The opinion of the court was delivered by: CANNELLA
After a trial on the merits of plaintiff's amended complaint and defendants' counterclaims, the Court finds for plaintiff on his claim against defendant Metal Polishers Union & Metal Production & Novelty Polishers Union 8A-28A (the "Union") for bonus pay, and for the Union on its counterclaim for $ 2,000. The Court also finds for defendant Metal Polishers Union Local 8A-28A Pension Fund and Metal Polishers Union Local 8A-28A Welfare Fund (the "Funds") on their counterclaims against plaintiff.
Plaintiff commenced this action in Civil Court, New York County on June 20, 1980. Thereafter, defendants removed the action to this Court pursuant to 28 U.S.C. § 1441(a) and the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1144. Plaintiff is seeking damages from the Funds on the grounds that they improperly withheld from him (1) payment of part of his pension, (2) the proceeds of a deferred compensation plan, and (3) two weeks vacation pay and one week of bonus pay.
Plaintiff is also seeking to recover $ 4,000 in severance pay from the Union. The Funds have asserted several counterclaims seeking to recover portions of the salary plaintiff received from the Funds for the years 1975 to 1979 which the Funds consider excessive and therefore violative of ERISA. See 29 U.S.C. §§ 1106(b), 1109. The Union has also asserted a counterclaim seeking to recover $ 2,000 it paid plaintiff as part of his severance pay agreement.
The following are the Court's findings of fact: Plaintiff joined Local 8A of the Metal Polishers Union in August 1937
and became its President in 1939. In 1941, Local 8A of the Metal Polishers Union and Local 28A of the Metal Production & Novelty Polishers Union merged and plaintiff was elected President of the newly merged local. Plaintiff remained in that position until his retirement in 1977. During his tenure, plaintiff never faced opposition in a union election; indeed, he does not recall any individual running on his slate ever being defeated in an election.
Between 1941 and 1960 plaintiff received a salary as Union President of approximately $ 60 per week. From 1961 to 1978 plaintiff received several salary increases and when he retired in 1977 his salary was $ 24,300.
In 1948, the Union and a group of employers executed a Welfare & Pension Agreement (the "Agreement") creating both the Welfare and Pension Funds.
The Funds are managed by three union-appointed and three employer-appointed trustees (the "Trustees") who are assisted by an administrator who oversees the Funds' day-to-day operations. Plaintiff was appointed as the Funds' first administrator.
As administrator, plaintiff initially was responsible for the management and distribution of benefits, as well as for the collection of employer contributions. Plaintiff received no compensation for his work as administrator until 1961, at which time each fund began paying him a salary of $ 125 per week, for a total of $ 250.
In 1972 an agreement between plaintiff and the Funds was reached whereby the Funds were to purchase from the Travelers Insurance Company ("Travelers") on behalf of plaintiff an annuity contract as part of a deferred compensation plan.
This agreement initially provided that the Funds would contribute $ 60 per week per fund toward this plan. The first payments toward the deferred compensation plan were made on March 1 and April 1, 1974.
On October 23, 1974, the Trustees doubled the amount that the Funds contributed to plaintiff's deferred compensation plan,
and on December 5, 1979, the Trustees unanimously executed a resolution directing Travelers to pay the proceeds of the plan, which by then amounted to $ 96,336.79, to plaintiff.
On October 16, 1974, the Union's Executive Board approved a motion retaining plaintiff as nonpaid president as of January 1, 1975.
Upon leaving the presidency, the Union promised, among other things, to pay plaintiff $ 6,000 in severance pay, of which only $ 2,000 has actually been paid to plaintiff to date.
Plaintiff nevertheless continued to receive a salary from the Union until 1978.
Although he claims not to have devoted significant time to union matters from 1975 through 1978, plaintiff took direct responsibility for servicing several collective bargaining agreements and actively attempted to settle an eleven-week strike in 1977.
On October 23, 1974, in addition to doubling plaintiff's deferred compensation, the Trustees approved an increase in plaintiff's salary as administrator of the Funds to $ 350 per week per fund effective January 1, 1975.
