.

In response to the allegations in Paragraph XIV of the Complaint,

Jafaco denies the allegations in Paragraph XIV of the Complaint.

15.

In response to the allegations in Paragraph XV of the Complaint, Jafaco

denies knowledge or information sufficient to form a belief as to the truth of the
allegations in Paragraph XV of the Complaint.

16.

In response to the allegations in Paragraph XVI of the Complaint,

Jafaco denies that Jafaco was a trade or business under common control with
Specialty and that the Initial Withdrawal Liability Notice allegedly delivered to
Specialty in January 2010 constituted notice to Jafaco of either Specialty’s or
Jafaco’s liability; admits the allegations in the first sentence of Paragraph XVI with
respect to Specialty’s receipt of the Initial Withdrawal Liability Notice; and
otherwise denies the allegations in Paragraph XVI.

17.

In response to the allegations in Paragraph XVII of the Complaint,

Jafaco denies knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph XVII of the Complaint.

624907.2\0352454

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JAFACO’S AMENDED ANSWER TO PLAINTIFFS’ COMPLAINT



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Case 2:13-cv-01995-MMM-PJW Document 16 Filed 06/11/13 Page 5 of 9 Page ID #:57

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18.

In response to the allegations in Paragraph XVIII of the Complaint,

Jafaco denies that Jafaco was a trade or business under common control with
Specialty and that the Redetermination Liability Notice allegedly delivered to
Specialty in January 2010 constituted notice to Jafaco of either Specialty’s or
Jafaco’s liability; admits the allegations in the first sentence of Paragraph XVIII
with respect to Specialty’s receipt of the Redetermination Liability Notice; and
otherwise denies the allegations in Paragraph XVIII.

19.

In response to the allegations in Paragraph XIX of the Complaint,

Jafaco denies knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph XIX of the Complaint.

20.

In response to the allegations in Paragraph XX of the Complaint, Jafaco
denies that Jafaco was a trade or business and that the Reallocation Liability Notice
allegedly delivered to Specialty in July 2010 constituted notice to Jafaco of either
Specialty’s or Jafaco’s liability; admits the allegations in the first sentence of
Paragraph XX with respect to Specialty’s receipt of the Reallocation Liability
Notice; and otherwise denies the allegations in Paragraph XX.

21.

In response to the allegations in Paragraph XXI of the Complaint,

Jafaco denies the allegations in Paragraph XXI of the Complaint.

22.

In response to the allegations of Paragraph XXII of the Complaint,
Jafaco denies the allegations in Paragraph XXII of the Complaint with respect to
Jafaco, and specifically denies that Jafaco was a trade or business under common
control with Specialty, that any notice delivered to Specialty constituted notice to
Jafaco of either Jafaco’s or Specialty’s liability, and that Jafaco failed, refused and
neglected to respond to the referenced notice, except admits the allegations in the
first sentence of Paragraph XXII with respect to Specialty.

23.

In response to the allegations in Paragraph XXIII of the Complaint,

Jafaco denies the allegations in Paragraph XXIII with respect to Jafaco.


624907.2\0352454

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Case 2:13-cv-01995-MMM-PJW Document 16 Filed 06/11/13 Page 6 of 9 Page ID #:58



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24.

In response to the allegations in Paragraph XXIV of the Complaint,

Jafaco avers that the allegations in Paragraph XXIV constitute a legal argument not
requiring a response, and otherwise denies the allegations in Paragraph XXIV of the
Complaint with respect to Jafaco.

25.

In response to the allegations in Paragraph XXV of the Complaint,

Jafaco denies the allegations in Paragraph XXV with respect to Jafaco.

26.

In response to the allegations in Paragraph XXVI of the Complaint,
Jafaco denies the allegations in Paragraph XXVI of the Complaint with respect to
Jafaco, admits the allegations in the second, third and fourth sentences of Paragraph
XXVI with respect to Specialty, and specifically avers that Jafaco’s time to request a
review or to demand or initiate arbitration has not expired.

27.

In response to the allegations in Paragraph XXVII of the Complaint,

Jafaco denies the allegations in Paragraph XXVII with respect to Jafaco.

AFFIRMATIVE DEFENSES

Jafaco asserts upon information and belief the following affirmative defenses

to the Complaint.

FIRST AFFIRMATIVE DEFENSE

1.

The Complaint is barred by Plaintiffs’ failure to assess withdrawal

liability in a timely manner.

2.

SECOND AFFIRMATIVE DEFENSE
The Complaint is barred by the doctrine of laches.
THIRD AFFIRMATIVE DEFENSE

3. Whether or not Jafaco was a member of a controlled group including
Specialty as of the date that Specialty withdrew from the Pension Fund; whether or
not the sale of 50% of the shares of Specialty to 6796702 Canada, Inc. (“Canada”)
effective May 31, 2008, was a transaction to evade or avoid liability by Jafaco for
payment of potential withdrawal liability that could be assessed against Specialty;
whether or not Jafaco is liable for payment of withdrawal liability assessed against

624907.2\0352454

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JAFACO’S AMENDED ANSWER TO PLAINTIFFS’ COMPLAINT

Case 2:13-cv-01995-MMM-PJW Document 16 Filed 06/11/13 Page 7 of 9 Page ID #:59



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Specialty; and whether or not the Initial Withdrawal Liability Notice allegedly
delivered to Specialty in January 2010, the Redetermination Liability Notice
allegedly delivered to Specialty in January 2010, and/or the Reallocation Liability
Notice allegedly delivered to Specialty in July 2010 constitute sufficient notice to
Jafaco pursuant to ERISA §4219(b)(1), 29 U.S.C. §1399(b)(1), to commence the 90
day period for Jafaco to seek review, respectively, of the Fund’s determination of
Jafaco’s initial withdrawal liability, redetermination liability and reallocation
liability pursuant to ERISA §4219(b)(2)(A), 29 U.S.C. §1399(b)(2)(A) (collectively,
the “Arbitrable Issues”) are all matters that must be determined by arbitration
pursuant to ERISA §4221, 29 U.S.C. §1401.

