Hauser v. Farwell, Ozmun, Kirk & Company
| Decision Date | 07 May 1969 |
| Docket Number | No. 3-66 Civ. 355.,3-66 Civ. 355. |
| Citation | 299 F. Supp. 387 |
| Parties | Richard HAUSER and Leonard LeTendre, on behalf of themselves and all similarly situated, Plaintiffs, v. FARWELL, OZMUN, KIRK & COMPANY, Defendant. LOCAL 970, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA; Earl Drange; Donald F. Liljedahl, Defendants and Third-Party Plaintiffs, v. Martin UNGER, Silas M. Dahlin and Stanley Cunningham, Third-Party Defendants. |
| Court | U.S. District Court — District of Minnesota |
Sax & Dove, by Paul D. Dove, St. Paul, Minn., for plaintiffs.
A. Patrick Leighton, Moore, Costello & Hart, St. Paul, Minn., appeared for defendant Farwell, Ozmun, Kirk & Co.
Lindquist, Magnuson & Glennon, by William C. Mortenson, Minneapolis, Minn., for defendants.
There was no appearance for third-party defendants.
This is a class action instituted on behalf of 37 former employees of the Metal Fabricating Division of defendant Farwell, Ozmun, Kirk & Company (FOK) against that company and against Local 970 of the Teamsters Union (Union) and two of its individual officials. The dispute arises first over who is entitled to the cash proceeds of a non-contributory pension fund remaining upon the cessation of business by FOK's Metal Fabricating Division and the expiration of a collective bargaining agreement and second over whether, despite the cessation of business by such Division, FOK remains obligated to make future contributions to such pension fund for the benefit of plaintiffs. The principal defenses apart from an attack upon the court's jurisdiction for failure of plaintiffs to exhaust administrative remedies, are first that on cessation of business FOK and the Union mutually agreed in writing in such a manner as to bind all plaintiffs to a disposition of the cash remaining in the pension fund by providing pensions for those former employees between the ages of 62 and 65 (3 in number) thereby more than exhausting the fund and second, that on cessation of business and the termination of the collective bargaining agreement with the Union FOK's obligation to contribute further to the pension fund automatically ceased. Plaintiffs have joined the Union and two of its officials as defendants claiming that by entering into the agreement aforesaid, the Union failed fairly to represent the plaintiffs and discriminated against them as Union members. The Union has brought in as third party defendants the three persons who were between the ages of 62 and 65 and who received the benefit of the cash balance remaining in the pension fund by the agreement providing pensions for them. None of them has responded or answered and all three are in default in this action.
This court has subject matter jurisdiction of this controversy under 29 U.S.C. § 1851 inasmuch as there is here involved an alleged contract violation between an employer and a labor organization. Jurisdiction inheres even though the suit is brought by individual members of a labor organization rather than by the Union itself to enforce personal rights if such are embodied in the collective bargaining agreement.2
At least a brief statement of facts is necessary to an understanding of the controversy. The collective bargaining agreement between FOK and the Union in force at the time of cessation of business of the Metal Fabricating Division in 1966 was dated January 31, 1963 and provided for the creation of a Pension Plan, superseding a prior 1958 plan, to be duly qualified under Treasury Department Regulations. The plan required no contributions by the employees, and provided "normal retirement" at age 65 with a minimum of ten years of employment prior thereto as eligibility for a pension. A monthly pension of $2.00 for each year of prior employment was specified. The plan provided as to financial contributions:
Emphasis added
The plan, though embodied in an agreement dated January 1, 1963 obviously contemplated that all employees who became 65 after that date could count their service for all prior years — not just from 1963 on. This caused the reference to "past service credits" above.
The 1963 Collective Bargaining Agreement clearly envisioned another written document, i. e., a pension agreement since it provided:
"* * * said new pension plan * * shall be drafted as rapidly as possible but in any case no later than June 30, 1963."3
No provision appears in the collective bargaining agreement for any "early" or prior-to-age-65 retirement. The collective bargaining agreement was duly ratified by the Union membership. In due course, FOK entered into a "Group Deposit Administration Contract" with Minnesota Mutual Life Insurance Company. This provided, inter alia, normal retirement date at age 65, a monthly annuity of $2.00, multiplied by the number of full years of service, and that (Sec. 5):
"A participant, upon termination of employment prior to Normal Retirement Date shall forfeit all rights to any benefits under this contract."
Section 6 provided:
"There are no early retirement benefits under this contract."
No reference appears in the collective bargaining agreement of January 1, 1963 concerning what should happen in the event the entire contract (and not the employment of one or more individuals) became terminated. The Group Deposit Administration Contract did, however, contemplate the possibility of the cessation of contributions by FOK and provided:
It appears from the above that on termination of contributions pensions for those then aged 65 would first be provided, and then, were a surplus to remain, a paid up deferred annuity under paragraph C. 3. would be provided for every other employee who had any accrued annuity credits, i. e., who had been an employee for a period of a year or more. Though the 37 plaintiffs in this class action are all persons with ten years or more of service, it seems clear that this period of service is immaterial under paragraph C. 3. (except to the extent of course that each year of service counts for any employee in determining the amount of pension he will receive).
It is stipulated that after providing for two persons who had reached age 65 and were thus eligible under 12.02 C. 1. above, and concerning whom there is no dispute in this lawsuit, there remained in the pension fund $11,897.12. It appears from stipulated facts that were this amount of $11,897.12 pro rated among the plaintiffs and other employees, not plaintiffs in this lawsuit, pursuant to paragraph C. 3. above, plaintiffs would receive at age 65 amounts varying from $1.09 to $4.53 per month. Many of course would wait years before receiving anything and normally some would be deceased prior to reaching that age. The latter figure represents the highest any would receive and the average payment would approximate $2.70 per month.5
The case would end here, and judgment would be entered in accordance with paragraph C. 3. above were it not for a claimed written agreement executed subsequent to the announcement of the closing down of the Metal Fabricating Division of FOK. By this agreement the Union and FOK covenanted to use the $11,897.12 plus an additional amount of $1,771.18 which FOK agreed to contribute to provide what have been referred to as meaningful pensions to three former employees (third party defendants herein) who were 62 years of age and over but who had not yet reached 65. This modification, if valid, brings into prominence paragraph 12.02 C. 2., relating to early retirement. The application of the funds in this manner left none to be applied under C. 3. above and if this agreement is to stand the 37 plaintiffs in this case have received and will receive nothing. If this subsequent agreement is valid and enforceable, then plaintiffs have no legal grievance. Whether it is valid and enforceable depends upon whether the Union had the power and the authority to represent and act for these plaintiffs, a substantial part of its membership in executing the same.
The fact of FOK's determination to close down its Metal Fabricating Division was communicated to the Union's Secretary-Treasurer prior to the end of March, 1966. A Union meeting was held April 2nd. The subsequent agreement is dated May 3, 1966 and is in the form of a Consent to a modification of the FOK Group Deposit Contract with Minnesota Mutual Insurance Company, signed by the President and the Secretary-Treasurer of the Union.6 May 16, 1966 the Group Deposit Contract was modified accordingly by FOK and the Insurance Company. Both these documents provided an amendment of Sections 5 and 6 of the original Group Deposit Contract (above quoted) so as to permit early...
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