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Eckert v. Chauffeurs

United States District Court, M.D. Pennsylvania

March 13, 2017



          Christopher C. Conner, Chief Judge

         Plaintiffs Mario Eckert, Robert Baker, Steve Billet, Kevin Bloom, Jr., Shawn Clark, Karen Dietz, Herbert C. Garber, Gisbel Garcia, Jr., Mario Garofalo, Bradley Hockenberry, Martin Parson, and Fred Wilson commenced this action against defendants Chauffeurs, Teamsters and Helpers Local Union 776 ("the Union"), its Profit Sharing Plan ("the Plan"), Edgar H. Thompson ("Thompson"), and Ronald W. Hicks ("Hicks"), alleging that defendants denied them retirement benefits under the Plan. (See Doc. 1). Presently before the court is defendants' motion (Doc. 31) for summary judgment pursuant to Federal Rule of Civil Procedure 56. Fed.R.Civ.P. 56. For the reasons that follow, the court will deny the motion.

         I. Factual Background & Procedural History[1]

         Plaintiffs are former officers and staff of the Union. (Doc. 31-2 ¶ 1; Doc. 36 ¶ 1). The Plan is a single employer, defined contribution employee benefit plan within the meaning of Sections 3(2) and 3(41) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1002(2), (41). (Doc. 31-2 ¶ 2; Doc. 36 ¶ 2). Thompson and Hicks are the Plan's current trustees. (Doc. 1 ¶¶ 16-17).

         The Union makes occasional contributions to the Plan throughout each year for the future benefit of Plan participants. (Doc. 31-2 ¶ 3; Doc. 36 ¶ 3). Employees cannot contribute to the Plan. (Doc. 31-2 ¶ 6; Doc. 36 ¶ 6). Plan retirement benefits only accrue through employer contributions and investment income. (Doc. 31-2 ¶ 6; Doc. 36 ¶ 6). Contributions are allocated to individual accounts in accordance with a formula specified in the Plan's documentation. (Doc. 31-2 ¶ 4; Doc. 36 ¶ 4). Participants receive their allocation upon retirement or end of covered employment. (Doc. 31-2 ¶ 5; Doc. 36 ¶ 5). The Plan Adoption Agreements- executed in 2008 and 2009-provide that an employee must complete one year of service and be 21 years old in order to be eligible for the Plan. (Doc. 31-2 ¶ 16; Doc. 31-4 at 2; Doc. 31-6 at 2, 6; Doc. 36 ¶ 16). Both the 2008 and 2009 Adoption Agreements specifically waive eligibility requirements for individuals employed as of January 1, 2008. (Doc. 31-4 at 2; Doc. 31-6 at 2, 6; Doc. 36 ¶ 16).

         The Union's Bylaws authorize the Union's Executive Board ("the Board") to make decisions regarding the Plan's design, such as eligibility and vesting requirements for obtaining Plan benefits. (Doc. 31-2 ¶ 7; Doc. 36 ¶ 7). The pertinent Bylaw Section 15(D) states:

The Local Union Executive Board may from time to time provide the terms and conditions of employment for Officers, employees and representatives of this organization including, but not limited to, such fringe benefits as vacation with pay, holidays, sick leave, time off for personal leave, and, in connection therewith, any disability or sickness, health and welfare and retirement benefits and activities and may from time to time provide changes therein, as well as additional compensations and allowances. The Local Union Executive Board or the President is authorized to make to any Local Union Officer or employee advances on his salary and/or vacation pay.
Based on the paragraph above the Local Union Executive Board shall have the sole authority to set and/or periodically adjust the salaries for staff/clerical employees of this Local Union.

(Doc. 31-10 at 18). This language notwithstanding, the parties dispute the extent of the Board's authority as well as applicable Board procedures for making discretionary decisions. (Doc. 32 at 11-18; Doc. 35 at 10-22; see Doc. 31-2 ¶¶ 7, 22, 30; Doc. 36 ¶¶ 7, 22, 35). The parties agree that the Union's Bylaws require the Board to meet at least monthly and that the Board's Recording Secretary must take minutes, which become the official record of a meeting. (Doc. 31-2 ¶¶ 8-10; Doc. 36 ¶¶ 8-10).

