Airco Indus. Gases v. TEAMSTERS PENSION TR. FUND

• Decision Date: 28 August 1987
• Docket Number: Civ. A. No. 84-123 MMS.
• Citation: 668 F. Supp. 893
• Parties: AIRCO INDUSTRIAL GASES, INC., Plaintiff, v. TEAMSTERS PENSION TRUST FUND OF PHILADELPHIA AND VICINITY, Defendant.
• Court: U.S. District Court — District of Delaware

668 F. Supp. 893

AIRCO INDUSTRIAL GASES, INC., Plaintiff, v. TEAMSTERS PENSION TRUST FUND OF PHILADELPHIA AND VICINITY, Defendant.

Civ. A. No. 84-123 MMS.

United States District Court, D. Delaware.

August 28, 1987.

Stanley William Balick, Wilmington, Del., for plaintiff; Robert J. Bray, Jr. and Stephen M. McManus of Robert J. Bray & Associates, Philadelphia, Pa., of counsel.

Francis J. Trzuskowski of Trzuskowski, Kipp, Kelleher & Pearce, P.A., Wilmington, Del., for defendant.

OPINION

MURRAY M. SCHWARTZ, Chief Judge.

Airco Industrial Gases, Inc. ("Airco") has brought suit for restitution of over-payments made on behalf of two employees to the Teamsters Pension Trust Fund of Philadelphia and Vicinity ("Fund"). Plaintiff originally brought this action under the Labor Management Relations Act, the Employee Retirement Income Security Act of 1974 ("ERISA"), and the state common law of unjust enrichment. The Court dismissed those claims, but permitted plaintiff to amend the complaint to bring a cause of action under the federal common law of unjust enrichment arising under ERISA, 29 U.S.C. § 1103(c)(2)(A)(ii). Airco Industrial Gases, Inc. v. Teamsters Health and Welfare Fund, 618 F.Supp. 943, 950-51 (D.Del. 1985).

The Court conducted a four-day trial on March 9-12, 1987, and oral argument was held on June 2, 1987. This opinion constitutes the Court's findings of fact and conclusions of law, as prescribed by Federal Rule of Civil Procedure 52(a). The Court finds the Fund's policy concerning employer overpayments was to refuse all requests for refunds, and this policy was not arbitrary and capricious. In light of the Fund's waiver of the "no refund" policy, as applied by its audit department manager, to cover overpayments back to January, 1983, the Court will order a refund of Airco's overpayments from January to April, 1983. The Court will deny plaintiff's request for attorney's fees and interest.

I. FINDINGS OF FACT

In June, 1986, Walter Dobromilski and John Lucas returned to Airco's employ as truck mechanics after having worked for a contract hauler for a period of years. The Airco plant in Pedricktown, New Jersey, where they worked, had two collective bargaining agreements with Teamsters Local Union No. 197: a production contract and a distribution contract. The production contract covered maintenance employees, including truck mechanics, and required Airco to make pension contributions to a private plan. The distribution contract, which covered approximately 15 employees, mandated contributions to the Fund, which is a multiemployer pension plan as defined by ERISA. 29 U.S.C. § 1002(37)(A). This contract was part of the National Master Freight Agreement and the Philadelphia Supplement until 1982. Plaintiff's Exhibit ("PX") 30.

Upon their rejoining Airco, a clerk in Airco's payroll department added Dobromilski and Lucas' names to the monthly contribution report form provided by the Fund for the pension plan. As they were covered by the production contract, however, the company was not to contribute to the Fund on their behalf. Under the Fund's established procedure, an employer would add or subtract employee names from the reports and the Fund would then make the necessary changes in listing the names on future reports sent to the employer. The responsibility for properly reporting and remitting contributions falls on the employer, not the Fund.

There is no question the mistake was due to Airco's negligence, and that it was entirely inadvertent. One possible explanation for the error is that Dobromilski and Lucas worked in Airco's distribution department, and this may have caused the payroll department to assume they were covered by the distribution contract instead of the production contract. The reason for the mistake is unimportant, and Airco erroneously paid the Fund $25,831.41 between June, 1976, and April, 1983.

Airco fortuitously discovered the error when Edward Ryan, head of the payroll department, mentioned Dobromilski and Lucas' status to Steve Toronye, a member of the labor relations department. Upon further investigation by Mr. Toronye, Airco learned it had mistakenly made pension contributions for employees who had no right to receive benefits from the Fund. On July 6, 1983, Mr. Toronye sent a letter to the Fund requesting a refund of the mistaken payments. After receiving no response, a second letter was sent on August 29. The Fund denied Airco's refund request by a letter dated September 26, 1983.

