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TRKMEN'S & WHSMN'S ASSOC. v. PENSION & RET. FUND

November 30, 1990

TRUCKMEN'S & WAREHOUSEMEN'S ASSOCIATION OF ROCHESTER; OF ROCHESTER; BOULTER CARTING CO., INC.; GEORGE M. CLANCY CARTING CO., INC.; VOGEL VAN AND STORAGE OF ROCHESTER, INC.; SERVICE STORAGE INCORPORATED; B.G. COSTICH & SONS, INC.; EAST END MOVING AND STORAGE, INC.; GOTTRY CORPORATION; ROCHESTER STORAGE WAREHOUSES, INC.; AND MICHAEL CLANCY, INDIVIDUALLY AND AS A PARTICIPANT IN, AND BENEFICIARY OF, THE NEW YORK STATE TEAMSTERS CONFERENCE PENSION AND RETIREMENT FUND, PLAINTIFFS,
v.
THE NEW YORK STATE CONFERENCE AND RETIREMENT FUND; IRVING WISCH, KEPLER VINCENT, T. EDWARD NOLAN, ROCCO F. DE PERNO, 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 CONFERENCE PENSION AND RETIREMENT FUND, DEFENDANTS. JOHN W. MORSE, INDIVIDUALLY AND AS A PARTICIPANT IN, AND A BENEFICIARY OF, THE NEW YORK STATE TEAMSTERS CONFERENCE PENSION AND RETIREMENT FUND, PLAINTIFF, V. THE NEW YORK STATE TEAMSTER CONFERENCE PENSION AND RETIREMENT FUND; T. EDWARD NOLAN, ROCCO F. DE PERNO, CURTIS GUNDERSON, PAUL E. BUSH, AND RICHARD MULLER, AS TRUSTEES OF THE NEW YORK 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, District Judge.

  BACKGROUND

These cases stem from a dispute over a 1979 stipulation form issued by the New York State Teamsters Conference Pension and Retirement Fund ("Fund"). The trustees of the Fund ("Trustees") have required employers to sign this form as a prerequisite to participation in the Fund. As this court held in Morse v. New York State Teamsters Conference Pension and Retirement Fund, 580 F. Supp. 180, 185-86 (W.D.N.Y. 1983) (Curtin, J.), aff'd, 761 F.2d 115 (2d Cir. 1985), this requirement was not an arbitrary and capricious exercise of the Trustees' authority. The Second Circuit affirmed, noting that

  so long as the trustees act solely in the proper
  interests of the Fund and its participant-employees
  and do not abuse their powers by arbitrarily
  intermeddling in the private management and labor
  negotiations of the sponsoring employers, courts
  should refrain from faulting their actions.

New York State Teamsters, 761 F.2d at 117. This court's holding in New York State Teamsters, however, was limited. It

  dealt solely with the trustees' insistence upon the
  execution of a participation agreement by sponsoring
  employers and [this court] was not asked to consider
  the capriciousness vel non of any of the agreement's
  provisions.

Id. The cases now before the court specifically allege that provisions in the 1979 stipulation form are arbitrary and capricious.

The court is presented with opposing motions for summary judgment. Both sides agree that the issue before the court is whether the actions of the Trustees in drawing up the 1979 form were arbitrary and capricious. As this court noted in New York State Teamsters, 580 F. Supp. at 185-86, aff'd, 761 F.2d 115, "[t]rustees of pension plans may be found to have acted in an arbitrary and capricious manner when

  the trustees of a plan impose a standard not required
  by the plan's provisions, or interpret the plan in a
  manner inconsistent with its plain words, or by their
  interpretation render some provisions of the plan
  superfluous. . . .

(quoting Miles v. New York State Teamsters Conference Pension and Retirement Fund Employee Pension Benefit Plan, 698 F.2d 593, 599 (2d Cir.), cert. denied, 464 U.S. 829, 104 S.Ct. 105, 78 L.Ed.2d 108 (1983)). Similarly, as noted above, trustees may be found to "abuse their powers by arbitrarily intermeddling in the private management and labor negotiations of the sponsoring employers. . . ." New York State Teamsters, 761 F.2d at 117. The task for this court is to assess each of the clauses at issue to determine whether the Trustees have overstepped their bounds.

DISCUSSION

I. STANDING

As an initial matter, defendants raise the question of the parties' standing to proceed. In Truckmen's & Warehousemen's Ass'n of Rochester v. New York State Conference Pension and Retirement Fund, CIV-31-1110C, plaintiffs include the Truckmen's & Warehousemen's Association of Rochester (an association of employers), nine corporations, and Michael Clancy, an alleged participant in, and beneficiary of the Fund.*fn1 In Morse v. New York State Conference Pension and Retirement Fund, CIV-85-1080C, only John Morse, an alleged participant in, and beneficiary of the Fund remains as plaintiff.