         The parties disagree on the requisite level of detail for said minutes. (Doc. 31-2 ¶¶ 11-12; Doc. 36 ¶¶ 10-12).

         In October 2011, the Union held elections for officers and business agents. (Doc. 31-2 ¶ 18; Doc. 36 ¶ 18). Union membership elected, inter alia, plaintiffs Fred Wilson ("Wilson"), Mario Garofalo ("Garofalo"), and Herbert Garber ("Garber") to three-year terms beginning January 1, 2012 and ending December 31, 2014. (Doc. 31-2 ¶ 18; Doc. 36 ¶ 18). All three men served on the Board, and Garofalo acted as one of two trustees of the Plan. (Doc. 31-2 ¶¶ 19-20; Doc. 36 ¶¶ 19-20).[2]

         The Union takes issue with an amendment to Plan documentation memorialized in the Plan's 2012 Adoption Agreement. (Doc. 31-2 ¶ 23; Doc. 32 at 11-12; see Doc. 31-18 at 6). The Union alleges that Garofalo independently emailed Continental Benefit Group, the Plan's third-party administrator, to alter Plan documentation to include a waiver of the one-year service eligibility requirement for current (as of September 1, 2012) but not future employees. (Doc. 31-2 ¶ 22; see Doc. 31-18 at 6). Plaintiffs aver that the Board approved the waiver along with new Plan documentation at a Board meeting on July 2, 2012. (Doc. 36 ¶ 22). The meeting minutes from July 2, 2012 do not indicate approval of the waiver specifically; the minutes only reflect perfunctory approval of new Plan documentation. (Doc. 31-22 at 4). From January 1, 2012 until December 31, 2014, the Union transferred approximately $70, 000 to $100, 000 to the Plan in compliance with the disputed waiver in the 2012 Adoption Agreement. (Doc. 31-2 ¶ 26; Doc. 36 ¶26).

         All plaintiffs, except Karen Deitz, ran unsuccessfully for election in October 2014. (Doc. 31-2 ¶ 27; Doc. 36 ¶ 27). At the conclusion of the 2012-2014 term, the Union terminated plaintiffs' employment. (Doc. 31-2 ¶ 28; Doc. 36 ¶ 28). Plaintiffs requested distributions from the Plan shortly thereafter. (Doc. 31-2 ¶ 29; Doc. 36 ¶ 29). Thompson and Hicks, acting as successor trustees of the Plan, sent letters to plaintiffs stating that they were unable to locate records confirming the adoption of the disputed waiver. (Doc. 31-2 ¶ 30; Doc. 36 ¶ 30). The trustees indicated that plaintiffs would receive their contributions from the Plan less any amounts attributable to their first year of service. (Doc. 31-2 ¶ 30; Doc. 36 ¶ 30). The Plan has distributed these funds to plaintiffs. (Doc. 31-2 ¶ 32; Doc. 36 ¶ 32). Plaintiffs appealed the decision of the trustees, and the Plan has not issued a determination on plaintiffs' appeals. (Doc. 31-2 ¶¶ 33, 37; Doc. 36 ¶¶ 33, 37).

         Plaintiffs commenced this action on October 2, 2015, alleging one count of denial of benefits in violation of ERISA, 29 U.S.C. § 1132(a)(1)(B), against the Plan and the Union; and one count of breach of fiduciary duty in violation of ERISA, 28 U.S.C. §§ 1104(a)(1)(A), (D), against Thompson and Hicks. (Doc. 1). The court will refer to defendants collectively as "the Union." The Union filed an answer on December 7, 2015. (Doc. 8). On June 7, 2016, the Union filed an amended answer and advanced two counterclaims, to wit: one count of breach of fiduciary duty in violation of the Labor-Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 501(a), against Wilson, Garofalo, and Garber; and one count of breach of fiduciary duty in violation of ERISA, 28 U.S.C. § 1104(a)(1)(D) against Garofalo. (Doc. 27). On August ...

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