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- By Paul A. Green
- Mooney Green Baker & Saindon, P.C.
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- The following slides contain key provisions of the law that you may want
to refer back to in answering the questions.
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- The provisions of this section shall not be applicable . . . (2) with respect to the
payment or delivery of any money or other thing of value in satisfaction
of a judgment of any court or a decision or award of an arbitrator or
impartial chairman or in compromise, adjustment, settlement, or release of any claim,
complaint, grievance, or dispute in the absence of fraud or duress; . .
. (5) with respect to money or other thing of value paid to a trust fund
established by such representative, for the sole and exclusive benefit
of the employees of such employer, and their families and dependents (or
of such employees, families, and dependents jointly with the employees
of other employers making similar payments, and their families and
dependents): Provided, That (A) such payments are held in trust for the
purpose of paying, either from principal or income or both, for the
benefit of employees, their families and dependents, for medical or
hospital care, pensions on retirement or death of employees,
compensation for injuries or illness resulting from occupational
activity or insurance to provide any of the foregoing, or unemployment
benefits or life insurance, disability and sickness insurance, or
accident insurance; (B) the detailed basis on which such payments are to
be made is specified in a written agreement with the employer, and employees
and employers are equally represented in the administration of such fund,
together with such neutral persons as the representatives of the
employers and the representatives of employees may agree upon and in the
event the employer and employee groups deadlock on the administration of
such fund and there are no neutral persons empowered to break such
deadlock, such agreement provides that the two groups shall agree on an
impartial umpire to decide such dispute, or in event of their failure to
agree within a reasonable length of time, an impartial umpire to decide
such dispute shall, on petition of either group, be appointed by the
district court of the United States for the district where the trust
fund has its principal office, and shall also contain provisions for an
annual audit of the trust fund, a statement of the results of which
shall be available for inspection by interested persons at the principal
office of the trust fund and at such other places as may be designated
in such written agreement; and (C) such payments as are intended to be
used for the purpose of providing pensions or annuities for employees
are made to a separate trust which provides that the funds held therein
cannot be used for any purpose other than paying such pensions or
annuities . . . .
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- Every employer who is obligated to make contributions to a multiemployer
plan under the terms of the plan or under the terms of a collectively
bargained agreement shall to the extent not inconsistent with law, make
such contributions in accordance with the terms and conditions of such
plan or such agreement.
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- A civil action may be brought —
- (1) by a participant or
beneficiary —
- (A) for the relief provided for in subsection (c) of this section, or
- (B) to recover benefits due
to him under the terms of his plan, to enforce his rights under the
terms of the plan, or to clarify his rights to future benefits under the
terms of the plan;
- (2) by the Secretary, or by a participant, beneficiary or fiduciary for
appropriate relief under section 409;
- (3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or
practice which violates any provision of this title or the terms of the
plan, or (B) to obtain other appropriate equitable relief (i) to redress
such violations or (ii) to enforce any provisions of this title or the
terms of the plan . . . .
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- (1) In any action under this title (other than an action described in
paragraph (2)) by a participant, beneficiary, or fiduciary, the court in
its discretion may allow a reasonable attorney's fee and costs of action
to either party.
- (2) In any action under this title by a fiduciary for or on behalf of a
plan to enforce section 515 in which a judgment in favor of the plan is
awarded, the court shall award the plan —
- (A) the unpaid contributions,
- (B) interest on the unpaid contributions,
- (C) an amount equal to the greater of —
- (i) interest on the unpaid
contributions, or
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(ii) liquidated damages provided for under the plan in an
amount not in excess of 20 percent (or such higher percentage as may
be permitted under Federal or State law) of the amount determined by
the court under subparagraph (A),
- (D) reasonable attorney's fees and costs of the action, to be paid by
the defendant, and
- (E) such other legal or equitable relief as the court deems
appropriate.
- For purposes of this
paragraph, interest on unpaid contributions shall be determined by using
the rate provided under the plan, or, if none, the rate prescribed under
section 6621 of the Internal Revenue Code of 1986.
