Truckmen's & Warehousemen's Ass'n v. New York State Conference Pension & Retirement Fund

763 F. Supp. 717, 1991 U.S. Dist. LEXIS 7039, 1991 WL 85579
CourtDistrict Court, W.D. New York
DecidedMay 23, 1991
DocketNos. CIV-81-1110C, CIV-85-1080C
StatusPublished
Cited by2 cases

This text of 763 F. Supp. 717 (Truckmen's & Warehousemen's Ass'n v. New York State Conference Pension & Retirement Fund) is published on Counsel Stack Legal Research, covering District Court, W.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Truckmen's & Warehousemen's Ass'n v. New York State Conference Pension & Retirement Fund, 763 F. Supp. 717, 1991 U.S. Dist. LEXIS 7039, 1991 WL 85579 (W.D.N.Y. 1991).

Opinion

CURTIN, District Judge.

Plaintiffs have moved this court to reconsider elements of its decision of November 30, 1990. In that decision, this court sustained most of the challenged provisions in the New York State Conference Pension and Retirement Fund’s (“Fund”) 1979 stipulation form. Truckmen’s & Warehousemen’s Ass’n of Rochester v. New York State Teamster’s Conference Pension & Retirement Fund, 751 F.Supp. 351 (W.D.N.Y.1990). Three provisions, however, were struck down as arbitrary and capri[719]*719cious. Id. at 360-61. Plaintiffs argue that three issues remain before this decision can be reduced to judgment. Specifically, plaintiffs argue that:

(1) Paragraph 2 of the 1979 stipulation is arbitrary and capricious to the extent it entitles the Fund to hold employers liable for -pension benefits as opposed to pension contributions during a period of employer delinquency in paying the required contributions;
(2) the Fund stipulated, and/or is required, to accept contributions to fund pension credits accruing during a dispute over a deficiency or delinquency in the payment of a pension contribution; and
(3) the court should declare the rights of the parties and order affirmative relief.

The court will address each argument in turn.

DISCUSSION

I. INTERPRETATION OF PARAGRAPH 2

Plaintiffs argue that this court’s November 30, 1990, decision is inconsistent in its interpretation of paragraph 2. See Truckmen’s, 751 F.Supp. at 358-59, 361. Paragraph 2 provides, in relevant part, that:

Failure on the part of the employer to contribute on any of his employees as specified herein, shall make the employer liable for all employee benefit claims which are incurred during the period of delinquency, damages, reimbursement to the Fund for the Fund’s attorneys’ fees, auditors’ fees, court costs, disbursements and expenses incurred by the Fund in recovering the above.

Id. at 358 (emphasis added). The court held that this paragraph was not arbitrary and capricious because it established “an entirely permissible set of rules designed to force delinquent employers to make the contributions required of them under the applicable collective bargaining agreement.” Id. at 359.

Plaintiffs argue that this holding is inconsistent with language of the decision under which the court struck down paragraph 8 as arbitrary and capricious. Again, the language of the decision is as follows:

Paragraph 8, on the other hand, is impermissible. It provides:
The employer agrees that should he not make contributions on 100% of all his Bargaining Unit employees as required herein, the Pension and Retirement Fund will not pay nor be liable or obligated to pay any Pension and Retirement or other benefits to all his employees involved, whether or not contributions were made on such individuals, in which event the employer shall pay to any or all such employees any and all Pension and Retirement or other benefits....
Item 77, Ex. 3 (emphasis added). As discussed above, defendants have conceded their liability to employees for whom an employer is obligated to contribute, even if the employer fails to make these contributions.... Moreover, the Trustees have no authority under the trust indenture to hold employers liable to employees for unpaid pension contributions. The Trustees may only hold employers liable to the Fund for these contributions.

Truckmen’s, 751 F.Supp. at 361.

The word plaintiffs latch onto in this long excerpt is the last one: “contributions.” Plaintiffs argue that on the one hand the court has held, by upholding paragraph 2, that the Fund may “make the employer liable for all employee benefit claims which are incurred during the period of delinquency,” id. at 358 (emphasis added); but on the other hand, by striking down paragraph 8, the court held the Fund may only hold employers liable for pension contributions.

The court understands the reason for the confusion and will endeavor to clarify its prior decision. Paragraph 8 was struck down because it directly contradicted the Internal Revenue Service’s (“IRS”) position that the Fund was required to credit and pay an employee’s pension benefits to the [720]*720degree an employer was obligated to make contributions on that person, even if the employer did not pay those contributions. The Fund has repeatedly acknowledged this obligation. See, e.g., Truckmen’s Item 88 (hereinafter Tr. Item_). Paragraph 8 was also struck down because, by purporting to make employers liable to their employees for pension benefits in the event of an employer’s delinquency in making contributions to the Fund, it contradicted the trust instrument. The Fund can make the employer liable to the Fund, not a third party. The confusion arose because the court used the phrase “pension contributions” here, Truckmen’s, 751 F.Supp. at 361, rather than pension benefits, and that usage was imprecise. The question whether employers could be held liable for pension benefits, or only pension contributions, had no bearing on this holding, however. The holding striking down paragraph 8 focused on who could be made liable to whom — employers can be held liable to the Fund, only — not on the amount or type of liability between those parties.

Paragraph 2, on the other hand, provides that “[fjailure on the part of the employer to contribute on any of his employees as specified herein, shall make the employer liable for all employee benefit claims which are incurred during the period of delin-quency_” Id. at 358 (emphasis added). The court upheld this clause based on the following reasoning:

Plaintiffs object that paragraph 2 renders employers liable for pension benefits during periods of delinquency. Under the trust indenture, “ ‘receipt given by the Trustees for any monies or other properties received by them shall effectively discharge the person or persons paying or transferring the same....’” Item 42, Ex. 16, ¶ 12(b). This paragraph relieves employers of liability for pension benefits to the extent they have properly paid therefor under the collective bargaining agreement. Moreover, the Fund has admitted it is liable to pay employees pension benefits for which an employer was obligated to pay under the collective bargaining agreement, even if that employer did not pay the Fund. See supra. But neither of these rules relieve employers of liability for these same pension benefits if they have failed to make their required payments to the Fund. A rule holding the employer liable to the Fund for such benefit claims is certainly not arbitrary and capricious.

Id. at 359.

Plaintiffs argue by example that strict application of this rule could lead to harsh results where a Fund audit revealed an inadvertent shortfall in an employer’s required contributions to the Fund. See Tr. Item 80, at 5. According to plaintiffs, they could be liable for thousands of dollars in employee benefit claims based on a negligible shortfall in their required contributions. Id.

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763 F. Supp. 717, 1991 U.S. Dist. LEXIS 7039, 1991 WL 85579, Counsel Stack Legal Research, https://law.counselstack.com/opinion/truckmens-warehousemens-assn-v-new-york-state-conference-pension-nywd-1991.