Finnell v. Cramet, Inc.

• Decision Date: 19 April 1961
• Docket Number: No. 14145.,14145.
• Citation: 289 F.2d 409
• Parties: Herman L. FINNELL et al., Appellants, v. CRAMET, INC., Oil, Chemical and Atomic Workers International, AFL-CIO, et al., Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

289 F.2d 409 (1961)

Herman L. FINNELL et al., Appellants, v. CRAMET, INC., Oil, Chemical and Atomic Workers International, AFL-CIO, et al., Appellees.

No. 14145.

United States Court of Appeals Sixth Circuit.

April 19, 1961.

Jess Parks, Jr., of McAllester, Parks, & McAllester, Chattanooga, Tenn., for appellants.

Hamilton Smith, of McDermott, Will & Emery, Chicago, Ill., Will Allen Wilkerson, Chattanooga, Tenn., John L. Lenihan, of Miller, Martin, Hitching & Tipton, Chattanooga, Tenn., on brief, for Cramet Inc.

William E. Rentfro, Denver, Colo., Will Allen Wilkerson, of Wilkerson & Abshire, Chattanooga, Tenn., for Oil, Chemical & Atomic Workers, etc.

Before McALLISTER, Chief Judge, MILLER and O'SULLIVAN, Circuit Judges.

SHACKELFORD MILLER, Jr., Circuit Judge.

Appellants filed this action against the appellee Cramet in the Chancery Court of Hamilton County, Tennessee, as a class action for the benefit of themselves and 499 employees of appellee Cramet, Inc., who were similarly situated. It seeks to recover for all members of the class their proportionate share of a pension fund which was established by the appellee Cramet for the use and benefit of its employees, which fund was distributed among certain employees of Cramet, excluding the appellants, when it terminated its operations and transferred its facilities to the Government.

The action was removed to the United States District Court, where an amended complaint was later filed, adding as defendants along with Cramet, Oil, Chemical and Atomic Workers International, AFL-CIO, and Local Union 9-671, hereinafter referred to as the Unions. The action was dismissed by the District Judge in a summary judgment proceeding.

The facts are largely stipulated, supported by numerous documentary exhibits and supplemented by depositions.

Cramet was incorporated in Delaware on February 20, 1953, and thereafter qualified to do business in Tennessee. At that time it was a wholly owned subsidiary of Crane Company, a nationally known manufacturer of valves, fittings and plumbing supplies. It was engaged in the production of titanium sponge metal for use primarily in the aircraft industry and for purchase essentially by the United States Government. Crane Company had adopted a pension plan on September 11, 1950, which plan was adopted by Cramet for its own employees on December 1, 1953. On June 5, 1956, Cramet established a plan of its own and on December 20, 1956, entered into a pension Trust Agreement with Continental Illinois National Bank & Trust Company of Chicago as Trustee. Under the Plan, employees having fifteen years continuous service with Crane Company and its subsidiaries and having either reached their 65th birthday or having become permanently disabled were eligible to retire and to receive a pension in accordance with the Plan. Cramet agreed to make contributions to the Trustee in such amounts as might be required under accepted actuarial principles to maintain the Plan and the Trust Fund in a sound actuarial condition. The Trust Agreement provided that no employee would be required to make any contributions under the Plan, and no employees of Cramet ever made any such contributions. Both the Plan and the Trust Agreement provided that they should be construed and administered in accordance with the laws of the State of Illinois. The Trust Agreement also provided that it could be amended by the Company from time to time, subject to certain limitations, one of which was that under no condition could an amendment permit the return to the Company of any part of the Trust Fund.

On July 31, 1953, Cramet entered into a contract with the General Services Administration of the United States Government, under which Cramet agreed to produce titanium sponge for the Government and the Government committed itself to purchase up to 6,000 tons of the sponge. By December 1957 Cramet had used up all but slightly more than 500 tons of its 6,000 ton option. At the same time no commercial markets were developed. In December 1957 it became imperative that Cramet find some means of disposing of its facilities and of going out of business. On March 7, 1958, a contract of sale was made between Cramet and the General Services Administration under which Cramet sold its facilities to the General Services Administration at a closing to be held March 17, 1958, it being provided, however, that the operations of Cramet after December 31, 1957, would be for the account of the Government. On March 17, 1958, the closing was held and the Cramet business thereafter wound up.

The Trust Agreement provided that upon termination of the Trust and the Plan the assets of the pension fund should be distributed, first, to assure pensions for life for those who were already receiving pensions on the date of termination. Secondly, the remaining assets should be used to pay pensions to those who on the termination date had qualified to receive pensions but had not begun to receive them. Finally, the remaining assets were to be allocated to those who on the termination date had fifteen years of continuous service but who had not reached the age of 65 or become permanently disabled.

In March 1958 there were seven employees, none of them appellants here, whose total continuous service within the terms of the pension plan exceeded fifteen years. No employees had qualified to receive pensions, however, and these seven employees would have therefore shared the entire pension fund if the Plan had not been amended.

On March 15, 1958, representatives of Cramet met with the negotiating committees of the unions and announced that the operation of the plant would be discontinued. Following this meeting Cramet sent out a notice to the employees of the discontinuance of business and the reasons therefor. On March 18, 1958, a further meeting was held between the representatives of the Company and the unions. At this meeting the Company representative presented a letter providing for the allocation of the pension fund on the following bases. Each employee's portion of the fund would be based on his length of service with the Company through December 31, 1957, and his earnings during 1957 as reported on revenue form W-2, the allocation to any employee in no event to be less than $200.00. The term "employee" for the foregoing purposes included only those employees who had completed one or more years of continuous service with the Company on December 31, 1957, whose continuing service with the Company was not broken prior to that date and who either (a) performed work for the Company during the last pay period in the calendar...