decided: June 28, 1984.
ROBERT J. ADAMS, MERREDNA T. BUCKLEY, WILLIAM J. CALLOWAY, JAMES JOSEPH CONNELL, ANTHONY MICHAEL COSELLA, JOHN R. COOK, ANNE CROWLEY, ON BEHALF OF THE ESTATE OF WILLIAM J. CROWLEY, DECEASED, KATHRYN M. CULLEN, ANGELINA A. DICARLO, ROCCO DELGRAMMASTRO, KATHLEEN DIEHL, AS EXECUTRIX, OF THE ESTATE OF JOHN M. DILLENSCHNEIDER, DECEASED, WANDA A. DOMAROTSKY, FRANK A. DREGAR, ROBERT J. EGY, AMANDA FAY, MARTHA FLINN, THOMAS E. FLOOD, CORNELIUS FRAZIER, JR., MARY GERACE, ROSE T. GUOKAS, JOHN GUY, MARY F. HABINA, JAMES HICKMAN, JOHN HUDSON, ROBERT H. JONES, PEARL KELLY, JOSEPH J. KLEIN, ELIZABETH D. LINDER, AUGUSTINE MARUCCI, JAMES MCGOWAN, ELIZABETH A. MCNALLY, JOHN MORRIS, JOHN MUMBOWER, ANNA M. MYERS, AGNES M. MYERS, JOHN A. NEFF, RUTH O'DONNELL, GRACE MARY PAPALA, ANNA PETRICCIONE, RICHARD M. PHILLIPS, RUSSELL RALLS, FLORENCE RAYSICK, DANIEL J. RONAU, BERNARD C. RUSSELL, JOHN V. RUSSELL, MARGARET RUSSELL, ANTHONY SANTOLERI, WALTER J. STANOWITCH, MADELINE T. STEIN, JOHN F. STEINMETZ, BEATRICE L. STILLWELL, MARIE SMITH, NANCY SWALLOW, MARION THOMPSON, WILLIAM J. WATTS, ANTOINETTE W. WEISS, CLIFFORD W. WILLIAMS, ROBERT WILLIAMS, JAMES C. WOLLNER, FRANK UMSTETTER, MARIE VENTI, JAMES C. WILLNER, BRIDGET BARLOW, APPELLANTS
GOULD INC. AND FIRST TRUST COMPANY OF ST. PAUL, MINNESOTA, INDIVIDUALLY AND AS TRUSTEE OF THE GOULD INC. PENSION TRUST FOR HOURLY EMPLOYEES AND PENSION BENEFIT GUARANTY CORPORATION, APPELLEES
On Appeal from the United States District Court for the Eastern District of Pennsylvania.
Gibbons and Becker, Circuit Judges, and Atkins, District Judge*fn*
This is a suit by a number of former employees of Gould Inc. against Gould and the First Trust Company of St. Paul Minnesota ("First Trust"), Gould's pension plan trustee, alleging that Gould violated the plaintiffs' rights by underfunding the Gould pension trust and that, despite their long service to the company, the plaintiff have consequently been deprived of any pension benefits whatsoever. The case was brought in 1978. It has been before this court once before, on a 28 U.S.C. § 1292(b) certification. Adams v. Gould, 687 F.2d 27 (3d Cir. 1982).
In its simplest terms, the question presented by this appeal is whether the district court abused its discretion in denying plaintiffs' motion to alter or amend the summary judgment it entered by the district court in favor of defendants and for contemporaneous leave to file a second amended complaint. The gravamen of the proposed amended complaint was that the labor union representing plaintiff had breached its duty of fair representation, and that Gould breached the collective bargaining agreement, when Gould and the union reached a settlement implementing an arbitration award settling the underfunding dispute. This contention was asserted earlier in the litigation in plaintiffs' briefs, but was not addressed either by the district court or by this court (which limited its ruling to responding to a certified question that did not subsume that claim).
