The opinion of the court was delivered by: FREDERICK J. SCULLIN, JR.
This is an action to determine the New York State Teamsters Conference Pension and Retirement Fund's (the "Plaintiff Fund") right to audit the payroll records of Boening Brothers, Inc. ("Boening") and Charles Snyder Beverages, Inc. ("Snyder"), employers that contribute to the Plaintiff Fund.
Boening and Snyder refused to submit to the requested audit claiming that they are contractually obligated to make contributions to the Plaintiff Fund, but are not obligated to submit to an audit. The Court holds that Boening and Snyder, by making contributions to the Plaintiff Fund in accord with collective bargaining agreements ("CBAs"), are bound by the Plaintiff Fund's governing documents as a matter of law, and are thus subject to an audit.
The Plaintiff Fund is a multiemployer plan as defined in the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1002(37)(A), and was established "for the purpose of providing pensions or retirement benefits" to Teamster union members covered by pertinent CBAs. Agreement and Declaration of Trust, DeBella Aff., Ex. C. The Plaintiff Fund was created by an Agreement and Declaration of Trust ("Trust Agreement") that governs its operation, and is managed by a Board of Trustees comprised of both employer and union trustees. Trust Agreement, DeBella Aff., Ex. C. The defendants, Boening and Snyder, contribute to the Plaintiff Fund in accord with CBAs between the defendants and the Brewery Delivery Employees Local Union No. 46., International Brotherhood of Teamsters. None of the CBAs require defendants to abide by the Trust Agreement. Indeed, the relevant CBA provisions are sparse at best and provide for little more than the required level of employer contribution per worker.
Prior to 1973 the defendants and other brewery employers contributed to the Brewery Workers Pension Fund ("Brewery Fund") on behalf of their "regular" employees in the bargaining unit, i.e., workers in the bargaining unit who work a certain number of days in a year. In 1973, the Plaintiff Fund absorbed the Brewery Fund under a Merger Agreement, which provided for the continuation of contributions and benefits previously controlled by the Brewery Fund. Specifically, the Merger Agreement provided that "each Employer under the Brewery Trust [i.e., the document that established the Brewery Fund] shall be considered to be an Employer within the meaning of that term under the Teamsters Trust." Merger Agreement, DeBella Reply Aff., Ex. A at 8-9. Further, the Merger Agreement provided that contributions made under the CBAs "shall be made in accordance with any rules established by the Trustees of the [Plaintiff] Fund." Id. The Merger Agreement also purported to require the "Brewery employers" to execute participation agreements. Id.
In 1974 numerous brewery employers initiated litigation to invalidate the Merger Agreement on grounds of fraud and misrepresentation. At around the same time, the Plaintiff Fund refused to accept the contributions of, and terminated the participation of, the defendants and other brewery employers who refused to sign participation agreements. A preliminary injunction issued for the pendency of that litigation which required the Plaintiff Fund to accept defendants' contributions and required the defendants to submit "'Employer Report Form[s]' documenting the amount and date of the contributions." See Brewery Delivery Employees Local No. 46, IBT, et al. v. Mosley, et al., 80-CV-1476 (E.D.N.Y. March 5, 1981); DeBella Reply Aff., Ex. C. Prior to that case being decided on the merits the parties executed a Settlement Agreement which included a stipulation that the Merger Agreement was "valid, final and binding" and that Boening and Snyder would not take any action "to challenge the validity" of the Merger Agreement. Settlement Agreement dated Aug. 30, 1990, DeBella Reply Aff., Ex. D. The parties also stipulated that they reserved whatever rights they had to seek or challenge any requested audits or requirements that a participation agreement be executed.
Currently, the Plaintiff Fund relies on its governing documents and Trust Agreement rules to claim it has the right to conduct the audit at issue in the case at bar.
The Trust Agreement provides in relevant part:
The Trustees shall have the power to manage and control the administration and operation of the Fund and Plan.
The Trustees ... shall have the power to demand, collect, receive and hold the employer contributions and take such steps ... as may be necessary or desirable to effectuate the collection of such Employer Contributions.
The Board of Trustees shall have the Power to make rules and regulations not inconsistent with the terms hereof to carry out the provisions hereof.
Trust Agreement, DeBella Aff., Ex. C at 2, 9. Under its rulemaking power, the Plaintiff Fund, through its Board of Trustees, promulgated a rule that "require[s] participating employers to submit to an examination of the employer payroll records." Memo from the Board of Trustees to Participating Employers, DeBella Aff., Ex. C.
In May 1989 the Plaintiff Fund sought to audit the defendants' payroll records dating back to November 1977. The defendants refused to submit to the audit. The Plaintiff Fund pursued the matter again in early 1991, and was again rebuffed. Consequently, the Plaintiff Fund brought the current action seeking a permanent injunction requiring defendants to permit the Plaintiff Fund to audit the defendants' payroll records and for an award of attorneys' fees. The Plaintiff Fund seeks the audit to verify whether proper pension contributions were submitted on behalf of defendants' employees. The defendants maintain that the Plaintiff Fund does not have the authority to conduct an audit of all its employees' payroll records; however, they do agree to submit to an audit of "the payroll records of all 'regular' employees in the bargaining unit for the period encompassed by ...