Brown v. International Union, United Automobile, Aerospace and Agricultural Implement Workers of America

85 F.R.D. 328, 29 Fed. R. Serv. 2d 554, 1980 U.S. Dist. LEXIS 11730
CourtDistrict Court, W.D. Michigan
DecidedJanuary 30, 1980
DocketNo. G-185-73 CA 6
StatusPublished
Cited by16 cases

This text of 85 F.R.D. 328 (Brown v. International Union, United Automobile, Aerospace and Agricultural Implement Workers of America) is published on Counsel Stack Legal Research, covering District Court, W.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brown v. International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, 85 F.R.D. 328, 29 Fed. R. Serv. 2d 554, 1980 U.S. Dist. LEXIS 11730 (W.D. Mich. 1980).

Opinion

OPINION

HILLMAN, District Judge.

This class action arises from the claim of former employees of the now bankrupt La-key Foundry Corporation against the UAW on a claim of a breach in its duty of fair representation. The issue presently before the court by various motions and cross-motions concerns the right of the plaintiffs and defendant UAW to add A. S. Hansen, Inc., an actuary firm as an additional party defendant and/or third-party defendant and/or cross-defendant. Hansen is vigorously contesting all these efforts.

BACKGROUND

The following facts are not in dispute. Plaintiffs are former members of Local 403 of the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW). On August 7, 1973, the plaintiffs (former employees of Lakey Foundry Corporation, the “Company”) filed a class action against the UAW. Plaintiffs represent the class of all former hourly employees of Lakey with vested rights to recover pension benefits because of any deficiency of funds. The gravamen of the complaint was that the UAW had breached its duty of fair representation and contractual obligations by failing to adequately police the payment of contributions by Lakey to the Lakey Foundry Corporation Pension Plan (“Pension Plan”) pursuant to the terms of the Pension Agreement. Employees sought to hold the Union liable for a funding deficit in the Pension Plan. The same causes of action were stated in plaintiffs’ second amended complaint, dated May 28, 1975, although additional specific instances of the breaches were alleged.

On December 13, 1973, Judge Fox of this court determined that the lawsuit was a class action under Rule 23 of the Federal Rules of Civil Procedure, and certified the class as consisting of all former hourly employees of Lakey who are members of the collective bargaining unit represented by the UAW and who had accrued vested rights under the Pension Plan. The class of plaintiffs shall hereafter be referred to as the “Employees”.

In 1959, Lakey, the UAW and Local 403 agreed to a substantial revision of the hourly employee Pension Plan. The 1959 amendments increased pension benefits and required Lakey to contribute to the pension fund an annual amount sufficient to meet the costs of benefits earned during the current fiscal year, plus a sufficient amount to fund over a period of 40 years a deficiency that had existed from January 1, 1956, and a past service cost that arose from the granting of the increased benefits. In addition, the 1959 agreement provided for the establishment of a Board of Administration consisting of six members, three appointed by Lakey and three by the UAW. Among the Board’s duties were: (1) receipt analysis of reports on the assets, receipts and disbursements of the Pension Plan; (2) receipt of an annual report from a Coordinating Committee on the operation and administration of the Plan; (3) receipt of an annual report of the expenditures for the adminis[332]*332tration of the Plan; and (4) evaluation and analysis of data regarding the actuarial assumptions used in determining minimum contributions of Lakey under the agreement. Lakey was required to furnish to the Board an annual statement certified by an actuary that the amount of the assets of the .Plan was not less than the amount required by the agreement to be in the Plan. The remaining relevant facts are outlined here in approximate chronological order:

1. It is undisputed that as early as 1966, Lakey was in financial difficulty and this fact was known at least to the UAW, if not the plaintiffs themselves. At that time, Lakey was financially unable to obtain Workmen’s Compensation Insurance coverage and was able to continue its self-insured status only through a special arrangement for the deposit of funds in escrow negotiated with the Workmen’s Compensation Department. Plaintiffs and the UAW had an active part in these negotiations and approved the arrangement.

2. In February, 1968, the UAW requested that Lakey Foundry furnish a copy of a recent actuarial report prepared by A. S. Hansen, Inc., the actuarial firm hired by the Company. Lakey furnished Hansen’s 25-page Actuarial Valuation Report for the year ended October 31, 1966. The report was reviewed by the UAW’s Actuarial Consultant. It showed a “funding deficit to end of year” of $216,824.00.

