Harju et al v. Olson et al
MEMORANDUM OPINION AND ORDER (1) Defendant Duluth Building Trades Welfare Fund's 28 Motion for Summary Judgment is GRANTED in part and DENIED in part, as follows: a) As to Counts 1 and 3 of the Complaint, the motion is DENIED; b) As to Count 2 of the Complaint, the motion is GRANTED in part and DENIED in part, as follows: i) As to breach of fiduciary duty for failure to produce plan documents and failure to address all arguments in the Claim Letter, the motion is GRANTED; and ii) As to Plaintiffs' remaining claims for breach of fiduciary duty, the motion is DENIED. (2) Defendants Named Trustees' 44 Motion for Dismissal or Summary Judgment is GRANTED in part and DENIED in part, as follows: a) As to Counts 1 and 3 of the Complaint, the motion is DENIED; b) As to Count 2 of the Complaint, the motion is GRANTED in part and DENIED in part, as follows: i) As to breach of fiduciary duty for failure to produce plan documents and failure to address all arguments in the Claim Letter, the motion is GRANTED; and ii) As to Plaintiffs' remaining claims for breach of fiduciary duty, the motion is DENIED. 3) Plaintiff Iron Wo rkers Local Union No. 512 and Individual Plaintiffs' 31 Motion for Summary Judgment is GRANTED in part and DENIED in part, as follows: a) As to Counts 1 and 2 of the Complaint, the motion is DENIED; and b) As to Count 3 of the Co mplaint, the motion is GRANTED in part and DENIED WITHOUT PREJUDICE in part, as follows: i) As to Plaintiffs request for statutory penalties for Defendants' refusal to produce requested documents, the motion is GRANTED, and the Cou rt ORDERS Defendants to pay Plaintiffs $42,020 in statutory penalties for failure to produce plan documents; and ii) As to Plaintiffs' request for equitable relief, the motion is DENIED WITHOUT PREJUDICE. 4) Plaintiffs' 39 Motion to Certify Class is GRANTED, and Faegre & Benson, LLP is APPOINTED as class counsel. 5) The Court further ORDERS Defendants to provide Plaintiffs with copies of any plan documents in existence prior to the 2003 SPD that reflect the Trustees' decision to allow a participant to maintain eligibility for coverage based on hours worked prior to the effective date of the decision to withdraw from the Fund. (Written Opinion). Signed by Judge John R. Tunheim on March 29, 2010. (DML)
UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA BRENT K. HARJU, LANCE L. TVEITEN, and NORMAN D. VOORHEES, on behalf of themselves and all others similarly situated, and IRON WORKERS LOCAL UNION NO. 512, Plaintiffs, v. CRAIG OLSON, JEFF DAVEAU, ELIZABETH ADATTE, MARK HUBBARD, JOHN RIIHILUOMA, and MIKE GERBER, as members of the Board of Trustees of the Duluth Building Trades Welfare Fund; and DULUTH BUILDING TRADES WELFARE FUND, Defendants. MEMORANDUM OPINION AND ORDER Civil No. 08-1329 (JRT/RLE)
Steven L. Severson and Deborah A. Ellingboe, FAEGRE & BENSON LLP, 90 South Seventh Street, Suite 2200, Minneapolis, MN 55402-3901, for plaintiffs. William A. Cumming, HESSIAN & MCKASY, PA, 4000 Campbell Mithun Tower, 222 South Ninth Street, Minneapolis, MN 55402-3801, for named trustee defendants. John H. Bray, KANUIT & BRAY, LTD., 5155 Miller Trunk Highway, Hermantown, MN 55811, for defendant Duluth Building Trades Welfare Fund. Plaintiffs Brent K. Harju, Lance L. Tveiten, and Norman D. Voorhees (collectively, the "Individual Plaintiffs"), on behalf of themselves and all others similarly situated, and Iron Workers Local Union No. 512 ("Local 512"), brought this putative
class action against six named members of the Board of Trustees of the Duluth Building Trades Welfare Fund (the "Named Trustees"), and against the Duluth Building Trades Welfare Fund (the "Duluth Fund" or "Fund") alleging breach of fiduciary duty and refusal to produce documents, and seeking a declaration of right to benefits. (Class Action Compl., Docket No. 1.) Local 512 and the Individual Plaintiffs (collectively, "plaintiffs") contend that the Duluth Fund and the Named Trustees (collectively, "defendants") improperly determined that a benefits plan participant's "banked hours" are reduced to zero if the participant's union leaves the Fund, and also improperly refused to produce requested documents relating to that determination. The parties filed crossmotions for summary judgment, and plaintiffs filed a motion for class certification. (Docket Nos. 28, 31, 39, 44.) For the reasons stated below, the Court grants in part and denies in part the motions for summary judgment, and grants plaintiffs' motion for class certification. BACKGROUND Local 512 is an affiliate of the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, AFL-CIO, and consists of over 1300 journeymen members and 350 apprentices working in Minnesota, North Dakota, and parts of Wisconsin. (Class Action Compl. ¶ 5, Docket No. 1.) The Duluth Fund is an employee welfare benefit plan within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1002(1). (Id. ¶ 7.) A trust sponsors and maintains the Duluth Fund, and the Named Trustees are six of the eight members of the Board of Trustees,
which is the body responsible for administering the trust. (Id. ¶¶ 9-14; see also Named Trustees Answers to Pls.' Combined Disc. at 2, Ellingboe Aff., Ex. A, Docket No. 36.) The Duluth Fund is a multiemployer plan, or "Taft-Hartley" plan, maintained pursuant to a collective bargaining agreement. See ERISA § 3(37)(A), 29 U.S.C. § 1002(37)(A). Members of several labor unions, including Local 512, participate in the Fund. (Class Action Compl. ¶ 8, Docket No. 1.) Approximately 621 Local 512 members, including the Individual Plaintiffs, participate in the Duluth Fund. (Id. ¶¶ 1-3; Flesher Aff. ¶ 5, Docket No. 37.) Other Local 512 members participate in the Twin City Iron Workers Health and Welfare Fund, which is not a party to this suit. (Mem. in Supp. of Pls.' Mot. for Summ. J. at 4 n.2, Docket No. 32.) The dispute centers on the practice of "banking hours." Employers make
contributions to the Fund on behalf of each participating employee, and the employee receives coverage if he or she has worked a minimum number of hours in a particular month. (Claim Letter, Ex. A at 14, Class Action Compl., Ex. 1, Docket No. 1.)
