Multiemployer Trustee Responsibilities

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These executive summaries were compiled from EMPLOYEE BENEFITS INFOSOURCE database, a source for information on employee benefits and human resources.

Individual Defendants Are Not Fiduciaries Responsible for Assessed Withdrawal Liability.
Benefits Magazine; v49 no4 pp 58-59 Apr 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A multiemployer pension plan administrator claimed the defendant in Einhorn v. Twentieth Century Refuse Removal Co. et al. was responsible for withdrawal liability after complete withdrawal from the plan. The plaintiff accused the defendants, two company owners, of transferring funds from the company to themselves and selling the company to avoid withdrawal liability. The Multiemployer Pension Plan Amendments Act prohibits transfers to evade such liability, but the defendants asserted they are not plan fiduciaries and cannot be held liable. The District Court for New Jersey agreed any withdrawal liability funds were not plan assets under the defendants' control. The assessed withdrawal liability was not a plan asset by law or by contract. The court dismissed the plaintiff's claim of breach of fiduciary duties but not their claim for equitable subrogation and constructive trust, pertaining to the defendants' conversion of funds to their personal accounts.
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Other Recent Decisions.
Benefits Magazine; v49 no4 pp 68-70 Apr 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Contested withdrawal liability prompted the case of Plan Board of Sunkist Retirement Plan v. Harding & Leggett Inc. The defendant company argued the basis for the liability calculation was erroneous in three ways. The Ninth Circuit Court of Appeals found one point based on a clerical error but otherwise affirmed the plaintiff's assessment of withdrawal liability. In Trustees of the U.A. Local 125 Health and Welfare Plan et al. v. A'Hearn Plumbing & Heating Inc. et al. the District Court for the Northern District of Iowa refused to grant a company's motion for summary judgment, finding disputed issues of material fact that cloud the company's relationship with the primary defendant company. In International Union, United Automobile, Aerospace, and Agricultural Implement Works of America et al. v. Kelsey-Hayes Co. et al., the Eastern Michigan District Court ruled the plaintiff retirees, seeking determination of lifetime health benefits, were bound by a plant closing agreement that terminated the collective bargaining agreement. Whether the plant closing agreement applies to retirees must be decided through arbitration. In Boddicker v. Esurance Insurance Services Inc., the District of South Dakota awarded the plaintiff a statutory penalty of $22,700 after finding the defendant failed to send COBRA notice to the plaintiff. In Smith v. Stockwell Construction Co. Inc. et al., the plaintiff was the ex-wife of a profit sharing plan participant and the designated beneficiary. Upon the participant's death, the plan awarded benefits to the participant's father. The District Court for Western New York permitted the plaintiff's claim about producing plan documents and notifying her of her rights to move forward, while dismissing the defendants' motion to dismiss.
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The Professional Trustee and the Multiemployer Plan.
Ecklund, William K.; Benefits Magazine; v49 no4 pp 20-25 Apr 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A professional trustee is a consultant with expertise in employee benefits and often with a particular industry, who works with a multiemployer plan in a neutral position or representing either union or management. Time pressures, lack of expertise, liability concerns and regulatory complexity have prompted the growing use of professional trustees. The trust agreement must authorize the ability to appoint an individual as a professional trustee, and the appointing sponsor becomes a fiduciary by virtue of the appointment. The appointing entity should set qualification requirements and regularly review performance, and the trust should expect to be charged for the professional trustee's services and expenses. As a trustee, the professional trustee must uphold fiduciary standards, despite having no direct involvement with the plan.
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Court Reverses Breach of Fiduciary Duty Judgment Against Former Plan Trustees.
Benefits Magazine; v49 no3 pp 51, 53 Mar 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Fourth Circuit Appeals Court vacated a ruling by the district court and remanded the case for further consideration. At issue was whether the former board of trustees of a multiemployer pension plan were liable for investment losses between 2003 and 2005. After previous serious losses, the board took a very conservative investment path and ignored recommendations of a financial advisor. They were removed from their positions between 2004 and 2005 and replaced by a new board, which sued the predecessors for breach of fiduciary duty. The district court ruled for the plaintiffs, finding the defendants failed to investigate investment options, as required by ERISA's fiduciary rules. On appeal, the defendants contended there was no objective finding of imprudent investments and asserted they should not be held liable for failure to achieve hypothetical returns. The Fourth Circuit ruled the lower court did not determine the investments were imprudent and gave no reason for assessing losses for a certain time period.
