Fox v. McCormick

20 F. Supp. 3d 133, 58 Employee Benefits Cas. (BNA) 1174, 2013 WL 6439128, 2013 U.S. Dist. LEXIS 172557
CourtDistrict Court, District of Columbia
DecidedDecember 9, 2013
DocketCivil Action No. 2012-1869
StatusPublished
Cited by3 cases

This text of 20 F. Supp. 3d 133 (Fox v. McCormick) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fox v. McCormick, 20 F. Supp. 3d 133, 58 Employee Benefits Cas. (BNA) 1174, 2013 WL 6439128, 2013 U.S. Dist. LEXIS 172557 (D.D.C. 2013).

Opinion

OPINION

ROSEMARY M. COLLYER, United States District Court

The question presented is whether employee-participants in a multiemployer, de-fíned-benefít, pension plan have standing to sue plan trustees for breach of their fiduciary duty to collect contributions from long-delinquent employers. Plaintiff-employees here contend that collection of allegedly overdue contributions would have increased the assets of the plan, induced the trustees to raise benefit rates upon retirement, and ultimately enlarged participants’ monthly pension benefits. The Court finds that Plaintiffs do not have standing to sue on the claim as presented in Count I, and will dismiss Count I without prejudice. Because Plaintiffs voluntarily and timely move to dismiss Counts II and III, those Counts also will be dismissed without prejudice.

I. FACTS

Eleven individuals bring this potential class action lawsuit under the Employee Retirement Income Security Act (ERISA) of 1974, as amended, 29 U.S.C. §§ 1001 et seq. Robert Fox, Jr., James McLaughlin, Finn Pette, Daniel Himmelberg, Ronald Pitts, Glenn Szalay, John Crooks, Nye Nelson, Edward Pete, Anne Brophy, and Jay Brophy (collectively, Plaintiffs) declare that they are members of Local 501, International Union of Operating Engineers, which represents stationary engineers in parts of California and Nevada, that is, “engineers who are responsible for the maintenance and repair of equipment at fixed locations such as hospitals, hotels, or arenas.” Compl. [Dkt. 1] ¶ 30. All Plaintiffs also are participants in the Central Pension Fund of the International Union of Operating Engineers and Participating Employers (Central Pension Fund). Id. ¶¶ 5-15, 30; see infra note 1. In Count I, Plaintiffs sue twenty-one current and former Trustees of the Central Pension Fund, on behalf of the Fund, “to recoup the plan assets squandered by the trustees’ failure to pursue claims for fringe [benefit] contributions .... ” Compl. ¶¶ 2,16-29. Specifically, Plaintiffs contend that ABM Industries, Inc. (ABM) and Able Engineering Services (Able) failed, for decades, to contribute to the Central Pension Fund as required and Trustees breached their ERISA fiduciary duties by not ensuring that ABM and Able satisfied their obligations to make contributions. Id. ¶¶ 1-2.

A. Overview of the Central Pension Fund

The Central Pension Fund is a multiem-ployer pension plan as that term is defined in Section 3(37) of ERISA, 29 U.S.C. § 1002(37). It is maintained under a Restatement Agreement and Declaration of Trust, administered by Trustees at its headquarters in Washington, D.C. Michael R. Fanning is the Chief Executive Officer of the Central Pension Fund. 1 The Central Pension Fund pays covered retirees a defined monthly benefit. Compl. ¶¶ 39-40.

*137 The Central Pension Fund is a defined benefit plan, which means that it pays covered retirees a fixed, or “defined,” monthly benefit. Id.; see also 29 U.S.C. § 1002(35); Fanning v. High Mountain Inspection Servs., Inc., 520 F.Supp.2d 55, 57-58 (D.D.C.2007) (finding the Central Pension Plan to be a defined benefit plan). Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999), provides the details that characterize a defined-benefit plan as relevant to this litigation:

Such a plan, as its name implies, is one where the employee, upon retirement, is entitled to a fixed periodic payment.... [T]he employer typically bears the entire investment risk and — short of the consequences of plan termination- — must cover any underfunding as the result of a shortfall that may occur from the plan’s investments_ Given the employer’s obligation to make up any shortfall, no plan member has a claim to any particular asset that composes a part of the plan’s general asset pool.... Since a decline in the value of a plan’s assets does not alter accrued benefits, members similarly have no entitlement to share in a plan’s surplus....

Id. at 440, 119 S.Ct. 755 (internal quotations and citations omitted).

The International Union negotiates collective bargaining agreements with one or more unspecified multiemployer bargaining associations to cover terms and conditions for operating engineers who are represented by the Union. Local Unions then negotiate coverage by the national contract with local multiemployer bargaining associations. See Compl. ¶ 30 (“Union locals negotiate parent-body CBAs with organizations representing employers of union labor.”). Local 501 has negotiated a collective bargaining agreement with the members of the Building Owners and Managers Association of Greater Los An-geles (sometimes, BOMA), most recently effective from November 1, 2006 through October 31, 2011. Id. Employers represented by Building Owners and Managers Association “include large property owners and property management agencies with a nationwide property base.” Id. ¶ 31. Members of the Association employ Local 501 labor. Id. The standard terms of the Building Owners and Managers Association collective bargaining agreements apply to any buildings built and operated by a signatory employer subsequent to the date of the contract. Standard terms also require an employer to pay a specified hourly wage and to contribute to the Central Pension Fund, among other negotiated benefits, for each hour worked by a represented employee. Employers are bound further by the Agreement and Declaration of Trust, as amended, that governs the Central Pension Fund and they agree to comply with such rules as are established by Trustees. Id. ¶¶ 31, 34, 36.

The Complaint alleges that the monthly defined benefit paid to retired operating engineers is the product of a simple mathematical formula: the contributions that an employer makes on behalf of an employee participating in the Central Pension Fund are multiplied by the Fund’s rate of return that existed at the time the contributions were made. Id. ¶ 40. Thus, if a participant covered by the Central Pension Fund earned $1000 in contributions in 2006, a period during which the rate of return was three percent, he would allegedly receive thirty dollars in monthly benefits upon retiring. Id.

The rate of return multiplier, or Benefit Accrual Rate, is set by Trustees. Plaintiffs claim that Trustees “from time to time” adjust the Benefit Accrual Rate based on the “health of the fund.” Id. ¶ 41. The Complaint alleges that, “[i]f the *138 [Central Pension Fund] has a relatively large amount of assets relative to pension obligations, the trustees will set the rate at a relatively high level. Conversely, if the assets are modest relative to pension obligations, the rate will be set at a low level.” Id.; see also id.

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20 F. Supp. 3d 133, 58 Employee Benefits Cas. (BNA) 1174, 2013 WL 6439128, 2013 U.S. Dist. LEXIS 172557, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fox-v-mccormick-dcd-2013.