Currently, for example, participants must work a minimum of 135 hours per month to maintain eligibility for benefits. (Id.) The employer's contribution is based on the number of hours the employee works in a particular month. (Id. at 14-15.) If an employee works fewer than the minimum number of required credit hours, the employer still makes contributions based on the hours worked, but the employee is not automatically eligible for benefits for the relevant month. (Id. at 14.) If, however, the employee works more than the minimum number of hours, the employer makes contributions for all of those hours. (Id. at 14-15.) The additional hours are "banked,"
and the employee may draw down the banked hours if the employee does not satisfy the minimum hours requirement in a subsequent month. (Id. at 15.) The Duluth Fund maintains records of banked hours in the participant's "Individual Record System." (Id.) Approximately 405 of the 621 Local 512 members who participate in the Duluth Fund have banked hours. (Flesher Aff. ¶ 5, Docket No. 37.) Local 512 members have a total of 261,060.53 banked hours an average of 4.76 months of coverage for each participant who has banked hours. (Id.) The parties dispute what should happen to those hours if Local 512 elects to withdraw from the Fund. A. Documents Governing the Duluth Fund and Provisions Relating to Banked Hours
Several documents govern the Duluth Fund. The Duluth Fund was established pursuant to a Trust Agreement, and the most recent Trust Agreement governing the Fund is dated January 8, 1987. (Trust Agreement, Claim Letter, Ex. C, Class Action Compl., Ex. 1, Docket No. 1.) The Duluth Fund has promulgated several Summary Plan
Descriptions, or SPDs, including one effective January 1, 1997 ("1997 SPD"), a revised SPD effective January 1, 2003 ("2003 SPD"), and an SPD that was revised during this litigation and went into effect in 2009 ("2009 SPD"). (Claim Letter, Ex. B, Class Action Compl., Ex. 1, Docket No. 1 (1997 SPD); Claim Letter, Ex. A, Class Action Compl., Ex. 1, Docket No. 1 (2003 SPD); Hanson Aff., Ex. J, Docket No. 34 (2009 SPD).) The Duluth Fund apparently also promulgated several Summary of Material Modification notices announcing interim changes to the SPDs. (See, e.g., Claim Letter, Ex. G, Docket No. 1.)
The Trust Agreement authorizes the Board of Trustees "to amend, repeal, add to or take away any right of payment retroactively or otherwise," but lists several "Limitation[s] of Authority of Trustees." (Trust Agreement §§ 10.1-10.2.) In particular, Section 10.2(d) of the Trust Agreement states that "[t]he Trustees shall have no authority to adopt amendments which . . . retroactively deprive anyone of his vested rights or benefits." (Id. § 10.2(d).) The Trust Agreement also has a provision governing partial termination of the Fund in the event that an employer decides to withdraw from the Fund. Section 11.2 states: In the event some of the Employers discontinue making contributions to the Fund, the Employees and Participants who were employed by such Employers, such Employers and the Unions representing such Participants and Employees shall have no right, title or interest in any portion of the assets of the Trust, except that otherwise eligible Employees and Participants may continue to receive benefits from the Fund under such terms and conditions as the Trustees may require or as may be required by this Agreement. (Id. Art. 11.2.) The 1997 SPD allowed participants to draw down their banked hours after their union or employer left the Fund. The 1997 SPD has a paragraph titled "Non-Portability of Hours." It states: If a participating Union or a group covered by a collective bargaining agreement ceases to participate in the Fund, all assets and banked hours credited to those members on the date of withdrawal shall remain as assets of this Fund credited to the individual Plan participant. Under no circumstances shall a Plan participant who is a member of the withdrawing group be entitled to transfer any hours to another Fund or any assets represented by such hours.
(1997 SPD at 13, Docket No. 1 (emphases added).) Effective May 1, 1998, Laborers Local No. 1091 withdrew from the fund, and in a letter dated April 24, 1998, the Fund Trustees quoted the "Non-Portability of Hours" paragraph and stated that "participants with hour banks will continue to be covered under the Duluth . . . Fund until such time that they do not have enough hours to cover another month's worth of coverage." (Hanson Letter at 2, Claim Letter, Ex. F, Docket No. 1.) In a letter dated December 2001, the Duluth Fund provided participants with a "Summary of Material Modification" to the 1997 SPD. (Claim Letter, Ex. G, Docket No. 1.) The letter announces three material modifications that would go into effect on January 1, 2002.1 (Id.) One of those modifications imposed a forward-looking cap on the number of banked hours in a participant's Individual Record System: The Individual Record System will be capped at 1,600 hours. This means that once you reach 1,600 hours in your Individual Record System, no more hours will be added. Members that currently have over 1,600 hours in their Individual Record System will not lose those hours, except for periodic adjustments for contribution rate increases. Those hours will remain available for use. (Id.) This modification is incorporated into the 2003 SPD. (2003 SPD at 15, Docket No. 1.)