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Court Assesses Liability for Unpaid Contributions.
Benefits Magazine; v49 no2 p 63-64 Feb 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In Trustees of the National Elevator Industry Pension, Health Benefit, Educational, Elevator Industry Work Preservation Funds et al. v. Century Elevator Inc. et al., the defendant company was found liable for unpaid contributions to the plaintiff multiemployer benefit plans. Further, the District Court for the Eastern District of Pennsylvania found the company president liable for breach of fiduciary duty. The defendant company failed to make contributions and underreported liability as required by a collective bargaining agreement. The court found that the individual defendant was a fiduciary based on control of plan assets in the form of the unpaid contributions. Because the defendants did not respond to the plaintiffs' motions, the court entered default judgment for the plaintiffs.
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Funding Policy: A Compass for Multi-Employer Pension Plans.
Sorhaitz, Kevin; Heise, Greg; Plans & Trusts; v30 no1 pp 6-9 Jan-Feb 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : For specified multiemployer pension plans (SMEPPs) it is especially important to have a well-thought-out plan funding policy. Though officially defined benefit plans, SMEPPs have target benefits rather than defined benefits and share features of both defined benefit (DB) and defined contribution (DC) plans. With similarities to and differences from the dominant plan designs, trustees must carefully chart a course that considers and balances the disparate philosophies, needs and implications of DB and DC plans, considering the investment strategy, benefit cuts and increases, level of margin and benefit volatility. The resulting plan policy will lead to a funding policy which should then be formally documented in writing to guide plan's governance.
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Other Recent Decisions.
Benefits Magazine; v48 no12 pp 57-58 Dec 2011; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In McNally et al. v. Eye Dog Foundation for the Blind Inc. et al., the District Court for the Eastern District of California found the defendant company, plan and director breached fiduciary responsibilities by failing to respond to repeated requests for distribution of vested benefits in the profit sharing plan by the employee after retirement and later by her beneficiaries. The judge found no factual basis for assertions made to defend the failure to distribute the benefits. The case of Shrivastava v. Fry's Electronics Inc., the District Court for the Northern District of California involved an employer's policy of use it or lose it for vacation and holiday pay but focused on preemption. Since the plaintiff's original claim was not contested and state law addresses the issue, the defendant failed to establish preemption. In Trucking Employees of North Jersey Welfare Fund Inc.-Pension Fund v. Uramix Concrete Corp. et al., the District Court for the District of New Jersey ruled the defendant companies need not make multiemployer plan withdrawal liability payments monthly and would only be in default if payments were not received within 60 days after any default notice.
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When Trustees Don't Agree.
Folk, Vivian C.; Benefits Magazine; v48 no12 pp 40-44 Dec 2011; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Differences of opinion among plan trustees can be stimulating, but entrenched dissent and deadlocks can have serious consequences. ERISA Section 405(a) discusses issues of cofiduciary liability, when one fiduciary is responsible for another's breach. Fiduciaries do not have the option to avoid the point of disagreement through inaction, and resigning from the board can lead to further liability. Dissenting opinions and votes should be clearly documented in meeting minutes. Section 302 of the Taft Hartley Act discusses approved methods to break a deadlock by choosing an impartial arbitrator to resolve the dispute or turning to the U.S. District Court to appoint one. To block the board majority from illegal action, dissenting trustees may have to seek an injunction from federal court. In some cases, plan sponsors might modify the basis that led to the trustees' disagreement.
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Discretionary Services: A Growing Investment Oversight Trend.
Veith, Matthew R.; Benefits Magazine; v48 no11 pp 1-5 Nov 2011; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In the traditional approach for investment portfolio management, institutional trustees and multiemployer pension plans seek recommendations from consultants about investment managers and asset rebalancing, then make final decisions and take action. In a discretionary investment advisory model, trustees delegate decision making for choosing managers and for rebalancing portfolios to a qualified investment advisory firm. The advantages of the discretionary investment model include better investment performance, clear accountability for performance, better oversight of plan assets and better use of trustees' time and resources. There are potential downsides to consider, including higher fees, the partial surrender of fiduciary responsibility, the requirement to oversee a firm chosen for discretionary investment decision making and the need for careful research prior to choosing among candidate firms.
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FAQs on Multiemployer Plan Leasing Arrangements.
