Demisay v. Local 144 Nursing Home Pension Fund
| Decision Date | 12 June 1991 |
| Docket Number | D,No. 1051,1051 |
| Parties | 137 L.R.R.M. (BNA) 2581, 60 USLW 2025, 119 Lab.Cas. P 10,794, 13 Employee Benefits Ca 2387 Nicholas DEMISAY, et al., Plaintiffs-Appellants, v. LOCAL 144 NURSING HOME PENSION FUND, et al., Defendants-Appellees. ocket 90-7894. |
| Court | U.S. Court of Appeals — Second Circuit |
Ronald E. Richman, New York City (Chadbourne & Parke, Mark E. Brossman, Eileen M. Fields, of counsel), for plaintiffs-appellants.
Henry Rose, Washington, D.C. (Epstein, Becker & Green, P.C., Michael L. Strickler, Linda E. Rosenzweig, Erica L. Summers, of counsel), for defendants-appellees.
Carol Connor Flowe, General Counsel, Washington, D.C. (Jeanne K. Beck, Deputy General Counsel, Nancy S. Heermans, Sr. Counsel, Marc A. Tenenbaum, Office of the General Counsel, Washington, D.C., of counsel), for amicus curiae Pension Ben. Guar. Corp.
Gerald M. Feder, Washington, D.C. (Feder & Associates, David R. Levin, Carla N. Giammichele, of counsel), for amicus curiae National Coordinating Committee for Multiemployer Plans.
Before KEARSE, PRATT and McLAUGHLIN, Circuit Judges.
In Local 50, Bakery and Confectionery Workers Union, AFL-CIO v. Local 3, Bakery and Confectionery Workers Union, AFL-CIO, 733 F.2d 229 (2d Cir.1984), we held that one union's health benefits trust fund was required to transfer certain monies to another union's health benefits trust fund when all the employees of an employer had shifted their union allegiance from one union local to another. Today, we must revisit that problem in a slightly different context, where an employer leaves one set of multi-employer trust funds in favor of a different set of trust funds.
Specifically, the question before us is whether, when an employer leaves pension and welfare trust funds in favor of another set of trust funds, Sec. 302(c)(5) of the Labor Management Relations Act ("LMRA") requires a reallocation of monies paid to the former funds on behalf of its employees, so that the monies are used "for the sole and exclusive benefit of the employees of such employer" as those terms are used in Sec. 302(c)(5). Because we believe that absent some reallocation of monies, the former fund would suffer from a "structural defect", we reverse the judgment of the district court and remand with instructions
to enter partial summary judgment in favor of the plaintiffs.
The appellants are management trustees, employers and management companies ("Southern Trustees", "Southern Employers" and "Southern Management Companies", respectively) which comprise the membership of the Local 144 Southern New York Residential Health Care Facilities Association Pension and Welfare Funds ("Southern Funds"), and employees ("Southern Employees") of the Southern Employers. Until 1981, the members of the Southern Funds were members of the Greater New York Health Care Facilities Association, Inc. ("Greater New York"), a multiemployer bargaining association, and were parties to collective bargaining agreements between Greater New York and Local 144, Hotel, Hospital, Nursing Home and Allied Services Employees Union, SEIU, AFL-CIO ("Local 144"). Pursuant to those agreements, the Southern Employers were required to and did contribute to pension and welfare funds established for the benefit of employees of the Greater New York employers ("Greater Funds", or separately, "Greater Pension Fund" and "Greater Welfare Fund").
The relationship between the Southern Employers and Greater New York ended in 1981, when the Southern Employers withdrew their membership in Greater New York. Upon their leaving Greater New York, the Southern Employers executed their own collective bargaining agreements with Local 144, agreements which obligated the Southern Employers to continue contributing to the Greater Funds on behalf of their employees.
This arrangement lasted until 1984, when the Southern Employers decided also to withdraw from the Greater Funds and, along with B.N.H. Management Associates, Inc., to establish their own pension and welfare funds. The Southern Employers then negotiated with Local 144 for a new collective bargaining agreement that allowed the new funds to be established. On November 30, 1984, the parties to that agreement provided for the establishment of the Southern Funds.
The agreement contained no provisions mandating a transfer of reserve funds from the Greater Funds to the Southern Funds. The agreement did provide, however, that (1) members of or contributors to the Southern Funds could sue to compel such a transfer, and (2) Local 144 would not oppose such a suit, provided that the suit was "consistent with applicable law."
