to plaintiffs, is binding upon the Funds. Although plaintiffs' reasoning is somewhat difficult to follow, it appears to have two aspects: first, that the Funds lack standing to dispute the McHughs' coverage under the collective bargaining agreements and, second, that the Funds are estopped from denying benefits to the McHughs.
Plaintiffs' standing argument is premised on the fact that the Funds are not party to the collective bargaining agreements between Local 470 and the McHugh companies. They maintain that the interpretation of a collective bargaining agreement must be left to the parties, that the union and employer regarded the McHughs as covered employees for approximately 17 years and that the Funds therefore lack standing to contest the McHughs' coverage.
Plaintiffs' arguments are without merit. It is true that the Funds' existence is due ultimately to collective bargaining agreements between the union and employer, requiring the employer to contribute to health and welfare and pension plans. Fund trustees must enforce eligibility provisions in a collective bargaining agreement. United Mine Workers of America Health & Retirement Funds v. Robinson, 455 U.S. 562, 573-74, 71 L. Ed. 2d 419, 102 S. Ct. 1226 (1982). In this case, however, the applicable collective bargaining agreements set forth no eligibility criteria and make no provision for owners and managerial personnel. The Funds were actually established by declarations of trust, which gave to the trustees the power to promulgate policies and rules governing the Funds. The trustees accordingly adopted plans defining eligible employees as those governed by a collective bargaining agreement.
Under established law and the clear language of the Funds' governing documents, interpretation of plan provisions is the province of the trustees. See, e.g., Gaines, 753 F.2d at 289; Aitken, 604 F.2d at 1264-65. The trustees' decision concerning the McHughs' eligibility for benefits is entitled to no less deference because the eligibility rules set forth in the plans refer to a collective bargaining agreement. See, e.g., Van Gunten, 672 F.2d at 587 (applying arbitrary and capricious standard of review to trustees' decision that appellant was not a member of a collective bargaining unit and was thus ineligible for benefits); Aitken, 604 F.2d at 1264-65; Gulino, 594 F. Supp. at 1268-70. Moreover, the trustees are not bound by alleged oral understandings between Local 470 and the McHughs. Employer benefit plan agreements must, by law, be in writing and oral modifications or supplementations are invalid. 29 U.S.C. §§ 186(c)(5)(B), 1102(a)(1); Abbate v. Browning-Ferris Industries, 767 F.2d 52, 54-55 (3d Cir. 1985); Kemmis v. McGoldrick, 706 F.2d 993, 996-97 (9th Cir. 1983); Lewis v. Seanor Coal Co., 382 F.2d 437, 442-44 (3d Cir. 1967), cert. denied, 390 U.S. 947, 19 L. Ed. 2d 1137, 88 S. Ct. 1035 (1968). See also Sinai Hospital of Baltimore, Inc. v. National Benefit Fund, 697 F.2d 562, 567-68 (4th Cir. 1982).
In my view, the principles discussed above compel rejection of plaintiffs' standing argument. The trustees' authority to determine eligibility would be of little value if they could take no independent action to enforce their decisions. The Supreme Court, in a somewhat different context,
held recently that an employee benefit plan need not rely on a union to enforce employer obligations to the plan or to resolve disputes concerning such obligations. Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, , 53 U.S.L.W. 4811, 4815-16, 86 L. Ed. 2d 447, 105 S. Ct. 2833 (1985). The Court reasoned that the union and plan trustees have different interests and responsibilities. In order to discharge their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., the trustees must be free to act independently of the union. Id. at 4813-16. See also Schneider Moving & Storage Co. v. Robbins, 466 U.S. 364, 375-76, 80 L. Ed. 2d 366, 104 S. Ct. 1844 (1984); Moldovan v. Great Atlantic & Pacific Tea Co., 790 F.2d 894 (3d Cir. 1986).
These considerations apply equally to the case before me. The trustees are charged with administering the Funds. Because their responsibilities run to all plan participants, not just current employees or union members, their concept of the Funds' best interests may differ from those of the union and the employer. The trustees' authority to make decisions concerning eligibility must include the right to enforce those decisions through litigation.