As this court made clear in New York State Teamsters, 580 F. Supp. at 183, aff'd, 761 F.2d at 116, employers lack standing to sue under the limited jurisdictional scope of the Employee Retirement Income Security Act ("ERISA"). 29 U.S.C. § 1132. This holding has repeatedly been reaffirmed by the Second Circuit. See Pressroom Unions Printers League Income Sec. Fund, 700 F.2d 889, 892-94 (2d Cir.), cert. denied, 464 U.S. 845, 104 S.Ct. 148, 78 L.Ed.2d 138 (1983); Tuvia Convalescent Center, Inc. v. National Union of Hosp. & Health Care Employees, 717 F.2d 726, 729-30 (2d Cir. 1983). Thus, the nine employers and the association of employers named as plaintiffs in Truckmen's lack standing to sue.

Defendants' argue further, however, that the individual plaintiffs are also "employers" within ERISA, because they are persons "acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan." 29 U.S.C. § 1002(5) (defining "employer" under ERISA). As "employers," defendants argue, these plaintiffs "cannot defeat the intent of Section 1132 and have the duel [sic] status of an employer/participant to obtain standing." Item 71, at 15.*fn2

The difficulty with defendants' argument is that it is too broad. Cases cited in support of this defendants' last proposition do hold that a sole proprietor may not enjoy the dual status of employer and employee to gain standing under ERISA. See Giardono v. Jones, 867 F.2d 409, 411-13 (7th Cir. 1989); Peckham v. Board of Trustees of the Int'l Bhd. of Painters and Allied Trades Union, 653 F.2d 424, 427 (10th Cir. 1981). Moreover, an "independent contractor's decision to independently subscribe to a policy shared by the company with which it has a contractual relationship does not transform the contractor into an employee for purposes of ERISA." HCA Health Serv. of the Midwest, Inc. v. Brown, 1988 WL 71219 (N.D.Ill. 1988) (emphasis added).

These cases do not, however, preclude standing for either individual in these cases. This court's prior decision in New York State Teamsters, specifically recognized the standing of Mr. Morse.

  [D]efendants readily admit that Mr. Morse is a
  participant in the Fund, and it is clear that his
  expectation of receiving benefits will be affected by
  the resolution of this action. Further, Mr. Morse
  states that his status in this action is one of a
  participant in the defendant Fund and that he is
  seeking a clarification and declaration of his rights
  under ERISA. Mr. Morse also states that he has never
  been a signatory in his personal capacity to any of
  the Fund's Participation Agreements or any other
  Participation Agreements.

580 F. Supp. at 184, (citations omitted). Moreover, several other courts have recognized standing of "employers" to sue as participants. See Peckham v. Board of Trustees of the Int'l Bhd. of Painters and Allied Trades Union, 724 F.2d 100, 100-01 (10th Cir. 1983) ("Peckham II") ("We need not decide whether an employer, qua employer, may bring an action to enforce a return of contributions mistakenly paid. . . . Plaintiffs Peckham and Woolum were named participants in the trust; they brought suit to recover pension rights in their capacities as participants."); Chase v. Trustees of the Western Conference of Teamsters Pension Trust Fund, 753 F.2d 744, 748 (9th Cir. 1985) (agreeing with the result in Peckham II, but leaving open the question whether plaintiffs were "participants"); R.M. Bowler Contract Hauling Co. v. Central States, Southeast and Southwest Areas Pension Fund, 547 F. Supp. 783, 784 (S.D.Ill. 1982) (noting "it is obvious that R.W. Bowler, as an individual, has standing as an employee-beneficiary under the Act."). Thus both Mr. Morse and Mr. Clancy have standing to proceed.

II. THE 1979 STIPULATION

A. Paragraph 1(b)

Plaintiffs object to two clauses found in ¶ 1(b) of the 1979 stipulation. See Item 77, Ex. 3. The first clause requires employers to make contributions to the Fund for all employees doing the same work as bargaining unit employees, whether or not such employees are members of the union, and whether they work full time, part time, casually or seasonally. The second clause says that

  in the event there is any agreement between employer
  and Union that is contrary to or inconsistent with the
  terms of this Stipulation or the rules of the Pension
  Fund, such inconsistent provisions shall be null and
  void and superseded by the terms of this Stipulation
  and/or the rules of the Fund.

Id.