The letter states that the modifications are "[e]ffective January 1, 2001," which would make the modifications retroactive. The modification descriptions use the future tense, however, and the 2003 SPD states that the cap was effective on January 1, 2002. (See 2003 SPD at 15, Docket No. 1.) The Court concludes, for purposes of the motions presently before the Court, that the modifications were effective January 1, 2002.
The 2003 SPD retained the "Non-Portability of Hours" paragraph from the 1997 SPD, as quoted above, but added a "Reduced to Zero" provision regarding banked hours. The provision states: Your credit hours will immediately be reduced to zero upon either of the following events: 1. You accept any employment in the Building Trades from an employer who is not a party to a collective bargaining agreement with a participating union; or Your home local union takes an action that will terminate the provisions of the collective bargaining agreement which requires contributions for your work. You will be eligible for coverage based on your hours worked prior to the effective date of the termination. For example, the union decides on January 1 to withdraw from the Fund on February 1. If you have worked the required 135 hours in January, you will have coverage through March 31. If you have not worked the required hours in January, your coverage will end on February 28.
(2003 SPD at 15-16, Docket No. 1 (emphases added).) The parties dispute when this "Reduced to Zero" provision took effect. Plaintiffs claim that they were not informed of the rule change until the Duluth Fund promulgated the 2003 SPD. (Mem. in Supp. of Pls.' Mot. for Summ. J. at 9, Docket No. 32.) Defendants allege that the Board of Trustees (the "Board") adopted the provision in October 1998. (Trustees Mem. of P. & A. at 3-4, Docket No. 48.) The minutes from an October 19, 1998, Board meeting reflect that Local No. 11 had informed the Duluth Fund that BendTec, an employer, would no longer be contributing to the Fund effective October 5, 1998. (Hanson Aff., Ex. A at 1, Docket No. 34.) The union informed the Fund "that it was their intent to run out their bank hours with the Fund prior to BendTec transferring them to the company's Blue Cross Blue Shield Plan." (Id.) The Board of
Trustees refused to allow the union to do so, and instead passed a motion stating that "the Fund would accept the contributions through October 5, 1998, for the metal trades employees of BendTec and terminate those employees' coverage effective November 30, 1998, as they no longer meet the definition of employee or employer under the Trust Agreement and Summary Plan Description." (Id.) John Bray, counsel for the Duluth Fund, "distributed copies of sample wording regarding rules for when eligibility terminates." (Id. at 2.) Bray indicated that the sample wording was from another fund, and it used language similar to that in the Reduced to Zero provision that appears in the 2003 SPD. The minutes reflect that the Trustees "asked Mr. Bray to review it and draft new language to be presented at the next Trustees meeting on November 19, 1998." (Id.) The Board apparently adopted a resolution on November 19, 1998, but the wording of that resolution is substantively different from the Reduced to Zero provision in the 2003 SPD. The minutes from the November 19, 1998, Board meeting state that "Mr. Bray discussed his resolution amending the plan rules regarding plan eligibility and termination rules and the individual record system." (Hanson Aff., Ex. B at 2, Docket No. 34.) The minutes state: After a lengthy discussion, a motion was made, second [sic] and carried: Motion to accept the resolution as proposed effective November 19, 1998. The following will be added to the current rules regarding selfpayment: Notwithstanding the foregoing, your hour bank shall be immediately reduced to zero if either of the following events happen [sic]: (1) You accept any employment in the building trades from an employer who is not a party to a collective bargaining agreement with a participating union; or
Your home local union takes an action that terminates or will at some future date terminate the provisions of the local union's collective bargaining agreement requiring contributions for your work. Eligibility for all benefits which would have been paid or received after the date of such action regardless of the action's effective date, shall be lost immediately.
(Id. at 2-3 (emphases added).) The primary substantive difference between the 1998 resolution and the 2003 SPD is that the 1998 resolution purports to reduce banked hours to zero immediately if the participant's union takes an action to terminate contributions, "regardless of the action's effective date," while the 2003 SPD allows a participant to maintain eligibility "for coverage based on . . . hours worked prior to the effective date of the termination." In the course of discovery, counsel for the Named Trustees produced an undated letter from the Board addressed to "Dear Participant," purporting to be a Summary of Material Modification to the 1997 SPD. (Ellingboe Aff., Ex. F, Docket No. 36.) It states, "The Trustees want to inform you that effective October 1, 1998 that [sic] a change has been made in the Individual Record System (Credit Hours)." (Id. at 1.) It describes an addition to the 1997 SPD that is almost identical to the resolution approved in the November 19, 1998, Board meeting. (Compare id. at 1 ("Your credit hours will
immediately be reduced to zero upon either of the following events . . . .") with Hanson Aff., Ex. B at 2, Docket No. 34 ("Notwithstanding the foregoing, your hour bank shall be immediately reduced to zero if either of the following events happen [sic] . . . .").) The 2009 SPD, which is only indirectly relevant to the motions currently before the Court, revises the Non-Portability of Hours paragraph to make it more consistent with the Reduced to Zero provision. The following paragraph illustrates those changes with
strike-throughs for the language that appears in the 2003 SPD but not in the 2009 SPD, and with underlining for the language that appears in the 2009 SPD but not in the 2003 SPD: If a participating Union or a group covered by a collective bargaining agreement ceases to participate ends participation in the Fund, all assets and banked hours credited to recorded for those members of the Union or group on the date of withdrawal shall remain as assets of this Fund credited to the individual Plan participant will be reduced to zero. All contribution [sic] received by the fund attributable to hours worked through the date of termination remain assets of this Fund. If your Union or group withdraws participation, Uunder no circumstances shall a Plan participant who is a member of the withdrawing group will you, or the Union or group, be entitled to transfer any hours or any assets related to those hours to another Fund or entity or any assets represented by such hours. (Compare 2009 SPD at 10, Hanson Aff., Ex. J, Docket No. 34 with 2003 SPD at 16, Docket No. 1.) The 2009 SPD retains the Reduced to Zero provision that appeared in the 2003 SPD, with some minor stylistic changes. B. The History of the Duluth Fund's Treatment of Banked Hours After Withdrawal
Several other unions or employers withdrew from the Fund after Laborers Local No. 1091 withdrew in May 1998. The first withdrawal was the BendTec withdrawal on October 5, 1998, which prompted the November 1998 Board resolution discussed above. Effective May 1, 2001, Cement Masons Local No. 633 withdrew from the Fund. (Ellingboe Aff., Ex. G, Docket No. 36.) Defendants have submitted affidavits from some of the Trustees stating that the Fund reduced to zero the banked hours for Local 633 members upon that union's withdrawal. (See, e.g., Olson Aff. ¶¶ 5-6, Docket No. 30.)
