76 F.3d 462 (2nd Cir. 1996), 292, Ganton Technologies, Inc. v. National Indus. Group Pension Plan

Docket Nº:292, Docket 95-7323.
Citation:76 F.3d 462
Party Name:GANTON TECHNOLOGIES, INC., and Shirley Klamm, Ronald Brown and Craig Small, as employees of Ganton Technologies, Inc., Plaintiffs-Appellants, v. NATIONAL INDUSTRIAL GROUP PENSION PLAN, a Multi-employer Trust Fund, Stanley L. Eisner, Ronald William Borst, Michael Kelly, A.E. Samson, Richard Shirley, Milford E. Woodbeck, Elmer Chatak, Dominick D'Ambr
Case Date:February 07, 1996
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 462

76 F.3d 462 (2nd Cir. 1996)

GANTON TECHNOLOGIES, INC., and Shirley Klamm, Ronald Brown

and Craig Small, as employees of Ganton

Technologies, Inc., Plaintiffs-Appellants,

v.

NATIONAL INDUSTRIAL GROUP PENSION PLAN, a Multi-employer

Trust Fund, Stanley L. Eisner, Ronald William Borst, Michael

Kelly, A.E. Samson, Richard Shirley, Milford E. Woodbeck,

Elmer Chatak, Dominick D'Ambrosio, Edgar Ball, Odessa Komer,

and Harvey Martin, as Trustees of the National Industrial

Group Pension Plan, Defendants-Appellees.

No. 292, Docket 95-7323.

United States Court of Appeals, Second Circuit

February 7, 1996

Argued Oct. 2, 1995.

Page 463

H. Roderic Heard, Chicago, IL (Cheryl A. Kettler, Kimberly E. Roy, Wildman, Harrold, Allen & Dixon, Chicago, IL, Thomas J. Smith, Mark R. Crosby, Thomas M. Geisler, Wildman, Harrold, Allen, Dixon & Smith, New York City, of counsel), for Appellants.

Linda E. Rosenzweig, New York City (Philip M. Berkowitz, Epstein Becker & Green, New York City, of counsel), for Appellees.

Before: MESKILL, KEARSE and ALTIMARI, Circuit Judges.

MESKILL, Circuit Judge:

This is an appeal from a judgment of the United States District Court for the Southern District of New York, Stanton, J., granting defendant-appellee National Industrial Group Pension Plan's (NIGPP) motion for summary judgment and dismissing plaintiff-appellant Ganton Technologies, Inc.'s (Ganton) claim that NIGPP violated the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461, and that the trustees of NIGPP violated their fiduciary duties imposed by ERISA. The claims arose out of Ganton's withdrawal from NIGPP and NIGPP's denial of Ganton's request for a transfer of plan assets to Ganton, which desired to start an independent pension plan.

BACKGROUND

From 1967 to 1992, Ganton and its predecessor in interest, Racine Die Cast Company (Racine) contributed to NIGPP on behalf of their employees pursuant to collective bargaining agreements with United Auto Workers Local 627. Racine entered into a participation agreement dated August 14, 1967 by which Racine agreed to be bound by the NIGPP Agreement and Declaration of Trust (the "Plan") and to contribute to NIGPP.

This lawsuit arose because Ganton and its employees believed they could gain more benefits from their contributions if they withdrew from NIGPP, a multiemployer pension plan, and formed their own single-employer pension plan. Contributions to multiemployer pension plans are negotiated by labor

Page 464

unions and individual employers, but the size of the pension paid to employees is determined by the plan.

Multiemployer plans, as the name indicates, consist of several employers that contribute to one plan. The assets of the plan are not segregated into accounts. 1 The common assets are invested and used to pay pensions to those employees of the participating employers whose rights vest according to the requirements set out in the plan document.

Multiemployer plans like NIGPP have liabilities and assets. The assets consist of the contributions made by participating employers in accordance with agreements made with the union representing its employees. The liabilities consist of the payments the plan must make to employees whose rights vest, generally consisting of a stream of payments beginning when an employee reaches a certain age and has retired.

The amount paid in benefits by the plan will be the same for employees of equal seniority whose employers contribute at the same rate, but there is no guaranteed tie between the amount contributed on behalf of a particular employee and the amount the employee actually will receive. See Caterino v. Barry, 8 F.3d 878, 879-80 (1st Cir.1993) (describing multiemployer Teamsters Pension Fund). In this case, Ganton contends that it could have provided pension benefits for its employees equal to those its employees receive under NIGPP, but for a lesser contribution, had Ganton created a single-employer plan itself. Ganton claimed this to be the case because of the "changed demographics" of its workforce. 2 Ganton considers any portion of the contributions it made that would not have been necessary in a single-employer plan to be "surplus" in which it has an interest.

Ganton requested that NIGPP transfer NIGPP's liabilities relating to the pensions of Ganton's employees and that NIGPP concurrently transfer to Ganton's new plan the portion of NIGPP assets attributable to Ganton's past contributions. Ganton then would use the assets to fund its new single-employer plan (the Ganton Plan), and would pay the already vested pensions itself. In this way, Ganton employees would retain their pensions and Ganton could take the "surplus" it would receive back from NIGPP and put it to other uses. NIGPP refused, and this action was commenced.

As we discuss below, nothing prevents Ganton and its employees from leaving NIGPP to start their own plan for hours worked in the future. The question is whether Ganton and its employees can force NIGPP to transfer liabilities accrued in the past and the supporting plan assets to Ganton's plan, so the Ganton Plan can take the place of NIGPP as the provider of Ganton employees' pensions for the already accrued pension benefits.

  1. Proceedings Before the District Court

    Ganton and three of its employees brought this suit in the Southern District of New York against NIGPP, a multiemployer defined-benefit pension plan, claiming that NIGPP violated ERISA and the Labor Management Relations Act (LMRA), 29 U.S.C. §§ 141-187, by refusing to...

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