Emp'r Trs. of W. PA Teamsters v. Union Trs. of W. PA Teamsters
| Decision Date | 01 March 2016 |
| Docket Number | 2:15-cv-1417 |
| Citation | 149 F.Supp.3d 544 |
| Parties | Employer Trustees of W. PA Teamsters and Employers Welfare Fund, Plaintiffs, v. Union Trustees of W. PA Teamsters, Employers Welfare Fund, Thomas N. Heider, Joseph A. Molinero, James W. Mcclelland, Jr., Albert J. Rush and Thomas Huck, Defendants. |
| Court | U.S. District Court — Western District of Pennsylvania |
Robert F. Prorok, Carsen N. Ruperto, Cohen & Grigsby, P.C., Pittsburgh, PA, for Plaintiffs.
Joseph J. Pass, Jubelirer, Pass & Intrieri, Pittsburgh, PA, for Defendants.
McVerry
, Senior Judge.
Pending before the are the MOTION TO DISMISS (ECF No. 8) filed by the Union Trustees of the Western Pennsylvania Teamsters and Employees Welfare Fund; and PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT (ECF No. 13) filed by the Employer Trustees of the Western Pennsylvania Teamsters and Employers Welfare Fund. The motions have been fully briefed and are ripe for disposition.
This case arises under Section 302(c)(5) of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 186(c)(5)
, and Section 502 of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132. The parties are members of the Board of Trustees of the Western Pennsylvania Teamsters and Employees Welfare Fund, a multi-employer employee benefit plan under Section 3(37) of ERISA, 29 U.S.C. § 1002(37), that was established under Section 302(c)(5) of the LMRA, 29 U.S.C. § 186(c)(5). Of the ten Trustees, five are appointed by the employers; they are the Plaintiffs in this action. The remaining five are appointed by the union; they are the Defendants in this action.
The Employer Trustees and the Union Trustees have equal voting strength. “In the event of a deadlock arising” between them, Section 3.15(a) of the Trust Agreement provides that the Trustees “may agree upon an impartial umpire to break such deadlock by deciding the dispute in question.” Pls.' Ex. A at 20, ECF No. 18-1. Furthermore, if the Trustees cannot agree to an “impartial umpire within a reasonable period of time, then, either group of Trustees...may petition the United States District Court for the Western District of Pennsylvania to appoint such impartial umpire.” Id. Language to this effect is required to be included in the Trust Agreement by Section 302(c)(5) of the LMRA, 29 U.S.C. § 186(c)(5)
). Under Section 3.15(b) of the Trust Agreement, the scope of any proceeding before the impartial umpire is “limited to the provisions of th[e] Trust Agreement...The impartial umpire shall have no jurisdiction or authority to change or modify the provisions of th[e] Trust Agreement....” Pls.' Ex. A at 21.
The Employer Trustees allege, and the Union Trustees do not dispute, that “[s]ince October 4, 1989, the Trustees have approved the payment of compensation to certain Trustees that are lawfully eligible to receive compensation to cover attendance at regular meetings, Sub-Committee meetings, seminars, annual meetings and any other duties arising out of the Trustees' position with the Fund, in addition to normal expenses incurred in the performance of those with the Fund.” Pls.' CSMF ¶ 13, ECF No. 11. The amount of compensation was initially set at $600 per month, but on December 3, 2008, the Trustees increased it from $600 to $1,000 per month. “The Trustees continued to investigate and discuss the compensation of Trustees thereafter, authorizing Fund Counsel to obtain opinion letters from the Department of Labor on compensation eligibility issues.” Id. ¶ 16.
At the Trustees' executive session on December 3, 2014, one of the Employer Trustees moved to pay compensation to eligible Trustees in “the amount of $600.00 per Trustee Sub-Committee Meeting and the amount of $600.00 per monthly Trustee Meeting, to be paid upon the Trustee's attendance at [the] meetings.” Id. ¶ 17. The Employer Trustees voted in favor of the motion, and the Union Trustees voted against it, leaving the Trustees deadlocked. As a result, the Employer Trustees sought to refer the dispute to arbitration, as envisioned by the LMRA and the Trust Agreement. The Union Trustees initially refused, arguing that the two Employer Trustees who voted for the measure were invalidly appointed. Eventually, though, the Union Trustees changed course (probably because Fund counsel provided a legal memo explaining that the Employer Trustees were validly appointed) and agreed that the dispute was arbitrable. The arbitration was scheduled for December 21, 2015.
In late August 2015, a dispute arose about whether the Employer Trustees should have to turn over income tax returns and other financial information belonging to the Employer Trustees who might be eligible to receive compensation. After the Employer Trustees declined to provide the information, the Union Trustees again refused to go to arbitration, taking the position that the Trust Agreement does not authorize the proposed payments to the Trustees.
