Borntrager v. CENTRAL STATES SE. & SW. PENSION FUND

577 F.3d 913
CourtCourt of Appeals for the Eighth Circuit
DecidedAugust 21, 2009
Docket08-2008, 08-2744
StatusPublished
Cited by1 cases

This text of 577 F.3d 913 (Borntrager v. CENTRAL STATES SE. & SW. PENSION FUND) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Borntrager v. CENTRAL STATES SE. & SW. PENSION FUND, 577 F.3d 913 (8th Cir. 2009).

Opinion

577 F.3d 913 (2009)

Lee BORNTRAGER; Donald P. Byers; James C. Chapman; Raymond D. Northrup; James L. Saddler; Thomas St. John; CRST Flatbed, Inc.; CRST Van Expedited, Inc., formerly known as CRST, Inc., Appellants,
v.
CENTRAL STATES SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, Appellee.

Nos. 08-2008, 08-2744.

United States Court of Appeals, Eighth Circuit.

Submitted: May 12, 2009.
Filed: August 21, 2009.

*915 Kevin M. Williams, argued, Washington, DC, Robert E. Konchar, Cedar Rapids, IA, and Hervey Heywood Aitken, II, Washington, DC, for appellants.

John Joseph Franczyck, Jr., Rosemont, IL, for appellee.

Before RILEY, SMITH, and COLLOTON, Circuit Judges.

RILEY, Circuit Judge.

CRST Flatbed, Inc., CRST Van Expedited, Inc. (collectively, CRST), and six current and former employees of CRST (Participants), sued Central States, Southeast and Southwest Areas Pension Fund (Central States) after Central States expelled CRST from the pension fund. The district court[1] granted summary judgment in favor of Central States, and awarded Central States attorney fees and litigation costs. CRST and the Participants appeal the district court's rulings regarding the grant of summary judgment and the award of attorney fees and litigation costs. We affirm.

I. BACKGROUND

Central States is a multiemployer employee benefit plan governed by a Trust Agreement and administered by ten Trustees, five of whom are selected by contributing employers and five of whom are selected by unions associated with the International Brotherhood of Teamsters. Central States is regulated by the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multiemployer Pension Plan Amendment Act of 1980 (MPPAA), 29 U.S.C. §§ 1001-1461.

Under Central States's plan, actuaries created forty-one benefit classes which determine the fixed benefit amount a participating employee will receive from retirement until the end of his or her life. The benefit classes are based upon the cost estimates of the actuaries and assume the fund will receive contributions from younger employees to help pay the benefits of retired employees. If Central States does not receive contributions from younger employees, the actuarial assumptions may become financially unsound, and Central States may be unable to pay guaranteed benefits.

To guard against Central States becoming financially unsound, Article III § 1 of *916 the Trust Agreement creates an "adverse selection" rule, which provides, in part,

The Trustees are authorized to reject any collective bargaining agreement of an Employer (and all contributions from the Employer) whenever they determine either that the agreement is unlawful and/or inconsistent with any rule or requirement for participation by Employers in the Fund and/or that the Employer is engaged in one or more practices or arrangements that threaten to cause economic harm to, and/or impairment of the actuarial soundness of, the Fund (including but not limited to any arrangement in which the Employer is obligated to make contributions to the Trust Fund on behalf of some but not all of the Employer's bargaining unit employees, and any arrangement in which the Employer is obligated to make contributions to the Trust Fund at different contribution rates for different groups of the Employer's bargaining unit employees). Any such rejection by the Trustees of a collective bargaining agreement shall be effective as of the date determined by the Trustees (which effective date may be retroactive to the initial date of the term of the rejected agreement) and shall result in the termination of the Employer and all Employees of the Employer from further participation in the Fund on and after such effective date.

In 1990, Central States promulgated Special Bulletin 90-7, which expounded on the adverse selection rule. Special Bulletin 90-7 explained the adverse selection rule "protect[s] the financial soundness of" Central States by prohibiting employment practices which "restrict[] pension coverage to only those employees likely to receive a benefit and exclude[] those employees less likely to receive a benefit." The bulletin also provided a non-exhaustive list of three examples of adverse selection, including (1) unequal contribution on behalf of employees who perform the same type of work; (2) contribution for certain individuals rather than a group of employees, or the creation of a non-covered employee group; and (3) classification of full-time employees subject to contribution as casual, part-time, or temporary.

CRST contributed to Central States under a collective bargaining agreement with Chauffeurs, Teamsters and Helpers Local Union 238 (Local 238), and a separate collective bargaining agreement with Chauffeurs, Teamsters and Helpers Local Union 142 (Local 142). As a participating employer, CRST signed a Participation Agreement with Central States which bound CRST to the terms, rules, and regulations of the Trust Agreement.

In March 2002, Central States notified CRST that Central States was reviewing CRST's actions in relation to Local 238 and Local 142 for possible violations of the adverse selection rule. Central States's investigation of CRST revealed CRST's participating employees in Local 238 decreased from six employees in 1992 to two employees in 2002 with no new hires in the ten years before the investigation, and also found CRST admitted it outsourced work when Local 238 employees departed from CRST. Central States similarly found CRST's participating employees in Local 142 declined from seventeen in 1992 to seven in 2002 with no new hires since March 1989, and CRST admitted participation in Central States on behalf of Local 142 employees declined based upon decreased business and CRST's decision to replace departing Local 142 employees with independent contractors. Central States's Actuarial Services Department further determined the future benefit accruals of CRST employees covered by the collective bargaining agreements with Local 238 and Local 142 would exceed the *917 contributions Central States would receive from CRST for these employees.

On August 21, 2002, Central States's Contracts Subcommittee recommended the Board of Trustees expel CRST from Central States. Based upon the recommendation and the findings of Central States's investigation and Actuarial Services Department, the Board of Trustees unanimously voted to expel CRST from Central States because (1) CRST's collective bargaining agreements violated Central States's rules and requirements of participation, and (2) CRST was "engaged in practices and arrangements that cause, and threaten to cause economic harm to, and impairment of the actuarial soundness of the Pension Fund." Central States terminated the participation of CRST and its Participants in Central States on September 29, 2002, and assessed complete withdrawal liability against CRST under ERISA.

II. PROCEDURAL HISTORY

On September 24, 2002, CRST and the Participants filed a complaint in the district court seeking declaratory and injunctive relief against Central States for wrongful expulsion of CRST.

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Cite This Page — Counsel Stack

Bluebook (online)
577 F.3d 913, Counsel Stack Legal Research, https://law.counselstack.com/opinion/borntrager-v-central-states-se-sw-pension-fund-ca8-2009.