United States District Court, S.D. New York
February 18, 2004.
LOCAL 8A-28A WELFARE AND 401(k) RETIREMENT FUNDS, by their Trustees: Hector Lopez, Richard Croll, Jr., Laura Foster, Jacinto Perez, Thomas Hodgson, Michele Bodner, Douglas Golan and Robert Fabrizio, Plaintiffs, -v- THE MILLARD GROUP, INC., Defendant
The opinion of the court was delivered by: DENISE COTE, District Judge
OPINION AND ORDER
On October 31, 2003, Trustees for the Local 8A-28A Welfare and 401(k)
Retirement Funds ("Trustees" and "Funds," respectively) filed a Complaint
alleging that the The Millard Group, Inc. ("Millard") failed to pay
welfare and retirement contributions to the Funds for the period January
1, 1999 through December 31, 2001. The Trustees allege that Millard
violated Section 515 of the Employee Retirement Income Security Act of
1974 ("ERISA"), 29 U.S.C. § 1145, by failing to make contributions
according to the terms of two employee benefit
plans, and the Agreement Between Metal Polishers Production and
Novelty Workers Union and Local 8A-28A and Chicago Coalition of Metal
Refinishers (the "CBA"). The Trustees seek to compel Millard to pay the
outstanding contributions and to enjoin Millard permanently from failing
and refusing to pay such contributions when and as they become payable
for the period January 1, 1999 through December 31, 2003.
On December 22, Millard moved pursuant to Rules 12(b)(1) and (b)(6),
Fed.R. Civ. P., to dismiss the Complaint on the grounds that the CBA
limits the Trustees' remedy to arbitration through the American
Arbitration Association and requires the Trustees to begin any such
arbitration within ninety days of raising any claim. For the following
reasons, Millard's motion to dismiss is denied.
The facts in this Opinion are taken from the Complaint and the
documents upon which the Complaint relies. This action arises from the
alleged nonpayment of certain contractual obligations by an employer to
two multi-employer employee-benefit trust funds. The Funds were
established by the Local 8A-28A, AFL-CIO (the "Union"), and Millard for
the purposes of providing insurance and retirement benefits to employees.
Both Funds are collectively bargained funds created pursuant to the Labor
Management Relations Act ("LMRA"), 29 U.S.C. § 186(c)(5).
On December 17, 1998, the Union executed the CBA with
Millard Maintenance Service Company ("MMSC"), a division of
Millard. Pursuant to Articles XVI and XVII of the CBA, Millard agreed to
make certain payments to the Union's welfare and retirement funds,
respectively. Article XXXII of the CBA provides that "[i]n the event of
any dispute between [Millard] and the Union as to the meaning,
application, performance, or operation of [the] Agreement, an employee
must file a grievance" within a specified timeframe. If Millard and the
Union are unable to resolve the employee's dispute through the grievance
process, the dispute "shall be submitted for arbitration to the Chicago
area office of the American Arbitration association [sic] (AAA)." The
decision of the arbitrator "shall be final and conclusive" upon Millard
and the Union.
The Trustees are not signatories to the CBA, but are fiduciaries of the
Funds. In performing this duty, the Trustees ordered an audit of the
Funds' books and records for the period of January 1, 1999 through
December 31, 2001. Based on the results of this audit, the Trustees claim
that Millard owes the Welfare Fund the sum of $23,174.03 and the 401(k)
Retirement Fund the sum of $2,675.43 in unpaid contributions. The
Trustees allege that, by failing to pay contributions owed to the Funds
pursuant to its CBA with the Union, Millard has violated the terms of the
agreement and Section 515 of ERISA, 29 U.S.C. § 1145.
Section 515 of ERISA covers delinquent contributions to plans made
under "the terms of a collectively bargained agreement" and requires that
[e]very employer who is obligated to make
contributions to a multi-employer plan under the
terms of the plan or under the terms of a
collectively bargained agreement shall, to the
extent not inconsistent with the law, make such
contributions in accordance with the terms and
conditions of such plan or such agreement.
