Furwa v. Operating Eng'rs Local 324 Health Care Plan

354 F. Supp. 3d 775
CourtDistrict Court, E.D. Michigan
DecidedDecember 3, 2018
DocketCase No. 18-12392
StatusPublished
Cited by1 cases

This text of 354 F. Supp. 3d 775 (Furwa v. Operating Eng'rs Local 324 Health Care Plan) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Furwa v. Operating Eng'rs Local 324 Health Care Plan, 354 F. Supp. 3d 775 (E.D. Mich. 2018).

Opinion

LAURIE J. MICHELSON, UNITED STATES DISTRICT JUDGE

Nicole Furwa is a member of Operating Engineers Local 324, a labor union. Local 324 negotiates collective bargaining agreements with the Michigan Infrastructure and Transportation Association, a trade group whose members employ Local 324's members to work on Michigan's roads. This past spring, the collective bargaining agreements terminated. These collective bargaining agreements included, as part of the union members' overall compensation, the payment of healthcare contributions by the employers. Post-termination, the employers wanted to continue to make these healthcare contributions. And Local 324's Health Care Plan agreed to accept some employers' contributions but not others.

Furwa and at least 19 other union members are among those that had their healthcare contributions rejected. And they believe this is a breach of the Defendants' fiduciary duties. So Furwa and others seek a preliminary injunction to force *778the Health Care Plan to accept and credit healthcare contributions from their employers.

I.

A.

Nicole Furwa and at least 19 other putative plaintiffs are members of Operating Engineers Local 324, a union. (ECF No. 23, PageID.1156.) Defendants are the Operating Engineers Local 324 Health Care Plan and its ten trustees, along with the union's other fringe-benefit trust funds. (Id. at PageID.1156-1157.) For eligible union members, the Health Care Plan and the other fringe-benefit funds accept contributions from employers. (Id. at PageID.1157.) Employer contributions are based on the number of hours worked by each union member. For each union member, the Health Care Plan, and the other funds, credit employer contributions toward union members' vacation days, retirement accounts, and health insurance coverage. (Id. ) All the trust funds, including the Health Care Plan, are creatures of the Taft-Hartley Act. (Id. )

The Taft-Hartley Act's default rule makes it illegal for employer associations to make payments to employee groups, e.g. , unions. 29 U.S.C. § 129(a). But the default rule contains exceptions. And one exception allows employers to make payments "for the sole and exclusive benefit" of union members, so long as the payments go into a trust fund jointly administered by employer and union management. See 29 U.S.C. § 186(c)(5). Jointly administered means the funds' trustees must include an equal number of union trustees and employer trustees. Id. Finally, to protect against improper payments by employers, the exception authorizes contributions to trust funds only if the "detailed basis on which such payments are to be made is specified in a written agreement with the employer." 29 U.S.C. § 186(c)(5)(B).

Taft-Hartley's requirement of a "written agreement with the employer" underlies the controversy in this case, a controversy stemming from a fraught collective bargaining relationship between Local 324 and the Michigan Infrastructure and Transportation Association, a trade group known as MITA. MITA comprises hundreds of employers that hire Local 324's members to repair the state's roads (and other public utilities). (ECF No. 23, PageID.1158.) Some MITA members-like Ajax Paving and Dan's Excavating-give MITA power-of-attorney. (ECF 23, PageID.1186.) By giving MITA power-of-attorney, Ajax and Dan's and others permit MITA to bargain with the union on their collective behalf. (Id. at PageID.1158.) Other MITA members do not give power-of-attorney to MITA. (Id. at PageID.1159-1160.) Each of those contractors bargain directly with the union. (Id. at PageID.1160.)

The end result is a host of collective bargaining agreements. For the power-of-attorney contractors, MITA and Local 324 have negotiated what are referred to as 8(f) agreements. (ECF No. 17, PageID.677-678.) One 8(f) agreement covers employers and union members working in the utility unit; another 8(f) covers employers and union members working in the road unit. The collective bargaining agreements cover a lot of ground. (See, e.g. , ECF No. 18-3.) But most importantly to this case, both 8(f) agreements require employers to contribute to the Taft-Hartley funds. (ECF No. 18, PageID.1015-1016, 1061-1062.) And the 8(f) agreements specify the dollar amounts employers are to contribute to the Health Care Plan on behalf of each eligible employee. (Id. ) As for those employers who bargain directly with Local 324, they negotiated separate collective bargaining agreements. (ECF No. 23, PageID.1161.)

*779However, this past spring, all the collective bargaining agreements expired (including the two 8(f) agreements between MITA and the union). (ECF No. 17, PageID.677.) Even so, union members continued to show up to work for all MITA contractors. (ECF No. 17, PageID.679.) And all MITA contractors continued to make contributions to Local 324's Health Care Plan, pursuant to the collective bargaining agreements. (Id. )

Not long after the agreements expired, representatives from MITA and Local 324 each sent letters to the Health Care Plan's trustees. MITA's letter advised that, despite the expiration of the 8(f) agreements, the Health Care Plan should continue to accept contributions from all employers on behalf of all employees showing up for work. (ECF No. 17, PageID.678.) At a minimum, MITA's letter recommended the trustees escrow the contributions until MITA and Local 324 negotiated successor agreements. (Id. ) And MITA's letter affirmed that contractors would continue to make contributions in line with the amounts set by the expired 8(f) agreements. (Id. ) Local 324 did not agree with MITA. Focusing specifically on those union members working for power-of-attorney contractors, Local 324's letter said the union had no interest in working out successor agreements with MITA. (Id. ) Rather, Local 324 was abandoning negotiations with MITA and with employers who gave power-of-attorney to MITA. (Id. ) Instead, the union wished to negotiate individually with each contractor. (Id. ) So Local 324's letter said the trustees could not accept and credit contributions from any contractor who gave MITA power-of-attorney. (Id. )

Unsure how to proceed in the face of dueling positions, the trustees asked the Health Care Plan's lawyer for advice (ECF No. 17, PageID.678.) And the lawyer said that in the past, when 8(f) agreements between Local 324 and MITA expired, the fund kept employer contributions in escrow until the parties reached a new agreement. (Id. at PageID.678-679.)

But Local 324's trustees resisted that approach. (ECF No.

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Bluebook (online)
354 F. Supp. 3d 775, Counsel Stack Legal Research, https://law.counselstack.com/opinion/furwa-v-operating-engrs-local-324-health-care-plan-mied-2018.