Walling v. Brady
| Decision Date | 09 February 1996 |
| Docket Number | Civil Action No. 94-410 MMS. |
| Citation | 917 F. Supp. 313 |
| Parties | Joseph R. WALLING, and other individuals similarly situated, Plaintiff, v. Edward J. BRADY, Harold R. Brohawn, John D. Daniello, William R. Hickman, Terrence M. Shannon, John W. Stewart, James R. Wahl and Alfred C. Wilson, Jr., as Trustees of the Plumbers and Pipefitters Local Union No. 74 Pension Fund, and Plumbers and Pipefitters Local Union No. 74 Pension Fund, Defendants. |
| Court | U.S. District Court — District of Delaware |
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Richard L. Abbott, of Theisen, Lank, Mulford & Goldberg, P.A., Wilmington, Delaware, for plaintiff.
Perry F. Goldlust, of Heiman Aber & Goldlust, Wilmington, Delaware (David Garcia-Villarreal, of Blackburn & Michelman, P.C., Philadelphia, Pennsylvania, of counsel), for defendants.
Plaintiff Joseph R. Walling ("Walling") has commenced this action against the Plumbers and Pipefitters Local Union No. 74 Pension Fund ("Pension Fund") and the Pension Fund Trustees1 ("Trustees") alleging violations of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and the Labor Management Relations Act, 29 U.S.C. § 186. Specifically, plaintiff avers that defendant Trustees have unlawfully diverted pension funds in violation of 29 U.S.C. § 1103(c)(1) and have breached their fiduciary duty owed under 29 U.S.C. § 1104.
On July 19, 1995, the Court certified a plaintiffs' class composed of 54 beneficiaries of the Pension Fund whose interests are identically aligned with those of Walling, the designated class representative. Pending before the Court are cross motions for summary judgment; the Court held oral argument in this matter on October 18, 1995.2 For the reasons set forth below, the Court will grant plaintiff's motion for summary judgment and deny defendants' motion for summary judgment. The Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 29 U.S.C. §§ 1132(a)(1)(B) and (e)(1).
The facts in this suit are essentially undisputed. Walling is a participant in the defendant Pension Fund, which is a qualified multi-employer pension plan under ERISA. Complaint, Docket Item ("D.I.") 1 at ¶¶ 4-6; Answer, D.I. 13 at ¶¶ 4-6. The individual defendants are Trustees of the Pension Fund: Four of the Fund's eight Trustees are union representatives; the other four Trustees are from management. D.I. 53 at 6. The Pension Fund is governed by and administered pursuant to the Plumbers and Pipefitters Local Union No. 74 Pension Plan. D.I. 1 at ¶ 6, D.I. 13 at ¶ 6.
In accordance with the provisions set forth in the Pension Fund's Agreement and Declaration of Trust ("Pension Plan"), the Fund's Trustees have the power to Pension Plan, Article V, D.I. 47, Exhibit ("Exh.") B at 13-14. The Trustees also possess the power to "amend, alter or otherwise change the Pension Plan in any way not inconsistent with applicable laws of regulations or government agencies or the provisions of this Trust." Id. at 14.
In the management of the Pension Fund, the Trustees retain various professional consultants to assist them in carrying out their fiduciary obligations to the participants and beneficiaries of the Pension Fund. These professionals include accountants, actuaries, attorneys, investment managers, and pension administrators. Trustee Affidavits, D.I. 47, Exh. D at 4-7. Many of these advisors regularly attend meetings of the Board of Trustees. Wilson Deposition, D.I. 47, Exh. E at 22; see also Minutes of the Meetings of the Board of Trustees for Aug. 24, 1992, Sept. 28, 1992, and Oct. 26, 1992. D.I. 51, Exh. A.
In 1992, following the annual actuarial analysis of the Pension Fund's operations, income, and investments, the Fund's actuarial consultant reported to the Trustees that the Pension Fund was fully funded and was in fact experiencing a surplus. D.I. 47, Exh. D at ¶ 10. In mid-1992, the Trustees discussed among themselves and with their advisers an appropriate course of action with respect to possibly using the surplus to increase plan benefits. See, e.g., D.I. 51, Exh. E at 22, 35. At that time, the Trustees were also aware that the Plumbers and Pipefitters Local Union No. 74 Welfare Fund ("Welfare Fund") was about to adopt a change in its participation requirements for members of that plan.3 The Welfare Fund, which provides medical and health care coverage to its beneficiaries, was about to start requiring its participants to pay $100 per month into the Welfare Fund for continued coverage. D.I. 47, Exh. D at 9. These Welfare Fund participants had previously received their health care coverage free of charge. Id.
