The opinion of the court was delivered by: PRATT
GEORGE C. PRATT, District Judge.
Invoking the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., the Security of Labor has brought this action to obtain equitable relief to redress alleged violations of Title I of ERISA. Subject matter jurisdiction exists under ERISA § 502(e)(1), 29 U.S.C.§ 1132(e)(1).
The complaint designates as defendants: General Teamsters Industrial Employees Local 806 (Local 806 or the Union); several present and former trustees of the Union's Health and Welfare Fund (the Welfare Plan), Pension and Retirement Fund (the Pension Plan), and Annuity Fund (the Annuity Plan); and 806 Record Processors, Inc. (RPI). Alleged to be a wholly owned subsidiary of the Welfare Plan, RPI performs the administrative functions of all the Plans. Some of the defendant trustees are members of the Union's Executive Board; some are officers, directors, or employees of RPI; and some are both.
In the main action, the Secretary seeks to redress past dissipation of the assets of the Plans and to prevent similar dissipation of their assets in the future. On January 25, 1977, the Secretary moved for a preliminary injunction and appointment of a receiver. Prior to the return date, the parties agreed to and submitted to the court an order for a consent disposition of the motion. On February 4, 1977 the then acting "Miscellaneous Judge" signed the consent order which provides in part:
1) that defendant trustees of the Local 806 Welfare Fund, Pension Fund, and Annuity Fund shall not make or permit to be made any direct or indirect payments for any purpose from the assets of the respective Funds of which they are trustees to defendant George Snyder, to any of the other individual defendants, to defendant Local 806, or for the benefit of any of said defendants;
2) that defendant 806 Record Processors, Inc. shall not hereafter make or permit to be made any direct or indirect payments for any purpose from its assets to defendant George Snyder, to any of the other individual defendants, to defendant Local 806, or for the benefit of any of said defendants; with the only exception that 806 Record Processors, Inc. may continue to make salary payments for services actually rendered to defendants Clarence Clarke, Anthony Calagna, James Isola, and William Snyder in amounts not exceeding the following:
Maximum per Week
Anthony Calagna $ 750
Clarence Clarke $ 300
James Isola $ 825
William Snyder $ 600
3) that defendant trustees of the Welfare Fund, Pension Fund, and Annuity Fund shall make all books and records of the respective Funds and of 806 Record Processors, Inc. available for inspection and copying to the attorneys for the plaintiff or their agents, during normal business hours upon one (1) day's prior notice.
The Secretary now claims that the consent order has been violated and, asserting that the assets of the Plans are still being dissipated to the detriment of the participants and beneficiaries of the Plans, he has moved for an order (1) appointing an interim receiver to manage and control all income, assets, and disbursements of the Plans and RPI; (2) holding the defendants in contempt of the consent order of February 4, 1977; (3) enjoining RPI and the trustees of the Plans from making payments to defendants Calagna, Clarke, Isola, and William Snyder; (4) directing defendants to comply with subsequent discovery demands made by the Secretary in accordance with the Federal Rules of Civil Procedure; (5) awarding the Secretary reasonable fees and costs; and (6) granting him "such further relief as may be equitable and just".
The Secretary bases his instant claims for relief on two principal contentions. First, he asserts that defendants are permitting payments to be made to Isola, Calagna, Clarke, William Snyder and other unspecified defendants in violation of the consent order. More specifically, the Secretary contends that the Plans through RPI are making payments to those defendants either for no work at all, or for work performed for the Union, and not the Plans or RPI. Second, he asserts that defendants have frustrated his attempts to supervise their performance or non-performance of the consent order by failing to comply with his discovery requests.
With respect to the motion, defendants claim that the payments in question were for the benefit of the Plans and necessary to their operation; that even if a portion of the work done by RPI's employees was for the benefit of the Union, precisely that arrangement was contemplated by the consent order which was designed to preserve the status quo; and that defendants have cooperated with, not prevented discovery.
On April 21, 1977 an evidentiary hearing was held. Testimony was elicited from Stanley Geller, the accountant for the Union, the Plans, and RPI; Annie Craig, the medical claim processor for RPI; Constance Mavroson, the bookkeeper and office manager for the Union, the Plans, and RPI; Mary Calfee, an attorney for the Department of Labor; defendant William Snyder, recording secretary for the Union, a trustee of the Annuity Plan, and an employee of RPI; defendant James Isola, vice president of the Union and an employee of RPI; defendant Anthony Calagna, president of the Union and the president and a director of RPI; John Gonzalez, an employee of RPI; and defendant Clarence Clarke, a trustee of the Pension Plan and an employee of RPI. Twenty-five exhibits were admitted into evidence.
For the purposes of the instant motion, the court has made the following findings of fact and conclusions of law:
1. Local 806 is a union which represents approximately 2,160 member-workers organized into approximately 120 separate "shops", involving approximately 102 employers.
2. The Welfare Plan is a plan established by Local 806 for the purpose of providing the Union's members and their beneficiaries medical, unemployment, and other benefits.
3. About 10,000 potential beneficiaries, including 2,040 union members, are covered by the Welfare Plan.
4. The Pension Plan is a plan established by Local 806 to provide retirement income to the Union's members.
5. About 1,032 union members are covered by the Pension Plan. Seventy-four persons are now receiving pensions under the Plan.
6. The Annuity Plan is a plan organized by Local 806 to defer the accrual of income earned by union members.
7. The Plans are funded by employers of the Union's members pursuant to rates of payments set up in the Union's collective bargaining agreements.
8. RPI is a corporation, organized in March of 1975, which performs all the administrative functions of the Plans. For instance, it maintains all their records, it processes all claims made against them, and it collects employer contributions owing to them.
9. Defendants George Snyder and Irving Rosenzweig, as trustees of the Welfare Plan, own all of RPI's outstanding stock.
10. The Union's Executive Board currently consists of the following six persons: defendant Calagna, the Union's president; defendant Isola, the Union's vice president; defendant George Snyder, the Union's secretary-treasurer; defendant William Snyder, the Union's recording secretary; defendant Rosario Albano, a trustee of the Union; defendant George Arth, a trustee of the Union; and John Gonzalez, the third trustee of the Union. Of these individuals, only Arth and Albano are compensated directly by the Union, each at $125 per month.
11. The Welfare Plan has two trustees: George Snyder and Irving Rosenzweig, an officer of an employer under contract with a Local 806 shop.
12. The Pension Plan has two trustees: Clarke and Joseph Grippo, an officer of another "Local 806 employer".
13. The Annuity Plan has four trustees: George Snyder, William Snyder, Irving Rosenzweig, and Benjamin Petcove, who, like Rosenzweig and Grippo, is an officer of a Local 806 employer.
14. RPI's president is Calagna.
15. RPI has three directors: Calagna, Petcove, and Rosenzweig.
16. Calagna, Clarke, Isola, and William Snyder have been employed by RPI as "field representatives" since its organization in March, 1975.
17. Gonzalez is also employed by RPI as a "field representative".
18. As of February 4, 1977, Ronald Kremens was similarly employed by RPI. Sometime thereafter his employment with RPI terminated.
19. Peter DeVuone is a paid employee of RPI. He serves as the chauffeur of George Snyder who is not an employee of RPI.
20. The Union, the Plans, and RPI share offices located at 275 Broad Hollow Road, Melville, New York. The various entities do not occupy ...