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MORSE v. THE NEW YORK

November 9, 1983

JOHN W. MORSE, Individually and as a participant in, and a beneficiary of, the New York State Teamsters Conference Pension and Retirement Fund, Plaintiffs,
v.
THE NEW YORK STATE TEAMSTERS CONFERENCE PENSION AND RETIREMENT FUND, and IRVING WISCH, KEPLER VINCENT, T. EDWARD NOLAN, ROCCO F. DePERNO, VICTOR MOUSSEAU, PAUL E. BUSH, and JACK CANZONERI, As Trustees of the New York State Teamsters Conference Pension and Retirement Fund, and AL SGAGLIONE, Executive Administrator of the New York State Teamsters Conference Pension and Retirement Fund, Defendants.



The opinion of the court was delivered by: CURTIN

This is plaintiff's motion for summary judgment and defendants' cross motion for summary judgment involving the scope and authority of pension fund trustees to accept and refuse to accept pension fund contributions. The material facts are not in dispute, but before discussing the issues presented by the parties, it is helpful to briefly outline the events leading up to the instant motions.

Defendant New York State Teamsters Conference Pension and Retirement Fund [the Fund] was established by employers and local unions representing the International Brotherhood of Teamsters in 1954, and the Trust Agreement was modified to comply with the Employee Retirement Income Security Act of 1974 [ERISA], 29 U.S.C. § 1001 et seq., on January 1, 1976. The Fund is a multi-employer Taft-Hartley pension plan. The purpose of the Fund, as defined in the indenture of trust, is

 to provide pension or retirement benefits to members of the Union covered . . . under collective bargaining agreements between the Union and Employers containing a pension or retirement benefits clause.

 (Declaration of Trust, Docket Item 8, Exhibit C, Paragraph 13.) The Fund is entirely supported by employer contributions from some 1,500 contributing employers located in New York, Pennsylvania, Massachusetts, and Canada. There are eight trustees of the Fund, half of whom are selected by contributing employers and the other half by the 15 participating local unions. The Fund serves approximately 25,000 participants and beneficiaries.

 For the last 20 years, the trustees of the Fund have periodically required individual employers and local unions to sign a "standard Participation Agreement" or "stipulation" in order to participate or continue to participate in the Fund. This agreement contains rules governing the relationship between the Fund and the unions and employers and restates employer obligations contained in the employer-union-negotiated collective bargaining agreement concerning contribution levels made by employers on behalf of their employees to the Fund.

 In September, 1979, the trustees prepared a new Participation Agreement which several Rochester, New York, area employers refused to sign. These employers claimed the Participation Agreement contained provisions which did not appear in prior participation agreements. The defendants maintain that these provisions were not new but had not been explicitly set forth in prior agreements. In any event, these employers and the defendants were unable to resolve their differences, and after these employers refused to sign the Participation Agreement, the defendants refused to accept the employers' pension fund contributions tendered to the Fund. The defendants maintain that without a signed Participation Agreement from an employer and the local union, they have no obligation to accept any employer contributions to the Fund.

 Concomitant with this refusal to accept these employers' payments, the Fund also contacted employees of these employers and informed them that because their employers had refused to sign the Participation Agreement, the employees were no longer covered for benefits.

 As a result of the Fund's refusal to accept employer contributions without the execution of a Participation Agreement, this action was commenced in September, 1980, by an association of employers, the Building Trades Employers Association, a number of individual Rochester area employers, and an individual employee, John Morse, against the Fund, the trustees of the Fund, and its executive administrator. Plaintiffs seek a declaratory judgment that the defendants' actions in refusing to accept the employers' contributions constituted a breach of the trustees' fiduciary duties under ERISA and an injunction prohibiting the defendants from refusing to accept these contributions. Plaintiffs requested a temporary restraining order allowing employers to tender their contributions to the Fund without executing the Participation Agreement, as well as an order requiring the Fund to accept these contributions and an order preventing the Fund from reducing pension benefits to the plaintiff-employers' employees. This order was granted, and since October 9, 1980, it has been continued by consent of the parties to the present time.

 Following the entry of this order, additional controversies between the parties developed. In early 1981, the Fund notified employer Rogers Fuel Corporation that the Fund wished to send an auditor to examine the company's employee and business records. When Rogers Fuel refused to allow the audit, the Fund responded by notifying the company that it was no longer a participating employer entitled to contribute to the Fund. A similar series of events surrounded the Fund's attempts to audit employer Comac Builders in June, 1981. The court directed that the parties should themselves reach a method for determining a satisfactory audit, and if they were unable to reach an agreement, the Fund should proceed by appropriate motion during the pendency of this action (Order of August 13, 1981, Docket Item 38).

 In the fall of 1981, plaintiffs and defendants filed cross motions for summary judgment concerning the Fund's requirement of a signed Participation Agreement from the plaintiffs in order to accept pension fund contributions. Both before and after the submission of these motions, plaintiffs made four different applications to hold the defendants in contempt for their failure to abide by the terms of the temporary restraining order. These activities primarily involved the Fund's refusal to accept employers' contributions, the reduction of retired employees' benefits, and Fund letters to plaintiff-employers requiring the execution of the disputed Participation Agreements in order to contribute to the Fund over a period of six months. Hearings were held on these motions, and the court found the individual trustees jointly and severally liable for these activities. The court imposed a fine of $100 per violation; however, this fine was suspended upon the condition that the trustees would take steps to carry out the terms of the court's order (Order of June 25, 1982, Docket Item 91).

 After the resolution of the contempt application, the court sua sponte raised the issue of whether the plaintiff-employers had standing to maintain this action under ERISA and directed that the parties submit additional memoranda addressing this question. On November 30, 1982, the court determined that the plaintiff-employers did not have standing to maintain their claims under ERISA pursuant to 29 U.S.C. § 1132 (Order of November 30, 1982, Docket Item 94). Plaintiff-employers then moved for reargument and reconsideration of this decision. Based upon the determination of the United States Court of Appeals for the Second Circuit that employers are not named in the jurisdictional provisions of ERISA and therefore may not bring suit under the Act, Pressroom Unions- Printers League Income Security Fund v. Continental Assurance Co., 700 F.2d 889, 892 (2d Cir. 1983), the court reaffirmed its earlier decision (Order of March 15, 1983, Docket Item 115).

 The court then requested that the parties examine and consider the status of the remaining plaintiff, John Morse, and directed the parties to submit additional memoranda concerning the cross motions for summary judgment in light of the court's decision concerning the lack of standing of the former plaintiff-employers to bring this action. These additional memoranda have now been received, and the issue is now ready for determination.

 The individual plaintiff in this action, John Morse, is a corporate officer of Morse Lumber, Inc., a general lumber supply company located in Rochester, New York. Mr. Morse holds the position of Secretary-Treasurer in the corporation, and although he is a managerial employee and is not a member of the local union or collective bargaining unit, for many years the defendants have permitted individuals other than members of the Teamsters Union to participate in the Fund. In fact, Mr. Morse has been a participant in the defendant Fund since 1965, when his employer, Morse Lumber, first began making contributions to the Fund upon his behalf.

 Morse Lumber is a party to a collective bargaining agreement with Teamsters Local 398, and the agreement requires Morse Lumber to contribute to the defendant Fund. Both the union and Morse Lumber signed the Fund's Participation Agreement, but plaintiff's employer deleted and altered several provisions of the Agreement, apparently with the consent of the Union (Docket Item 11). The Fund refused to accept these changes in provisions, and Mr. Morse received a letter from the Fund in 1980 informing him that because his employer refused to sign the ...


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