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- In 1989, Employer Havarti signed a “me-too” agreement
adopting the collective bargaining agreement between Local 71 of the
International Association of Professional Cutters of Cheese and the
local area cheese cutters’ employers’ association. Included in the Local 71 Area
Agreement are:
- An “Evergreen” clause, binding signatory employers to
successor agreements in the absence of a timely notice of termination.
- A “Traveling Contractor’s” clause, providing that if
a signatory employer performs covered work outside Local 71’s
jurisdiction “within the geographic area covered by an Agreement
with another Cheese Cutters’ affiliate, the Employer agrees to
abide by the terms and conditions of the Agreement in effect in the job
site area.”
- Successor five-year agreements are negotiated between Local 71 and the
local employer association in 1994 and 1999 containing both the
Evergreen and Traveling Contractor’s clauses. Due to a scriveners error, the
Traveling Contractor’s clause is garbled in the 1999
agreement. Havarti does not
sign. Neither Havarti nor
Local 71 provides a notice of termination.
- In 2000, Havarti bids on and wins a cheese cutting job in another state
in the jurisdiction of Cheese Cutters’ Local 200. Local 200 has a contract with the
local employers’ association with several key provisions:
- Contributions are owed to the National Cheese Cutters Medical and
Pension Plans for all hours worked.
- Employers are prohibited from avoiding their contractual obligations by
subcontracting bargaining unit work to non-signatory contractors.
- All disputes arising under the contract are subject to the mandatory
grievance/arbitration procedures
- The Cheese Cutters Plans sue Havarti, claiming Havarti is bound to the
Local 200 agreement, and that it owes damages in the form of
contributions for hiring non-signatory subcontractors to do bargaining
unit work. Both sides file
cross motions for summary judgment.
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- The Traveling Contractor’s clause in the latest version of the
Local 71 Area Agreement is garbled and unintelligible. The Cheese Cutters Plans submit
affidavits from Local 71 that this was a scrivener’s error, and
that the language was supposed to be identical to that found in the
earlier agreements. Havarti
presents no evidence. Who is
correct:
- The Cheese Cutters Plans argue that Havarti is bound to the
“corrected” Traveling Contractor’s clause.
- Havarti argues that the Traveling Contractor’s clause is
incomprehensible on its face and must therefore be disregarded.
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- The Traveling Contractor’s clause in the latest version of the
Local 71 Area Agreement is garbled and unintelligible. The Cheese Cutters Plans submit
affidavits from Local 71 that this was a scrivener’s error, and
that the language was supposed to be identical to that found in the
earlier agreements. Havarti
presents no evidence. Who is
correct:
- The Cheese Cutters Plans argue that Havarti is bound to the
“corrected” Traveling Contractor’s clause.
- Havarti argues that the Traveling Contractor’s clause is
incomprehensible on its face and must therefore be disregarded.
- Answer: A. See, Flynn v. Dick Corp., 481
F.3d 824 (D.C. Cir. 2007).
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- Under the Traveling Contractor’s clause, if a signatory employer
performs covered work “within the geographic area covered by an
Agreement with another Cheese Cutters’ affiliate,” the
employer is bound to that agreement. Havarti presents affidavits from
its negotiators that it understood this to mean that employers are only
bound to local area agreements that they had entered into. Who is correct:
- The Cheese Cutters Plans argue that the Traveling Contractor’s
clause binds Havarti to the agreement between Local 200 and the local
area employers’ association.
- Havarti argues that “an Agreement with another Cheese
Cutters’ affiliate” refers to an agreement between the specific
employer and that affiliate.
Since Havarti is not signatory to an agreement with Local 200, it
is not bound to the Local 200 Area Agreement.
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- Under the Traveling Contractor’s clause, if a signatory employer
performs covered work “within the geographic area covered by an
Agreement with another Cheese Cutters’ affiliate,” the
employer is bound to that agreement. Havarti presents affidavits from
its negotiators that it understood this to mean that employers are only
bound to local area agreements that they had entered into. Who is correct:
- The Cheese Cutters Plans argue that the Traveling Contractor’s
clause binds Havarti to the agreement between Local 200 and the local
area employers’ association.
