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The New York State Teamsters Conference Pension and Retirement Fund has brought suit against C&S Wholesale Grocers, the company that bought Syracuse, N.Y.-based Penn Traffic’s warehouse distribution division in 2008 for $43 million, alleging that the two companies conspired to avoid paying $58 million into a pension fund for the warehouse workers, according to a published report. Keene, N.H.-based C&S has denied the allegations.
According to the lawsuit, Penn Traffic’s contracts, customer lists, equipment, files and intellectual property were included in the sale, but the 500 union workers at the building remained with Penn Traffic, which leased them to C&S. The only reason for retaining the employees, the suit alleges, was for Penn Traffic to avoid paying the $63 million it was required to pay when it dropped out of the pension fund. The now-defunct Penn Traffic, which filed for bankruptcy in 2009, paid $5 million into the fund, but was excused from paying the remainder. Following the bankruptcy, C&S closed the Syracuse warehouse and laid off its workers in 2010.
C&S described itself in court papers as innocent of any wrongdoing, noting that it had nothing to do with employing the workers and so wasn’t obligated to pay the $58 million that Penn Traffic couldn’t.
The two sides are slated to appear in federal court in Syracuse in August to argue C&S’s request to have the suit thrown out, according to a report in the city’s Post-Standard.
The laid-off workers receive pension benefits, but not as much as they would have gotten if the full amount had been paid into the fund, according to fund officials.