Thereafter, the Employer Trustees initiated this action, petitioning the Court for the appointment of an arbitrator to settle the deadlock. (ECF No. 1). The Employer Trustees also brought claims against the Union Trustees for breach of fiduciary duty under Section 404(a)(1) ERISA, 29 U.S.C. § 1104(a)(1)
. The Union Trustees filed their motion to dismiss on December 29, 2015, arguing that an arbitrator cannot be appointed to decide the parties' dispute because the Trust Agreement does not authorize the payment of compensation to Trustees and so any decision by an arbitrator would exceed her authority under Section 3.15(b) of the Trust Agreement. (ECF No. 8). The Employer Trustees' motion for partial summary judgment followed on January 19, 2016. (ECF No. 13). Their position is that the Trust Agreement can be read to allow such payments, and it should be left to the arbitrator to decide which side's interpretation is correct.
Under Section 302(c)(5) of the LMRA, this Court is empowered “to appoint an impartial umpire, upon petition, in the event the trustees deadlock on an issue of trust fund administration and are unable to agree upon which umpire should resolve the dispute.” Employer Trustees of Graphic Commc'ns Int'l Union, Local 1 – B Health & Welfare Fund v. Union Trustees of Graphic Commc'ns Int'l Union, Local 1 – B Health & Welfare Fund , 428 F.Supp.2d 997, 1002 (D.Minn.2006)
. “The compulsory, statutory mechanism of arbitration is triggered once the trustees deadlock on an important aspect of trust administration.” Id. (citing Hawkins v. Bennett , 704 F.2d 1157, 1160 (9th Cir.1983) ; Geigle v. Flacke , 768 F.2d 259, 262–63 (8th Cir.1985) ). There is no dispute that the parties have reached a deadlock. The question, then, is whether the issue over which they are deadlocked is amenable to resolution by an arbitrator. That is, is the issue a matter of “trust administration”?
The Third Circuit Court of Appeals has not defined that phrase. However, other courts have considered this question and come to “at least three different conclusions.” Citrin v. Erikson , 911 F.Supp. 673, 681 (S.D.N.Y.1996)
. “The Second Circuit defines an issue of trust administration as any issue which the trustees have authority to decide under the trust agreement.” Id. (citing Mahoney v. Fisher , 277 F.2d 5, 6 (2d Cir.1960) ; Barrett v. Miller , 276 F.2d 429, 431 (2d Cir.1960) ; Singleton v. Abramson , 336 F.Supp. 754, 757 (S.D.N.Y.1971) ). Thus, “if the answer sought by the proponent [of the measure] would require action plainly beyond the powers conferred upon the trustees,” an arbitrator cannot be appointed. Barrett , 276 F.2d at 431. “In other words, while a trustee petitioning for the appointment of an umpire need not demonstrate that his interpretation that the issue was one the trustees could decide is the correct one...he must at least establish that it is a possible one.” Id. at 432. However, “a court need not order arbitration when it is prepared to say 'with positive assurance that the contract is not susceptible to an interpretation to cover the asserted dispute.”' Id. (quoting Local 1912, Int'l Ass'n of Machinists v. U.S. Potash Co. , 270 F.2d 496, 498 (2d Cir.1959) ). “In addition to looking to the terms of the Trust Agreement, other circuits have recognized a distinction between ordinary matters which are considered to constitute administration and extraordinary matters which do not.” Hodges v. Holzer , 707 F.Supp. 232, 235 (M.D.La.1988) (citing Ader v. Hughes , 570 F.2d 303, 307 (10th Cir.1978) ). “The Ninth Circuit has combined the foregoing approaches with an examination as to whether the dispute involves a structural deficiency as opposed to day-to-day fiduciary administration of the fund.” Id.
(citing Hawkins , 704 F.2d at 1157 ).
In Poston v. Caraker , 378 F.2d 439 (5th Cir.1967)
, the Fifth Circuit Court of Appeals addressed a situation similar to the one before this Court. The trust agreement at issue in Poston provided that “the trustees shall be reimbursed out of the Fund for all reasonable and necessary expenses which may occur in the performance of their duties.” Id. at 442. As in this case, the employer trustees voted to compensate themselves “as a regular expense for attending trustee meetings,” the union trustees voted against the proposal on the basis that the trust agreement did not allow the payments, and a deadlock ensued. Id. The district court, however, refused to appoint an arbitrator, siding with the union trustees. Id. at 441.
On appeal, the Fifth Circuit, citing the Second Circuit's Barrett
decision, explained that “if § 186(c)(5) does not expressly allow compensation to trus...
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