The opinion of the court was delivered by: Curtin, District Judge
(1) Paragraph 2 of the 1979 stipulation is arbitrary
and capricious to the extent it entitles the Fund to
hold employers liable for pension benefits as
opposed to pension contributions during a period of
employer delinquency in paying the required
(2) the Fund stipulated, and/or is required, to
accept contributions to fund pension credits
accruing during a dispute over a deficiency or
delinquency in the payment of a pension
(3) the court should declare the rights of the
parties and order affirmative relief.
The court will address each argument in turn.
I. INTERPRETATION OF PARAGRAPH 2
Plaintiffs argue that this court's November 30, 1990, decision is
inconsistent in its interpretation of paragraph 2. See Truckmen's, 751
F. Supp. at 358-59, 361. Paragraph 2 provides, in relevant part, that:
Failure on the part of the employer to contribute
on any of his employees as specified herein, shall
make the employer liable for all employee benefit
claims which are incurred during the period of
delinquency, damages, reimbursement to the Fund
for the Fund's attorneys' fees, auditors' fees,
court costs, disbursements and expenses incurred
by the Fund in recovering the above.
Id. at 358 (emphasis added). The court held that this paragraph was not
arbitrary and capricious because it established "an entirely permissible
set of rules designed to force delinquent employers to make the
contributions required of them under the applicable collective bargaining
agreement." Id. at 359.
Plaintiffs argue that this holding is inconsistent with language of the
decision under which the court struck down paragraph 8 as arbitrary and
capricious. Again, the language of the decision is as follows:
Paragraph 8, on the other hand, is impermissible. It provides:
The employer agrees that should he not make
contributions on 100% of all his Bargaining Unit
employees as required herein, the Pension and
Retirement Fund will not pay nor be liable or
obligated to pay any Pension and Retirement or other
benefits to all his employees involved, whether or
not contributions were made on such individuals, in
which event the employer shall pay to any or all
such employees any and all Pension and Retirement or
other benefits. . . .
Item 77, Ex. 3 (emphasis added). As discussed above,
defendants have conceded their liability to employees
for whom an employer is obligated to contribute, even
if the employer fails to make these contributions.
. . . Moreover, the Trustees have no authority under
the trust indenture to hold employers liable to
employees for unpaid pension contributions. The
Trustees may only hold employers liable to the Fund
for these contributions.
Truckmen's, 751 F. Supp. at 361.
The word plaintiffs latch onto in this long excerpt is the last one:
"contributions." Plaintiffs argue that on the one hand the court has
held, by upholding paragraph 2, that the Fund may "make the employer
liable for all employee benefit claims which are incurred during the
period of delinquency," id. at 358 (emphasis added); but on the other
hand, by striking down paragraph 8, the court held the Fund may only hold
employers liable for pension contributions.
The court understands the reason for the confusion and will endeavor to
clarify its prior decision. Paragraph 8 was struck down because it
directly contradicted the Internal Revenue Service's ("IRS") position
that the Fund was required to credit and pay an employee's pension
benefits to the
degree an employer was obligated to make contributions on that person,
even if the employer did not pay those contributions. The Fund has
repeatedly acknowledged this obligation. See, e.g., Truckmen's Item
88 (hereinafter Tr. Item ___). Paragraph 8 was also struck down
because, by purporting to make employers liable to their employees for
pension benefits in the event of an employer's delinquency in making
contributions to the Fund, it contradicted the trust instrument. The Fund
can make the employer liable to the Fund, not a third party. The
confusion arose because the court used the phrase "pension contributions"
here, Truckmen's, 751 F. Supp. at 361, rather than pension benefits, and
that usage was imprecise. The question whether employers could be held
liable for pension benefits, or ...