Rocco v. New York State Teamsters Conference Pension & Retirement Fund

281 F.3d 62
CourtCourt of Appeals for the Second Circuit
DecidedFebruary 13, 2002
DocketDocket Nos. 01-7519(L), 01-7571(XAP)
StatusPublished
Cited by2 cases

This text of 281 F.3d 62 (Rocco v. New York State Teamsters Conference Pension & Retirement Fund) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rocco v. New York State Teamsters Conference Pension & Retirement Fund, 281 F.3d 62 (2d Cir. 2002).

Opinion

KATZMANN, Circuit Judge.

This case, like many before it, traces its roots to the troubled merger of two pension funds, the Brewery Workers Pension Fund (“Brewery Fund”) and the New York State Teamsters Conference Pension and Retirement Fund (“Teamsters Fund”). See, e.g., Baum v. Nolan, 853 F.2d 1071 (2d Cir.1988), cert. denied, 489 U.S. 1053, 109 S.Ct. 1313, 103 L.Ed.2d 582 (1989); Wenzel v. Commissioner, 707 F.2d 694 (2d Cir.1983); New York State Teamsters Conference Pension and Ret. Fund v. Pension Benefit Guaranty Corp., 591 F.2d 953 (D.C.Cir.), cert. denied, 444 U.S. 829, 100 S.Ct. 56, 62 L.Ed.2d 37 (1979) (hereinafter “PBGC”). In their Amended Complaint, plaintiffs Thomas Rocco and Dorothy Casey contend that defendant, the Board of Trustees of the Teamsters Fund (“Board of Trustees”), wrongfully delayed the effective date of the merger, and is now relying on that delayed effective date to deny plaintiffs the increased pension benefits they expected under the terms of the merger. The United States District Court for the Northern District of New York (Munson, J.) granted defendant’s motion for summary judgment and dismissed plaintiffs’ Amended Complaint in its entirety. The district court concluded that the wrongful conduct alleged by plaintiffs predates the effective date of the Employment Retirement Income Security Act of 1974 (“ERISA”) and thus is not actionable under that statute. See Seitz v. Bd. of Trustees, 2000 WL 31978 (N.D.N.Y. Jan.7, 2000) (“Seitz /”). Plaintiffs moved for reconsideration. In response, the district court affirmed its order of dismissal and further concluded that, contrary to plaintiffs’ assertion, the Amended Complaint failed to plead pendent claims under New York common law. See Seitz v. Bd. of Trustees, 2000 WL 748102 (N.D.N.Y. June 9, 2000) (“Seitz II”). Thereafter, the Board of Trustees moved for attorney’s fees and costs, but this motion was denied. See Seitz v. Bd. of Trustees, No. 97 Civ. 232, Memorandum-Decision & Order (N.D.N.Y. Mar. 30, 2001) (“Seitz III”). Both parties now appeal the district court’s respective decisions against them. For the reasons that follow, we affirm.

[65]*65I. BACKGROUND

A. Factual Background

The facts surrounding the merger of the Brewery Fund and Teamsters Fund have been described numerous times by this and other Courts, and are not disputed by the parties. See, e.g., Baum, 853 F.2d at 1072-1074; PBGC, 591 F.2d at 954-55; New York State Teamsters Conference Pension and Ret. Fund v. Hoh, 554 F.Supp. 519, 521-525 (N.D.N.Y.1982); Cicatello v. Brewery Workers Pension Fund, 434 F.Supp. 950, 952-53 (W.D.N.Y.1977). The starting point for all these cases is the Agreement and Plan of Integration (“Merger Agreement”) executed by representatives of the Brewery Fund and Teamsters Fund on July 30, 1973 and August 7, 1973 respectively. The Merger Agreement provided, inter alia, that upon approval of the merger by the Internal Revenue Service (“IRS”), the Brewery Fund would merge into the Teamsters Fund, with the assets of the former transferred and assigned to the trustees of the latter. See Merger Agreement, Art. IV, § 1. The Teamsters Fund would thereafter receive all employer contributions formerly paid to the Brewery Fund and would pay out benefits to current and future participants and beneficiaries of the Pension Plan of the Brewery Fund (“Brewery Plan”). See id., Art. IV, § 5. Under the terms of the Merger Agreement, members of the Brewery Fund could elect either to continue receiving benefits under the terms of the Brewery Plan or, subject to certain conditions, receive benefits under the preexisting Pension Plan of the Teamsters Fund (“Teamsters Plan”). Depending on various factors, benefits received under the Teamsters Plan could be greater than benefits received under the Brewery Plan. Eligibility to elect Teamsters Plan benefits, however, was limited by the terms of the Merger Agreement to current and active members of the Brewery Plan for whom contributions were made to the Teamsters Fund after the effective date of the Merger Agreement. See id., Art. Ill, § 3(e). Said “effective date” was defined as thirty days after notification of IRS approval. See id., Art. Ill, § 1.

The Merger Agreement required that an application for IRS approval be made “forthwith.” See id., Art. IX. But rather than seeking such approval, defendant Board of Trustees instead attempted to repudiate the Merger Agreement on the grounds that soon after the agreement was signed, Rheingold Brewery, a major contributor to the Brewery Fund, terminated operations and laid off approximately 1500 workers, thereby threatening the Brewery Fund’s financial solvency. After receiving notice that the Board of Trustees would not proceed with the merger, representatives of the Brewery Fund brought suit in New York State Supreme Court, Queens County, to compel performance. On April 29, 1975, the New York Supreme Court declared that, despite the closure of the Rheingold Brewery and changed economic circumstances, the Merger Agreement remained valid and binding. The court also ordered specific performance of the Merger Agreement by the Board of Trustees, including the filing of an application for approval with the IRS. See Brewery Workers Pension Fund v. New York State Teamsters Conference Pension and Ret. Fund, No. 9997/74, J. & Order at 2 (N.Y.Sup.Ct. Apr. 29, 1975). The lower court’s judgment was unanimously affirmed by the Appellate Division, see 49 A.D.2d 755, 374 N.Y.S.2d 590 (2d Dep’t 1975), and leave to appeal was thereafter denied by the New York Court of Appeals. See 38 N.Y.2d 709, 382 N.Y.S.2d 1028, 346 N.E.2d 558 (1976). Nevertheless, the Board of Trastees did not undertake performance of the Merger Agreement or [66]*66seek IRS approval, but chose instead to pursue other means of challenging the merger. See PBGC, 591 F.2d at 957.

Rather than waiting for the Board of Trustees to exhaust its legal remedies, the Brewery Fund sought IRS approval itself, filing the necessary application on April 29, 1976. Five months later, on September 28, 1976, the District Director of the IRS in Buffalo, New York, sent a letter to the Board of Trustees, informing it that the merger had been approved. Thereafter, the Brewery Fund transferred all its assets to the Teamsters Fund, effective December 1, 1976. The Board of Trustees objected to the manner in which IRS approval had been obtained, refused to recognize the transfer or accept the assets, and sought reconsideration by the IRS, which was denied. Consistent with past practice, the Board of Trustees went back to the courts and launched a series of challenges to the IRS approval, all of which proved unsuccessful. See, e.g., Wenzel, supra; New York State Teamsters Conference Pension and Ret. Fund v. Commissioner, 90 T.C. 862, 1988 WL 42902 (U.S.Tax Ct.1988).

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281 F.3d 62, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rocco-v-new-york-state-teamsters-conference-pension-retirement-fund-ca2-2002.