Hawkeye Nat. Life Ins. Co. v. AVIS Indus. Corp., s. 96-3045

• Citation: 122 F.3d 490
• Decision Date: 28 July 1997
• Docket Number: Nos. 96-3045,96-3097,s. 96-3045
• Parties: 21 Employee Benefits Cas. 1469, Pens. Plan Guide (CCH) P 23936B HAWKEYE NATIONAL LIFE INSURANCE COMPANY, Plaintiff, v. AVIS INDUSTRIAL CORPORATION; Edgerton Forge, Inc., Appellants, Steel Technologies, Inc.; Midwest Plating and Chemical Corporation, Defendants, Metal Polishers, Buffers, Platers and Allied Workers International Union; Metal Polishers, Buffers, Platers and Allied Workers International Union, Local 15; Metal Polishers, Buffers, Platers and Allied Workers International Union, Local 24; Metal Polishers, Buffers, Platers and Allied Workers International Union, Local 301; Metal Polishers, Buffers, Platers and Allied Workers International Union, Local 305, Appellees. HAWKEYE NATIONAL LIFE INSURANCE COMPANY, Plaintiff, v. AVIS INDUSTRIAL CORPORATION; Edgerton Forge, Inc., Appellees, Steel Technologies, Inc.; Midwest Plating and Chemical Corporation, Defendants, Metal Polishers, Buffers, Platers and Allied Workers International Union; Metal Polishers, Buffers, Platers and Allied Workers International Union, Local 15; Metal Polishers, Buffers, Platers and Allied Workers International Union, Local 24; Metal Polishers, Buffers, Platers and Allied Workers International Union, Local 301; Metal Polishers, Buffers, Platers and Allied Workers International Union, Local 305, Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 490

122 F.3d 490 21 Employee Benefits Cas. 1469,
Pens. Plan Guide (CCH) P 23936B HAWKEYE NATIONAL LIFE INSURANCE COMPANY, Plaintiff,
v.
AVIS INDUSTRIAL CORPORATION; Edgerton Forge, Inc., Appellants,
Steel Technologies, Inc.; Midwest Plating and Chemical
Corporation, Defendants,
Metal Polishers, Buffers, Platers and Allied Workers
International Union; Metal Polishers, Buffers, Platers and
Allied Workers International Union, Local 15; Metal
Polishers, Buffers, Platers and Allied Workers International
Union, Local 24; Metal Polishers, Buffers, Platers and
Allied Workers International Union, Local 301; Metal
Polishers, Buffers, Platers and Allied Workers International
Union, Local 305, Appellees.
HAWKEYE NATIONAL LIFE INSURANCE COMPANY, Plaintiff,
v.
AVIS INDUSTRIAL CORPORATION; Edgerton Forge, Inc., Appellees,
Steel Technologies, Inc.; Midwest Plating and Chemical
Corporation, Defendants,
Metal Polishers, Buffers, Platers and Allied Workers
International Union; Metal Polishers, Buffers, Platers and
Allied Workers International Union, Local 15; Metal
Polishers, Buffers, Platers and Allied Workers International
Union, Local 24; Metal Polishers, Buffers, Platers and
Allied Workers International Union, Local 301; Metal
Polishers, Buffers, Platers and Allied Workers International
Union, Local 305, Appellants. Nos. 96-3045, 96-3097. United States Court of Appeals,
Eighth Circuit. Submitted March 12, 1997.
Decided July 28, 1997.

Page 492

Douglas Dormire Powers, Fort Wayne, IN, argued (Lisa M. Dillman, on the brief), for appellant.

William C. Hirsch, Cincinnati, OH, argued, for appellee.

Before MAGILL ¹ and MURPHY, Circuit Judges, and GOLDBERG, ² Judge.

MAGILL, Circuit Judge.

Hawkeye National Life Insurance Company (Hawkeye), the administrator of the Metal Polishers, Buffers, Platers and Allied Workers International Union Pension Plan (Plan), brought this declaratory judgment action under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461 (1994 & Supp.1995). Hawkeye seeks declaratory relief for its decision to distribute the

Page 493

Plan's remaining assets to AVIS Industrial Corporation (AVIS) and Edgerton Forge, Inc. (Edgerton). In its action for declaratory relief, Hawkeye named AVIS, Edgerton, Steel Technologies, Inc. (Steel Technologies), and Midwest Plating and Chemical Corporation (Midwest) (collectively, the employers) as defendants. In addition, Hawkeye named as defendants the various local chapters of the Metal Polishers, Buffers, Platers, and Allied Workers International Union (collectively, the Union) to which the Plan participants, the employees, belong. Hawkeye filed a motion for summary judgment in which AVIS and Edgerton joined. After unsuccessfully arguing that consideration of Hawkeye's summary judgment motion should be deferred, the Union filed a cross-motion for summary judgment, seeking a declaratory judgment that the remaining Plan assets should inure to the benefit of Plan participants. Ruling that 29 U.S.C. § 1103(c)(1) (1994) barred distribution of the remaining Plan assets to one or more Plan employers, the district court granted the Union's cross-motion for summary judgment and denied Hawkeye's motion for summary judgment. AVIS and Edgerton appeal, and the Union cross-appeals. We affirm in part, reverse in part, and remand.

I.