4 pp Jan 2011; misc. publication

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Abstract : Provisions under ERISA Section 406 pertain to the use of office space that is an asset of a multiemployer plan. ERISA prohibits the sale, exchange or leasing of any property between the plan and a party in interest. Any self dealing or conflict of interest by plan trustees is a prohibited transaction. Plan fiduciaries may not exercise authority if their interests would interfere with best judgment acting for the plan. ERISA provides limited exemptions for otherwise prohibited transactions that benefit multiemployer plans. Leasing of classroom space is treated separately. Plan leasing arrangements must be written and formalized and involve reasonable compensation and equitable terms. Fiduciaries should seek guidance from the Employee Benefits Security Administration's Office of Exemption Determinations.
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Court Enforces Fiduciary Exception to Attorney-Client and Work Product Privileges.
Benefits Magazine; v48 no9 pp 60-61 Sep 2011; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In Solis v. The Food Employers Labor Relations Association the Fourth Circuit Court of Appeals upheld subpoenas issued by the Secretary of the DOL. The defendant company claimed that some of the subpoenaed information was protected by attorney-client privilege. Upholding a district court ruling, the Fourth Circuit noted that all the documents under subpoena directly related to plan administration and fell under ERISA's fiduciary exception to attorney-client privilege. The court noted that a similar exception would apply to information a plan claimed was protected by work product privilege.
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ERISA: Court Kills Claims That Plan Breached Duties as to Notice of Early Retirement Elimination.
Maresca, Meredith Z.; Daily Labor Report; no153 p A5 Aug 9, 2011; journal article

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Abstract : In McGuigan v. Local 295/Local 851 International Brotherhood of Teamsters Employer Group Pension Plan the District Court for the Eastern District of New York dismissed the plaintiff participant's claims that the defendant pension plan did not notify him of the cutoff date for obtaining early retirement benefits in a timely manner. The plan was in critical funding status and eliminated the early retirement program as part of a rehabilitation plan. While the plan did not explicitly notify the defendant that he had to apply for early retirement benefits before the deadline, the notification the plan made of its critical status and the fact it was legally allowed to reduce or eliminate benefits met its disclosure obligations under the Pension Protection Act.
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Court Identifies Proper Defendants for Plaintiff's Benefit Claims.
Benefits Magazine; v48 no8 p 63 Aug 2011; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The District Court for the District of Minnesota has identified the proper defendants in Kendall v. International Association of Bridge, Structural, and Ornamental Iron Workers Local 793 Pension Plan et al. The plaintiff worked under two benefit plans, one of which reciprocated contributions to the other. The plaintiff was informed that the reciprocated contributions would be adjusted to account for differing terms. The benefits were less than expected, and the plaintiff sued both plans and administrators. The court dismissed the original plan and its administrator since the plan no longer existed, but allowed certain claims to go forward against the claims administrator and plan administrator of the reciprocating plan and the plan itself.
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Fiduciary Duties Created by Project Labor Agreements.
Moorhead, Paul; Benefits Magazine; v48 no8 pp 32-38 Aug 2011; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Trustees of Taft-Hartley funds should ensure they have written policies for the collection of fringe benefit contributions as laid out in project labor agreements (PLAs). PLAs are collective bargaining agreements, used in California public works projects since the 1930s and encouraged by President Barack Obama in a 2009 executive order. One specific PLA that has been heavily litigated is the Los Angeles Unified School District (LAUSD) Project Stabilization Agreement (PSA), which covers hundreds of LAUSD construction projects and requires fringe benefit contributions to be paid to Taft-Hartley funds. The fact that the PSA covers both union and nonunion workers creates new obligations between fund trustees, contractors and unions.
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Court Considers Plaintiff's Claims Regarding Lack of Service Credit for Period Prior to Break in Service.
Benefits Magazine; v48 no7 pp 63-64 Jul 2011; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The case of Gannon et al. v. NYSA-ILA Pension Trust Fund and Plan et al. hinges on whether amending a plan is a fiduciary act. The plaintiff worked from 1969 to 1974, took a break until 1978, and resumed work until 2009. On retirement, his benefits were based on 31 years of accrued and credited service, starting in 1978. This discounted the years before his break in service which, though less than the break period, the plaintiff felt were to be counted. The plaintiff asserted a Second Circuit Appeals Court decision requiring credit for all years of service, regardless of a break, and claimed the defendants breached fiduciary duty by failing to amend the plan to comply with the decision. The District Court for the Southern District of New York ruled that modifying plan terms is not a fiduciary activity and dismissed the breach of fiduciary duty claims.
