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D'Antonio v. Metropolitan Transportation Authority

March 31, 2010

DANIEL P. D'ANTONIO, ET AL., PLAINTIFFS,
v.
METROPOLITAN TRANSPORTATION AUTHORITY, NEW YORK CITY TRANSIT AUTHORITY; TRANSPORT WORKERS UNION OF AMERICA; AFL-CIO; LOCAL 100; AND ROGER TOUSSAINT AS PRESIDENT OF THE TRANSPORT WORKERS UNION LOCAL 100; JOHN DOE AND JANE DOE AND OTHER PERSONS TO BE NAMED LATER AS OFFICIALS OF TRANSPORT WORKERS UNION, AFL-CIO, LOCAL 100, DEFENDANTS.



The opinion of the court was delivered by: Wood, U.S.D.J.

OPINION & ORDER

Plaintiffs, employees of the New York City Transit Authority ("NYCTA") and members of Transport Workers Union of America Local 100 (the "Union"), bring this action against Defendants Metropolitan Transit Authority ("MTA"); NYCTA; Transport Workers Union of America ("TWU"); the Union; Roger Toussaint ("Toussaint"), President of the Union; AFLCIO; and unnamed officials of TWU, AFL-CIO, and TWU Local 100 ("John Doe Defendants") (collectively, "Defendants"). Plaintiffs bring eighteen federal and state law claims, based on allegations that Defendants misappropriated certain monies that Plaintiffs contributed to two employee benefit programs. Plaintiffs claim that Defendants were obligated to use the contributions to pay for Plaintiffs' retirement healthcare benefits, but that Defendants instead used the monies for other purposes.

In 2008, the Court dismissed a number of Plaintiffs' claims. Defendants now move for summary judgment on Plaintiffs' remaining claims. MTA and NYCTA move for summary judgment on Plaintiffs' claims for unjust enrichment, and Defendant NYCTA moves for summary judgment on Plaintiffs' claims for breach of contract. Defendants TWU, the Union, Toussaint, AFL-CIO, and John Doe Defendants (collectively, "Union Defendants") move for summary judgment on Plaintiffs' (1) state common-law claims for breach of duty of fair representation, misappropriation, conversion and bad faith, and unjust enrichment; (2) federal claims for breach of fiduciary duty in violation of Section 501 of the Labor-Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 501; and (3) state law claims for breach of fiduciary duty in violation of Sections 720 and 723 of the New York Labor Law.

For the reasons stated below, the Court GRANTS MTA's and NYCTA's motion for summary judgment, and GRANTS Union Defendants' motion for summary judgment.

I. Background

A. Factual Background

Unless otherwise noted, the following facts are undisputed by the parties: MTA and its subsidiary, NYCTA, are public authority and public benefit corporations, organized pursuant to the Public Authorities Law of the State of New York. They are responsible for operating virtually all public transportation systems in New York City. The Union is the exclusive recognized bargaining representative for certain employees of the NYCTA. Plaintiffs are employees of NYCTA and members of the Union.

NYCTA and the Union periodically renegotiate a collective bargaining agreement (the "CBA") that governs the rights and obligations of NYCTA and the Union's members, with respect to the members' employment with NYCTA.

1. The 25/55 Plan

In 1994, the New York Legislature enacted legislation improving pension benefits for transit workers. The legislation -- commonly referred to as the "25/55 Plan" -- permits transit employees with twenty-five years of service to retire at age fifty-five with full pension benefits. N.Y. Ret. & Soc. Sec. L. § 604(b). Prior to the legislation, transit employees could not retire with full benefits until the age of sixty-two. When the legislation was passed, transit workers who elected to participate in the 25/55 Plan were required to contribute an additional 2.3% of their wages (on top of the 3% of wages they already contributed) to the New York City Employees Retirement System ("NYCERS") (the "NYCERS Contribution"). (Union Defs' 56.1 St., ¶ 6a.) NYCERS is system through which the employees of New York City public agencies receive pension benefits. (Id.) The New York Legislature eliminated the NYCERS Contribution in December, 2000. (Id.)