The Plan was established in 1971 as a multiemployer employee benefit plan. The employers that took part in the Plan were Edgerton, Steel Technologies, Midwest, North Vernon Forge, Inc. (North Vernon Forge), and North Vernon Steel Products, Inc. (North Vernon Steel). At all times relevant to this appeal, Hawkeye served as the Plan administrator, and Bruce & Bruce Company (Bruce & Bruce) served as the consulting actuary for the Plan. Pursuant to § 8.5(b) of the Plan, Hawkeye has the authority "to construe and interpret the Plan...." Metal Polishers, Buffers, Platers and Allied Workers International Union Pension Plan, as amended (Jan. 1, 1986) (Plan) § 8.5(b), reprinted in Appellants' App. at 38. In addition, the Plan provides that the Union, Hawkeye, and each of the employers are fiduciaries of the Plan "with respect to the specific responsibilities of each for Plan administration...." Plan § 2.19, reprinted in Appellants' App. at 12.

AVIS never contributed to or took part in the Plan. However, according to the affidavit of AVIS's chief financial officer, Carol J. Mineart, AVIS acquired three employers that were part of the Plan: Edgerton, North Vernon Steel, and North Vernon Forge. Carol J. Mineart Aff. (Apr. 18, 1996) at pp 3-4, reprinted in Appellants' App. at 71-72. Mineart also testified that AVIS assumed all the liabilities of the acquired companies, including each employer's obligations under the Plan. Id. at p 5, reprinted in Appellants' App. at 72. Consequently, according to Mineart, AVIS is the successor in interest to these three companies. Id. at p 3, reprinted in Appellants' App. at 71. ³

The Plan was funded entirely by the employers. See Plan § 7.6, reprinted in Appellants' App. at 36. Collective bargaining agreements that each employer reached with the Union specified the amount of each employer's contributions. Id. According to the provisions of the Plan, these contributions were determined at least in part by the actuarial calculations of Bruce & Bruce. Pursuant to the Plan, Bruce & Bruce was to calculate the Plan's expected actuarial requirements and, based on these calculations, make recommendations as to the contributions that the employers should be required to make in order to insure that the Plan remained fully funded. See Plan § 7.2, reprinted in Appellants' App. at 35. As provided by the Plan, each employee's benefits were based on the length of that employee's service as well as the monthly pension rate set forth in the applicable collective bargaining agreement reached between the employers and the Union. See Plan §§ 2.1, 2.22,

Page 494

5.1, reprinted in Appellants' App. at 10, 13, 21.

Over time, the individual employers withdrew from the Plan: Midwest withdrew on March 21, 1985; Steel Technologies withdrew on June 24, 1988; and North Vernon Forge and Edgerton both withdrew on August 31, 1988. As a result, as of August 31, 1988, North Vernon Steel was the sole remaining employer in the Plan. On December 31, 1989, sixteen months later, North Vernon Steel also withdrew from the Plan. With North Vernon Steel's withdrawal, the Plan as a whole terminated.

Under the terms of the Plan, the withdrawal of each employer resulted in a partial termination of the Plan. See Plan § 12.2, reprinted in Appellants' App. at 43. With each withdrawal, the Plan required Hawkeye and Bruce & Bruce to "allocate and segregate for the benefit of the affected Participants with respect to which the Plan is being terminated the proportionate interest of such Participants in the Pension Fund." Id. The Plan further required that such segregated funds "be liquidated (after provision is made for the expenses of liquidation) by the payment or provision for the payment of [employee] benefits" in a specified order of preference. Plan § 12.3, reprinted in Appellants' App. at 43.

In addition to insuring that Plan liabilities were paid in the event of a partial termination, the Plan also specified how assets remaining in the Plan were to be distributed. Specifically, § 12.6 provided that:

In no event shall the Employer receive any amounts from the Pension Fund upon termination of the Plan, except that, and notwithstanding any other provision of the Plan:

(a) The Employer shall receive such amounts, if any, as may remain after the satisfaction of all liabilities of the Plan and arising out of any variations between actual requirements and expected actuarial requirements, and

(b) The amount, if any, received by the Employer does not contravene any provision of law.

Plan § 12.6, reprinted in Appellants' App. at 44. The Plan further provided that, if the withdrawing employer expressly elected not to receive such surplus amounts, those amounts would be distributed to Plan participants of the withdrawing employer as long as the Plan as a whole remained fully funded. See Amendment to Metal Polishers, Buffers, Platers and Allied Workers International Union Pension Plan, as amended (June 6, 1988) (Plan Amendment) § D, reprinted in Appellants' App. at 47.

The chief actuary for Bruce & Bruce, S.A. Vora, testified that "Bruce and Bruce ... made all determinations of the benefits to be paid to participants of the withdrawing employers." S.A. Vora Aff. (Jan. 17, 1996) at p 21, reprinted in Appellants' App. at 68. More importantly, Vora testified that "[p]ayment or provision for payment of those benefits as determined by Bruce and Bruce [was] made for all participants in the Plan." Id. at p 22, reprinted in Appellants' App. at 68.

In addition, Vora testified regarding the distribution of Plan assets attributable to specific employers. Vora testified that, after Midwest Plating withdrew, "there were no assets remaining in the Plan attributable to Midwest Plating." Id. at p 5, reprinted in Appellants' App. at 66. Vora further testified that, when Steel Technologies withdrew, "Steel Technologies elected not to receive any portion of the Pension Fund," even though there were assets remaining that were attributable to Steel Technologies. Id. at p 10, reprinted in Appellants' App. at 67. Instead, Steel Technologies desired to allocate those remaining assets to its employees. Id. at p 7, reprinted in Appellants' App. at 66. Finally, Vora testified that Edgerton, North Vernon Forge, and North Vernon Steel did not elect, as provided by the Plan, to forego receipt of any amounts from the Plan. Id. at pp 16, 18, 20, reprinted in Appellants' App. at 67-68. Therefore, in accordance with the provisions of the Plan, these employers are still eligible to receive a distribution of the residual assets attributable to them. See Plan Amendment § D,...