Hartline v. Sheet Metal Workers' Nat. Pension Fund

• Decision Date: 14 September 2000
• Docket Number: No. Civ.A.1998-1274 RMU.,Civ.A.1998-1274 RMU.
• Citation: 134 F.Supp.2d 1
• Parties: Robert E. HARTLINE et al., Plaintiffs, v. SHEET METAL WORKERS' NATIONAL PENSION FUND et al., Defendants.
• Court: U.S. District Court — District of Columbia

Page 1

134 F.Supp.2d 1

Robert E. HARTLINE et al., Plaintiffs, v. SHEET METAL WORKERS' NATIONAL PENSION FUND et al., Defendants.

No. Civ.A.1998-1274 RMU.

United States District Court, District of Columbia.

September 14, 2000.

COPYRIGHT MATERIAL OMITTED

George Michael Chuzi, Kalijarvi, Chuzi & Newman, P.C., Washington, DC, David S. Preminger, Rosen, Szegda, Preminger & Bloom, New York City, for Plaintiffs.

Steuart Hill Thomsen, Nicholas Theodore Christakos, Anthony J. Costantini, Sutherland, Asbill & Brennan, L.L.P., Washington, DC, David R. Levin, Kilpatrick Stockton, LLP, Washington, DC, Marc Harold Rifkind, I, Slevin & Hart, P.C., Washington, DC, Franklin K. Moss, Spivak, Lipton, Watanabe, Spivak & Moss, New York City, for Defendants.

MEMORANDUM OPINION

URBINA, District Judge.

GRANTING THE TRUSTEE DEFENDANTS' MOTION TO DISMISS; GRANTING THE SMWIA DEFENDANTS' MOTION TO DISMISS; GRANTING IN PART AND DENYING IN PART THE PLAINTIFFS' MOTION TO AMEND THE COMPLAINT; DENYING THE PLAINTIFFS' MOTION TO ORDER SETTLEMENT DISCUSSIONS AND STAY THE PENDING MOTIONS

I. INTRODUCTION

This ERISA matter is before the court on a motion to dismiss filed by defendants Sheet Metal Workers' International Association ("SMWIA") and Arthur Moore, in his capacity as President of the SMWIA (collectively, "the SMWIA defendants"), a motion to dismiss filed by defendants Board of Trustees of the Sheet Metal Workers' National Pension Fund ("Board of Trustees"), Arthur Moore, Matthew B. Hernandez, Jr., Clinton O. Gowan, Jr., Bruce Stockwell, Alan J. Chermak, Ronald Palmerick, and the Estate of Gordon Jones (collectively, with the Board of Trustees, "the Trustee defendants"), a motion for leave to file a second amended complaint filed by plaintiffs Robert E. Hartline, Eugene Hintz, Ronald W. McCarthy, Joseph Valdastri, and Eurie Williams (collectively, "the named plaintiffs"), and the named plaintiffs' motion to refer this action to a magistrate judge for settlement discussions and to stay consideration of the pending motions to dismiss during such discussions.

The named plaintiffs bring this consolidated action on behalf of themselves and on behalf of a class of all others similarly situated (collectively, with the named plaintiffs, "the plaintiffs") under sections 502(a)(1)(B), (a)(2), (a)(3) and 510 of the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132(a)(1)(B), (a)(2), (a)(3) and § 1140, against the Sheet Metal Workers' National Pension Fund (the "Pension Fund"), the Trustee defendants, and the SMWIA defendants. This court has subject matter-jurisdiction pursuant to ERISA section 502(e), 29 U.S.C. § 1132(e). This court has supplemental jurisdiction over any other claims pursuant to 28 U.S.C. § 1367(a). For the reasons stated herein, this court grants the Trustee defendants' motion to dismiss, grants the SMWIA defendants' motion to dismiss, grants in part and denies in part the plaintiffs' motion for leave to file a second amended complaint, and denies the plaintiffs' motion for referral to a magistrate judge for settlement discussions and for a stay of consideration of the pending motions during such discussions.

II. BACKGROUND

A. Facts

The named plaintiffs are retired employees of three different employer-participants in the Pension Fund. (Am. Compl.¶¶ 5-11.) Each named plaintiff also is a member of a local union affiliated with the SMWIA and, at some time prior to their respective retirements, worked under the auspices of his respective local union. (Am.Compl.¶ 10.) Each named plaintiff has been a participant and beneficiary of the Pension Fund within the meaning of ERISA sections 3(7) and 3(8), 29 U.S.C. §§ 1002(7) and 1002(8), and is currently receiving a retirement pension from the Pension Fund. (Am.Compl.¶ 11.)

The Pension Fund is an employee benefit plan within the meaning of ERISA section 3(3), 29 U.S.C. § 1002(3), an employee pension benefit plan within the meaning of ERISA section 3(2), 29 U.S.C. § 1002(2), a defined benefit plan within the meaning of ERISA section 3(35), 29 U.S.C. § 1002(35), and a multiemployer pension fund within the meaning ERISA section 3(37)(A), 29 U.S.C. § 1002(37)(A). (Am.Compl.¶ 12.) The plaintiffs allege no substantive wrongdoing by the Pension Fund and have named the Pension Fund "solely for the purpose of relief." (Am.Compl.¶ 12.)

