Mosley v. NATIONAL MARITIME UNION PENSION & WEL.

• Decision Date: 07 September 1977
• Docket Number: No. 74 C 616.,74 C 616.
• Citation: 438 F. Supp. 413
• Parties: Curtis MOSLEY, Plaintiff, v. The NATIONAL MARITIME UNION PENSION & WELFARE PLAN, Defendant.
• Court: U.S. District Court — Eastern District of New York

438 F. Supp. 413

Curtis MOSLEY, Plaintiff, v. The NATIONAL MARITIME UNION PENSION & WELFARE PLAN, Defendant.

No. 74 C 616.

United States District Court, E. D. New York.

September 7, 1977.

COPYRIGHT MATERIAL OMITTED

Jack A. Kaplowitz, Mineola, N. Y., for plaintiff.

Phillips & Cappiello, New York City, for defendant.

MISHLER, Chief Judge.

In July 1969, Curtis Mosley, aged 61 and in failing health, made his last voyage as a merchant seaman. His retirement ended a career as a seaman that began in 1934. On April 8, 1970, he applied to the National Maritime Union Pension & Welfare Plan (the Plan) for a retirement pension. His application for retirement benefits was denied, and he began this action against the Plan, its administrators and its trustees, pursuant to § 302(c)(5) of the Labor Management Relations Act (Taft-Hartley), 29 U.S.C. § 186(c)(5). Jurisdiction is based on 29 U.S.C. § 186(e) and 28 U.S.C. § 1331. The plaintiff seeks to have declared unlawful the determination of the Plan denying him retirement benefits and requests injunctive relief and damages. Both sides, in agreement as to the essential facts, move for summary judgment.

The Plan is a jointly-administered pension trust¹ that is financed by employer contributions pursuant to a collective bargaining agreement. The Plan was established in 1951, but employer contributions were not begun until 1953. Since many NMU seamen covered by the Plan had worked substantial periods prior to the creation of the pension fund, a formula was developed to credit these seamen with their pre-Plan service yet avoid burdening the pension fund with payments to seamen whose working years, coming to an end, had not generated payments to the Plan. Thus, 1951 became the critical year for crediting pre-Plan service towards a pension, and several rules for obtaining pre-Plan pension credit, keyed to the year 1951, were established.

First, at its inception the Plan required that in order to obtain pension credit for work in the years prior to 1951, a seaman must have worked in covered employment for at least 200 days during any period of three consecutive years, beginning January 1, 1953. Under this rule as originally enacted, for example, a seaman could work 67 days a year in the three-year period 1953-55 without incurring a "Break in Service." A single break in service, however, cancelled out the seaman's entire pre-1951 service for pension crediting purposes. Second, as originally devised, the Plan required that, to receive credit for "past" service, an employee must work 200 days in covered employment between 1951 and 1953. Finally, of course, the Plan established the basic age and service requirements for qualifying for one of the several pension plans available to NMU seamen. One type of plan, the "Early Retirement Pension," entitled a seaman to retire once he attained the age of 60 and, if his pension would be paid after 1959, once he had accumulated 15 years of pension credit.

It was apparently the Early Retirement Pension that interested the plaintiff. Prior to 1951, the plaintiff had earned 6 and ¼ years of past service credit. Between 1951 and 1969, he acquired 8 and ¾ years of future service credit, making a total of 15 years of past and future credit. Under the break rule, in which the requirement of minimum covered employment did not begin until 1953, the plaintiff avoided a break in service. Additionally, he met the requirement of working 200 days in covered employment between 1951 and 1953. Had the regulations in effect for nearly all of the plaintiff's career remained unchanged, the plaintiff would currently be receiving an early retirement pension.

In the late 1960's, however, changes were made in the eligibility requirements. Effective January 1, 1970, the break rule was amended to require that, beginning in 1951, instead of 1953, a seaman must have worked not less than 200 days in any three consecutive years, or he would incur a break in service. Although the plaintiff had worked 200 days between 1951 and 1953, and he had worked 200 days in every three year period after 1953, he had not worked 200 days in the three year period 1952-54. Thus, under the new rule, he incurred a break in service which wiped out his pre-1951 service for pension purposes.

On April 17, 1968, a requirement was added, effective January 1, 1969, that a seaman seeking credit for pre-1951 work must, "on and after January 1, 1951, earn at least (10) years of credit." Credits are calculated on the basis of days of covered employment worked in the calendar year. Two hundred days worked in a calendar year counts as one full year's credit; 150-199 days, as ¾ of a year's credit; 100-149 days, as ½ a year's credit; 50-99 days, as ¼ of a year's credit; and less than 50 days in a calendar year earns no credit. Thus, the bare minimum of days to accumulate 10 years of post-1951, or "future" service, and thereby obtain credit for pre-1951, or "past" service, is 2,000. At his retirement, however, the plaintiff was 1 and ¼ credits short of the post-1951 requirement of 10 years of credit, now a prerequisite to aggregating his pre-1951 service towards a pension.

