Eckert v. Chauffeurs, Teamsters & Helpers Local Union 776 Profit Sharing Plan
| Decision Date | 26 January 2018 |
| Docket Number | CIVIL ACTION NO. 1:15–CV–1920 |
| Citation | 306 F.Supp.3d 659 |
| Parties | Mario ECKERT, Robert Baker, Steve Billet, Kevin Bloom, Jr., Shawn Clark, Karen Dietz, Herbert C. Garber, Gisbel Garcia, Jr., Mario Garofalo, Bradley Hockenberry, Martin Parson, and Fred Wilson, Plaintiffs v. CHAUFFEURS, TEAMSTERS AND HELPERS LOCAL UNION 776 PROFIT SHARING PLAN, Chauffeurs, Teamsters and Helpers Local Union 776, Edgar H. Thompson, and Ronald W. Hicks, Defendants |
| Court | U.S. District Court — Middle District of Pennsylvania |
Michael J. Crocenzi, Barley Snyder LLP, York, PA, Peter J. Russo, Law Offices of Peter J. Russo, PC, Mechanicsburg, PA, for Plaintiffs.
Irwin W. Aronson, Willig, Williams & Davidson, Harrisburg, PA, Ralph J. Teti, Willig, Williams & Davidson, Philadelphia, PA, for Defendants.
Plaintiffs commenced this action against defendants pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. Presently before the court for judgment is the complaint (Doc. 1) against defendants Chauffeurs, Teamsters and Helpers Local Union 776 Profit Sharing Plan ("the Plan") and Chauffeurs, Teamsters and Helpers Local Union 776 ("the Union") for denial of benefits and against the Union, Edgar H. Thompson ("Thompson"), and Ronald W. Hicks ("Hicks") for breach of fiduciary duty. Also before the court are defendants' counterclaims (Doc. 27) against plaintiffs Herbert C. Garber ("Garber"), Mario Garofalo ("Garofalo"), and Fred Wilson ("Wilson") for breach of fiduciary duty in violation of the Labor–Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 501(a), and against Garofalo for breach of fiduciary duty in violation of ERISA. A non-jury trial was held on October 23 and October 24, 2017. Pursuant to Federal Rule of Civil Procedure 52(a), the court's findings of fact and conclusions of law are set forth below.
The International Brotherhood of Teamsters charters the Union which is governed by the Local 776 Union Bylaws. (See P–1 at 1–2). The Union's executive board consists of the following positions: president, vice president, secretary-treasurer, recording secretary, and three trustees. (Doc. 54 ¶ 7; P–1 at 3–8). Business agents and stewards assist the executive board in the daily governance of the Union and administration of the bylaws. (P–1 at 8). The bylaws provide for election of executive board members and business agents by the membership every three years. (Id. at 17). The International Brotherhood of Teamsters supplies local unions with a "working Manual" designed to guide each local union in developing its own policies and procedures. (D–8).
The executive board must meet monthly and the recording secretary takes down the minutes. (Doc. 54 ¶¶ 7–8). A majority vote is required for all executive board decisions. (Id. ¶ 7). The president casts the deciding vote on any question when a tie occurs. (P–1 at 3; 10/23/17 Trial Tr. 121:7–11). The executive board's monthly meeting minutes are read aloud at general membership meetings but are not subject to general membership approval. (Doc. 54 ¶ 9). At each executive board meeting, the previous meeting's minutes are reviewed and accepted with corrections as necessary. (See generally P–60). Members have a right of access to information concerning the conduct of the Union's business. (P–1 at 35). The secretary-treasurer is required to provide access to Union records to any member during normal business hours upon request. (Id. at 5).
The Union administers and contributes to an employee pension benefit plan subject to ERISA. (Doc. 54 ¶¶ 2–3). The executive board is authorized to set the terms and conditions of union employment including, inter alia , unilaterally changing retirement benefits. (P–1 at 16); see also Eckert v. Chauffeurs, Teamsters & Helpers Local Union 776 Profit Sharing Plan, No. 15-CV-1920, 2017 WL 959340, at *4 (M.D. Pa. Mar. 13, 2017). The Union designates trustees to administer the benefit plan. (Doc. 54 ¶ 10). The plan is funded solely through employer contributions and investment income, and contributions made to the plan in a particular year are allocated among participants' accounts according to a salary-based formula. (Id. ¶¶ 4, 6). Participants may request distribution from the plan upon retirement or separation from covered employment. (Id. ¶ 5).
Prior to 2008, the Union provided retirement benefits to employees through participation in the Joint Council 53 retirement trust. (P–3). On May 5, 2008, the executive board voted to withdraw from the Joint Council 53 retirement plan and establish an alternative plan for Union employees. (P–4 at 1; P–60 at 5/5/08). Hicks served as a Union trustee from January 2008 until his resignation in 2009, and he attended the May 5, 2008 meeting. (10/23/17 Trial Tr. 95:17–97:23). Thompson served as a business agent from 2008 through 2011. (Id. at 35:9–13, 36:6–7, 71:19–21).