Plaintiffs' estoppel argument must fall on similar grounds. Edward, James and Gerard McHugh allege that when they joined Local 470 and on several occasions thereafter they were assured by Ronald Egan, Raymond Taylor and Richard Cammorotti that they could participate in the Funds. James McHugh claims to have received similar assurances from Peter Schultz and William Crean. The parties agree that Egan, Taylor and Cammorotti were union officials and not Fund trustees. Defendants have submitted an unchallenged document which shows that Schultz was a Fund trustee during the 1960s and Crean was a Fund trustee from 1978 to 1981.
The law is clear that erroneous advice from a union official cannot be attributed to the trustees of an employee benefit fund. E.g., Chambless v. Masters, Mates & Pilots Pension Plan, 772 F.2d 1032, 1041 (2d Cir. 1985), cert. denied, 475 U.S. 1012, 106 S. Ct. 1189, 89 L. Ed. 2d 304 (1986); Knoll v. Phoenix Steel Corp., 465 F.2d 1128, 1132 (3d Cir. 1972), cert. denied, 409 U.S. 1126, 35 L. Ed. 2d 257, 93 S. Ct. 941 (1973); Dudo v. Schaffer, 551 F. Supp. 1330, 1342 (E.D.Pa. 1982), aff'd mem., 720 F.2d 661 (3d Cir. 1983); Zaucha, 444 F. Supp. at 606. The Funds are separate entities from the union and, as the governing documents provide, the power to administer the Funds is vested solely in the trustees. See, e.g., Teamsters Health & Welfare Fund Original Declaration of Trust at paras. 1, 4, 9 (Dec. 13, 1951); Teamsters Pension Trust Fund Agreement and Declaration of Trust at Art. III, § 1; Art. IV; Art. IX, § 2 (Dec. 30, 1957); Teamsters Pension Plan at Art. V, § A (effective Sept. 1, 1964). See also NLRB v. Amax Coal Co., 453 U.S. 322, 328-30, 69 L. Ed. 2d 672, 101 S. Ct. 2789 (1981); Talarico v. United Furniture Workers Pension Fund A, 479 F. Supp. 1072, 1079-80, 1083 (D.Neb. 1979); Huge v. Overly, 445 F. Supp. 946, 947 (W.D.Pa. 1978); Zaucha, 444 F. Supp. at 606.
I reject plaintiffs' contention that the McHughs' reliance on statements by union officials was reasonable because the Funds were not in fact independent from the union. A similar claim was rejected by the district court in Chambless v. Masters, Mates & Pilots Pension Plan, 571 F. Supp. 1430 (S.D.N.Y. 1983). The court recognized that there was, "as one would expect, a close relationship between the union and the plan." Because, however, the employee benefit plan's declaration of trust and the LMRA made "crystal clear that only the trustees -- and not the union -- are authorized to obligate the plan," the court held that reliance on a union agent was unreasonable. Id. at 1452. In this case, as in Chambless, the Funds maintain close contact with the union. Plaintiffs have not, however, submitted evidence to refute the Fund Administrator's sworn statement that the union has no authority to control the Funds and that the Funds are set up to deal with participants directly, not through the union. See Declaration of Charles J. Schaffer, Jr. at para. 26; Deposition of Charles J. Schaffer, Jr. at 43-51 (June 7, 1985).
I also reject plaintiffs' claim that the Fund is bound by the alleged statements of Peter Schultz and William Crean. I recognize that the Third Circuit has held that a single trustee's statement can bind an employee benefit fund if the trustee has actual or apparent authority to act on the fund's behalf. Rosen v. Hotel and Restaurant Employees & Bartenders Union, 637 F.2d 592 (3d Cir.), cert. denied, 454 U.S. 898, 70 L. Ed. 2d 213, 102 S. Ct. 398 (1981). In Rosen, a trustee who was secretary to the fund initiated a meeting with plaintiff Rosen specifically to discuss a threat to Rosen's pension eligibility. The trustee advised Rosen how his rights could be preserved and accepted money from him to bring his pension contributions up-to-date. Under these circumstances, the court held, Rosen reasonably relied on the trustee's representations and the Fund was therefore estopped from denying him a pension. Id. at 597-98 & n.7.