The controversy over the first of these clauses did not begin with the present suit. Plaintiffs note that prior to 1977, collective bargaining agreements between local Teamsters' unions and local employers required pension contributions only on behalf of union members. See B. G. Costich & Sons, Inc. v. N.L.R.B., 613 F.2d 450, 451-52 (2d Cir. 1980). In 1977, although the collective bargaining agreements did not change, the Fund claimed that, under the stipulation in effect at that time, employers owed contributions on non-union employees doing bargaining unit work. See Boulter Carting Co. v. DePerno, No. 925/78, slip op. at 2 (N.Y. Sup.Ct. May 9, 1980) (Wagner, J.) (Item 1, Ex. K). Various employers brought suit against the Fund to bar this requirement. Judge Wagner of the New York Supreme Court granted the employers summary judgment, "declaring that based upon the General Trucking Agreement and stipulation [in place at that time] they were obligated to make pension contributions only on behalf of employees who are members of [the union]." Id. (citing decision of Aug. 2, 1978). The Appellate Division, Fourth Department, however, found the language of the stipulation ambiguous and remanded for a hearing to clarify its meaning. Boulter Carting Co. v. DePerno, 72 A.D.2d 939, 421 N.Y.S.2d 483, 483-84 (1979). On remand, Judge Wagner again concluded that the stipulation, which required employers "to contribute for any and all of [their] regular full-time and any and all other employees covered by this Agreement," Boulter Carting, No. 925/78, slip op. at 16, "looked to the collective bargaining agreement to identify those employees for whom the plaintiff-employers had to make pension contributions in order to participate in the fund." Id. at 17.

In 1979, the Fund amended the stipulation to remove the ambiguity. Paragraph 1(b) was substituted for the above-quoted language to make clear the Fund's requirement that employers contribute on behalf of non-union and casual employees. Shortly thereafter, this suit was commenced. The question for the court is whether the Trustees' adoption of this new language was arbitrary and capricious.

This precise issue was litigated with respect to this Fund before Judge McAvoy in the Northern District of New York in 1987. New York State Teamsters Conference Pension & Retirement Fund v. S.M. Flickinger Co., 1987 WL 8442, No. 85-CV-170 (N.D.N.Y. March 16, 1987). As Judge McAvoy clearly stated:

  The only issue before this court is whether the Funds'
  requirement that Flickinger make contributions on
  behalf of seasonal and casual employees despite the
  absence of such a mandate in its collective bargaining
  agreement is arbitrary and capricious.

Id. at *3.*fn3 To decide this issue, Judge McAvoy asked the following questions:

  (1) whether the Fund's interpretation of the
  stipulation executed with Flickinger which requires
  that it make contributions on behalf of seasonal and
  casual employees is rational, (2) whether the Fund's
  adoption of the rule requiring such contributions is
  authorized by the terms of the trust indenture and
  plan, (3) whether the foregoing rule is consistent
  with the plan's purpose of providing benefits to all
  employees covered therefor by the collective
  bargaining agreements, and (4) whether the rule
  represents an arbitrary intermeddling in the
  collective bargaining process.

Id. at *3-4 He noted that the Second Circuit, reviewing the Fund's requirement in the context of an unfair labor practice charge, expressly left open the question whether these trustees have the right to adopt pension coverage which modifies the terms of a collective bargaining agreement. Id. at *4 (discussing N.L.R.B. v. Truck Drivers Local Union No. 449, 728 F.2d 80, 85 (2d Cir. 1984)).*fn4

Proceeding to discuss each question, Judge McAvoy first concluded that the Fund had not misinterpreted its rule requiring contributions on behalf of non-union seasonal and casual employees. S.W Flickinger, 1987 WL 8442, at *5. This point is not contested in the present cases.

The court next evaluated whether the Fund's rule was authorized under the Fund's trust indenture. The preamble to the trust provides:

  Whereas, Local Unions . . . of the International
  Brotherhood of Teamsters . . . has [sic] heretofore
  executed and will from time to time execute collective
  bargaining agreements with Employers . . . engaged in
  the trucking industry and in allied industries which,
  among other things, provide and will continue to
  provide for the payment by such Employers to the . . .
  Fund, . . . periodically, a sum of money more nearly
  described in such collective bargaining agreements
  between said Contributing Employers and the Union;
  and
    Whereas, the sums payable to the Fund as aforesaid
  . . . are for the purposes of providing pensions or
  retirement benefits to the employees covered therefor
  under collective bargaining agreements or supplements
  thereto, between the Union and contributing
  Employers;
    Now, therefore, in consideration of the premises,
  the Trustees declare that they will receive and hold
  the Employer contributions and other money or property
  which may come into their hands as Trustees hereunder
  . . . with the following powers and duties and ...

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