3. In 1969 and 1970, with the consent of plaintiffs and the UAW, Lakey borrowed money from the Workmen’s Compensation escrow fund established in 1966. The borrowing was to finance capital expenditures.

4. At a meeting on July 8,1971, Lakey’s attorney, James Hale, disclosed to Plaintiffs’ Bargaining Committee and UAW International Representative Scott and Assistant Regional Director Rogers that La-key had not made the pension contributions due October 31, 1970, in the amount of approximately $500,000, and would not be able to make the larger contributions that would fall due October 31, 1971. In paragraph 22 of its cross-complaint, the UAW acknowledges that it was informed of the $1,200,000 deficit on July 8, 1971.

5. One of the persons in attendance at the meeting during which the disclosure was made was Victor Scott, the UAW International Representative assigned to La-key. His notes show that at the meeting, Hansen was identified as Lakey’s actuary and was discussed in connection with the disclosure of delinquent contributions. Thereafter, on August 6,1971, the president of Local 403 made a report on the July 8 meeting to a regular meeting of the membership of Local 403 and the report was accepted.

6. Lakey ceased doing business on February 4, 1972, and filed a petition for bankruptcy under Chapter XI of the Bankruptcy Act on February 7, 1972. The Pension Plan was declared terminated as of October 13, 1972, by the Muskegon County Circuit Court. Defendant filed unsecured claims with the Bankruptcy Court in the amount of $6.5 million, the total amount required to pay off all accrued benefits, of which $1.2 million represented the deficit as of the date of termination.

Plaintiffs claim that defendant UAW violated its duty of fair representation in the following ways:

(a) Failure to require Lakey to comply with the requirement of the Pension Agreement for reporting on the status of assets and contributions to the Pension Fund;

(b) Failure to ascertain that after the 1964 fiscal year an increasing fund deficit was accruing in the Plan;

(c) Failure to take action to insure that Lakey was maintaining its contribution despite knowledge of Lakey’s serious financial problem;

(d) Failure to establish a procedure for routine review of either pension reports required to be filed by Lakey or actuarial violations;

(e) Failure to detect the existence of a funding deficit even when copies of actuarial reports were received from Lakey;

[333]*333(f) Failure to pursue legal remedies against Lakey’s officers and directors despite knowledge that defendant may have been defrauded by them;

(g) Failure to pursue legal remedies against the actuaries hired by Lakey despite knowledge that actuaries may have submitted false or misleading reports.

Plaintiffs seek damages in an amount equal to the funding deficit that existed as of the date the Plan was terminated.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Funke v. Aggregate Construction, Inc.
2015 ND 123 (North Dakota Supreme Court, 2015)
State ex rel. Cohen McNeile & Pappas, P.C. v. Blankenship
375 S.W.3d 233 (Missouri Court of Appeals, 2012)
Alltech Communications, LLC v. Brothers
601 F. Supp. 2d 1255 (N.D. Oklahoma, 2008)
Hawkins v. Berkeley Unified School District
250 F.R.D. 459 (N.D. California, 2008)
Patterson v. State, Dept. of Transportation & Development
509 So. 2d 505 (Louisiana Court of Appeal, 1987)
Holman v. Walls
648 F. Supp. 947 (D. Delaware, 1986)
Allard v. Benjamin (In re DeLorean Motor Co.)
65 B.R. 767 (E.D. Michigan, 1986)
Seminole Electric Cooperative, Inc. v. Tanner
635 F. Supp. 582 (M.D. Florida, 1986)
Johnson v. Rank
110 F.R.D. 99 (N.D. California, 1986)
Naph-Sol Refining Co. v. Murphy Oil Corp.
550 F. Supp. 297 (W.D. Michigan, 1982)
Brown v. INTERN. UNION, UNITED AUTO. AEROSPACE, ETC.
512 F. Supp. 1337 (W.D. Michigan, 1981)
Federal Deposit Insurance v. Abraham
501 F. Supp. 221 (E.D. Louisiana, 1980)

Cite This Page — Counsel Stack

Bluebook (online)
85 F.R.D. 328, 29 Fed. R. Serv. 2d 554, 1980 U.S. Dist. LEXIS 11730, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brown-v-international-union-united-automobile-aerospace-and-agricultural-miwd-1980.