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On July 31, 2001, Sheet Metal Workers' International Association, Local Union No. 10, wrote to the Duluth Fund to inform the Fund that Local 10 "has implemented its right under the current collective bargaining agreement to transfer contributions from your Plan to the Twin Cities Plan commencing with contributions accrued for work hours performed on or after August 1, 2001." (Sandberg Letter, Hanson Aff., Ex. D, Docket No. 34.) The letter noted that Local 10 had "attempted to engage [the Duluth Fund] in a discussion concerning continued eligibility rights of sheet metal workers who are participants in your Plan if Local 10 were to act on its contractual right to transfer contributions from your Plan to the Twin Cities Plan." (Id.) The letter indicated that Local 10 had some awareness of at least one potentially relevant plan amendment regarding the effective date of the Reduced to Zero provision: We have been given to understand you recently resolved to modify your Plan's rules to permit participants to continue eligibility based on current contributions until it would otherwise expire for contributions due and owing prior to a switch in contributions rather than to immediately cut off eligibility as it was claimed your Plan's prior rule apparently called for. (Id.) This letter suggests that by July 31, 2001, the Board had modified the language adopted in the November 1998 Board meeting, because that resolution required that banked hours be reduced to zero effective immediately if the participant's union "takes an action that terminates or will at some future date terminate" the union's participation in the Fund. There is no evidence in the record to indicate whether or when the Board made such a change. On March 19, 2002, Bray wrote to the business agent of the Bricklayers and Allied Craftworkers Local Union No. 1, stating that because Local 1 had taken action to
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withdraw from the Fund, Local 1 "participants' hour banks are reduced to zero as of the date the action was taken." (Bray Letter, Hanson Aff., Ex. I, Docket No. 34.) Defendants have submitted affidavits from some of the Trustees stating that the Floorcoverers' Union also withdrew from the Fund after the 1998 amendment, and that the Fund reduced to zero the banked hours of that union's members upon withdrawal. (See, e.g., Olson Aff. ¶¶ 5-6, Docket No. 30.) The record reflects that at some point in 2003, the Floorcoverers transferred their membership from the Carpenters Local No. 361, a Fund participant, to Local No. 596, which is not a Fund participant. (Ellingboe Aff., Ex. G, Docket No. 36.) C. Local 512's 2007 Claim Letter
At some point prior to the end of 2007, Local 512 investigated the welfare fund options available to its members and concluded that it was in the best interests of its members to participate in the Twin City Iron Workers Health and Welfare Fund (the "TCIW Fund"), rather than the Duluth Fund. Local 512 favored the TCIW Fund because it "is specifically designed to meet the needs of iron workers and because it provides more generous benefits than the Duluth Fund." (Claim Letter at 2, Class Action Compl., Ex. 1, Docket No. 1.) The Board denied Local 512's informal request that the Board allow Local 512 members to draw down any banked hours in the Duluth Fund after their employers ceased making contributions to the Fund. (See Claim Letter at 3, Class Action Compl., Ex. 1, Docket No. 1.) On April 13, 2007, Local 512 wrote a letter to Darrell Godbout, who was then Chairman of the Board of Trustees, requesting a meeting with the Board of
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Trustees "to discuss . . . the termination of contributions to the Duluth [Fund and] the ability of departing participants . . . to run out their banked hours when contributions made on their behalf terminate." (Witt Letter at 1, Claim Letter, Ex. D, Docket No. 1.) "[A]s an alternative to an hours run-out," Local 512 suggested "a transfer of assets and liabilities" to the TCIW Fund. (Id.) The record does not reflect whether a meeting took place, but at some point in 2007 the Board denied Local 512's informal requests. (Claim Letter at 3, Class Action Compl., Ex. 1, Docket No. 1.) On December 26, 2007, Local 512, acting through counsel, sent a letter to the Duluth Fund (the "Claim Letter"). (Id.) The letter states that it is regarding a "Claim for Declaration of Right to Exhaust Banked Hours Brought on Behalf of Members of Iron Workers Local 512." (Id. at 1 (emphases in original).) The Claim Letter states that "[t]he Union is pursuing this claim on behalf of all of its members who have banked hours in the Duluth Fund[.]" (Id.) It further states that "[t]he Union is authorized to pursue this claim on its members' behalf consistent with its role as representative for its members, as set out in the applicable Collective Bargaining Agreement (`CBA') among the Union" and several employers. (Id. at 1 n.2.) The Claim Letter explains that Local 512 "plans to use [its] authority to cease Employer Contributions to the Duluth Fund" and to direct employers to make contributions to the TCIW Fund. (Id. at 2-3.) It explains that "[b]efore the Union makes a final decision, however, the Claimant Members are entitled to know whether they will be allowed the benefit of the banked hours they have accumulated in the Duluth Fund." (Id. at 3.) The Claim Letter then argues that the Trust Agreement and the 2003 SPD
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"require the Trustees to allow participants to run out their banked hours after Employer Contributions made on their behalf cease," noting that this conclusion is consistent with the April 1998 decision regarding the withdrawal of Laborers Local No. 1091. (Id. at 35.) The Claim Letter also argues that the amendments reflected in the 2003 SPD are ineffective, to the extent that they purport to eliminate departing participants' rights in their banked hours. (Id. at 7-8.) The Claim Letter also requests certain documents and other information. (Id. at 910.) First, it requests all information "required to be furnished to participants under ERISA §§ 104(b)(2) and 502(c)," including "all `pertinent documents' within the meaning of Section 104(b)(2)." (Id. at 9.) Second, it requests all information "required to be furnished to participants under ERISA § 502 and 29 C.F.R. § 2560.503-1(i)(5)," including "[a]ny board resolutions (draft, proposed or final) regarding any amendments to the Duluth Plan or Trust Agreement concerning banked hours." (Id. at 9-10.) Third, it requests "[a]ny other information or documents relating to the design, operation, exhaustion or cessation of banked hours in the Duluth Fund, including, without limitation, any communications or advice of the Duluth Fund's consultants and counsel." (Id. at 10.) The Claim Letter attaches several documents, including the 1997 and 2003 SPDs, the 1987 Trust Agreement, and correspondence relating to the withdrawal of Laborers Local 1091 in 1998. (Claim Letter Appx., Docket No. 1.)
