Hugo Neuffer v. Bakery and Confectionery Workers International Union of America

307 F.2d 671, 113 U.S. App. D.C. 334, 50 L.R.R.M. (BNA) 2495, 1962 U.S. App. LEXIS 4739

• Court: Court of Appeals for the D.C. Circuit
• Decided: June 21, 1962
• Docket: 16492
• Status: Published

Opinions

WASHINGTON, Circuit Judge.

Appellant, a former employee of the Bakery and Confectionery Workers International Union, brought suit in the District Court against the Union, seeking resumption of pension payments, together with back payments, claiming that he is entitled to them under the Employees’ Pension Plan established by the Union. The District Court dismissed the complaint after trial, and this appeal followed.

Neuffer worked for appellee Union as an international representative until April 1952, at which time at the age of 55 he became eligible under the Employees’ Pension Plan to retire and receive a pension. From August 1952 until July 16, 1958, Neuffer regularly received $108.71 monthly as a pension. On June 18, 1958, Neuffer was charged with having violated the Union constitution. In substance, the charge alleged that he had engaged in dual unionism by sponsoring the creation of American Bakery & Confectionery Workers International Union, a rival labor organization, and actively assisting in the enlistment of new members — many of whom were recruited from the ranks of appellee Union. The charge also alleged that the conduct of Neuffer was such as to bring him within the terms of a forfeiture clause in the Pension Plan, providing:

“(19) Forfeiture of Rights. A participant shall forfeit all rights to any benefits hereunder if he be found guilty of an offense against the Union after proper trial in accord-anee with the Trials and Appeals procedure set forth in Article XXIII of the Constitution and laws of the Union and if, in consequence, the General Executive Board of the Union orders such forfeiture of benefits.”

On July 10, 1958, appellant, after notice, was accorded a hearing upon the charges. He was found guilty by the Trial Board, and the General Executive Board of ap-pellee subsequently ordered forfeiture of his pension benefits.'

Appellant claims that he has a vested, legally enforceable right to continuation of pension payments, in spite of the provision for forfeiture. We think there is no doubt that any rights possessed by Neuffer under the Plan should be accorded judicial protection. But the crucial question is the extent of his rights. See Hurd v. Illinois Bell Telephone Co., 136 F.Supp. 125 (N.D.Ill.1955) , affirmed, 234 F.2d 942 (7th Cir. 1956) , cert. denied sub nom. Seybold v. Western Electric Co., 352 U.S. 918, 77 S.Ct. 216, 1 L.Ed.2d 124 (1956). Here, the Pension Plan voluntarily established by the appellee Union required no contribution from Neuffer or any other participant, and none was made. The Union could properly prescribe, as it did here, conditions on payment of pension benefits reasonably related to the Union’s welfare. See Hughes v. Encyclopaedia Britannica, 199 F.2d 295 (7th Cir. 1952); Anno., 42 A.L.R.2d 462 (1955). The forfeiture clause was a part of the Plan from the beginning, and at all times after Neuffer’s retirement. Appellant does not deny that he engaged in dual union activities contrary to the constitution of the Union. Nor does appellant here contend that the charges, hearing and trial by the Union Trial Board, as such, were in any way improper. He does say that he was not a “participant” in the Plan, but this is plainly untenable.¹

What is important here is whether the forfeiture clause on its face, or in its application to Neuffer, is clearly unreasonable. We do not think that it is. Trivial offenses against the Union, to be sure, might not justify total forfeiture. But the offense of seeking to reduce or even cut off completely the Union’s revenues by inducing its members to join another organization is certainly not a trivial one. Just as a corporation might properly enforce a contractual provision terminating a pension to one of its former executives if he competed with the company during his retirement,² so could this union enforce its reserved rights against a former employee who seeks to put an end to its very existence.

We think that Neuffer has by his own voluntary action squarely brought himself within the terms of an express forfeiture clause which the Union could validly write into the Plan. He argues that to enforce forfeiture would contravene public policy by discouraging activity by a former employee in behalf of a rival union. But appellant was perfectly free to exercise his every effort to have a rival union replace appellee Union. However, at least as a non-contributing beneficiary of the appellee Union’s plan, he could not at the same time insist on obtaining pension benefits from the plan in the face of an express provision to the contrary. It appears, to be sure, that the Union was expelled from the AFL-CIO “on charges of corruption.” But this would hardly justify the courts in holding that the Union was thereafter precluded from enforcing the provisions of its contracts.

Appellant seems to believe that the only consideration he owed for the pension was his work while actively employed, and that once those days were over he acquired a “vested right” to continuation of his pension regardless of the terms of his contract. But many “vested” interests are subject to divestiture upon failure to meet agreed-upon conditions. Put in another way, the consideration to be given on appellant’s part consisted of both active employment and compliance with reasonable contractual conditions after retirement. Where the conditions are reasonable and not against public policy, and where there has been no fraud on the employer’s part, we see nothing inherently illegal in such an agreement. Although the law abhors forfeiture, it nevertheless enforces reasonable contracts.

The action of the District Court in dismissing the complaint will accordingly be

Affirmed.

1 . The Plan appears not to contain an express definition of “participant.” But Neuffer would seem to be more of a “participant” while he received a regular pension than he was before retirement, when he received, gave, and did nothing (other than being an employee) having anything to do with the Plan. In fact, the provision for forfeiture of benefits in event of an offense against the Union would seem to be primarily designed for use against those already retired, as the more usual sanction against an existing employee would be discharge from employment. It should be noted also that the Union’s Pension Committee unanimously construed the forfeiture paragraph “as being applicable to any and all participants regardless of whether they have or have not reached or achieved a retirement or pension status * * Although this formal interpretation was made only after Neuffer was brought to trial, it was rendered as a general interpretation of the clause, and not as an explanation of the Plan as specifically applied to Neuffer.

2 . 6 Corbin on Contracts § 1394 (1051); cf. Erikson v. Hawley, 56 App.D.C. 268, 12 F.2d 491 (1920); Masden v. Travelers’ Ins. Co., 52 F.2d 75, 79 A.L.R. 469 (8th Cir. 1931) (insurance agent forfeits renewal commissions if employed by rival). See also the New York Life Insurance Company retirement plan described in Duran v. Commissioner, 123 F.2d 324 (10th Cir. 1941), which terminated payments to retired agents if they entered the service of another life insurance company.