White v. Distributors Ass'n Warehousemen's Pension Trust, 83-2610

• Decision Date: 15 January 1985
• Docket Number: No. 83-2610,83-2610
• Parties: Venning WHITE, Plaintiff-Appellant, v. DISTRIBUTORS ASSOCIATION WAREHOUSEMEN'S PENSION TRUST; Industrial Employees and Distributors Association, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1068

751 F.2d 1068

40 Fed.R.Serv.2d 1210

Venning WHITE, Plaintiff-Appellant, v. DISTRIBUTORS ASSOCIATION WAREHOUSEMEN'S PENSION TRUST Industrial Employees and Distributors Association Defendants-Appellees.

No. 83-2610.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Aug. 10, 1984.

Decided Jan. 15, 1985.

Neal S. Dudovitz, Los Angeles, Cal., Jeffrey Lewis, Oakland, Cal., for plaintiff-appellant.

David S. Foster, Gary S. Fergus, Brobeck, Phleger & Harrison, San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before BROWNING, and SNEED, Circuit Judges, and STEPHENS ^*, District Judge.

SNEED, Circuit Judge:

The plaintiff brought this suit against Distributors Association Warehousemen's Pension Trust (Pension Trust) and the Industrial Employees and Distributors Association (Association). He contends that the defendants violated fiduciary duties owed to him and that one of the pension eligibility rules they maintained violated the Employee Retirement Income Security Act's (ERISA's) prohibition of age discrimination. After discovery, the district court denied the plaintiff's motion for leave to amend his complaint and granted the defendants' motion for summary judgment on all claims against them. We affirm the district court's judgment with this exception. Plaintiff's motion to amend his complaint, in order to state a cause of action alleging violations of ERISA's requirement that the terms and conditions of pension plans be fully disclosed, should have been granted.

I. FACTS AND PROCEEDINGS BELOW

The plaintiff has worked as a warehouseman for most of his adult life. In 1973, at age 52, he began work for an employer covered by collective bargaining and pension agreements previously negotiated between the Association and Warehouse Union Local 6, ILWU. Long before the plaintiff began his employment, the collective bargaining agreement had created a pension trust and established detailed rules for its administration. From 1956 to 1976 one of these pension eligibility rules barred workers who began their employment after age fifty from any form of participation in the Pension Trust. The 1976 Pension Agreement, however, was negotiated shortly after Congress passed ERISA, 29 U.S.C. Secs. 1001-1461 (1982). Because ERISA clearly prohibits the sort of age discrimination embodied in the Pension Trust's old rule, the new collective bargaining agreement contained a new participation rule for older workers. Section 3.2 of the 1976 agreement provided that employees who had begun work after age fifty but before age sixty could participate in the Pension Trust. The agreement also provided, however, that such employees would receive no "benefit credit" for any work performed before June 1, 1976, the date on which ERISA began to apply to the Pension Trust. ¹ As applied to him, the rule ultimately would reduce the plaintiff's retirement income by approximately thirty-six dollars each month because it requires the Trust to disregard his service from 1973 to 1976 when calculating his pension benefits.

In 1979 the plaintiff first learned that the rule would reduce his pension benefits. In the suit that he then filed against the Association and the Pension Trust, the plaintiff sought declaratory and injunctive relief to assure that his work from 1973 to 1976 would count toward his pension benefits.

The original complaint, in three related counts (The Fiduciary Duty Claims), alleged that the Association and the Pension Trust violated fiduciary obligations created by ERISA, the Taft-Hartley Act, and state common law. In a fourth count (The Age Discrimination Claim), the plaintiff alleged that the 1976 rule regulating the participation of older workers in the Pension Trust violated ERISA's age discrimination prohibition.

After discovery, the plaintiff sought to amend his complaint. In three of the four proposed amendments the plaintiff: (1) would convert the lawsuit into a class action, (2) would add his union local as a defendant, and (3) would state a claim for breach of fiduciary duty under Sec. 301 rather than Sec. 302(c)(5) of the Taft-Hartley Act. In the fourth proposed amendment, the plaintiff would add a fifth, entirely new cause of action to his complaint, alleging violations of the ERISA-imposed duty to fully disclose the terms and conditions of eligibility in pension plans. Both the plaintiff and the defendants then moved for summary judgment. The district court entered judgment for the defendants and simultaneously denied the plaintiff's request to amend his complaint in all respects.

II. THE FIDUCIARY DUTY CLAIMS

The plaintiff argues that the Association and his union local violated a fiduciary duty to act "reasonably" in the collective bargaining sessions in which the pension eligibility rule at issue in this case was negotiated. His argument assumes that federal courts have the power to review the substantive terms of the agreements reached by collective bargaining. This assumption is false.