- Havarti argues that “an Agreement with another Cheese
Cutters’ affiliate” refers to an agreement between the specific
employer and that affiliate.
Since Havarti is not signatory to an agreement with Local 200, it
is not bound to the Local 200 Area Agreement.
- Answer: A. See, Flynn v. Dick Corp., 481
F.3d 824 (D.C. Cir. 2007).
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- Because Havarti is not performing bargaining unit work with its own
employees, the Cheese Cutters Plans are seeking contributions in the
form of damages for Havarti’s violation of its subcontracting
clause. Who is correct?
- The Cheese Cutters Plans argue that damages awarded by the Court for
breach of the Local 200 agreement are lawful and appropriate.
- Havarti argues that, because the contributions are not being sought for
its employees, their payment would fail to meet the requirements of
Section 302(c)(5) of the Taft-Hartley Act.
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- Because Havarti is not performing bargaining unit work with its own
employees, the Cheese Cutters Plans are seeking contributions in the
form of damages for Havarti’s violation of its subcontracting
clause. Who is correct?
- The Cheese Cutters Plans argue that damages awarded by the Court for
breach of the Local 200 agreement are lawful and appropriate.
- Havarti argues that, because the contributions are not being sought for
its employees, their payment would fail to meet the requirements of
Section 302(c)(5) of the Taft-Hartley Act.
- Answer: A. See, Flynn v. Dick Corp., 481
F.3d 824 (D.C. Cir. 2007).
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- The Local 200 Agreement requires arbitration of all disputes arising
under the agreement. Who is
correct?
- The Cheese Cutters Plans argue that they are not a party to the contract
and therefore not required to abide by its dispute resolution
procedures.
- Havarti argues that the contract means what it says, so that the Cheese
Cutters Plans must arbitrate.
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- The Local 200 Agreement requires arbitration of all disputes arising
under the agreement. Who is
correct?
- The Cheese Cutters Plans argue that they are not a party to the contract
and therefore not required to abide by its dispute resolution
procedures.
- Havarti argues that the contract means what it says, so that the Cheese
Cutters Plans must arbitrate.
- Answer: Flynn v. Dick, 481
F.3d 824 (D.C. Cir. 2007), Rhode Island Carpenters Annuity Fund v. Trevi
Icos Corporation, 474 F.Supp.2d 326 (D.R.I. 2007); Laborers’
International Union of North America Local No. 91 v. Empire
Dismantlement Corporation, 2006 U.S. Dist. LEXIS 22967 (W.D.N.Y. 2006); Digangi
Plumbing Co. v. Plumbers’ Pension Fund, Local 130 U.A,
2007 U.S. Dist. LEXIS 54986 (N.D. Ill. 2007)
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- Basic Bytes, a computer design and construction contractor, is signatory
to multiple collective bargaining agreements with different unions
covering various trades in the computer industry. For example, its contract
with the Computer Coolers Local 236 covers its employees who work in “computer cooling
and refrigeration” and its contract with Electronics Electrical
Workers Local 7 covers its employees who “wire or repair
electrical connections to electronic devices.” Basic Bytes, desperate for work,
successfully bids a job after negotiating a project agreement with CC
Local 236 including the following provisions:
- Overall wages are reduced by 5%.
- The project agreement covers all present and future members of CC Local
236.
- All hourly employees who are currently members of CC Local 236 must
remain members.
- All newly-hired hourly employees must join CC Local 236.
- Contributions to the Computer Coolers Pension and Benefit Plans are
required for all hours worked by employees.
- Pursuant to its oral understanding with CC Local 236, Basic Bytes pays
contributions to the CC Plans for all of its employees working in
computer cooling and refrigeration or who wire or repair electrical
connections to electronic devices.
It does not contribute for its non-union hourly employees,
including 3 employees transferred to the job to work as Computer Core
Cleaners and 5 newly-hired Hardware Handlers.