29 U.S.C. § 1145. Section 301(a) of the LMRA provides that
"[s]uits for violation of contracts between an employer and a labor
organization . . . may be brought in any district court in the United
States having jurisdiction over the parties. . . ." 29 U.S.C. § 185
A presumption of arbitrability applies to disputes arising between an
employer and a union. Federal policy seeks to promote industrial
stabilization through collective bargaining agreements, which themselves
rely on arbitration to redress grievances. United Steelworkers of
Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 578 (1960).
"Complete effectuation of the federal policy is achieved when the
agreement contains both an arbitration provision for all unresolved
grievances and an absolute prohibition of strikes, the arbitration
agreement being the 'quid pro quo' for the agreement not to
strike." Id. at n.4. "Such a presumption furthers the national
labor policy of
peaceful resolution of labor disputes [between employers and
unions] and thus best accords with parties' presumed objectives in
pursuing collective bargaining." Schneider Moving & Storage Co.
v. Robbins, 466 U.S. 364, 371-372 (1984).
Unlike grievances between employers and unions, disputes between an
employer and the trustees of employee-benefits trust funds are not
subject to a presumption of arbitrability. Id. at 372 (1984).
"The notion that federal policy favors union enforcement of an employer's
collectively bargained obligations to a benefit plan, to the exclusion of
enforcement by the plan's trustees, simply did not survive" the
Schneider decision. Cent. States, Southeast and Southwest
Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 575 (1985).
Because trustees of employee-benefit funds cannot avail themselves of the
"economic weapons" of strikes and lockouts, requiring them to arbitrate
disputes with an employer would not promote peaceful settlement of labor
disputes. Schneider, 466 U.S. at 372. As a result, "the
presumption of arbitrability is not a proper rule of construction" in
disputes between trustees and employers, "even if those disputes raise
questions of interpretation under the collective-bargaining agreements."
Further, arbitration is a matter of contract, and a party cannot be
required to submit to arbitration any dispute which he has not agreed so
to submit. See, e.g., United Steelworkers, at 582. Where the
relevant agreements underlying a dispute do not
indicate the parties' intent to require arbitration between
trustees of multi-employer plans and the employers, failure to arbitrate
cannot bar the trustees' suit. Schneider, 466 U.S. at 367.
See also O'Hare v. Gen'l Marine Transp. Co., 740 F.2d 160, 168
(2d Cir. 1984) (an arbitration provision did not apply to trustees where
it referred only to claims by the employer or the union); Local
8A-28A Welfare and 401(k) Retirement Funds v. Golden Eagles Architectural
Metal Cleaning and Refinishing, 277 F. Supp.2d 291, 297 (S.D.N.Y.
2003) (a collective bargaining agreement between the Local 8A-28A,
AFL-CIO and an employer did not obligate the Trustees to submit their
suit to arbitration).
It is undisputed that the Trustees are not a party to the CBA. As was
the case in Schneider, the terms of the CBA do not contain an
arbitration requirement applicable to the Trustees "and the circumstances
surrounding the execution of the [CBA] suggest that none should be
inferred." Schneider, 466 U.S. at 372-373. Article XXXII of the
CBA requires the arbitration of "any dispute between the Company and
the Union as to the meaning, application, performance or operation
of this Agreement." (Emphasis supplied.)
The Trustees' authority to bring claims against Millard is established
in The Restated Agreement and Declaration of Trust of the Metal Polishers
Union Local 8A-28A Welfare Fund and The Restated Agreement and
Declaration of Trust of the Metal Polishers Union Local 8A-28A Annuity
Fund (the "Trust
Agreements"). Each of the Trust Agreements empowers the Trustees to
"take whatever proceedings may be proper and necessary in their
discretion for enforcement of an Employer's obligations including but not
limited to proceedings at law and in equity and arbitration and any
remedies which would be generally available to the parties for
enforcement of" the CBA. Nothing in this passage requires the Trustees to
arbitrate their disputes with Millard. The Trustees may exercise their
discretion to choose the appropriate means to enforce Millard's
obligations. As in Schneider, "[n]owhere in the trust
agreements is the exercise of that authority expressly conditioned on the
exhaustion of any contractual remedies" that might be found in the CBA
with Millard. Id. at 373. As a result, the Trust Agreements'
enforcement mechanisms "protect the collective interest of the
parties . . . by allowing the trustees to seek prompt judicial
enforcement of the contribution requirements." Schneider, 466
U.S. at 373.
The defendant's motion to dismiss is denied.
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