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CARSON v. LOC. 1588

August 1, 1991


The opinion of the court was delivered by: Sand, District Judge.


Plaintiff Donald Carson was the business agent and later the elected secretary-treasurer of defendant Local 1588. Local 1588 is a small union with a membership today of less than 300 workers, primarily from the cargo and shipping industries, and assets worth approximately $176,000. Carson was the only full time officer employed by the union for the entirety of the approximately fifteen years he served. In 1988 Carson was indicted and convicted on a variety of criminal charges and left his position at Local 1588. The present motion involves Carson's right to receive a pension from Local 1588 under relevant portions of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. (1988). In this case, which is consolidated with United States v. Local 1804-1, et al., Carson moves for summary judgment under Fed.R.Civ.P. 56(c). For the reasons discussed below, Carson's motion for summary judgment is denied.


Donald Carson's involvement with Local 1588 began in the mid-1970's and continued until 1988. In 1972, shortly before Carson's tenure began, Local 1588 adopted a Constitution and By-Laws. Article IX.E of the 1972 Constitution and By-Laws provided in pertinent part:

  All elected officers and Business Agents who have
  served twelve (12) uninterrupted years of service
  to the Local Union shall receive a pension until
  their demise from the Local Union of forty (40%)
  per cent of their last year's base pay. . . .
  After [death], half of his pension goes to his
  widow until she remarries or dies.

See Exhibit D of Appendix to Defendant's Brief in Opposition to the Motion for Summary Judgment ("Defendant's Brief"). In 1979, Local 1588 amended its Constitution and By-Laws but did not alter the original pension provisions. See Exhibit E of Appendix to Defendant's Brief. After Carson was convicted on the criminal charges he became disqualified by federal law from holding any position as an officer or employee of any labor union and resigned his position at Local 1588.

After leaving Local 1588, Carson made an application for a pension under the provisions of Article IX.E of the 1979 Constitution and By-Laws. Initially, Local 1588 granted Carson's application and began paying him a monthly pension of $1,387.67. In 1989 and early 1990, after having paid approximately $9,280.00, Local 1588 ceased to provide Carson with any pension payments after concluding that the payments were not proper. See Exhibit A of Declaration of Frederic J. Gross in Support of Plaintiff's Motion for Summary Judgment.

Carson, thereafter, filed a lawsuit in the District of New Jersey seeking to compel Local 1588, its officers, executive board, and trustees to resume paying the $1,387.67 monthly pension, and to guarantee that upon his demise payments would be made at half the rate to his wife, Peggy Carson. Local 1588 obtained a stay in the New Jersey action pending the outcome of a motion to consolidate this case with U.S.A. v. Local 1804-1, et al., 90 Civ. 963 (LBS), in which Donald Carson is a named defendant. This Court granted the consolidation of the cases and the defendants filed an Answer and Counterclaim, which subsequently has been amended.


A. Applicability of ERISA to Top-Hat Pensions

Donald Carson moves for summary judgment claiming that Local 1588 promised him a pension, began payment of its obligation and presently is illegally withholding payments due. Summary judgment may be granted if there is "no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party has the burden of demonstrating "the absence of any material factual issue genuinely in dispute." Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317, 1319-20 (2d Cir. 1975). In determining whether there is a genuine factual issue, a court must resolve all ambiguities and draw all inferences against the moving party. United States v. Diebold Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); see also Advisory Committee Notes to the 1963 Amendments to Rule 56.

The fundamental question on this motion is the applicability of various provisions of the ERISA statutory scheme. Congress enacted ERISA to protect certain employees from abuses in the administration and investment of private retirement plans and employee welfare plans. In essence, ERISA establishes minimum standards for the vesting of benefits, funding of plans, overseeing fiduciary responsibilities, reporting to the government and making disclosures to participants. See generally H.R.Rep. No. 93-533, 93rd Cong.2d Sess., reprinted in 1974 U.S. Code Cong. & Ad. News 4639; see also Donovan v. Dillingham, 688 F.2d 1367, 1370 (11th Cir. 1982) (en banc). Yet, the ERISA framework does not include in its protection all retirement arrangements nor do all provisions of the statute apply equally to each covered plan.

In order for ERISA protection to attach there must be a pension plan, as defined under ERISA.*fn1 At oral argument there was extensive discussion about whether Local 1588 had actually established a pension plan. Disagreement existed over whether the pension provisions in the 1972 and 1979 Constitutions and By-Laws, which have the same language, are self-executing or require the ratification of the union membership. Local 1588 was given two weeks to locate documents that were seized by the United States government in connection with the U.S.A. v. Local 1804-1 case that allegedly prove that Article IX(E) of the 1979 Constitution and By-Laws was not self-executing.*fn2 In a letter dated April 22, 1991, Local 1588 stated it was unable to locate the relevant documents and withdrew its argument that Article IX(E) was not ratified and approved. Consequently, Local 1588 has conceded that a pension plan was established, as defined under ERISA.*fn3

The next question is what type of plan was established, and consequently, which provisions of ERISA apply. There is no dispute among the parties that Article IX(E) is a ...

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