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Exclusion of Trustee Godbout from the January 11, 2008 Board Meeting
The Court describes in some detail the events leading up to the Board's denial of Local 512's claim because plaintiffs allege that those events involved procedural irregularities, a factor that is relevant to the legal standard governing the Court's review of that decision. Soon after the Board received the Claim Letter, the Board determined that it should exclude Darrell Godbout, a member of Local 512 and one of the eight Duluth Fund Trustees, from the Board's consideration of the Claim Letter. On January 3, 2008, Chairman of the Board John Riihiluoma left Godbout a telephone message informing him that there would be a special Board meeting on January 11, 2008. (Godbout Aff. ¶ 2, Docket No. 33.) Riihiluoma told Godbout that he "could be present at the meeting for all matters, except consideration of Local 512's claim. He said this decision was made on the advice of Fund counsel," John Bray. (Id.) In response to this message, Godbout consulted with counsel for the Iron Workers Pension and Health and Welfare Funds, who assisted Godbout in preparing a letter to the Board. (Id. ¶¶ 3-4.) On January 7, 2008, Godbout wrote to the other seven Trustees stating that he had "been advised by the Chairman of the Board of Trustees that a determination has been made (by whom I am not sure) that I as a Union Trustee who is also a member of the Iron Workers Local 512 should not and will not participate in the consideration of or voting on the Claim." (Jan. 7 Godbout Letter at 1, Class Action Compl., Ex. 2, Docket No. 1.) Godbout objected to that determination, stated that he was "fully prepared" to "carefully and impartially consider the Claim and render an independent decision that
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[he] believe[s] to be in the best interests of the Fund and its participants," and argued that he had "both a contractual and legal right to participation" in the decision. (Id.) He argued that neither the Trust Agreement nor ERISA allows the Board to exclude him. (Id. at 1-3.) He further argued that, "[t]o the extent that some Trustees believe that I cannot participate in the determination of the Claim because of a perceived conflict of interest, then the same is also true of all of the Fund's Trustees." (Id. at 3.) Godbout attached two proposed resolutions to his letter. He presented a proposed resolution that would allow him to participate in the determination of the claim. (Id. at 4.) Godbout also included a proposed "conditional resolution which, if a decision is made to exclude me based on a perceived conflict of interest, would preclude all of the Fund's Trustees from determining the Claim for the same reason," and which would require the Board to select an impartial umpire, in accordance with the Trust Agreement provisions regarding the disqualification of all Trustees. (Id.) That impartial umpire would then decide the matter. (Id.) On January 8, 2008, Bray prepared a memorandum to the Trustees regarding the plan amendments relating to banked hours. (Duluth Fund Supplemental Answers to Combined Set of Disc. at 3, Flesher Aff., Ex. A, Docket No. 37.) The parties dispute whether the Board voted to exclude Godbout from the meeting of the Board of Trustees on January 11, 2008. Defendants allege that Godbout
voluntarily excluded himself from the meeting. They state: The Trustees did not advise Mr. Godbout that he would not be allowed to participate in the consideration of [Local 512's] letter before a meeting, but rather, Mr. Godbout (in spite of the allegations of the Complaint and the language used in Mr. Godbout's correspondence) voluntarily excused
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himself from the meeting after being advised that he had a conflict of interest pertaining to the issues raised by [Local 512's] letter. The Trustees did not offer a resolution to exclude Mr. Godbout. (Duluth Fund's Supplemental Answers to Combined Set of Disc. at 2, Flesher Aff., Ex. A, Docket No. 37; see also Named Trustees Answers to Pls.' Combined Disc. at 2, Ellingboe Aff., Ex. A, Docket No. 36 ("Trustee Godbout was not told that he was not allowed to participate. Mr. Godbout was asked if he would recuse himself, and leave the meeting. Mr. Godbout subsequently excused himself and left the meeting."); Olson Aff. ¶ 7, Docket No. 30 ("The other board members suggested that Mr. Godbout take no part in the deliberations or decision on what to do with the Local 512 and he then left the meeting voluntarily. . . . We took no formal action to exclude him from the meeting because we did not need to do so."); Adatte Aff. ¶¶ 10-11, Docket No. 71 ("[N]o one at the board meeting told Darrel Godbout that he was required to leave. . . . Instead of anyone forcing Mr. Godbout to leave, he voluntarily left the meeting."); Daveau Aff. ¶ 10-11, Docket No. 72 (same); Gerber Aff. ¶¶ 10-11, Docket No. 73 (same); Hubbard Aff. ¶¶ 10-11, Docket No. 74 (same).) Plaintiffs state that the Trustees excluded Godbout from the relevant portion of the meeting. Godbout describes the meeting as follows: When it came time for the Board to consider the Claim, I was asked . . . to leave the meeting. I responded that I would not leave the meeting until I had an opportunity to state my position and to present the resolutions enclosed with my January 7, 2008 letter. I then proceeded to state my position which largely summarized what I had said in my January 7, 2008 letter. I also presented each of the resolutions for a vote by the Board. In neither case did I receive the necessary second from another Trustee to bring the resolutions to a vote by the full Board. At that point, I was again asked to leave the meeting. Recognizing that I had lost my effort to participate in consideration of the Claim, I got up and left the meeting. By
