CENTRAL STATES, ETC. v. Central Transport, Inc., Civ. No. 80-71872.

• Citation: 522 F. Supp. 658
• Decision Date: 19 September 1981
• Docket Number: Civ. No. 80-71872.
• Parties: CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and Central States, Southeast and Southwest Areas Health and Welfare Fund, Plaintiffs, v. CENTRAL TRANSPORT, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Michigan

522 F. Supp. 658

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and Central States, Southeast and Southwest Areas Health and Welfare Fund, Plaintiffs, v. CENTRAL TRANSPORT, INC., et al., Defendants.

Civ. No. 80-71872.

United States District Court, E. D. Michigan, S. D.

September 19, 1981.

Russell N. Luplow, P.C., Russell N. Luplow, Diana L.S. Peters and Charles J. Taunt, of counsel, Bloomfield Hills, Mich., for plaintiffs.

Daniel F. Berry, Simpson, Moran & Burnett, Birmingham, Mich., for defendants.

MEMORANDUM OPINION AND ORDER

ANNA DIGGS TAYLOR, District Judge.

Plaintiffs, Central States, Southeast and Southwest Areas Pension Fund and Central States, Southeast and Southwest Areas Health and Welfare Fund, are employee benefit plans designed and maintained to serve as repositories of benefit fund contributions from companies with employees engaged in interstate trucking. The plaintiff funds will be referred to here as "Central States." Relying upon the jurisdictional grants of Section 301(a) of the Labor Management Relations Act of 1947, as amended (29 U.S.C. § 185(a)), and Section 502 of the Employee Retirement Income Security Act of 1974 (hereinafter referred to as "ERISA") (29 U.S.C. § 1132), Central States filed the instant complaint on behalf of its trustees, participants, and beneficiaries against 16 named defendants. The defendants, all companies engaged in interstate transportation of goods, will be referred to collectively as "Central Transport."

The gravamen of plaintiff's complaint is that Central Transport has failed to accurately report and remit benefit fund contributions for all employees covered by the collective bargaining agreements which establish the benefit plans. Central States has asked this court to issue an order permitting its auditors to conduct an independent verification of Central Transport's complete payroll records in order to determine whether the duties and status of each of its employees has been accurately reported by Central Transport. Without such an independent audit, Central States argues that it is unable to insure the financial integrity of the benefit funds and to fulfill its fiduciary obligations to the participants in and beneficiaries of the benefit plans.

On August 25, 1980, Central Transport filed a motion to dismiss plaintiff's complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Central Transport contends that Central States has neither a statutory nor a contractual right to the payroll data of all of its employees, without prior determination by the local union and the employer that particular individuals are covered by the collective bargaining agreement and thereby eligible as plan participants. Central Transport also argues that its obligation to protect the confidentiality of employee records prevents disclosure of data for those individuals who are not covered by the collective bargaining agreement.

Central States replied to the defendant's motion to dismiss, and at the same time filed its own motion for partial summary judgment, or in the alternative for a preliminary injunction to permit an audit of the defendant's payroll and employment records. The matter was set for hearing before the court. The parties then agreed on the record that the relevant facts are not in dispute and requested that the court treat their respective pleadings as cross-motions for summary judgment.

Having considered the oral and written arguments of the parties, partial summary judgment in favor of the plaintiff Central States is hereby granted. As is further discussed below, this court finds that the plaintiff Central States has both a contractual right and a statutory obligation under the circumstances to independently verify the status and duties of all individuals employed by Central Transport in order to insure that proper benefit contribution payments are being made. The court therefore orders that Central Transport provide to the audit representatives of Central States all of the documentation requested and that the audit procedure undertaken by Central States be allowed to continue.