The Board of Trustees of the Pension Fund is comprised of natural persons, half of whom have been appointed by the SMWIA and half of whom have been appointed by employers who contribute to the Pension Fund. (Am.Compl.¶ 13.) The Board of Trustees as an entity is a fiduciary within the meaning of ERISA section 3(21)(A), 29 U.S.C. § 1002(21)(A). (Am. Compl.¶ 13.) Defendants Arthur Moore Matthew B. Hernandez, Jr., Clinton O. Gowan, Jr., Bruce Stockwell, Alan J. Chermak, Ronald Palmerick, Robert J. Fanning, Cavet Snyder, Robert Custer, Ronald Simpson, Gordon Jones and Edward J. Carlough allegedly were directly responsible for the administration and operation of the Pension Fund, are or were members of the Board of Trustees and are or were fiduciaries within the meaning of ERISA section 3(21)(A), 29 U.S.C. § 1002(21)(A). (Am.Compl.¶ 14.)

The SMWIA is a labor organization within the meaning of Labor Management Relations Act section 201(5), 29 U.S.C. § 1002(5), and is the current or former employer of certain named plaintiffs and members of the putative class. (Am. Compl.¶ 16.) The SMWIA is affiliated with many local unions throughout the United States (the "locals"), each of which bargains collectively with employers in its jurisdiction on behalf of its members, who also are members of the SMWIA. (Am. Compl.¶ 21.) The collective bargaining agreements entered into by the majority of the locals require the signatory employers to contribute to the Pension Fund on behalf of their employees who are members of the local. (Am.Compl.¶ 21.) The contribution rate varies from one local to another. (Am.Compl.¶ 21.)

The Pension Fund also receives contributions from employers that are not parties to collective bargaining agreements but that are related to SMWIA (the "Related Employers"). (Am.Compl.¶ 23.) The Related Employers include the SMWIA, the National Training Fund for the Sheet Metal & Air Conditioning Industry ("NTF") and the National Energy Management Institute ("NEMI"). (Am. Compl.¶ 23.) The Related Employers have employees who are both members and non-members of the SMWIA. (Am. Compl.¶ 23.) Related Employers contribute to the Pension Fund pursuant to "Participation Agreements" rather than collective bargaining agreements. (Am. Compl.¶ 24.) The Pension Fund's Board of Trustees allegedly unilaterally sets the contribution rates to be paid by the Related Employers. (Am.Compl.¶ 24.) The Trustee defendants set non-uniform contribution rates for the SMWIA, the NTF and the NEMI to pay on behalf of their SMWIA-member employees. (Am. Compl.¶ 24.) The contribution rate paid on behalf of any such employee is the rate established by collective bargaining by that employee's "home local union." (Am. Compl.¶ 25.) The SMWIA makes no Pension Fund contributions on behalf of any SMWIA employee whose local union has not negotiated for employers in its jurisdiction to make Pension Fund contributions and, therefore, such employees are ineligible for Fund benefits. (Am. Compl.¶ 26.) The NTF makes Pension Fund contributions on behalf of any NTF employee whose local union has not negotiated to require employers in its jurisdiction to make Pension Fund contributions. (Am.Compl.¶ 26.) However, the NTF makes such contributions at a rate arbitrarily selected by the Defendants. (Id.) The plaintiffs contend that this system sets contribution rates and, therefore, pension amounts, without any relation to a participant's employer, job, duties, or salary. (Am.Compl.¶ 26.)

The plaintiffs assert eight claims. They assert the first, second, third, fifth, seventh, and eighth claims only against the Trustee defendants, and the fourth and sixth claims only against the SMWIA defendants. The plaintiffs contend that the Trustee defendants breached their fiduciary duty under ERISA section 404(a)(1), 29 U.S.C. § 1104(a)(1), by establishing non-uniform. Pension Fund contribution rates for contributions by the plaintiffs' former employers on behalf of the plaintiffs. (Am Compl. Claims 1, 2 and 3.) The plaintiffs ask that the pension plan be reformed to provide higher pension benefit levels. (Id.) The plaintiffs further assert that the Trustee defendants acted arbitrarily and capriciously in setting contribution rates that the SMWIA, the NTF and the NEMI would pay on behalf of class members. (Am.Compl. ¶ 29.) The plaintiffs contend that the contribution rate system creates a disparity in pension-benefit computations among the class and that the disparity: (1) is not required by any provision of the Pension Fund or ERISA, (2) bears no rational relation to any legitimate purpose of the Pension Fund and (3) is antithetical to the fiduciary requirements of ERISA section 404(a)(1), 29 U.S.C. § 1104(a)(1). (Am.Compl. ¶ 29.) The plaintiffs allege that employers of certain SMWIA, NTF, and/or NEMI employees contributed at the "Maximum Contribution Rate" — the prevailing highest contribution rate paid by any employer contributing to the Pension Fund — and, therefore, those employees will receive pension benefits based on that rate. (Am.Compl. ¶¶ 18 and 30.) The plaintiffs seek permanent injunctive relief reforming the Pension Fund to require that the pension-benefit calculation for class members be based on the Maximum Contribution Rate. (Am.Compl.¶ 31.)

The plaintiffs also allege that the SMWIA, at the direction of Arthur Moore, stopped contributing to the Pension Fund on behalf of its participating employees. (Am.Compl. ¶ 34, Claim 4.) The plaintiffs claim this action by the SMWIA violates ERISA section 510, 29 U.S.C. § 1140, because it was in retaliation for the commencement of the...