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- The CC Plans audit Basic Bytes and discover the three Computer Core
Cleaners. They demand
contributions and, when Basic Bytes refuses to pay, file suit. Who is correct?
- The CC Plans claim contributions are owed under the plain language of
the contract
- Basic Bytes says the language only requires contributions on its union
employees, and these three are not union.
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- The CC Plans audit Basic Bytes and discover the three Computer Core
Cleaners. They demand
contributions and, when Basic Bytes refuses to pay, file suit. Who is correct?
- The CC Plans claim contributions are owed under the plain language of
the contract
- Basic Bytes says the language only requires contributions on its union
employees, and these three are not union.
- Answer: B. Onondaga County
Laborers’ Health and Welfare, Pension Annuity and Training Funds
v. Geddes Glass & Metal, Inc., 2006 U.S. Dist. LEXIS 8767, 180 LRRM
3251 (N.D.N.Y. 2006).
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- Three years later, the CC Plans perform a subsequent audit that reveals
the 5 newly-hired non-union Hardware Handlers, and Basic Bytes refuses a
demand for payment. Two
years and 364 days after the audit, the CC Plans get around to filing
suit. Both sides agree that,
for collection actions, ERISA borrows the most closely analogous state
limitations period, which, in this case, is the state’s three-year
statute of limitations for enforcement of written contracts. Who is correct?
- The CC Plans contend that the suit is timely because the limitations
period does not begin to run until they knew or should have known of the
violation (the “discovery rule”).
- Basic Bytes argues that the state does not recognize the discovery rule,
so that the limitations period began to run on the date it failed to pay
contributions, making any contributions due more than three years’
ago uncollectible.
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- Three years later, the CC Plans perform a subsequent audit that reveals
the 5 newly-hired non-union Hardware Handlers, and Basic Bytes refuses a
demand for payment. Two
years and 364 days after the audit, the CC Plans get around to filing
suit. Both sides agree that,
for collection actions, ERISA borrows the most closely analogous state
limitations period, which, in this case, is the state’s three-year
statute of limitations for enforcement of written contracts. Who is correct?
- The CC Plans contend that the suit is timely because the limitations
period does not begin to run until they knew or should have known of the
violation (the “discovery rule”).
- Basic Bytes argues that the state does not recognize the discovery rule,
so that the limitations period began to run on the date it failed to pay
contributions, making any contributions due more than three years’
ago uncollectible.
- Answer: A. Local 282 Trust
Funds v. R. Rio Trucking, 03-CV-1508 (E.D.N.Y. July 26, 2007).
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- In the same litigation over the 5 newly-hired Hardware Handlers, Basic
Bytes files a motion for summary judgment, contending that it had
reached an oral agreement with CC Local 236 that it would not have to
pay contributions for anyone outside of the CC or EEW trades. Who is correct?
- The CC Plans claim contributions are owed under the plain language of
the contract.
- Basic Bytes states that its oral agreement with CC Local 236 relieves it
from any obligation to make contributions on behalf of Hardware
Handlers.
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- In the same litigation over the 5 newly-hired Hardware Handlers, Basic
Bytes files a motion for summary judgment, contending that it had
reached an oral agreement with CC Local 236 that it would not have to
pay contributions for anyone outside of the CC or EEW trades. Who is correct?
- The CC Plans claim contributions are owed under the plain language of
the contract.
- Basic Bytes states that its oral agreement with CC Local 236 relieves it
from any obligation to make contributions on behalf of Hardware
Handlers.
- Answer: B. Onondaga County
Laborers’ Health and Welfare, Pension Annuity and Training Funds
v. Geddes Glass & Metal, Inc., 2006 U.S. Dist. LEXIS 8767, 180 LRRM
3251 (N.D.N.Y. 2006).
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- After several years of investment losses, the CC Plans have run into
trouble and are about to fail to meet statutory minimum funding
standards. In response, the
Trustees impose an hourly “surcharge” on the contractual
contribution rate during the final year of Basic Byte’s project
agreement in an amount that they determine will be sufficient to just
satisfy those standards.