It is true, of course, that both ERISA and the Taft-Hartley Act require "fiduciaries" to act reasonably in fashioning and applying pension eligibility rules. ² It is also true that, at least for some purposes, the defendants, as well as the plaintiff's union local, are subject to these fiduciary obligations. The defendants' behavior during collective bargaining sessions, however, is subject to different constraints. Ordinarily, the distinction between an employer's (or union's) role as a fiduciary and its role as a negotiator of a collective bargaining agreement is unimportant. That is so when an employer and union agree by collective bargaining to grant to pension fund trustees the power to establish pension eligibility rules. The trustees' duty to act reasonably in establishing such rules exists even though such a duty did not exist with respect to bargaining as such. In this case, however, the rules affecting the plaintiff's pension benefits were fixed by the collective bargaining process. Under these circumstances the rule in question is insulated from judicial review under ERISA or the Taft-Hartley Act. This result is in accord with a basic principle of labor law, viz., that the parties to collective bargaining agreements generally are free to fashion whatever type of employment contract on which they are able to come to agreement. Also it is dictated by United Mine Workers of America Health & Retirement Funds v. Robinson, 455 U.S. 562, 102 S.Ct. 1226, 71 L.Ed.2d 419 (1982). There the Supreme Court applied this basic principle to bar judicial review of collectively bargained pension agreements. It held that pension eligibility rules that are the product of collective bargaining agreements cannot be reviewed for "reasonableness" under section 302(c)(5) of the Taft-Hartley Act, and observed that "when neither the collective-bargaining process nor its end product violates any command of Congress, a federal court has no authority to modify the substantive terms of a collective-bargaining contract." Robinson, 455 U.S. at 576, 102 S.Ct. at 1234 (footnote omitted).

This court has recognized the point. In Hurn v. Retirement Fund Trust of Plumbing, Heating and Piping Industry of Southern California, (Hurn II), 703 F.2d 386 (9th Cir.1983), we reached the merits of a challenge to the reasonableness of the actions of trustees who had broad discretion in the administration of a pension fund. At the same time, however, we frankly acknowledged that our holding would have been "otherwise had the details of the [pension] Fund been worked out in collective bargaining." Id. at 389 (citing Robinson ). Accord, Music v. Western Conference of Teamsters Pension Trust Fund, 712 F.2d 413, 417 (9th Cir.1983); Elser v. IAM National Pension Fund, 684 F.2d 648, 653 (9th Cir.1982), cert. denied, --- U.S. ----, 104 S.Ct. 67, 78 L.Ed.2d 82 (1983).

The plaintiff attempts to restrict Robinson and its progeny to suits brought under section 302(c)(5) of the Taft-Hartley Act. The plaintiff argues that his suit states a claim under section 404 of ERISA and thus is not governed by Robinson. We disagree.

Both section 404 of ERISA, 29 U.S.C. Sec. 1104 (1982), and section 302(c)(5) of the Taft-Hartley Act, 29 U.S.C. Sec. 186(c)(5) (1982), subject the actions of pension trustees to review under the identical standard of reasonableness. See NLRB v. Amax Coal Co., 453 U.S. 322, 332, 101 S.Ct. 2789, 2795, 69 L.Ed.2d 672 (1981) ("ERISA essentially codified the strict fiduciary standards that a Sec. 302(c)(5) trustee must meet"); Elser, 684 F.2d at 654 ("The actions of trustees are subject to the same standard of review under the ERISA's fiduciary provisions as they are under the LMRA [i.e., the Taft-Hartley Act]."). The plaintiff has suggested no reason why Robinson- 's principle should become inapplicable merely because a lawsuit is brought under ERISA rather than Taft-Hartley. We believe no satisfactory explanation exists. The intention of Congress, as explicated in Robinson, is applicable to section 404 of ERISA, as well as to section 302(c)(5) of the Taft-Hartley Act.

III. THE AGE DISCRIMINATION CLAIM

The Robinson principle is not, however, absolute. It is, of course, unlawful for an employer and union to reach an agreement that violates applicable federal laws. See Robinson, 455 U.S. at 575, 102 S.Ct. at 1234. Seeking to take advantage of this limitation, the plaintiff has alleged that the agreement between the Association and his union local violates ERISA's prohibition of age discrimination. The issue thus raised is a difficult one.

The starting point in our analysis is section 202 of ERISA, 29 U.S.C. Sec. 1052(a)(2) (1982), which provides that "No pension plan may exclude from participation (on the basis of age) employees who have attained a specified age, unless ... such employees begin employment with the employer after they have attained a...