UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
October 5, 1983
MICHAEL ROSENTHAL, as Trustee of and Participant in the TAXICAB INDUSTRY LOCAL 3036 BENEFIT FUND, TAXICAB INDUSTRY PENSION FUND, TAXICAB INDUSTRY HEALTH AND WELFARE FUND and TAXICAB INDUSTRY TRAINING AND EDUCATION FUND, Plaintiff,
ANN SERVICE CORPORATION, et al., Defendants
The opinion of the court was delivered by: SAND
LEONARD B. SAND, U.S.D.J.
Plaintiff, Michael Rosenthal, is a participant in and trustee of four funds: 1) The Taxicab Industry Local 3036 Benefit Fund ("Benefit Fund"); 2) The Taxicab Industry Pension Fund ("Pension Fund"); 3) The Taxicab Industry Health and Welfare Fund ("Welfare Fund"); and 4) The Taxicab Industry Training & Education Fund ("Training Fund"). These funds were established pursuant to a collective bargaining agreement signed by the Metropolitan Taxicab Board of Trade ("MTBOT") and the New York City Taxi Drivers and Allied Workers Union, Local 3036 SEIU, AFL-CIO ("Local 3036"). The defendants are nineteen taxicab employers who are or have been members of the MTBOT.
Plaintiff alleges that defendants violated the collective bargaining agreement by, inter alia, (1) failing to make required contributions to the above named funds, (2) failing to adequately report fund participants' loss of eligibility, and (3) fraudulently manipulating the ratio of fund participants to fund contributors so as to cause "underfunding." Plaintiff bases this action on various provisions of ERISA and also, in the case of (2) and (3), "applicable New York State law." Defendants move for summary judgment, urging the Court to enter judgment in their favor because this Court lacks subject matter jurisdiction and plaintiff lacks standing.
Subject Matter Jurisdiction
In objecting to this Court's subject matter jurisdiction, defendants concentrate on the language of ERISA, contending that the Act's framers drew a clear distinction between "collectively bargained agreements" and "plans." Actions for contributions to funds established by the former, defendants argue, do not fall within the statute's jurisdictional grant.
We find the alleged distinction far less clear than defendants contend. The provision cited by plaintiff indicates a similarity of treatment of "plans" and "agreements":
"Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement."
ERISA § 515, 29 U.S.C. § 1145 (Supp. 1983). The cases defendants refer to in their memorandum provide little support for the alleged distinction. The Second Circuit's recent decision in Pressroom Unions-Printers League Income Security Fund v. Continental Assurance Co., 700 F.2d 889 (2d Cir. 1983), merely establishes that a pension benefit fund per se cannot bring suit under ERISA.
By implication, it reinforces the contention that a participant or fiduciary may sue under ERISA. O'Brien v. Sperry Univac, 458 F. Supp. 1179 (D.D.C. 1978), dismissing for lack of subject matter jurisdiction an action brought solely under a "summary plan description," rests on the fact that this description differed in material respects from the plan itself. It is not by any means "precisely analogous," Defendants' Memorandum at p.19, to the issue before this Court.
We conclude that Congress intended that ERISA provide a maximum amount of protection to covered employees,
and hold that the collective bargaining agreement providing for contributions to specified funds constitutes a plan under ERISA. Thus, claims involving alleged underfunding, failure to render proper reports, and collusion, may be brought in federal court.
Plaintiff's Standing as an Individual Trustee
Defendants argue that even if the collective bargaining agreement constitutes an ERISA "plan," plaintiff fails to qualify as a participant or fiduciary under ERISA § 502, 29 U.S.C. 1132, and thus lacks standing to bring this action.
Defendants urge that permitting plaintiff to bring this suit as trustee for the funds would violate both the Taft-Hartley Act and the actual trust agreements. For the following reasons, we agree.
The trust agreements covering the Pension Fund, Welfare Fund, and Training Fund have been drafted so as to comply with § 302(c)(5)-(8) of the Taft-Hartley Act, 29 U.S.C. § 186(c)(5)-(8). This statute permits employer payments to funds such as the three just mentioned, provided that
"the detailed basis on which such payments are to be made is specified in a written agreement with the employer, and employees and employers are equally represented in the administration of such fund, together with such neutral persons as the representatives of the employers and the representatives of employees may agree upon . . . ."