The agreement clearly illustrates that Local 144's primary concern was to assure that none of its members would suffer a loss of benefits as a result of the Southern Employers' change from the Greater Funds to the Southern Funds. To this end, the agreement provided not only for a continuity of benefits for covered employees, but also contained a requirement that the Southern Funds would provide the same level of benefits as had the Greater Funds. The Southern Employers were required to contribute to the Greater Welfare Fund until a date two months prior to the Southern Funds' operation. Additionally, the Greater Pension Fund ceased to accrue pension credits for the Southern Employees on July 1, 1984. The Southern Employers made pension contributions after July 1, 1984 to an escrow account maintained for the purpose of building reserves for the Southern Funds.
The Southern Funds were established on October 18, 1985, with the execution of trust agreements. The trustees of the new funds agreed that the Southern Funds would become operational on December 1, 1985. On November 5, 1985, the Southern Trustees agreed that the Southern Pension Fund would fully recognize all years of credited service earned by participants who had not yet vested under the Greater Pension Fund. Those employees who had vested under the Greater Pension Fund, since they would receive a partial pension from that fund, would be provided a supplemental portion of their ultimate benefit by the Southern Pension Fund, so that they would receive the same total benefit, but part would be paid by the Greater Pension Fund, where they were already vested, and To help finance this change from the Greater Funds to the Southern Funds, plaintiffs desired to have portions of the reserves in the Greater Funds that represented contributions on behalf of the Southern Employees transferred to the Southern Funds. To that end, plaintiffs filed this action in the district court, claiming (1) that the Greater Funds' trust documents, because they failed to provide for a transfer of a portion of their reserves to the Southern Funds, suffered from a "structural defect" which violated Sec. 302(c)(5) of the LMRA, 29 U.S.C. Sec. 186(c)(5); (2) that the failure of the Greater Funds to provide asset transfer rules violated Sec. 4234 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Sec. 1414; and (3) that the defendant Greater Fund trustees had breached their fiduciary duties under Sec. 404 of ERISA, 29 U.S.C. Sec. 1104.
the remainder or supplemental portion would be paid by the Southern Pension Fund.
In an opinion reported at 710 F.Supp. 58 (S.D.N.Y.1989), the district court denied the plaintiffs' motion for partial summary judgment, granted the defendants' motion for summary judgment on the first and third claims, and dismissed the plaintiffs' second claim for lack of standing. On the first claim, involving Sec. 302(c)(5), the district court distinguished our decision in Local 50, noting that the Local 50 panel was influenced by policy concerns regarding collective bargaining. Local 50 involved employees who had changed bargaining representatives (and, hence, health benefit funds), while here, it was the employers who had initiated the change of funds. Consequently, the district court held, "[t]he absence of those [collective bargaining] considerations requires a different result here." Id. at 63. The plaintiffs renew their arguments on appeal.
As an initial matter, we must consider the appellees' contention that ERISA, not the LMRA, controls this appeal, since ERISA is a "comprehensive and reticulated" statute, cf. Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 361-62, 100 S.Ct. 1723, 1726, 64 L.Ed.2d 354 (1980), and as a specific statute, must be given precedence over a more general one. Some background on this statutory scheme is necessary to understand how the statutes relate to each other.
In 1980, Congress passed the Multiemployer Pension Plan Amendments Act ("MPPAA"), which, inter alia, added Sec. 4235 of ERISA, 29 U.S.C. Sec. 1415, to require the transfer of assets and liabilities from one pension plan to another when a change in pension plans comes about "as a result of a certified change of collective bargaining representative." Since the MPPAA was silent on transfers resulting from other scenarios, the appellees argue that Congress must have meant for asset transfers to occur only when the change is triggered by a certified change of collective bargaining representative; thus Sec. 302(c)(5), in the appellees' view, cannot be read to make a structural defect out of a failure to transfer assets in situations not covered by Sec. 4235 of ERISA.
We reject this argument. First, the proposition that a specific statute controls a general one applies only when the statutes are irreconcilable. When two statutes can live a peaceful coexistence, we must give effect to both of congress's commands. See Morton v. Mancari, 417 U.S. 535, 551, 94 S.Ct. 2474, 2483, 41 L.Ed.2d 290 (1974); Romano v. Luther, 816 F.2d 832, 840 (2d Cir.1987). It is well established that trust funds such as the ones at hand are governed jointly by the LMRA and ERISA;...
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