On April 17, 1968, the same day the ten year rule was enacted, the Trustees amended the early retirement plan to require that all conditions to qualifying for such a pension must be met by January 1, 1969. If a seaman did not reach the age of 60 by January 1, 1969, or did not put together 15 years of credit until after that date, he would be unable to obtain an early retirement pension. The plaintiff did not accumulate his 15 years of pension credit, pre-and post-1951, until seven months later, in July 1969, the month of his final voyage. The Trustees ruled that he was ineligible for the early retirement plan.

I.

Section 302 of the Labor Management Relations Act, 29 U.S.C. § 186, prohibits employers and their representatives from making payments of money "or other thing of value" to employee representatives, i. e., unions, and makes it illegal for unions to demand such payments.² An important exception to this general prohibition was made for payments to an employee welfare or pension fund. Section 302(c)(5) provides that the provisions of § 302 are not applicable.

with respect to money or other thing of value paid to a trust fund established by such representative, for the sole and exclusive benefit of the employees of such employer, and their families and dependents (or of such employees, families, and dependents jointly with the employees of other employers making similar payments, and their families and dependents)

29 U.S.C. § 186(c)(5) (emphasis supplied). Under § 302(e), 29 U.S.C. § 186(e), federal district courts have jurisdiction "to restrain violations of this section."

Although the general objective of Congress in enacting § 302 was to eliminate the corruption generated by employer payments to unions, see 92 Cong.Rec. 5180-81 and 5345 (1946); 93 Cong.Rec. 4746-47 (1947),³ the pension plan exception of § 302(c)(5) has been the basis for a multitude of challenges to the denial of pension benefits.⁴ There is, however, disagreement as to the meaning of the "sole and exclusive benefit" language of § 302(c)(5) and the scope of its substantive requirements. Preminger & Clancy, Aspects Of Federal Jurisdiction Under Sections 302(c)(5) And 302(e) Of The Taft-Hartley Act—The "Sole And Exclusive Benefit" Requirement, 4 Texas So.L.Rev. 1 (1976). Nonetheless, a majority of courts agree that for jurisdictional purposes a distinction exists between

actions involving "structural" deficiencies in the relevant trust which cause it to violate the "sole and exclusive benefit" provision of § 302(c)(5) and actions involving only questions of day-to-day fiduciary administration of welfare and pension funds.

Alvares v. Erickson, 514 F.2d 156, 165 (9th Cir.), cert. denied, 423 U.S. 874, 96 S.Ct. 143, 46 L.Ed.2d 106 (1975). See Lugo v. Employees Retirement Fund of the Illumination Products Industry, 529 F.2d 251, 254-55 (2d Cir.), cert. denied, 429 U.S. 826, 97 S.Ct. 81, 50 L.Ed.2d 88 (1976); Bowers v. Ulpiano Casal, Inc., 393 F.2d 421, 425 (1st Cir. 1968). Challenges to structural deficiencies in a pension plan, as opposed to an individual claim of misadministration, are within the jurisdiction of federal courts. Of course, there are varying views as to when a plan violates § 302 by failing to be for the sole and exclusive benefit of the employees, and is therefore structurally deficient. In Bowers v. Ulpiano, supra, the First Circuit ruled that to violate § 302, a structural defect must be the result of conduct which is "made a crime by section 302," id., implying that allegations of criminal intent or willfulness are a prerequisite to jurisdiction under § 302(e). See Preminger & Clancy, supra at 5-6 and n. 29-32.

In Alvares v. Erickson, supra, the Ninth Circuit, without mentioning the Bowers requirement of § 302 criminal conduct, adopted the position that jurisdiction exists if the complaint alleges that trustees acting under the authority of the fund, arbitrarily and capriciously denied pensions to employees. In such a case, the fund allegedly is not applied for the sole and exclusive benefit of all employees and is, therefore, structurally deficient. Accord, Burroughs v. Board of Trustees of Pension Trust Fund for Operating Engineers, 542 F.2d 1128, 1131 (9th Cir. 1976), cert. denied, 429 U.S. 1096, 97 S.Ct. 1113, 51 L.Ed.2d 543 (1977); Johnson v. Botica, 537 F.2d 930, 934 (7th Cir. 1976).

In this circuit, the most recent case involving § 302 is Lugo v. Employees Retirement Fund, supra. There, an electrical worker challenged, inter alia, minimum work requirement provisions of his pension plan, claiming that the denial of a pension because of his failure to work 90 months in the ten years prior to his pension application was arbitrary and unreasonable. The court held that § 302 jurisdiction exists if the plaintiff alleges that a...