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no means did I leave the meeting "voluntarily," as I understand from Plaintiffs' counsel the Fund has alleged in its Answer to the Complaint. (Godbout Aff. ¶ 6, Docket No. 33.) The minutes from the meeting, which were subsequently amended on February 29, originally stated: Chairman Riihiluoma stated that he had a couple of telephone conversations with Mr. Godbout regarding today's meeting. Chairman Riihiluoma then asked Mr. Godbout to voluntarily leave the meeting so the other Trustees could discuss the Iron Workers claim. Mr. Godbout presented his case as to why he should be allowed to remain during the discussion stating that he represents all members of the Fund and has not made a decision on the Iron Workers claim. He feels that he would be unbiased in his decision. Mr. Bray, distributed a copy of this memo regarding his decision on this matter. He stated that in his legal opinion this would be a prohibited transaction to allow Mr. Godbout to take part in any vote on the hour bank issue. Mr. Bray stated that it was his legal opinion that Mr. Godbout not be presented [sic]. After considerable discussion, Mr. Godbout made a motion: Motion to allow him to remain present at the remainder of the meeting. Hearing no second, the motion failed. Mr. Godbout then left the meeting voluntarily. (Olson Aff., Ex. A at 1, Docket No. 30.) The minutes further reflect the Board's action on the Claim Letter after Godbout left the meeting. They state: Mr. Bray then reviewed the Iron Workers' claim. Mr. Bray stated first and foremost, he does not believe Local 512 is authorized to bring a suit on behalf of their members. He stated that there is case law regarding that. He stated that even with that in mind, he feels they need to respond to the claim. Mr. Bray stated that he felt the benefit comparison is of no matter regarding this issue. He stated that the hour bank is kept only to determine eligibility and the funds are not segregated and accounted for on behalf of each member. He stated the funds are pooled thereby making them a non-vested item and thereby a fund asset. Mr. Bray stated that the sole and exclusive benefit rule, in his opinion is being misrepresented. He stated that this benefit rule applies to all of the participants, not a select few.
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After some discussion, a motion was made, seconded and carried: Motion to have Mr. Bray proceed with his response. It was noted that there was one abstaintion [sic] from voting. (Id. at 1-2.) On January 14, 2008, Godbout wrote another letter to his fellow Trustees. (Jan. 14 Godbout Letter, Class Action Compl., Ex. 3, Docket No. 1.) The letter expressed
Godbout's "strong objection to [the Board's] decision to exclude [Godbout] from participating in consideration of Local 512's Claim at the Board meeting on Friday, January 11, 2008." (Id. at 1.) Godbout argued that there was no legal or factual basis for the Board's decision to exclude him from the meeting, and that the decision violated the Trust Agreement, ERISA, and relevant case law. (Id.) Godbout stated that the Board must "meet as soon as possible to establish a fair and appropriate process for the selection of an impartial umpire to decide Local 512's claim" because the Trustees "are unable to decide Local 512's Claim consistent with [their] fiduciary duties as trustees of the Fund and . . . any decision [they] make will be tainted by [their] conflicts of interest." (Id. at 12.) He also "demand[ed] that the Board inform [him] immediately and in writing what took place at the meeting after [Godbout] was removed." (Id. at 1.) The letter included "a proposed resolution by which the Board would authorize [the] seven trustees to petition the Court to name an impartial trustee and name [Godbout] as the sole respondent," pursuant to 29 U.S.C. § 186(c)(5). (Id. at 2.) E. The Duluth Fund's Denial Letter
After the January 11 meeting, the Duluth Fund sent Local 512's counsel a letter dated January 31, 2008 (the "Denial Letter"), which counsel received on February 28,
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2008. (Denial Letter, Duluth Fund Answer, Ex. A, Docket No. 3; see Class Action Compl., Ex. 4, Docket No. 1.) response to the Claim Letter: [T]he Trustees are treating your letter, for the sake of argument only, as an appeal within the meaning of the Plan documents. This does not mean that the Trustees believe your letter to be an appeal resulting from denial of benefits. The Trustees reserve their right to assert that your letter does not constitute an appeal, that no decision was even made to appeal from, and that the Local 512 is not entitled to act on behalf of all of its members, some of whom may not agree with the positions taken in your letter. (Denial Letter at 1, Docket No. 3.) The Denial Letter provided several substantive responses to the Claim Letter. First, the Duluth Fund argued that banked hours are not a vested benefit belonging to individual participants, and stated that the Fund maintains banked hour accounts for individual participants merely for record-keeping purposes. (Id. at 2.) Second, the Duluth Fund argued that the Trust Agreement requires the Trustees to safeguard Fund assets by barring individuals who have left the Fund from using Fund resources. (Id.) The Denial Letter responded to Local 512's request for documents but did not include any responsive documents. (Id. at 3.) In response to the request for documents under ERISA §§ 104(b)(2) and 502(c), the Duluth Fund stated, "By virtue of your letter, [which attached the 1997 and 2003 SPDs and the 1987 Trust Agreement,] you are in possession of all documents we believe are responsive to this request. If you wish to make a request for specific documents, please do so and we will consider it." (Id.) In response to the request under ERISA § 503 and 29 C.F.R. § 2560.503-1(i)(5) for board resolutions "regarding any amendments to the Duluth Plan or Trust Agreement The letter included the following qualifications in