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Other Recent Decisions.
Benefits Magazine; v48 no7 p 69 Jul 2011; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In Trustees of the Iron Workers' Local No. 25 Pension Fund et al. v. KVM Door Systems Inc. et al., the plaintiff plan sought nearly $1 million in unpaid contributions from the defendant after an audit. The District Court for the Eastern District of Michigan found issues of fact about whether the defendant maintained work hour records properly and held them for long enough for use in re-audits. The court denied summary judgment for both parties and required further evaluation of the claims. In Carpenters Pension Trust Fund for Northern California v. Moxley, the plaintiff plan sought to have the defendant's multiemployer plan withdrawal liability identified as a nondischargeable debt in the defendant's bankruptcy. The bankruptcy court ruled for the defendant. The District Court for the Northern District of California found the defendant was not a plan fiduciary and the debt owed as withdrawal liability to be dischargeable.
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Why Serve as a Trustee?
Brislin, Joseph A.; Benefits Magazine; v48 no7 pp 38-43 Jul 2011; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : It takes time and dedication to serve as a trustee for a multiemployer trust fund, but the personal advantages can be substantial. Being a trustee means expanding horizons and learning about investments, operations of pension plans and health and welfare plans, the challenges these plans face and management strategies. A trustee holds a position of leadership and honor, contributing to the success of the plan. He or she should be willing to read reports about plan functions and work proactively with others as a problem solver. With the aid of professional advisors and commitment to fiduciary duty guidelines, a trustee will be prepared to meet their responsibilities.
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ERISA: Company and Its Owner Found Liable for Failing to Pay Benefit Contributions.
Nadimi, Peter; Daily Labor Report; no121 p A7 Jun 23, 2011; journal article

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Abstract : The plaintiff funds won a summary judgment against the defendant company and its owner in Trustees of National Elevator Industry Pension, Health Benefit, Education Elevator Industry. Work Preservation Funds v. Gateway Elevator Inc. The group of multiemployer funds, NEI Trust Funds, claimed the defendant did not make contributions as required by a collective bargaining agreement (CBA), that he should be required to report work hours and make payments to providers and that he should be found in breach of fiduciary duties under ERISA Section 409. The District Court for the Eastern District of Pennsylvania ruled that the company breached the CBA by failing to make required reports and contributions in a timely way, and that since the owner controlled plan assets, he was personally liable as fiduciary.
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If Not I, Who?: Fund Counsel's Duties to Participants and Beneficiaries.
Handelman, Gwen Thayer; Journal of Pension Planning & Compliance; v37 no2 pp 25-32 Summer 2011; journal article

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Abstract : In 2009 the U.S. District Court for the Eastern District of Michigan ruled in Iron Workers Local 25 Pension Fund v. Watson Wyatt that pension plan participants have no standing to sue attorneys who represent the plan. The thinking was that participants and beneficiaries do not have a direct attorney client relationship with the lawyers or law firm. The court circumvented the issue of the trustees' fiduciary duty to participants and declined to view participants as third-party beneficiaries or derivative clients. The court's observations of problems that could arise from counsel's owing duty to all participants and beneficiaries leaves serious unanswered questions. State professional rules may set up a special relationship to nonclients by extension, providing a basis for participants to sue for breach of a lawyer's duty of care to participants and beneficiaries, when the lawyer nominally represents the plan. The courts should recognize the link between attorneys representing a plan and the plan participants and beneficiaries.
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Other Recent Decisions.
Benefits Magazine; v48 no6 pp 67-68 Jun 2011; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In Union Security Insurance Co. v. Blakeley et al., the Sixth Circuit Appeals Court resolved the issue of definition of domestic partner when a deceased plan participant's fiancee and children made competing claims to death benefits. Finding the definition in the plan document, the court overturned a magistrate judge's reliance on state statute and remanded the case for consideration using the discovered criteria. In Gretsky v. Edelstein & Co LLP et al., the defendant failed to deliver plan documents to clarify matching contribution calculations and later fired the plaintiff after the plaintiff complained to the Employee Benefits Security Administration. The District Court for Massachusetts supported the plaintiff in his efforts to recover benefits and show breach of fiduciary duty by the company. The court also found evidence supporting a retaliatory discharge claim but dismissed motions against individual partners. In Grant-Bullens v. New Jersey Building Laborers Statewide Annuity Fund et al., the District Court for New Jersey granted the defendant's motion for summary judgment without prejudice. The plaintiff alleged the plan administrator overpaid her ex husband in a divorce division of her pension plan assets. The court ruled the plaintiff should have pursued available administrative remedies. In Duehr et al. v. Marriott Hotel Management Co. VI Inc., the District Court for the Eastern District of Pennsylvania entered a default judgment for the plaintiff, the fiduciary for a multiemployer pension plan. The defendant company had failed to make required contributions for over one year, not responded to demands and provided no explanation for its inaction.
