Operative Plasterers & Cement Masons International Ass'n Local 202 v. Board of Trustees of the Plastering Industry Welfare & Pension Trust Funds

710 F. Supp. 42, 10 Employee Benefits Cas. (BNA) 2421, 132 L.R.R.M. (BNA) 2853, 1989 U.S. Dist. LEXIS 4359, 1989 WL 35151
CourtDistrict Court, E.D. New York
DecidedApril 7, 1989
DocketNo. 85 CV 3336
StatusPublished
Cited by1 cases

This text of 710 F. Supp. 42 (Operative Plasterers & Cement Masons International Ass'n Local 202 v. Board of Trustees of the Plastering Industry Welfare & Pension Trust Funds) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Operative Plasterers & Cement Masons International Ass'n Local 202 v. Board of Trustees of the Plastering Industry Welfare & Pension Trust Funds, 710 F. Supp. 42, 10 Employee Benefits Cas. (BNA) 2421, 132 L.R.R.M. (BNA) 2853, 1989 U.S. Dist. LEXIS 4359, 1989 WL 35151 (E.D.N.Y. 1989).

Opinion

MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

This action is before the Court on cross-motions for summary judgment pursuant to Fed.R.Civ.P. 56 filed by plaintiffs (“Local 202”) and defendants (“Local 60”). For the reasons discussed below, Local 202’s motion is granted and Local 60’s motion is denied.

FACTS

Both Local 202 and Local 60 are affiliated with the same international union— Operative Plasterers and Cement Masons International Association (“the Union”). Local 202 has exclusive jurisdiction to perform plastering work on new construction and renovation projects within Brooklyn and parts of Long Island. Local 60 has exclusive jurisdiction to perform such work in Manhattan. Each local has established employee benefit plans within the meaning of the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (“ERISA”)..

Plastering contractors (“employers”) who contract to perform work in the metropolitan area generally execute collective bargaining agreements with the various locals having jurisdiction therein. Each collective bargaining agreement provides that, in addition to wages paid directly to the employee, the employer must pay benefit contributions to the fund or funds for the local in the jurisdiction within which the work is performed. The benefit contributions are required to be paid in this fashion notwithstanding that members of one local occasionally work outside their local’s jurisdiction. For example, although a member of Local 202 may perform work for an employer within the jurisdiction of Local 60, the employer will pay benefit contributions to Local 60’s benefit funds. The benefit funds for the respective unions, however, have different eligibility requirements. As a result, members of one local who have worked within the jurisdiction of another local may not meet the eligibility requirements for the latter local’s benefit fund and thus receive no benefits from that local’s fund.

In an effort to mitigate the inequity that resulted from this arrangement, Local 202 and Local 60 executed an agreement on July 1,1983 that provided for the reciprocal exchange of benefit contributions (“the Reciprocal Agreement”). The Reciprocal Agreement provided that each local would return all contributions received from an [44]*44employer on behalf of a member of the other local to that member’s local fund. The Reciprocal Agreement also provided that its terms would be effective for two years and that thereafter, upon proper notice, either party could terminate the agreement. On June 30, 1985, Local 60 terminated the Reciprocal Agreement.

As a result of the termination of the Reciprocal Agreement and the fact that employers are performing more work in Manhattan as compared to Brooklyn, contributions are made to Local 60 benefit funds for work performed by Local 202 members in greater proportion than contributions are made to Local 202 benefit funds for work performed by Local 60 members.

Local 202 commenced this action in 1985 alleging that Local 60’s refusal to transfer to Local 202 contributions received on behalf of Local 202 members violates the “sole and exclusive benefit provision” of § 302(c)(5) of the Labor Management Relations Act, 29 U.S.C. § 186(c)(5) (“LMRA”) and the fiduciary duty provisions of ERISA, 29 U.S.C. § 1104.1

DISCUSSION

I. JURISDICTION UNDER THE LMRA

Section 302(e) of the LMRA confers jurisdiction in a district court over an action to restrain violations of § 302. Section 302(c)(5) authorizes payments by an employer to an employee representative “with respect to money or other things of value paid to a trust fund established by such representative, for the sole and exclusive benefit of the employees of such employer, and their families and dependents.” 29 U.S.C. § 186(c)(5). Jurisdiction is founded under these sections when a party alleges that a “structural defect” exists in a pension or welfare plan such that the plan runs afoul of the “sole and exclusive benefit” requirement of § 302(c)(5). See Molnar v. Wibbelt, 789 F.2d 244, 249 (3rd Cir.1986); Local 50, Bakery and Confectionary Workers Union v. Local 3, Bakery and Confectionary Workers Union, 733 F.2d 229, 234 (2d Cir.1984); Alvarez v. Erickson, 514 F.2d 156, 166 (9th Cir.), cert. denied, 423 U.S. 874, 96 S.Ct. 143, 46 L.Ed.2d 106 (1975). Thus, jurisdiction has been extended to entertain claims brought by successor trust funds seeking to recover payments made by employers to predecessor trust funds. See Molnar, supra, 789 F.2d at 249; Local 50, supra, 733 F.2d at 234; Alvarez, supra, 514 F.2d at 166.

The Complaint alleges that the Local 60 defendants, conspiring with each other to deprive the Local 202 members of fringe benefits contributions paid on their behalf, terminated the Reciprocal Agreement and have since failed and refused to transfer said fringe benefit contributions to Local 202 Welfare Fund and Annuity Fund. Complaint 1122. These acts, plaintiffs aver, constitute violations of § 302(c)(5) of the LMRA and § 404 of ERISA, 29 U.S.C. § 1104. Id. ¶¶ 24, 25. In its prayer for relief, Local 202 seeks to restrain Local 60 from retaining the fringe benefit contributions; directing reciprocal exchange of fringe benefits; and costs and attorney’s fees pursuant to ERISA § 502(g), 29 U.S.C. § 1132(g).

The Court concludes that the allegation, while not artfully pleaded, is not frivolous, see Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946), and comes with the definition of a “structural defect” in Local 60’s benefit plans. Thus, this Court’s exercise of jurisdiction over the claim is proper. The Court further concludes that plaintiffs have standing to challenge the structural defect. See Molnar, supra, 789 F.2d at 249.

II. MERITS OF THE LMRA CLAIM

In Local 50, the structural defect was “the absence of any provision in the instruments of trust requiring a transfer of funds in cases where there is an employee change to a different bargaining representative.” Local 50, supra, 733 F.2d at 234 (emphasis supplied). This defect had a chilling effect on an employee’s right to [45]*45change his bargaining representative because to effect such a change would result in the forfeiture of employer contributions left in the predecessor benefit fund. Id. at 231.

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Related

Operative Plasterers v. Board of Trustees
888 F.2d 1376 (Second Circuit, 1989)

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Bluebook (online)
710 F. Supp. 42, 10 Employee Benefits Cas. (BNA) 2421, 132 L.R.R.M. (BNA) 2853, 1989 U.S. Dist. LEXIS 4359, 1989 WL 35151, Counsel Stack Legal Research, https://law.counselstack.com/opinion/operative-plasterers-cement-masons-international-assn-local-202-v-board-nyed-1989.