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Service Employees International Union, District 1199P v. Monsour Medical Center

August 25, 2009

SERVICE EMPLOYEES INTERNATIONAL UNION, DISTRICT 1199P, PLAINTIFF,
v.
MONSOUR MEDICAL CENTER, INC., PHYSICIANS SERVICES, INC., WESTMORELAND PRIORITY, LLC AND MICHAEL MONSOUR, IN HIS INDIVIDUAL CAPACITY, DEFENDANTS.



The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge

MEMORANDUM ORDER

Pending before the Court are the following: (1) MOTION OF DEFENDANT WESTMORELAND PRIORITY, LLC ("Westmoreland") FOR SUMMARY JUDGMENT (Document No. 59); (2) MOTION OF DEFENDANT PHYSICIAN SERVICES, INC. ("PSI") FOR SUMMARY JUDGMENT (Document No. 63); and (3) PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (Document No. 67) filed by Service Employees International Union, District 1199P (the "Union"). The parties have each filed Concise Statements of Material Facts (Document Nos. 61, 65, 69), although no responses were filed. The motions have been thoroughly briefed (Document Nos. 60, 64, 68, 71, 72, 73) and are ripe for disposition.

Factual and Procedural Background

This is a case brought pursuant to the Employee Retirement Income Security Act ("ERISA") which arises from the failure of Monsour Medical Center, Inc. ("MMC") to make pension contribution payments on behalf of employees. The Amended Complaint asserts two counts: (1) joint and several liability of all Defendants for failure to make contributions to an ERISA retirement pension plan; and (2) breach of fiduciary duty by MMC and Michael Monsour for directing that assets which could have been used to satisfy unpaid pension contributions be used for other purposes. The Court denied Defendants' motions to dismiss as to both counts. It appears to the Court that the summary judgment motions relate solely to Count One.*fn1

In March 2006, after decades of financial troubles, the MMC hospital permanently closed. The hospital owed significant liabilities to its employees, including certain pension payments. The Union and MMC had entered into a series of collective bargaining agreements ("CBAs") over the years. Pursuant to the most recent CBA, MMC was obligated to make contributions to a "defined benefit" pension plan for each of its employees. To that end, the CBA required MMC to participate in a multi-employer fund (the "NIPF Plan") and to "make payments of ninety cents ($.90) per hour for all bargaining unit employees." In May 2004, MMC's participation in the NIPF Plan was terminated due to its failure to make past due contributions to the pension fund. The Union filed a grievance against MMC for breach of the CBA.

In late 2004, MMC filed for Chapter 11 voluntary bankruptcy. The Union filed a claim in the bankruptcy action for the unpaid pension contributions. In March 2005, MMC sought to withdraw from the Chapter 11 bankruptcy. The Union refused to consent to the withdrawal from bankruptcy unless the pension contribution issue was resolved. On March 22, 2005, John Bukovac, chief executive officer of MMC, and Claudia Davidson, attorney for the Union, signed a two-page, handwritten agreement (the "March 22 Contract") on behalf of MMC and the Union. In relevant part, the March 22 Contract stated:

Subject to the approval of the Local Union Chapter membership and the Monsour Board of Directors, the Union the Employer (Monsour) agree that those monies currently the subject of a pending grievance (as well as claims filed in the Bankruptcy Case [ ]) regarding the failure of the Employer to pay the employees $.90/hour from 5/1/04 to date [3-22-05], it is agreed that [MMC] will, as soon as it can, but no later than 6-30-05, or unless otherwise agreed to by the parties, to place those monies in their 403-B plan currently in place at Monsour, or some mutually agreeable alternative. Additionally, it is agreed that [MMC] will as soon as it can, but no later than 6-30-05, or unless otherwise agreed to by the parties, increase the Bargaining unit employees' wages by $.90/hour per employee from 3-24-05 forward.

The parties dispute whether the Board of Directors of MMC ever approved this agreement. The Union points to the minutes of the April 25, 2005 meeting of the MMC Board of Directors, which recognized the existence of the March 22 Contract and stated, in relevant part:

SEIU Proposal

Administration agreed to pay back the $.90 an hour owed to employees in lieu of the pension which has been terminated. The Service Employees Internal [sic] Union agreed to the request of the Hospital to terminate the Chapter 11.

Defendants point to the minutes of the May 25, 2005 meeting of the MMC Board of Directors, which stated, in relevant part:

SEIU Contract -- Health Insurance . . . A second union issue involves the $.90 an hour owed to employees once the pension was terminated. Mr. Bukovac signed an agreement to begin paying the $.90 an hour effective June 1, 2005. Following discussion, it was determined that the Hospital is unable to meet the $.90 an hour obligation at this time but recommends a proposal of $.30 an hour beginning September 7th. The Hospital is also willing to extend the Union Contract.

The minutes of the June 22, 2005 MMC Board meeting state:

The Service Employees International Union has agreed to a contract extension to September 7, 2005 and to extend the partial payment from the agreement ...


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