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The Intricacies of Apprenticeship Training Fund Collections.
Sollars, Karen; Benefits Magazine; v48 no6 pp 34-39 Jun 2011; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : All employer sponsors of apprenticeship programs under the Taft-Hartley Act are responsible for contributing to training trust funds, and a fund's board of trustees must pursue delinquent contributions. Funds should communicate closely with participating employers to keep up with contribution history, financial status and local union involvement. Fiduciaries must monitor contributions and step in quickly if they fall behind schedule in order to protect the fund. If a lawsuit becomes necessary, apprenticeship training funds can piggyback with other benefits funds. If pursuing collections is not cost-effective, the DOL offers trustees the protection of a prohibited transaction exemption. Apprenticeship funds should have a trust agreement and written policies for collections, noting trustees' discretion and flexibility on payment agreements with cash-strapped employers.
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Delinquent Contributions: Court Nixes Attempt to Slap Contributions on Bankrupt Company's Alleged Successor.
BNA's Pension & Benefits Reporter; v38 p 495 Mar 8, 2011; journal article

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Abstract : The District Court for the Eastern District of New York dismissed a complaint by trustees of multiemployer benefit and pension plans in LaBarbera v. United Crane and Rigging Services Inc. The trustee plaintiffs were seeking to hold a company liable as an alter ego for withdrawal liability owed by a bankrupt former contributing employer. The court dismissed the alter ego and successorship claims because they were not personal to the plaintiff trustees and therefore could not be pursued outside of bankruptcy court. It also found the defendant company was not an alter ego at the time of the initial ERISA violation and therefore could not be sued under ERISA. The court found the owner of the bankrupt company, whom the plaintiffs had also sued as jointly liable for the withdrawal liability, solely liable and ruled the owner had to pay the total withdrawal liability.
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CCH 2011 U.S. Master Pension Guide.
Kaster, Nicholas; Kennedy-Luczak, Kathleen; McInerney, Kerry; Panszczyk, Linda; Pope, Elizabeth; Strzelecki, John; Sulzer, Glenn; 1321 pp 2011; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Provides a comprehensive overview of qualified retirement plans. Major topics include: funding, participation and coverage, vesting, distribution rules, reporting and disclosure, special rules for 401(k)s, ESOPs, TSAs and IRAs. Contains a plan reporting calendar that identifies 2010 dates when forms must be filed and documents provided to participants. Who must file forms and to whom copies must be provided is also specified. Includes a mortality table, cost-of-living adjustments table, and the PBGC maximum monthly benefit table.
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The 2011 Pension Answer Book.
Krass, Stephen J.; 3120 pp 2011; book

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Abstract : In question-and-answer format, covers pension topics related to starting or continuing a pension plan; choosing the plan; and complying with federal regulations. Topics include vesting, minimum distribution requirements, funding requirements, taxation of distributions, multiemployer plans, rollovers and fiduciary responsibility. Changes due to legislation are incorporated, as well as all IRS rulings and regulations that interpret them. Pertinent IRC and ERISA sections, Treasury and DOL regulations, letter rulings, notices and announcements, and case law are included.
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Complex Public Pension Plans Benefit From External Guidance.
Barrett, Timothy; Hickey, Thomas A., III; Benefits & Compensation Digest; v47 no12 pp 34-36 Dec 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : San Bernardino County Employees' Retirement Association (SBCERA) is a public multiemployer defined benefit pension plan that has established a number of best practices that have proven cost-effective ways of improving transparency. The plan hired an accounting firm to perform due diligence on investment managers before and during their tenure. SBCERA, the accounting firm and the investment managers all agree to operational and reporting procedures to promote transparency between all three groups. SBCERA also has an external legal team to advise on a number of topics, including board member fiduciary responsibility, ethical guidelines and proposed legal and regulatory changes.
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