In my view, this case is distinguishable from Rosen. First, the Funds have submitted evidence indicating that James McHugh's alleged conversation with Schultz was in 1960, four years before the McHughs joined the union, and that the conversation with Crean was in 1975, three years before Crean became a trustee. Even apart from this evidence, which plaintiffs have not attempted to refute, I note that James McHugh's reported conversations with Schultz and Crean were very different from the interaction between the plaintiff and the trustee in Rosen. According to James McHugh, he once "went out drinking" with Crean during a Local 470 strike and Crean threatened that he would lose his benefits if he crossed the picket line. Supplemental Answers to Interrogatories by James McHugh at 5 (June 6, 1985). James McHugh also described one occasion on which Schultz said he would be entitled to benefits as long as his company contributed to the Funds. McHugh admitted he did not ask Schultz specific questions concerning his eligibility. Deposition of James McHugh at 128-32. These casual comments do not rise to the level of the specific, detailed assurances in Rosen. See Chambless, 571 F. Supp. at 1452.
Moreover, the McHughs were not ordinary employees. As owners and managers of the contributing companies, they had access to all of the Funds' governing documents. A review of those documents should have put them on notice that they might not be eligible and that they should seek formal clarification from the Funds as to their status.
Plaintiffs admit the McHughs never did so. See, e.g., Plaintiff Edward L. McHugh's Answers to Interrogatories of Defendant Funds at No. 30(a); Answers of Plaintiffs Christina McHugh, Gerard J. McHugh and James C. McHugh to Interrogatories of Defendant Funds at No. 30(a).
Plaintiffs contend that the Funds were responsible to inform them of their ineligibility. As I have already stated, the definitions in the Funds' governing documents provided adequate notice that persons such as the McHughs might not be eligible participants. The Third Circuit has stated that if trustees are aware that an employee is ineligible they must so inform him. Rosen, 637 F.2d at 600. Here, however, the McHughs assert only that the Funds should have known of their status; they present no evidence that the Funds were ever officially informed. Moreover, the trustees in Rosen failed to inform the plaintiff of a fact which he was not likely to know -- that his employer was not making contributions on his behalf. See id. In contrast, details concerning the McHughs' positions were peculiarly within their knowledge, not that of the Funds. I cannot conclude that the McHughs were "entitled to the kind of individualized attention . . . [they] urge here." Higgins v. Carpenters Health & Welfare Fund, 524 F. Supp. 601, 608 (E.D.Pa. 1981). See also Murn v. United Mine Workers, 718 F.2d 359, 362 (10th Cir. 1983); Vrablick, 425 A.2d at 1073.
As a further ground for their estoppel claim, plaintiffs point out that the Funds have accepted contributions on the McHughs' behalf for approximately 17 years. Payment of contributions into an employee benefit fund cannot, however, "create an eligibility for benefits that otherwise would not exist." Freeman v. Central States, Southeast and Southwest Areas Pension Fund, 86 Lab. Cas. (CCH) P 11,422 at 21,609 (E.D.Mich. 1979). See also Talarico, 479 F. Supp. at 1083; Vrablick, 425 A.2d at 1072. Cf. Burke v. French Equipment Rental, Inc., 687 F.2d 307, 311-12 (9th Cir. 1982) (an employer may have an obligation to contribute to a benefit plan for time worked by an employee even if the employee is not eligible for benefits). I conclude that plaintiffs' various estoppel theories are without merit.
Because I have determined that the individual plaintiffs are not entitled to receive benefits from the Funds, I must address the corporate plaintiffs' claim for reimbursement. Equipment Corporation and Crane Rentals seek to recover the approximately $165,000 in contributions which they paid on behalf of the McHugh brothers from 1964 to 1983.