The Trustees took this action because they believed that ERISA, which was to take effect January 1, 1975, precluded plaintiff from serving as both salaried administrator of the Funds and as a salaried union official. Moreover, after Angelo La Barbera, a Trustee of the Funds and Vice President of the Union, represented to the Trustees that the Union had discontinued payment of plaintiff's salary, his salary as administrator was increased to offset this loss in income.
On January 22, 1975, at a meeting attended by plaintiff,
the Trustees rescinded the salary increase approved for him on October 23, 1974.
Plaintiff's salary, however, was never reduced in accordance with this resolution. In fact, at plaintiff's request, it was increased by the Trustees on February 23, 1977, from $ 15,600 per fund to $ 26,000 per fund per year, retroactive to January 1, 1977.
Plaintiff sought this increase because he claimed that the requirements of ERISA had substantially increased his workload and responsibilities.
The Trustees, however, conditioned this increase upon the receipt of a letter from the Funds' accountants stating that the increase was reasonable and consistent with ERISA. On March 28, 1977, the Funds' certified accountants sent a letter to the Trustees in accordance with their request.
As administrator of the Funds, plaintiff supervised the work of three secretaries; consulted with financial advisors on the Funds' investment decisions; prepared pension calculations and submitted them to the Trustees; ensured that the actuarial information and insurance contracts of the Funds were current; co-signed and distributed checks on behalf of the Funds;
and acted as an advisor to Union members concerning their rights under the Agreement.
In addition to his other duties as administrator, plaintiff supervised the management of the building which housed both the Funds' and the Union's offices, and performed minor repairs when needed.
Although plaintiff was available at any time to handle any problem concerning the Funds, he only spent ten to twelve hours per week physically in the Funds' offices.
In 1978, because the Union had understated his income to the Internal Revenue Service, plaintiff incurred a tax deficiency of approximately $ 8,500. To cover this deficiency, plaintiff sought an increase in salary from the Funds.
Initially, the Trustees were reluctant to grant this increase because they believed it to be an unreasonable request.
On June 21, 1978, however, after plaintiff had made a number of phone calls to individual Trustees, his salary was increased by $ 7,500.
On March 7, 1979, the Trustees ratified an employment contract with plaintiff which guaranteed him a salary of $ 52,000 for the year ending December 31, 1979.
On December 5, 1979, the Trustees unanimously approved the payment to plaintiff of the proceeds of his deferred compensation plan,
but refused plaintiff's request for vacation pay.
Previously, on October 18, 1979, the Trustees approved a pension of $ 2,480.85 per month for plaintiff.
Plaintiff retired as administrator of the Funds as of December 31, 1979, and in January 1980 received his first pension check for approximately $ 1,900. He continued to receive checks for $ 1,900 until May 1980.
On April 30, 1980, the Trustees, after a review of plaintiff's payroll records, determined that he joined the Union in 1941, not 1934 as he reported in his pension application. Accordingly, after denying plaintiff seven years of service credit, the Trustees reduced his pension to $ 1,238.88 per month.
The Trustees further determined that the deferred compensation plan executed on behalf of plaintiff was excessive and therefore unanimously refused to authorize payment of its proceeds to plaintiff. On May 21, 1980, the Trustees informed plaintiff by letter of these actions.
On January 15, 1981, after plaintiff instituted this lawsuit, the Trustees reconsidered the reasonableness of plaintiff's compensation as the Funds' administrator.
At this meeting the Trustees determined that (1) for the purposes of pension calculation plaintiff became a member of the Union in August 1937 and (2) the compensation plaintiff received as administrator of the Funds for the years 1975 through 1979 was excessive and unreasonable.
The Trustees, therefore, decided that the salary plaintiff received as administrator between 1975 and 1979 could not be considered in determining his pension. The Trustees also decided that the portion of the salary plaintiff received as Union president for the years 1974 through 1978 which exceeded his Union salary for 1973 was excessive and therefore could not be considered in the calculation of his pension.
Finally, because the Trustees determined that the Education and ...