After withdrawing from the Joint Council 53 trust, the Union implemented an adoption agreement and summary plan description for a new retirement benefit plan (hereinafter the "Plan") on December 20, 2008. (See P–5; P–6). The Plan was retroactively effective on January 1, 2008. (P–5 at 1; P–6 at 1). An employee became eligible to participate in the Plan after completing one year (1,000 hours) of covered service. (P–5 at 1; P–6 at 2). The executive board waived this one-year-of-service requirement for anyone employed by the Union as of the Plan's January 1, 2008 effective date. (P–5 at 1; P–6 at 2). On March 23, 2009, the executive board approved a Plan restatement which retained the one-year-of-service requirement waiver for employees hired on or before January 1, 2008. (P–9 at 1, 23; P–10 at 5; 10/23/17 Trial Tr. 102:3–12; see generally P–11). After approving the 2009 restatement, the executive board amended the Plan in November 2009 and twice in 2011. (P–12; P–13; P–14). The executive board meeting minutes make no mention of the 2009 restatement or the Plan amendments in 2009 and 2011. (See generally P–61; see also 10/23/17 Trial Tr. 61:7–63:4, 103:18–105:23).
The Union held its regularly scheduled election of executive board members and business agents in October 2011. (Doc. 54 ¶ 11). The following officials were elected to a three-year term beginning January 1, 2012 and concluding December 31, 2014: President Fred Wilson, Vice President John White ("White"), Secretary–Treasurer Mario Garofalo, Recording Secretary Herbert Garber, and Trustees Robert Green ("Green"), Joe Thevenin ("Thevenin"), and Chad Turns ("Turns"). (Id. ¶¶ 11–12; 10/23/17 Trial Tr. 178:14–18; 10/24/17 Trial Tr. 57:3–10; Green Dep. 5:6–25; Turns Dep. 5:24–6:8). Upon taking office, the executive board hired Karen Dietz ("Dietz") as secretary to the Union president. (P–60 at 1/3/12; see also Doc. 54 ¶ 16).
The new executive board received two main grievances from Union employees about their pension benefits.2 First , newly elected and appointed Union employees complained that they were losing a year of benefits in the absence of a waiver addressing the one-year-of-service requirement. (10/23/17 Trial Tr. 122:2–20, 129:22–130:2; 10/24/17 Trial Tr. 8:18–21, 35:23–36:15, 57:16–22, 81:20–82:8, 105:16–106:4). Second , some employees feared a degradation of their pension benefits because they were compelled to make investment decisions without professional guidance. (10/24/17 Trial Tr. 6:24–7:6). The executive board charged Garofalo as secretary-treasurer with exploring solutions to these concerns. (10/23/17 Trial Tr. 122:20–25; 10/24/17 Trial Tr. 8:22–9:4, 57:23–58:13, 80:8–18, 82:9–14).
At the conclusion of his investigation, Garofalo presented two recommendations to the Union executive board. He proposed moving the Union's retirement investments to Merrill Lynch to address employee concerns regarding investment decisions. (10/24/17 Trial Tr. 7:19–8:17, 80:8–81:8). The executive board approved this recommendation and the Union's retirement investments were transferred to Merrill Lynch in June 2012. (P–60 at 6/4/12). Garofalo also recommended establishing an amended or restated pension plan which would mirror the 2009 restatement but include a waiver of the one-year-of-service requirement for anyone employed on or before September 1, 2012. (10/23/17 Trial Tr. 129:1–2; 10/24/17 Trial Tr. 9:5–16). To achieve this objective, the executive board retained Continental Benefit Group Continental Benefit Group ("Continental") as the new third party contract administrator for the Plan. (Doc. 54 ¶ 14; see also 10/24/17 Trial Tr. 26:5–22).
Continental drafted a proposal that reflected a waiver of the one-year-of-service requirement. (Id. ¶ 15). The summary plan description stated in relevant part: "[I]f you were an eligible employee as of September 1, 2012, you shall become a participant as of that date for purposes of Employer Discretionary Contributions." (P–18 at 2). At the July 2, 2012 executive board meeting, Garofalo provided each board member with a copy of the proposal and supporting documents. (10/23/17 Trial Tr. 127:6–129:5; 10/24/17 Trial Tr. 9:20–25, 10:19–11:5, 31:14–15; see also P–17; P–18; P–19). The executive board members reviewed the proposed documents, discussed the various amended provisions and the cost to the Union of the one-year-of-service requirement waiver, and voted to approve the 2012 Plan amendment. (10/23/17 Trial Tr. 127:14–130:21, 135:4–136:13, 180:4–183:19; 10/24/17 Trial Tr. 11:6–18, 14:6–15:14, 53:2–13, 59:3–61:16, 70:1–12, 82:21–85:6, 97:21–24, 99:2–14, 108:20–109:12; Green Dep. 7:5–8:3, 9:24–11:5; Turns Dep. 11:6–17, 8:20–9:14, 21:4–18, 37:25–38:7, 72:3–21; P–15 at 3; P–60 at 7/2/12).
The waiver affected members of the executive board who participated in the Plan as well as office personnel. (10/23/17 Trial Tr. 65:24–66:21, 186:17–25; 10/24/17 Trial Tr. 99:2–11). Executive board members White, Thevenin, Green, and Turns each voted to approve the 2012 Plan a...
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Eckert v. Chauffeurs
...(Doc. 63).I. Factual Background & Procedural History1 The Union administers an employee pension benefit plan subject to ERISA. Eckert, 306 F. Supp. 3d at 664. The Union's executive board sets the terms and conditions of Union employment and this authority extends to retirement benefits. Id.......
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