By a letter dated and delivered by telefax transmission on August 27, 2009 to
the Pension Fund, Specialty responded to a request for information from the Pension
Fund regarding the ownership of Specialty by informing the Pension Fund that
Jafaco owned 100% of the common stock of Specialty from the incorporation of
Specialty on December 11, 2007, through May 31, 2008, when Jafaco sold 50% of
the common stock of Specialty to Canada, and that from May 31, 2008 through
August 27, 2009, Jafaco and Canada each owned 50% of the common stock of
Specialty. That letter also provided the addresses of Jafaco and Canada to the
Pension Fund.

As of August 27, 2009, the Pension Fund knew that Jafaco was not in a

controlled group of corporations with Specialty as of the date of Specialty’s
withdrawal from the Pension Fund in November 2008, and therefore, had no
liability for Specialty’s withdrawal liability to the Pension Fund.

Jafaco first received notice from the Pension Fund that the Pension Fund

sought to hold Jafaco liable for the Pension Fund’s assessment of withdrawal
liability against Specialty on March 22, 2013, when the complaint in this action was
served on Jafaco.

By letter dated May 17, 2013, Jafaco notified the Pension Fund that Jafaco


624907.2\0352454

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Case 2:13-cv-01995-MMM-PJW Document 16 Filed 06/11/13 Page 8 of 9 Page ID #:60



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intends to file a Request for Review with the Pension Fund’s Board of Trustees,
within the time frame permitted under ERISA Section 4219(b)(2)(A), regarding the
Pension Fund’s determination that Jafaco has an obligation to pay the assessment of
withdrawal liability against Specialty, and requested that the Pension Fund provide
specified information to Jafaco to enable Jafaco to prepare its Request for Review.

By letter dated June 10, 2013, the Pension Fund informed Jafaco that the

Initial Withdrawal Liability Notice allegedly delivered to Specialty in January 2010,
the Redetermination Liability Notice allegedly delivered to Specialty in January
2010, and the Reallocation Liability Notice allegedly delivered to Specialty in July
2010 constituted notice to Jafaco pursuant to ERISA §4219(b)(1), 29 U.S.C.
§1399(b)(1), because “[n]otice to one member in a controlled group constitutes
notice to all;” that Jafaco has waived any right to seek review pursuant to ERISA
§4219, 29 U.S.C. §1399; and that the Pension Fund would not provide information
to Jafaco pursuant to ERISA §4219(b)(2), 29 U.S.C. §1399(b)(2).

If the Pension Fund declines to grant Jafaco’s Request for Review, then
Jafaco will commence arbitration of the Arbitrable Issues within the time frame
authorized by ERISA §4221, 29 U.S.C. §1401.

FOURTH AFFIRMATIVE DEFENSE (IN THE ALTERNATIVE)
4.

Jafaco incorporates the allegations set forth in Paragraphs 3 through 8

of the Third Affirmative Defense as if fully set forth herein.

If the Pension Fund opposes Jafaco’s effort to seek arbitration of the

Arbitrable Issues on the ground, as alleged in the Complaint, that the notices that the
Pension Fund delivered to Specialty regarding Specialty’s obligation to pay assessed
withdrawal liability constituted notice to Jafaco of Jafaco’s obligation to pay
withdrawal liability assessed against Specialty, then the Pension Fund should be
estopped from opposing arbitration based on its failure and refusal to notify Jafaco
of the Arbitrable Issues at the time that it delivered withdrawal liability notices to
Specialty.

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Case 2:13-cv-01995-MMM-PJW Document 16 Filed 06/11/13 Page 9 of 9 Page ID #:61

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FIFTH AFFIRMATIVE DEFENSE (IN THE ALTERNATIVE)

5.

Jafaco incorporates the allegations set forth in Paragraphs 3 through 10

of the Third and Fourth Affirmative Defenses as if fully set forth herein.

Construing ERISA §4221, 29 U.S.C. §1401, to require Jafaco to pay
Specialty’s assessed withdrawal liability in the circumstances described in
Paragraphs 3 through 10 of the Third and Fourth Affirmative Defenses would
constitute a violation of the Fifth Amendment of the United States Constitution.
WHEREFORE, all claims for relief against Jafaco Holding, Inc. should be

dismissed in their entirety, with prejudice, and Jafaco should be awarded its
attorneys fees and costs.



Dated: June 11, 2013







BRYAN CAVE LLP
Julie E. Patterson
Candice F. Boyd


By:

Attorneys for Defendant
JAFACO HOLDING, INC.

/s/ Julie E. Patterson
Candice F. Boyd


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