This equal representation provision aims to prevent misuse of labor organization funds and exploitation of positions of trust by unscrupulous labor officials. See generally Denver Metro. Ass'n v. Journeyman Plumbers, 586 F.2d 1367, 1374-75 (10th Cir. 1978); Costello v. Lipsitz, 547 F.2d 1267 (5th Cir.), cert. denied, 434 U.S. 829, 54 L. Ed. 2d 88, 98 S. Ct. 109 (1977). Exhibits and memoranda submitted by defendants and not challenged by plaintiff satisfy this Court that the Pension Fund, Welfare Fund, and Training Fund -- administered by equal numbers of union and employer trustees -- meet the Taft-Hartley equal representation requirement.
Plaintiff's desire to proceed as an individual trustee, without receiving the approval of his co-trustees or even formally presenting to them the grievances that underlie this action, contravenes the letter and spirit of Taft-Hartley and the trust agreements. Moreover, ERISA provides no support for such action. See ERISA § 514(d), 29 U.S.C. § 1144(d) (ERISA, with certain exceptions, not to "alter, amend, modify, invalidate, impair, or supersede any law of the United States"). It is no answer to suggest, as plaintiff does, that the dangers Taft-Hartley § 302 was designed to prevent "are not present in the case at bar." Plaintiff's Reply Memorandum at 11. As the Fifth Circuit stated, in a case where union and management "acted with the utmost propriety," Costello, supra, 547 F.2d at 1278 n.36, "knowing that § 302 requires equal representation, remembering that the purpose of § 302 is, at the least partially, to prevent abuses -- not requiring that one actually occur, and being aware of the infinite creativity of mankind to circumvent such statutory schemes," we hold that this lawsuit cannot go forward at the present time. In reaching this conclusion, we are mindful of the various alternative avenues open to plaintiff -- formal demand upon the entire body of trustees, a lawsuit naming co-trustees as defendants, use of a class action, and possibly a derivative suit. We further note that a contrary decision here would lay the groundwork for lawsuits by any one trustee, at any time, to advance what is believed to be the best interests of the trust. This would expose funding employers, the body of trustees, and the trusts themselves to the risk of inconsistent obligations and other uncertainties -- precisely the type of evil that Taft-Hartley, the trust agreements, and ERISA itself aim to eliminate.
Plaintiff as Participant
Plaintiff is a "participant" as defined by ERISA § 3(7), 29 U.S.C. § 1002(7). Pursuant to ERISA § 502, a "participant or beneficiary" may sue "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." Defendants argue that plaintiff is not suing to recover benefits due to him or to enforce or clarify his rights, but rather is seeking to vindicate the rights of the fund.
We note that the Taft-Hartley safeguard would be an ineffective tool if a trustee and participant in a fund could avoid the strictures on individual action imposed by Taft-Hartley § 302 by suing in the guise of a "participant." Moreover, it is clear that plaintiff does not, except in the most oblique sense, seek to enforce duties owed to him personally, but rather acts solely because of an alleged shortfall of monies and neglect of duties owed to the funds. Thus, the posture of this case differs sharply from that of cases such as Lechner v. National Benefit Fund, 512 F. Supp. 1220 (S.D.N.Y. 1981), cited by plaintiff, where an individual participant sought only to establish her own eligibility.
In the absence of controlling authority in this Circuit, we choose to follow Thornton v. Evans, 692 F.2d 1064 (7th Cir. 1982), where the Court, noting that ERISA did not provide an "explicit answer" to the question before it, considered the procedural requirements for a suit under the statute against nonfiduciary parties:
The provision granting to each individual beneficiary a right to sue can generate, and here in fact has generated, a multiplicity of suits. Such a provision does not confer standing on these plaintiffs to proceed with suits on their own behalf against these nonfiduciary defendants when these plaintiffs are suing for a breach of fiduciary duty committed not against them as individual beneficiaries but rather against the entire fund.
692 F.2d at 1079 n.35 (emphasis in original).
For the foregoing reasons, defendants' motion for summary judgment is granted.