The facts surrounding the overpayment are essentially undisputed.¹ The key question is what refund policy the Fund operated under when Airco submitted its refund request in July, 1983. Plaintiff contends the Fund continued a one-year refund policy first adopted in June, 1979. Defendant argues it amended its policy in March, 1981, in response to the Multiemployer Pension Plan Act Amendments ("MPPAA"), by instituting a "no refund" policy. This latter position changed in July, 1984, back to a one-year refund.

Prior to the passage of MPPAA in 1980, ERISA § 403(c)(2)(A) provided,

In the case of a contribution which is made by a mistake of fact, paragraph (1) shall not prohibit the return of such contribution within one year after the payment of the contribution.

29 U.S.C. § 1103(c)(2)(A) (1976). The problem multiemployer pension plans confronted for post-ERISA overpayments was distinguishing between mistakes of law and fact, an issue on which the statute provided minimal guidance. On June 7, 1979, the Fund adopted a refund policy outlined by its co-counsel, Mr. Thomas Jennings, which stated:

If it is determined that the excess contribution was clearly the result of a `mistake of fact' and that there are no outstanding delinquencies owed to the Fund(s) to which an overpayment was made, then the employer would be entitled to a refund for the total amount of the excess contributions (minus the amount of any claim(s) honored by that particular Fund(s) as a result of said overpayment) received by the Fund(s) within one (1) year prior to the date of receipt of the employer's written request for a refund.

PX 71, at 5; see PX 20, at 3. The policy did not attempt to define mistakes of fact, and the Fund determined that it would seek judicial resolution in order to clarify the law. Trial Transcript ("Tr.") C-74. In 1977, the Fund had refused an employer refund request on the ground that the only mistake was one of law. The subsequent lawsuit was before the United States District Court for the Eastern District of Pennsylvania at the time the Fund adopted the one-year refund policy. The court rendered a decision favorable to the Fund on October 30, 1979. AAA Trucking Corp. v. Teamsters Pension Trust Fund, 480 F.Supp. 579 (E.D.Pa.1979). The decision was subsequently vacated and the case ordered dismissed by the Court of Appeals for the Third Circuit for lack of subject matter jurisdiction. 633 F.2d 209 (3d Cir. 1980); see Crown Cork & Seal Co. v. Teamsters Pension Fund, 549 F.Supp. 307, 310 n. 4 (E.D.Pa.1982) (discussing appellate resolution of AAA Trucking). The appellate court's dismissal in AAA Trucking took place on September 16, 1980, only ten days before the enactment of MPPAA.

The new act liberalized the permissible scope of overpayment refunds by eliminating the one-year limitation and the exclusion of overpayments made by mistakes of law. It provides:

(2)(A) In the case of a contribution, or a payment of withdrawal liability under part 1 of subtitle E of subchapter III of this chapter—

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(ii) made by an employer to a multiemployer plan by a mistake of fact or law (other than a mistake relating to whether the plan is described in section 401(a) of Title 26 or the trust which is part of such plan is exempt from taxation under section 501(a) of Title 26), paragraph (1) shall not prohibit the return of such contribution or payment to the employer within 6 months after the plan administrator determines that the contribution was made by such a mistake.

29 U.S.C. § 1103(c)(2)(A)(ii) (1982). Mr. Jennings noted that MPPAA presented the Fund with a new problem. The Trustees had to determine within six months of the date of enactment a policy for treating pre-MPPAA overpayments and act on outstanding employer refund requests. Tr. C-78. A failure to respond could, under Mr. Jennings' understanding, result in the Fund's liability for those excess contributions. In addition to this problem, a number of employers filed suit for return of overpayments shortly after MPPAA's passage. At this point, the parties strongly disagree as to whether or not the Fund adopted a new policy concerning refunds.

Mr. Jennings prepared a memorandum prior to the Trustees' March 26, 1981 meeting. He outlined the effect of MPPAA on the overpayment refund question and specifically noted the lack of guidance in the act, its legislative history, and administrative regulations on the proper policy to adopt. PX 72, at 5-8. The memorandum also discussed pending litigation filed after MPPAA's passage, and focused attention on a suit filed by the Crown Cork & Seal Company as a good test case for determining the issue of jurisdiction over employer suits and the propriety of returning excess contributions. PX 72, at 8-9. Mr. Jennings concluded by presenting the trustees with three ways of proceeding:

Alternative 1: Return of all verified employer overpayments received on or after January 1, 1975.

The first alternative would be the return of all verified employer payments (less any appropriate set offs) that were received by the Fund on or after January 1, 1975. Inherent within this alternative is a determination by the Fund administrator that these overpayments were made by a mistake of fact or law.

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Alternative 2: Agreement to toll statute of limitations

Pending further clarification of the relevant statutory amendments, including the resolution of any constitutional issues presently before the United States

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