Basic Bytes fails to pay the surcharge, and the CC Plans add this
claim to their pending law suit.
Who is correct?
- The CC Plans contend that all of the contributing employers are legally
required to satisfy statutory minimum funding standards, and, as the
plan Administrator, the Board of Trustees has the authority to impose an
hourly surcharge sufficient to meet those standards.
- Basic Bytes claims that its obligation is fixed in its contracts.
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- After several years of investment losses, the CC Plans have run into
trouble and are about to fail to meet statutory minimum funding
standards. In response, the
Trustees impose an hourly “surcharge” on the contractual
contribution rate during the final year of Basic Byte’s project
agreement in an amount that they determine will be sufficient to just
satisfy those standards.
Basic Bytes fails to pay the surcharge, and the CC Plans add this
claim to their pending law suit.
Who is correct?
- The CC Plans contend that all of the contributing employers are legally
required to satisfy statutory minimum funding standards, and, as the
plan Administrator, the Board of Trustees has the authority to impose an
hourly surcharge sufficient to meet those standards.
- Basic Bytes claims that its obligation is fixed in its contracts.
- Answer: A. Gastronomical
Workers Union Local 610 v. Dorado Beach Hotel Corp., 476 F. Supp. 2d 99
(D.P.R. 2007).
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- Basic Bytes’ contract with EEW Local 7 requires contributions to
the EEW National Plans for all employees covered under that
agreement. The EEW Plans
perform an audit of Basic Bytes and discover employees performing
EEW’s work under the CC Local 236 project agreement. The EEW Plans demand
contributions and, when Basic Bytes refuses, they sue. Who is correct?
- The EEW Plans say contributions are required on all of Basic
Bytes’ employees performing work covered under EEW Local 7’s
collective bargaining agreement.
- Basic Bytes asserts that it has already paid contributions for its
employees working under the CC Local 236 Project Agreement, and to
require duplicate contributions to the EEW Plans would be unlawful,
inequitable, and result in the unjust enrichment of the EEW Plans.
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- Basic Bytes’ contract with EEW Local 7 requires contributions to
the EEW National Plans for all employees covered under that
agreement. The EEW Plans
perform an audit of Basic Bytes and discover employees performing
EEW’s work under the CC Local 236 project agreement. The EEW Plans demand
contributions and, when Basic Bytes refuses, they sue. Who is correct?
- The EEW Plans say contributions are required on all of Basic
Bytes’ employees performing work covered under EEW Local 7’s
collective bargaining agreement.
- Basic Bytes asserts that it has already paid contributions for its
employees working under the CC Local 236 Project Agreement, and to
require duplicate contributions to the EEW Plans would be unlawful,
inequitable, and result in the unjust enrichment of the EEW Plans.
- Answer: A. Rhode Island
Carpenters Annuity Fund v. Trevi Icos Corporation, 474 F.Supp.2d
326 (D.R.I. 2007).
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- Dover Sole, Inc. is signatory to a contract with the Fish Mongers
International Union requiring contributions to the National Fish Mongers
Plans. Under the terms of
the contract, delinquent contributions become Plan assets if they are
not paid when due. After
Dover Sole runs into hard times and is delinquent on its contributions,
it settles its liability with the Plans. Among other things, its owner and
principal officer, Benjamin K. Dover, accepts personal liability for the
amounts due under the settlement.
As Dover Sole falls deeper in debt, Ben is periodically forced to
pay his employees from his personal funds in order to make payroll. Dover Sole becomes delinquent on
its contributions and the Fish Mongers Plans sue. Not only do they sue Dover Sole,
they also sue Ben personally.
- The Fish Mongers Plans get summary judgment against Dover Sole. Ben then files a motion for
summary judgment.
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- The Fish Mongers Plans seek to hold Ben liable by “piercing the
corporate veil” under state law. They allege that Ben has ignored
the corporate form, so that creditors should not be barred from holding
him personally liable. Who
is correct:
- The Fish Mongers Plans argue that they have made sufficient allegations
to survive summary judgment, and should be permitted to engage in
discovery and go to trial.
