later distribution to them with interest. Additional funding for the new pension plan was to be provided by the Company as needed.
The profit sharing plan and trust agreements did not expressly reserve to the Company and the locals the right to modify terms through collective bargaining, nor did they provide for the transfer of profit sharing funds out of the trust. Nevertheless, pursuant to and shortly after the collective bargaining agreement of February 10, 1974, the Company ceased profit sharing contributions on behalf of members of locals 4561, 3968 and 6449. In December, 1974, the Company amended the profit sharing plan to formally remove the members of those locals from the profit sharing plan. The amendment also directed the trustees to segregate the trust funds allocable to these employees' accounts, which the Trustees have done, pending disposition of this action.
The essence of the plaintiffs' complaint is that their right to the trust accounts under the profit sharing plan were vested and could not be affected by the 1974 collective bargaining agreement and ratification. Plaintiffs also contend that, their interests in the profit sharing plan and trust having been "terminated," a distribution of their relative interests is necessary. In response, both the Company and the Trustees contend that the plaintiffs are bound by the 1974 collective bargaining agreement and that the profit sharing plan and trust were not "terminated."
Since the plaintiffs seek a remedy for contractual rights arising from a collective bargaining agreement, this court has subject-matter jurisdiction under § 301(a) of the Labor Management Relations Act of 1947.
Smith v. Evening News Association, 371 U.S. 195, 83 S. Ct. 267, 9 L. Ed. 2d 246 (1962).
The plaintiffs rely heavily on the decision of the district court in Hauser v. Farwell, Ozmun, Kirk & Co., 299 F. Supp. 387 (D.Minn.1969), in which former employees brought an action against the employer-company and their bargaining agent union contending that a plant close-down agreement entered into between the defendants unlawfully eliminated pension rights granted the plaintiffs by an earlier collective bargaining agreement. The pension rights in question were described in the original agreement as being " fully vested in each participant," id. at 390, and the court found accordingly that the rights were vested at the time the union attempted to bargain them away. Reasoning that "whereas a Union may bargain as to prospective matters such as seniority rights, future conditions of employment etc., it cannot bargain away the accrued or vested rights of its members," the district court held that the former employees were to be restored to the pension rights which accrued under the original pension agreement. 299 F. Supp. at 393, 396, discussing Elgin, Joliet & Eastern Ry. v. Burley, 325 U.S. 711, 65 S. Ct. 1282, 89 L. Ed. 1886 (1945), adhered to, 327 U.S. 661, 66 S. Ct. 721, 90 L. Ed. 928 (1946).
Unlike the agreement in Hauser, no rights under the profit sharing plan and trust in the instant case are described as "vested." On the contrary, the plaintiffs' rights thereunder were substantially limited by the broad power of amendment reserved to the company, including the company's right to eliminate all of the participant's interests save his right to that to which he would have been entitled had he resigned on the date of the amendment.
See, e.g., Jackson v. Trans World Airlines, Inc., 457 F.2d 202 (2d Cir. 1972); Genevese v. Martin-Marietta Corp., 312 F. Supp. 1186 (E.D.Pa.1969). Any other expectancies under the plan cannot be deemed "vested." The only profit-sharing plan which might be considered "vested" in the plaintiffs on February 10, 1974 -- the resignation values of their accounts -- were unaffected by the collective bargaining agreement, which more than adequately preserved for each participant the entire value of his profit sharing account as of that date.
The provisions of the profit sharing plan having been extended to the plaintiffs in this case through prior collective bargaining, a transition from profit sharing to a fixed-benefit pension plan was an appropriate subject of collective bargaining in February of 1974. Indeed, 29 U.S.C. § 158(a)(5) (1970), as applied in Inland Steel Co. v. NLRB, 170 F.2d 247 (7th Cir. 1948), compelled McGraw-Edison to negotiate on the subject once it was proposed by the unions. It was within the power of locals 4561, 3968 and 6449 and the Company to negotiate and determine the terms of the pension plan effected by the 1974 collective bargaining agreement, so long as those terms did not affect the vested rights of employees established by prior agreements. Elgin, Joliet & Eastern Ry. v. Burley, 325 U.S. 711, 739, 65 S. Ct. 1282, 89 L. Ed. 1886 (1945). The subsequent amendment to the profit sharing plan adopted in accordance with the collective bargaining agreement was also within the authority reserved to the Company under the terms of the profit sharing plan itself. See Note 3 supra.
The plaintiffs, nevertheless, contend that they are entitled to a distribution under the terms of the profit sharing plan and trust, asserting that the Company by agreeing with the locals to remove these bargaining unit employees from the profit sharing plan, caused a "termination" of the plan which triggered the following provision:
"Upon termination of the plan as respects all employers, each participant's share of the trust fund shall be fully vested in him and shall be distributed to him in accordance with the terms of the plan. Upon termination of the plan as respects any employer, the trustees shall distribute to each participant employed by such employer his share in the trust fund in accordance with the terms of the plan . . . ." Trust Agreement art. VIII.