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concerning banked hours," the Duluth Fund responded, "You are in possession of all such documents." (Id. at 4.) In response to the request for "[a]ny other information or documents relating to the . . . operation . . . of banked hours in the Duluth Fund," the Duluth Fund responded, "You are in possession of documents related to the banked hours. With regard to your request for communications by the Fund's consultants and counsel, you are not entitled to those documents; accordingly, those documents are not produced." (Id.) F. The February 29, 2008 Board Meeting
Two items in the minutes from the February 29, 2008, Board Meeting relate to banked hours. First, the minutes reflect that the Board approved a change to the minutes of a previous Board meeting. (Feb. 29, 2008 Minutes at 1, Duluth Fund Answer, Ex. B, Docket No. 3.) The change reflects that Trustee Godbout was "removed from the
meeting," over his objection: The Trustees reviewed the minutes of their meetings held October 31, 2007 and January 11, 2008. It was noted that the October 31, 2007 [sic] minutes should reflect that Mr. Godbout objected from [sic] being removed from the meeting stating that he was elected by the building trades as a representative and that he had the right to be at the meeting. A motion was made, seconded and carried: Motion to approve the minutes as corrected. (Id. (first emphasis added).)
The Court does not have a copy of the minutes from the October 31, 2007, Board meeting. The context of the February 29, 2008, minutes strongly suggests that the amendment applied to the minutes from the January 11, 2008, Board meeting, which originally stated that Godbout "left the meeting voluntarily."
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Second, the minutes reflect a "new business" item proposed by Rick Berg, a union Trustee. (Id. at 4.) "Mr. Berg presented a resolution to allow any withdrawing group to take their hour banks upon withdrawal." (Id.) In response to Berg's presentation, "Mr. Bray stated that Mr. Berg could not make the motion due to his conflict of interest." (Id.) The minutes state that Godbout attended the meeting, but they do not mention the proposed resolution that Godbout sent to the Trustees on January 14. (See id. at 1-5.) G. Documents Produced in February 2009
Nearly nine months after plaintiffs filed suit, the Duluth Fund produced several documents relevant to the document requests in the Claim Letter. On February 10, 2009, the Duluth Fund produced the minutes from the Board meetings on October 19, 1998, November 19, 1998, and January 21, 1999. (See Flesher Aff. ¶ 2, Docket No. 37; Duluth Fund Supplemental Answers to Combined Set of Disc. at 2-3, Flesher Aff., Ex. A, Docket No. 37; Ellingboe Aff., Ex. D, Docket No. 36.) Those minutes include Bray's resolutions about the Reduced to Zero provision, which later appeared in a different form in the 2003 SPD. On February 11, 2009, the Duluth Fund produced the undated letter to Fund participants explaining that the Reduced to Zero amendment took effect on October 1, 1998. (Ellingboe Aff., Ex. F, Docket No. 36.) H. Procedural History
On May 15, 2008, the Individual Plaintiffs and Local 512 brought suit in the United States District Court for the District of Minnesota, seeking a declaration of right
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to benefits (Count One), and claiming breach of fiduciary duty (Count Two) and refusal to produce documents (Count Three). (Class Action Compl. ¶¶ 103-25, Docket No. 1.) On June 2, 2009, the parties filed motions for summary judgment, (Docket Nos. 28, 31, 44), and plaintiffs filed a motion to certify the class (Docket No. 39). The Duluth Fund raises the following arguments in support of its motion for summary judgment: (1) Local 512 is not entitled to the documents it requested, (2) Local 512 was already in possession of all of the documents to which it might have been entitled, (3) the claim for declaration of right to benefits is not ripe because Local 512 has not withdrawn from the Fund, and (4) plaintiffs are not entitled to relief because the Trustees' interpretation of plan documents was not arbitrary and capricious. The Named Trustees raise the following arguments in support of their motion for summary judgment: (1) Local 512 lacks standing under ERISA to assert its claims, (2) plaintiffs' claims are not ripe, (3) the individual plaintiffs failed to exhaust administrative remedies and therefore their claims are barred, (4) the statute of limitations bars the claim for breach of fiduciary duty, (5) the Trustees properly applied the terms of the plan with regard to banked hours, and (6) the Trustees did not breach their fiduciary duties in addressing Local 512's request for documents. Plaintiffs moved for summary judgment on all three causes of action, and also moved for certification of a class of all members of Local 512 who are also participants in the Duluth Fund.