Each of the defendant companies are parties signatory to a collective bargaining agreement entitled the "National Master Freight Agreement" and to certain supplementary agreements with various local union affiliates of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. The National Master Freight Agreement undisputedly obliges an employer to make weekly health and welfare, and pension contributions to a fund jointly administered by the union and the employer for each employee "covered by the agreement." (National Master Freight Agreement, April 1, 1979 to March 31, 1982, Article 60 and Article 61). Article 60 and Article 61¹ of the National Master Freight Agreement specify the amount of weekly health and welfare and pension benefits to be paid for each covered employee. These provisions further authorize the Central Transport employers to enter trust agreements which set forth the terms and conditions under which the benefit funds are to be administered. Significantly under Article 60 and Article 61, Central Transport agreed to ratify all action taken or to be taken by the benefit plan trustees within the scope of their authority. Thus Article 60 states:

By the execution of this Agreement, the Employer authorizes the Employers' Associations which are parties hereto to enter into appropriate trust agreements necessary for the administration of such Fund, and to designate the Employer Trustees under such agreement, hereby waiving all notice thereof and ratifying all actions already taken or to be taken by Trustees within the scope of their authority. (Emphasis added).

In addition to the National Master Freight Agreement and to the Trust Agreements, Central Transport has undisputedly executed participation agreements applicable to the plaintiff Pension Funds and joint applications applicable to the plaintiff Health and Welfare Funds, which also confirm the defendant's obligation to be bound by all actions of the trustees in administering the Central States funds. Paragraph one of the Pension Fund participation agreement reads as follows:²

The Union and the Employer herein agree to be bound by, and hereby assent to, all of the terms of the Trust Agreement creating said CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, all of the rules and regulations heretofore and hereafter adopted by the Trustees of said Trust Fund pursuant to the said Trust Agreement, and all of the actions of the Trustees in administering such Trust Fund in accordance with the Trust Agreement and rules adopted. (Emphasis added)

Clearly, the unambiguous language of the collective bargaining agreement, the joint application and the participation agreement executed by every Central Transport employer, binds Central Transport to the terms of the Trust Agreement and to the actions of the Trustees in administering the benefit funds.

The Trust Agreement³ itself delineates Central Transport's obligation to plan participants and beneficiaries and sets out the precise scope of the Trustees' power to administer the benefit funds. The court finds that the clear language of the Trust Agreement accords Central States in its capacity as Trustee the right to conduct an audit of all payroll data for those individuals whom Central Transport employs, regardless of whether the defendant considers them to be covered by the collective bargaining agreement.

Article II of the Trust Agreement establishes the Central States' funds, and creates a Board of Trustees consisting of equal numbers of employer and union representatives. (Trust Agreement Article II, Sections 1 and Section 2). Each employer is obligated to make "continuing and prompt payments to the Trust Fund as required by the applicable collective bargaining agreement..." (Trust Agreement Article III, Section 1). Collection of employer contributions and enforcement of payment obligations is delegated to the Trustees. (Article III, Section 4).

Article III, Section 5 of the Trust Agreement requires both the employer and the union to furnish employment records and personal background information of "employees" to the Trustees upon request. In pertinent part, Article III, Section 5 states:

Each Employer shall promptly furnish to the Trustees, upon reasonable demand, the name and current addresses of its Employees, their Social Security numbers, the hours worked by each employee (and past industry employment history in its files)⁴ and such other information as the Trustees may reasonably require in connection with the administration of the Trust. The Trustees may, by their representatives, examine the pertinent records of each Employer at the Employer's place of business whenever such examination is deemed necessary or advisable by the Trustees in connection with the proper administration of the Trust... (Article III, Section 5). (Emphasis added)

Traditionally, the Central States Funds have operated on a self-reporting basis, which required the employer to initially establish a base group of employees entitled to weekly contributions and then to inform the plaintiff monthly of any fluctuations in the employment status of individuals covered by the collective bargaining agreement. Central States relies upon the status reports of defendant employers to compute an invoice statement which it forwards to Central Transport. Thus, when the employer reports the termination or layoff of an individual formerly covered by the collective bargaining agreement, Central States will adjust its records and reduce the defendant's invoice to reflect the reported change. Conversely, when an employer reports the addition of new employees, Central States will increase the invoice by an amount which corresponds to the weekly contribution figure multiplied by the number of weekly hired employees.

On December...