Hurd v. Hutnik

• Decision Date: 23 September 1976
• Docket Number: Civ. A. No. 74-899.
• Court: U.S. District Court — District of New Jersey
• Parties: William J. HURD et al., Plaintiffs, v. Edward HUTNIK et al., Defendants.

419 F. Supp. 630

William J. HURD et al., Plaintiffs, v. Edward HUTNIK et al., Defendants.

Civ. A. No. 74-899.

United States District Court, D. New Jersey.

September 10, 1976.

As Amended September 23, 1976.

COPYRIGHT MATERIAL OMITTED

Schwartz, Steinberg & Tobia by Ronald L. Tobia, East Orange, N. J., for plaintiffs.

Harry Krieger, East Orange, N. J., for defendants Alderney Dairy Company, Inc. and Johanna Farms, Inc.

Pitney, Hardin & Kipp by S. Joseph Fortunato, Morristown, N. J., for defendant Borden, Inc.

Martin D. Cohen, Newark, N. J., for defendants Marx, Goldman, Hayman, Rockoff, Glenby & Tanis.

Parsonnet, Parsonnet & Duggan by Thomas L. Parsonnet, Newark, N. J., for defendants Hutnik and Mashuh.

Walder, Steiner, Sondak & Evenchick by Justin P. Walder, Newark, N. J., for defendant Tuscan Dairy Farms, Inc.

Philip J. Mylod, Bloomfield, N. J., for defendant O'Dowd's Dairy.

Stryker, Tams & Dill, John J. Rizzo, Newark, N. J., for defendant Dairylea Cooperative, Inc. Hellring, Lindeman & Landau by Bernard Hellring, Newark, N. J., Receiver, pro se.

Professor Leonard Orland, University of Connecticut, West Hartford, Conn., for Certain Pensioner plaintiffs.

Lowenstein, Sandler, Brochin, Kohl & Fisher by Matthew P. Boylan, Newark, N. J., for All-Star Dairies, and others.

Wicoff & Voorhees, Trenton, N. J., for defendant Walker Gordon Lab. Co.

Bernstein, Schocket & Krieger, Newark, N. J., and Botein, Hays, Sklar & Herzberg by Arnold Chase, and Buffum Lovell, New York City, for defendants Gannon Bros. Inc., Kudile Bros—Hasbrouck Heights Dairy Inc.

Brown, Cass & Connolly by Harold J. Brown, Bloomfield, N. J., for third-party plaintiffs Arthur Baxter, and others.

Patrick J. Diegnan, Jr., South Plainfield, N. J., for third-party plaintiffs Patrick J. Diegnan, and others.

Barry S. Slevin, Washington, D. C., for defendant Pension Benefit Guaranty Corp.

OPINION

STERN, District Judge.

The complaint in the present lawsuit was filed on June 18, 1974. It involves a multi-employer pension fund established for the benefit of the milk drivers and dairy employees of northern New Jersey. Though the case has changed in focus and grown in size and complexity since that date,¹ it now

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

comes before the Court for resolution of the one critical question from which all the issues flow:

When employers who have previously entered into a multi-employer pension plan find the plan too expensive to maintain, may they enter into a new agreement with the union extinguishing the pension fund by eliminating further contributions to it, while making no provision for the financial protection of some 1400 former employees who have retired and are currently receiving pension benefits from the fund?

Though there may be circumstances permitting such action, the Court finds on the facts before it that the parties contracted for a lifetime pension, and that the subsequent termination was therefore a breach of contract. In addition, the Court holds that where employers have given other assurances of a lifetime pension and employees elect to retire in reliance thereon, the doctrine of promissory estoppel bars such a later termination of the fund.

I. The Operative Documents

The pension fund in question was created by an Agreement and Declaration of Trust (R-1) adopted pursuant to the governing collective bargaining agreement over a period of years. The original trust agreement was adopted on April 16, 1962 and was successively amended on March 31, 1970, April 30, 1970, and December 1, 1971. R-1 is the trust agreement as amended and as ratified and affirmed on August 25, 1972. The pension plan was adopted pursuant to Article III, Section 4 of the trust agreement. R-2 is the pension plan booklet distributed to the employees. R-2 contains certain questions and answers relating to the pension plan, and the latest text of the plan itself. Changes through the last collective bargaining agreement, which expired on November 30, 1975, are included on a gummed insert attached to the last page of R-2.