Plaintiffs claim that the NYCERS Contribution was required to pay for both Plaintiffs' pension benefits and their retirement healthcare benefits. (Pls' Resp. to Union Defs' 56.1 St., ¶ 6b.)

2. The Health Benefit Trust

The 25/55 Plan increased the cost of providing healthcare benefits to retirees. In 1994, therefore, NYCTA and the Union signed a document known as the "Open Offer," which was incorporated into the CBA. (Union Defs' 56.1 St., 7.) The Open Offer provided that transit employees participating in the 25/55 Plan would cover the increased healthcare costs by contributing 1% of their wages to the Health Benefit Trust (the "Trust Contribution").*fn1 (Union Defs' 56.1 St., ¶ 8.) At the time the Open Offer was signed, the Health Benefit Trust ("Trust") was the mechanism that provided healthcare benefits to transit employees and retirees. (Union Defs' 56.1 St., ¶ 7.) NYCTA made contributions to the Trust, which the Trust used to pay for employees' healthcare benefits. Plaintiffs argue that the NYCTA and the Trust were required to save the Trust Contribution to pay for Plaintiffs' retirement healthcare benefits. (Pls. Resp., ¶ 7.)

In 1996, NYCTA and the Union signed a Memorandum of Understanding ("1996 MOU") that amended the CBA by (1) eliminating the Trust Contribution; (2) placing a moratorium on the requirement that NYCTA make contributions to the Trust; and (3) eliminating the requirement that the Health Benefit Trust maintain a reserve or fund balance.*fn2 (Union Defs' 56.1 St., ¶ 10.) The 1996 MOU provided that during the moratorium on NYCTA contributions, the Trust could spend all of its assets to cover its immediate expenses. (Union Defs' 56.1 St., ¶ 11.) Plaintiffs contend that this provision did not permit the Trust to spend the proceeds of the Trust Contribution. (Pls' Resp., ¶ 11.)

In 2002, NYCTA and the Union signed a new MOU (the "2002 MOU") that provided that NYCTA would assume all obligations of the Health Benefit Trust. (NYCTA 56.1 St., ¶ 13.) In lieu of making payments into the Trust, NYCTA would provide a guaranteed defined benefit plan to all active transit employees and to retirees, paid for from NYCTA's general accounts. (Pls' Resp. NYCTA 56.1 St., ¶ 13.)

Plaintiffs elected to participate in the 25/55 Plan. They paid the NYCERS Contribution and the Trust Contribution (collectively, the "Contributions"),*fn3 until each was eliminated. Plaintiffs are now either in, or preparing for, retirement.

B. Procedural Background

Plaintiffs brought this putative class action in 2004, alleging that Defendants misappropriated the Contributions that Plaintiffs, and thousands of other similarly-situated transit employees, made to NYCERS and the Health Benefit Trust from 1994 to 1996.*fn4 According to Plaintiffs, the NYCTA was required to save these Contributions to pay for Plaintiffs' retirement healthcare benefits. (Compl. ¶ 48.) Plaintiffs claim that Union Defendants promised Plaintiffs that the Contributions would be used to pay for healthcare benefits, but then permitted NYCTA and MTA to spend them on other expenses. (Compl. ¶¶ 50-57.) Plaintiffs assert that, because NYCTA spent the Contributions, Plaintiffs will not receive the health benefits to which they are entitled when they retire.

Plaintiffs raise eighteen federal and state law claims against Defendants. In 2007, Defendants moved to dismiss all of Plaintiffs' claims. In 2008, the Court granted MTA's and NYCTA's motion to dismiss all claims against them, except (1) a claim for unjust enrichment against both MTA and NYCTA; and (2) a claim for breach of contract against NYCTA. The Court granted Union Defendants' motion to dismiss certain claims, but did not dismiss (1) Plaintiffs' federal claim for breach of fiduciary duty, pursuant to 29 U.S.C. ยง 501; or (2) ...


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