State law applies to plaintiffs' claim for return of contributions made before January 1, 1975, the effective date of ERISA. See Reuther v. Trustees of the Trucking Employees of Passaic and Bergen County Welfare Fund, 575 F.2d 1074, 1077-78 (3d Cir. 1978) (ERISA does not apply to contributions made before its effective date); Crown Cork & Seal Co. v. Teamsters Pension Fund, 549 F. Supp. 307, 312 (E.D.Pa. 1982), aff'd mem., 720 F.2d 661 (3d Cir. 1983). Pennsylvania law provides for restitution of such overpayments only if they were made pursuant to a mistake of fact. According to the Pennsylvania Supreme Court, "money deliberately and voluntarily paid under a contract, with knowledge or means of knowledge of the material facts and without fraud or duress, even though paid under a mistake of law as to the interpretation of a contract cannot be recovered back." William Sellers & Co. v. Clarke-Harrison, Inc., 354 Pa. 109, 113, 46 A.2d 497, 499 (1946). The corporate plaintiffs in this case were in possession of the relevant facts concerning the McHugh brothers' positions, but maintain they were unaware that persons in such positions were ineligible to participate in the Funds. Plaintiffs' mistake (if indeed it was a mistake) concerns the coverage of the trust fund agreements and was therefore a mistake of law. See Chase v. Trustees of the Western Conference of Teamsters Pension Trust Fund, 753 F.2d 744, 750-51 (9th Cir. 1985); Martin v. Hamil, 608 F.2d 725, 729 (7th Cir. 1979); Gulino, 594 F. Supp. at 1273-74. Plaintiffs are thus not entitled to recover payments made to the Funds before January 1, 1975.
Plaintiffs' claim for restitution of payments made after January 1, 1975 is governed by ERISA. Section 403(c)(1) of ERISA provides 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 beneficiaries and defraying reasonable expenses of administering the plan." 29 U.S.C. § 1103(c)(1). Section 403(c)(2)(A), however, provides in pertinent part:
In the case of a contribution . . . made by an employer to a multiemployer plan by a mistake of fact or law . . . paragraph (1) shall not prohibit the return of such contribution or payment to the employer within 6 months after the plan administrator determines that the contribution was made by such a mistake.
29 U.S.C. § 1103(c)(2)(A)(ii).
In Crown Cork & Seal Co. v. Teamsters Pension Fund, 549 F. Supp. 307 (E.D.Pa. 1982), aff'd mem., 720 F.2d 661 (3d Cir. 1983), Judge Giles held that an employer has no private right of action for restitution under § 403(c)(2)(A). As Judge Giles noted, ERISA was enacted to protect the pension rights of employees and their beneficiaries. Employers are conspicuously omitted from ERISA's list of persons empowered to bring a civil action. Id. at 311-12. See 29 U.S.C. § 1132(a). Further, the language of § 403(c)(2)(A)(ii) "is entirely permissive. . . . The use of the phrase, . . . ['shall not prohibit'] expresses an intent to allow, but not require the trustees to return contributions if they choose to do so, as an exception to their strict fiduciary duties to maintain the funds for the benefit of employees." Id. at 311. Judge Giles concluded that to require trustees to refund mistaken contributions could undermine the funds' integrity and would thus violate the principles underlying ERISA. Id. at 311-12. See also Higgins, 524 F. Supp. at 610; In re Malone, 39 Bankr. 81 (Bankr. E.D.Pa. 1984).
As plaintiffs point out, other courts have recognized a cause of action for restitution. See, e.g., Award Service, Inc. v. Northern California Retail Clerks Unions and Food Employers Joint Pension Trust Fund, 763 F.2d 1066, motion to recall mandate denied, 774 F.2d 1391 (9th Cir. 1985), cert. denied, 474 U.S. 1081, 106 S. Ct. 850, 88 L. Ed. 2d 890 (1986); Chase, 753 F.2d 744; Peckham v. Board of Trustees, 719 F.2d 1063, modified and reaff'd, 724 F.2d 100 (10th Cir. 1983). Judge Giles' reasoning, however, is compelling. Moreover, Crown Cork & Seal has been summarily affirmed by the Third Circuit and I am bound by it. See Teamsters Pension Trust Fund v. Carolina Freight Carriers Corp., No. 84-5983, slip op. at 12 (E.D.Pa. Aug. 29, 1985). Defendants are therefore entitled to summary judgment with respect to the corporate plaintiffs' restitution claim.
IV. Attorneys' Fees
Both parties have requested an award of attorneys' fees. Section 502(g)(1) of ERISA provides that "the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." 29 U.S.C. § 1132(g)(1). In reviewing requests for fees under ERISA, courts have considered five policy factors:
(1) the offending parties' culpability or bad faith;
(2) the ability of the offending parties to satisfy an award of attorneys' fees;