At their August and September 1992 Board meetings, the Trustees discussed both the Pension Fund's surplus and the Welfare Fund's new monthly $100 co-pay requirement. D.I. 51 at Exh. A. They entertained their actuary's proposal that an additional $100 per month Pension Fund benefit could be paid to that group of retirees who were also participants in the Welfare Fund. Id. The Trustees openly concede that the motivation behind this additional $100 per month Pension Fund benefit was to maintain the purchasing power of those retired Welfare Fund individuals who now shouldered an additional $100 monthly burden, presumably on a fixed income. See, e.g., D.I. 47, Exh. G at 62-63; D.I. 51, Exh. E at 49, Exh. F at 55, Exh. H at 49. The Trustees also considered amending the Pension Fund to increase benefits to all participants by five percent. D.I. 51 at Exh. A.
The Executive Summary of actuarial valuations as presented to the Trustees is set forth in the record as part of the Minutes of the Meetings of the Board of Trustees. Id. In that document, the actuary pegged the Pension Fund's current level of surplus at 112%, and projected the actuarial health of the Fund for the proposed benefit increases, if implemented, to be at a level of 96.6%. Upon discussion at their October, 1992 Board meeting, in the presence of the Pension Fund's attorneys, the Trustees unanimously approved the proposed increases. Id.
Plaintiff does not participate in the Welfare Fund and thus is not eligible for the extra $100 per month paid to those who participate in both the Pension and Welfare Funds. D.I. 1 at ¶ 8; D.I. 13 at ¶ 8. He seeks to enjoin defendants from paying this enhanced pension benefit exclusively to the eligible subgroup of Welfare Fund/Pension Fund beneficiaries; as alternative relief, he seeks an order retroactively amending the Pension Fund plan to increase benefits by $100 per month for all participants, with damages to be paid both retroactively and prospectively.
Both sides have moved for summary judgment in this action. Under the Federal Rules of Civil Procedure, the Court shall grant a motion for summary judgment if it determines "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party has the initial burden of demonstrating that it should prevail under Rule 56(c), see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986), which can be accomplished by simply pointing out to the Court that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986); see also Peters Township School Dist. v. Hartford Accident & Indem. Co., 833 F.2d 32, 34 (3d Cir.1987). In opposition, the nonmoving party must come forward with evidence supporting a claim that there is a genuine issue of material fact in dispute which requires resolution by the trier of fact. First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968). An issue is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
When faced with cross motions for summary judgment, the Court must consider the motions independently. Williams v. Philadelphia Hous. Auth., 834 F.Supp. 794, 797 (E.D.Pa.1993), aff'd, 27 F.3d 560 (3d Cir. 1994). In this case, because the facts are undisputed, the issues presented are legal, rather than factual, and thus are suitable for resolution by judgment as a matter of law. Fed.R.Civ.P. 56(c); Associated Hardware Supply Co. v. Big Wheel Distrib. Co., 355 F.2d 114, 119 (3d Cir.1966).
ERISA was enacted in 1974, following nearly a decade of Congressional study of the nation's private pension plans and other employee benefit plans. Moench v. Robertson, 62 F.3d 553, 560 (3d Cir.), petition for cert. filed, 64 U.S.L.W. 3438 (U.S. December 11, 1995). A major goal sought to be achieved by ERISA's enactment was the improvement of "the fairness and effectiveness of qualified retirement plans" so that "individuals who have spent their careers in useful and socially productive work will have adequate incomes to meet their needs when they retire." H.R.Rep. No. 807, 93rd Cong., 2d Sess. 8 reprinted in 1974 U.S.C.C.A.N. 4639, 4670, 4676-77.
One product of these Congressional concerns was ERISA's anti-diversion provision, which mandates that "the assets of a plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their...
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