- Ben argues that the facts alleged by the National Plans—that he
paid some of Dover Sole’s obligations out of his own
pocket—are insufficient to pierce the corporate veil.
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- The Fish Mongers Plans seek to hold Ben liable by “piercing the
corporate veil” under state law. They allege that Ben has ignored
the corporate form, so that creditors should not be barred from holding
him personally liable. Who
is correct:
- The Fish Mongers Plans argue that they have made sufficient allegations
to survive summary judgment, and should be permitted to engage in
discovery and go to trial.
- Ben argues that the facts alleged by the National Plans—that he
paid some of Dover Sole’s obligations out of his own
pocket—are insufficient to pierce the corporate veil.
- Answer: B. Building Service
32B-J Health Fund v. Benedict Bradford McCaffree, 225 Fed. Appx. 25,
2007 U.S. App. LEXIS 12384 (2nd Cir 2007, unpublished).
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- ERISA allows for “special circumstances” where an officer
may be found personally liable, such as where he has defrauded a plan or
conspired with plan fiduciaries.
The Fish Mongers Plans allege that Dover Sole is a
thinly-capitalized shell used to fraudulently shield Ben’s assets
from the Plans. Who is
correct:
- The Fish Mongers Plans argue that they have made allegations of fraud
sufficient to survive summary judgment and conduct discovery.
- Ben contends that Dover Sole is a legitimate business enterprise that
has fallen on hard times, and that the Fish Mongers Plans have made no
specific allegations of fraud nor have they alleged that they have been
harmed by reliance on any acts of fraud.
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- ERISA allows for “special circumstances” where an officer
may be found personally liable, such as where he has defrauded a plan or
conspired with plan fiduciaries.
The Fish Mongers Plans allege that Dover Sole is a
thinly-capitalized shell used to fraudulently shield Ben’s assets
from the Plans. Who is
correct:
- The Fish Mongers Plans argue that they have made allegations of fraud
sufficient to survive summary judgment and conduct discovery.
- Ben contends that Dover Sole is a legitimate business enterprise that
has fallen on hard times, and that the Fish Mongers Plans have made no
specific allegations of fraud nor have they alleged that they have been
harmed by reliance on any acts of fraud.
- Answer: B. Building Service
32B-J Health Fund v. Benedict Bradford McCaffree, 225 Fed. Appx. 25,
2007 U.S. App. LEXIS 12384 (2nd Cir 2007, unpublished).
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- The Fish Mongers Plans also claim that the contract makes contributions
Plan assets if not paid when due.
Because Ben retained control over those assets, he became a Plan
fiduciary. Who is correct?
- The Fish Mongers Plans argue that Ben, as principal officer of Dover
Sole, had Plan assets under his control—the unpaid
contributions—but spent it for other corporate purposes, amounting
to a violation of his fiduciary duty for which he is personally liable.
- Ben contends that there were no “plan assets” because Dover
Sole did not have the money to pay its contributions, and that, in any
case, the contract language is not sufficient to make him a Plan
fiduciary.
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- The Fish Mongers Plans also claim that the contract makes contributions
Plan assets if not paid when due.
Because Ben retained control over those assets, he became a Plan
fiduciary. Who is correct?
- The Fish Mongers Plans argue that Ben, as principal officer of Dover
Sole, had Plan assets under his control—the unpaid
contributions—but spent it for other corporate purposes, amounting
to a violation of his fiduciary duty for which he is personally liable.
- Ben contends that there were no “plan assets” because Dover
Sole did not have the money to pay its contributions, and that, in any
case, the contract language is not sufficient to make him a Plan
fiduciary.
- Answer: A. Operating
Engineers Local 17 Training Fund v. BDR Inc., 2006 U.S. Dist. LEXIS
70967 (N.D.N.Y. 2006); Connecticut Pipe Trades Local 777 Health Fund v.
Nettleton Mechanical Contractors, Inc., 478 F. Supp. 2d 279 (D. Conn.,
2007).
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Notes