The Court finds as a fact that R-14 is the collective bargaining agreement in effect between the union and management from November 30, 1973 to November 30, 1975. The parties have offered a great deal of testimonial and documentary evidence on the issue whether the following language was inadvertently omitted from R-14 when it was printed:

It being understood, however, that the agreement is limited to contribution without guarantee of benefits by Union or Employer and without right of refund to Employer.

The quoted language is from Schedule F, ¶ 3 of R-10, the collective bargaining agreement booklet which expired October 31, 1967. Similar language was continued in the agreement which expired in 1969, as represented by R-11, the settlement agreement for 1967-1969. (Tr. 8/9/76: 117) Since that date the language has not appeared in subsequent collective bargaining agreements with respect to the pension plan, though similar language has uniformly appeared with respect to the welfare plan.

The deletion is immaterial to the Court's resolution of the issues before it. The evidence adduced by the defendant employers on this point demonstrates that the language in question was bargained away by the parties for reasons unrelated to the issue whether the governing documents promise a pension for life or merely for the term of the current collective bargaining agreement.

Defendants called Lawrence W. McGinley, president of the union during the relevant period. It was his testimony that the "no guarantee" provision had been inserted into the contract at the employers' request during negotiations on a contract in which the employers had convinced the union to agree to a level of employer contributions below the level recommended by the fund actuary, the Martin E. Segal Company, as actuarially sound based on its projection of retiree life span, rate of retirement and other relevant factors. (Tr. 8/9/76: 114-115) During the 1969 negotiations, according to McGinley's testimony, the level and timetable of agreed employer contributions was such that the union "felt strongly that it was no longer necessary to have that language in there, that the new benefits, that portion of the new benefits, would have to be guaranteed." (Tr. 8/9/76: 109-110)

Thus if it had any meaning at all the disputed language referred to the agreed level of benefits and not to the agreed duration of benefits, which is the issue before the Court:

THE COURT: Let me see if I understand this whole controversy. Anyway, this "no guarantee" provision was there to guard against the computation error which may have been made in providing for increased benefits; is that it?

THE WITNESS: That's my opinion, your Honor.

THE COURT: Was it there to alert people that if they retired after 25 or 30 years of service, that no guarantee provision meant their pension would not outlive the life of the agreement itself unless it was bargained for again?

THE WITNESS: No. That was not the purpose of it.

(Tr. 8/9/76: 133)

Thus whether the deletion was merely a "scrivener's error," as defendants claim, or a material term of the contract bargained by the parties, as the receiver and the pensioners contend, is immaterial here. Nevertheless, so that the record shall be complete, the Court finds as a fact that despite some conflict in the testimony the printed booklets R-9, R-10, R-11, R-12, R-13 and R-14 constitute the agreement in effect between the parties for the contract periods covered by each. (Tr. 8/9/76: 274) While there was other testimony from representatives of the milk companies to the contrary, after hearing all of the testimony the Court finds McGinley's testimony to be accurate, and finds as a matter of fact that it is the printed booklets, signed by each of the companies, which are the collective bargaining agreements for each period. The Court further finds that the "without guarantee" language was deliberately deleted after 1969 in the course of collective bargaining.

It was these booklets, and not the rough outline agreements hurriedly produced and signed at the end of a particular bargaining session, which in fact governed the relationship of the parties during their term. McGinley testified that it was not uncommon for additional details to be agreed upon after the negotiations ended, that these additions were written into the text sent to the printer and that the printer's galleys were checked by the employers, each of which signed the resulting printed booklets, R-9 through R-14, which were the actual formal agreements. (Tr. 8/9/76: 267-269) When the employers met to discuss upcoming collective bargaining sessions, according to Milk Industry Association vice-president Dan Wetlin, Jr., it was these booklets upon which they relied for the text of the present contract. (Tr. 8/9/76: 79) It was these booklets, according to McGinley, that were distributed to the employers' supervisory personnel for use in the event of on-the-job disputes. (Tr. 8/9/76: 268) When copies of the collective bargaining agreement were requested by any agency for any purpose, Wetlin testified, it was these booklets which were provided. (Tr. 8/9/76: 77, 80) The testimony of both collective bargaining parties confirms the Court's conclusion, and its consideration of the collective bargaining agreement will be based on the printed agreements for each relevant period. (R-9 through R-14)

The pension program set forth in R-1 remained in effect after November 30, 1973 as modified in Schedule F of R-14. As noted earlier, R-2 contains a gummed insert reflecting these changes. R-1 was entered into by the parties pursuant to Schedule F of the collective bargaining agreement, as reflected in the preamble to R-1. Article III, Section 1 of the trust agreement created the "Milk Industry—Local 680 Pension Fund." Article III, Section 4 provides in pertinent...