This description, however, masks the complexity of this appeal, the disposition of which will require consideration of procedural issues as well as issues of pension law and labor law. The most important issue before us involves the application of the recent Supreme Court decision in Del Costello v. International Brotherhood of Teamsters, 462 U.S 151, 103 S. Ct. 2281, 76 L. Ed. 2d 476 (1983). In Del Costello, the Court held that the six-month statute of limitations of section 10(b) of the National Labor Relations Act applied in the context of a suit by an employee alleging a breach of the collective bargaining agreement by the employer and a breach of the duty of fair representation by the employee's union. The issue before us is whether a different statutory period applies where the subject matter of the suit is collectively bargained pension rights.
For the reasons that follow, we believe that the motion to alter or to amend the judgment and for leave to file an amended pleading should have been granted. We therefore vacate the judgment of the district court and remand for further proceedings.
In 1962, Gould purchased the Wilkening Manufacturing Company's piston ring plant, assuming the pension plan agreement negotiated in 1953 by Local 416 of the United Automobile Workers Union ("Local 416") and Wilkening. In 1972, Gould and Local 416 entered a collective bargaining agreement, incorporating by reference the "Gould Inc. Pension Plan," ("the Plan"), which thereupon covered the past and present employees of the Wilkening plant.
In 1974, Gould decided to close the Wilkening plant. Pursuant to section 7.1 of the Plan, Gould terminated the Plan as to the employees, both currently working and retired, who were covered by the Plan due to their employment at the Wilkening plant (the "Wilkening beneficiaries"). Under section 7.2 of the Plan, the assets in the pension fund attributable to the Wilkening plant were to be used to pay pensions to the Wilkening beneficiaries according to a system of priorities specified therein. Under this system, beneficiaries already retired (the "current retirees") had the first priority, and would receive their pensions to the extent possible goven the Plan's assets. If the current retirees were paid their full pensions, then the employees with ten or more years of credited time, whose rights were therefore "vested" under the Plan ("vested employees") would receive their pensions when they reached retirement age, to the extent of the remaining assets.*fn1 When the Wilkening plant was closed, the assets of the pension fund were insufficient to pay the current retirees' pensions in full, and thus the vested employees were not entitled to receive pensions under the Plan when they reached retirement age.
Local 416 brought a grievance against Gould under section XVII of the collective bargaining agreement, seeking to force Gould to fund the pension benefits of the Wilkening beneficiaries in full. The grievance proceeded to arbitration. Although the arbitrator held that Gould did not have to fund the Plan in full, he found that Gould had improperly changed its actuarial assumptions in 1969 in such a way that its contributions to the Plan attributable to the Wilkening plan decreased. At about the same time, Gould had begun considering closing the Wilkening plant. The arbitrator held that the use of "less conservative" actuarial assumptions at a time when Gould was considering closing the plant was improper. The arbitrator therefore ordered the parties to determine by negotiations the amount by which Gould's contributions were less than they would have been had the proper actuarial assumptions been used, and directed Gould to pay that amount into the pension fund.
After negotiations, Gould and Local 416 agreed that the amount of the undercontribution was $570,600. They also negotiated a settlement of the grievance (the "Settlement"), pursuant to which Gould agreed to guarantee full pension rights to the current retirees in exchange for not having to deposit $570,600 with the Plan's trustee, defendant First Trust. The agreement stated that the Settlement was providing "additional retirement benefits" to the current retirees, and accordingly provided a mechanism in the settlement to increase the benefits paid to the current retirees in the event that the value of the pensions paid under the settlement at any time became less than the value of the pensions that would have been paid if the $570,600 had been deposited. The vested employees, however, were not entitled to any benefits under the Settlement.
On July 13, 1977, the plaintiffs, a number of the vested employees, brought this suit. The complaint*fn2 alleged that the Plan provided for stated monthly benefits upon retirement, that the employees were induced to accept a lower wage because of these promised benefits, and that the failure of Gould to fund these benefits was a breach of the collective bargaining agreement and amounted to fraudulent inducement. The complaint also charged First Trust with breach of its fiduciary duty to plaintiffs in failing to pay benefits when due.Defendants moved for summary judgment, arguing that Gould had properly terminated the Plan pursuant to its terms. The defendants also argued that plaintiffs' claims had been resolved by the arbitration proceeding, at which the plaintiffs were represented by Local 416, and that ...
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