International Ass'n of Bridge, Structural & Ornamental Iron Workers Local No. 111 v. Douglas

646 F.2d 1211, 109 L.R.R.M. (BNA) 2949
CourtCourt of Appeals for the Seventh Circuit
DecidedMay 1, 1981
DocketNo. 80-1644
StatusPublished
Cited by19 cases

This text of 646 F.2d 1211 (International Ass'n of Bridge, Structural & Ornamental Iron Workers Local No. 111 v. Douglas) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
International Ass'n of Bridge, Structural & Ornamental Iron Workers Local No. 111 v. Douglas, 646 F.2d 1211, 109 L.R.R.M. (BNA) 2949 (7th Cir. 1981).

Opinion

BONSAL, Senior District Judge.

Defendants-appellants Allen Douglas, et al., Trustees of the Iron Workers Tri-State Welfare Plan (“the Trustees”), appeal from a judgment of the United States District Court for the Northern District of Illinois, Eastern Division. The district court held that the Trustees lacked the authority to amend the Agreement and Declaration of Trust of the Welfare Plan (“the Agreement”), and rules and regulations thereunder, “in such a way as to deprive participants in the Welfare Plan under the jurisdiction of Local No. Ill of any of the benefits .. . which arise out of hours accumulated on their behalf in their Reserve Accumulation Accounts.”

The plaintiffs are the International Association of Bridge, Structural and Ornamental Iron Workers Local No. Ill and Robert O. Figg, President of the Local Union (“Local 111”).

The Iron Workers Tri-State Welfare Fund is a pooled, multi-union, multi-em[1213]*1213ployer trust fund jointly administered pursuant to the Agreement by a Board of Trustees, half of whom are appointed by labor unions and half of whom are appointed by employers. The Fund provides participants and their families with hospital, medical care, death benefits and other benefits. It exists for the benefit of the employees of contributing employers (the participants do not contribute). The participants are members of eleven Local Unions which have collective bargaining agreements with their employers. Additional income of the Fund is derived from investment of reserves.

The Trustees are empowered by the Agreement to establish benefit levels and to promulgate eligibility rules. Article VI, Section 4 of the Agreement provides:

The Trustees may promulgate such rules and regulations as may, in their discretion, be proper and necessary for the sound and efficient administration of the Trust, provided that such rules and regulations are not inconsistent with this Agreement and Declaration of Trust.

The eligibility rules permit an employee to enjoy “continued eligibility” under certain circumstances, even though he has not complied with the basic requirement stated in Sub-part A of the rules. Sub-part A provides that an employee’s eligibility is to be determined on a quarterly basis; he must perform 250 hours of work during a three-month period to remain eligible for benefits during the subsequent three-month period.

Sub-parts B and C create exceptions to this requirement. Sub-part B provides for continued eligibility if the employee has worked for the specified numbers of hours during prior months. Sub-part C creates a “reserve accumulation account,” in which the hours that an employee works for a contributing employer are credited to an employee’s account. If an employee’s account contains “hours” in excess of a figure designated by the Trustees, he may be eligible for benefits even though not in compliance with Sub-part A. Therefore, under the eligibility rules in effect prior to the amendment, an employee’s eligibility could continue for at least three months, and indeed for longer periods under Sub-parts B and C, after the employer ceased making contributions on the employee’s behalf.

On April 15,1977, the Trustees, by a vote of eleven to five, amended the eligibility rules to limit the eligibility for benefits of employees whose employers had ceased to make contributions to the Fund. At the Trustees’ meeting, Mr. McLeish, Consultant to the Fund, reported that as of December 31, 1976, the extended liability of the Fund exceeded its assets by approximately $400,-000. Mr. Hanft, Administrator of the Plan, reported that disbursements had exceeded income during the first three months of 1977.

The amendment provided:
In the event that a Collective Bargaining Agreement requiring contributions to the Welfare Fund is not succeeded by a Collective Bargaining Agreement requiring contributions to the Welfare Fund, then a Participating Employer which is no longer obligated under the terms of a Collective Bargaining Agreement to make contributions to the Welfare Fund shall cease being a Participating Employer on the date that the obligation terminates, and its Employees shall not be. Eligible Employees as to any claims incurred on or after the thirty-first calendar day following the date on which the obligation to contribute terminated.

Under the amendment, certain employees are eligible for welfare benefits for a maximum of 31 days following the date on which their employer is no longer obligated to make contributions to the Fund.

Plaintiffs argued at trial that the Trustees, in adopting the amendment, violated the Labor Management Relations Act, 29 U.S.C. § 186, and the Employees’ Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 et seq. The district court concluded as a matter of law that the Trustees, in attempting to deprive participants of already earned reserve accumulations, had acted in a manner inconsistent with [1214]*1214their fiduciary obligations. The district court held that the action of the Trustees was arbitrary and capricious and accordingly “rescinded” the amendment as it applied to members of Local 111 and enjoined the Trustees from amending the Plan to the detriment of members of Local 111.

The Trustees appeal and we reverse. DISCUSSION

Justiciability

Local 111 has not withdrawn from the Plan but rather continues to be a participating Union. Therefore, the Trustees contend that Local Ill’s complaint, requesting declaratory relief, presents no “case or controversy” under Article III of the Constitution and thus no “justiciable” issues.

Section 502 of ERISA, 29 U.S.C. § 1132(a)(1)(B), provides that “a civil action may be brought by a participant or beneficiary ... to clarify his rights to future benefits under the terms of the plan.” Local 111 seeks such a clarification; the right of its members to future benefits would be affected by the amendment in the event that it should later withdraw from the Plan. Therefore, the district court had jurisdiction under 29 U.S.C. § 1132(e).

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Bluebook (online)
646 F.2d 1211, 109 L.R.R.M. (BNA) 2949, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-assn-of-bridge-structural-ornamental-iron-workers-local-ca7-1981.