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ANALYSIS I. MOTIONS FOR SUMMARY JUDGMENT A. Standard of Review
Summary judgment is appropriate where there are no genuine issues of material fact and the moving party can demonstrate that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). A fact is material if it might affect the outcome of the suit, and a dispute is genuine if the evidence is such that it could lead a reasonable jury to return a verdict for either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). A court considering a motion for summary judgment must view the facts in the light most favorable to the non-moving party and give that party the benefit of all reasonable inferences that can be drawn from those facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). B. Affirmative Defenses
Defendants argue that four affirmative defenses warrant summary judgment in their favor: standing, ripeness, statute of limitations, and failure to exhaust administrative remedies. The Court concludes that none of these arguments has merit. 1. Standing
The Duluth Fund argues that Local 512 "was not statutorily entitled to receive records . . . , or to obtain relief in district court arising out of its request," and therefore defendants had no obligation to take any action in response to the Claim Letter. (Duluth Fund Mem. in Supp. of Summ. J. at 10, Docket No. 29.) The Named Trustees argue that
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"Local 512 lacks standing under ERISA to assert" its claims. (Named Trustees' Mem. of P. & A. at 2, Docket No. 48.) a. Standing to Request Documents and Bring Administrative Claims
The Duluth Fund argues that Local 512 was not entitled to request records or to bring a claim, and therefore the Fund did not improperly refuse to produce documents and had no obligation to rule on the purported claim. The Court finds that Local 512 was acting as an authorized representative of at least some of its members and therefore was entitled to request documents and bring a claim on their behalf. ERISA regulations expressly require plans to allow "an authorized representative" of a claimant to act on behalf of that claimant. Under 29 C.F.R. § 2560.503-1(b), an employee benefit plan must have "reasonable claims procedures," and those procedures are "deemed to be reasonable only if," among other things, [t]he claims procedures do not preclude an authorized representative of a claimant from acting on behalf of such claimant in pursuing a benefit claim or appeal of an adverse benefit determination. Nevertheless, a plan may establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant . . . . 29 C.F.R. § 2560.503-1(b)(4). The Claim Letter expressly states that Local 512 was making the claim as an authorized representative on behalf of certain plan participants who have banked hours. (Claim Letter at 1, Class Action Compl., Ex. 1, Docket No. 1.) It also references 29 C.F.R. § 2560.503-1(b)(4) and cites Local 512's authority under its collective bargaining agreement. (Id. at 1 n.2.) It attaches a copy of the collective bargaining agreement,
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which states that Local 512 serves as the "agent for the Employees whom it represents." (Claim Letter, Ex. H, Docket No. 1.) Defendants cannot now argue that Local 512 was not authorized to act on behalf of at least some of its members, because there is no evidence in the record to show that defendants ever attempted to ascertain whether Local 512 had such authorization. The Denial Letter does not contend that Local 512 is not an authorized representative. Instead, it states that "[t]he Trustees reserve their right to assert . . . that the Local 512 is not entitled to act on behalf of all of its members, some of whom may not agree with the positions taken in your letter." (Denial Letter at 1, Docket No. 3 (emphasis added).) It does not dispute that Local 512 was authorized to represent at least some of its members. It also does not invoke any "reasonable procedures for determining" whether members had authorized Local 512 to act on their behalf, as required by 29 C.F.R. § 2560.5031(b)(4). Because Local 512 was acting as agent for at least some of its members, it was entitled to request plan documents and to make claims on behalf of those members. b. Statutory Standing to Bring Suit
Defendants do not dispute that the Individual Plaintiffs are plan participants who have standing to bring suit. The parties also do not seem to dispute that Local 512 has Article III associational standing to bring a suit on behalf of its members.3 See Warth v.
The Duluth Fund briefly argues that "[t]here is no justiciable controversy presented by Plaintiffs for this Court to address," arguing that plaintiffs' claims "do not call into question the Trustees' authority to amend the Plan." (Duluth Fund Mem. in Supp. of Mot. for Summ. J. at 14, Docket No. 29.) First, plaintiffs do argue that 2003 amendments to the SPD violate the Trust Agreement and violate ERISA. (Mem. in Supp. of Pls.' Mot. for Summ. J. at 34-36, Docket No.
(Footnote continued on next page.)
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Seldin, 422 U.S. 490, 511 (1975). At issue is whether Congress withdrew that authority when it enacted the standing provisions in ERISA. See S. Ill. Carpenters Welfare Fund v. Carpenters Welfare Fund of Ill., 326 F.3d 919, 922 (7th Cir. 2003). Section 502(a)(3) of ERISA authorizes civil actions brought: by a participant, beneficiary, or fiduciary (A) (B) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or to obtain other appropriate equitable relief (i) (ii) to redress such violations or to enforce any provisions of this subchapter or the terms of the plan.
29 U.S.C. § 1132(a)(3). Section 502(a)(1) authorizes "a participant or beneficiary" to bring a civil action to obtain relief from a Plan Administrator's refusal to supply requested information and "to clarify [the participant's or beneficiary's] rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(A)-(B). Neither the parties nor the Court has identified any case from the Eighth Circuit or the District of Minnesota that holds that a union may or may not bring a civil action under ERISA. Courts in other jurisdictions are split on the issue of whether a labor union may bring ERISA claims. Soc'y of Prof'l Eng'g Employees in Aerospace, IFPTE Local 2001 v. Boeing Co., No. 05-1251, 2006 U.S. Dist. LEXIS 71712, at *8 (D. Kan. Sept. 29,
32.) Second, the case the Duluth Fund cites simply decided that there was a justiciable controversy because the parties disputed whether the trustees had the authority to amend the plan as they did. The court did not hold that the dispute in question was the only possible justiciable controversy. See Int'l Ass'n of Bridge, Structural & Ornamental Iron Workers Local No. 111 v. Douglas, 646 F.2d 1211, 1214 (7th Cir. 1981).
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2006). The Third Circuit in New Jersey State AFL-CIO v. New Jersey held that "[i]t is clear from [ERISA] that labor unions are neither participants nor beneficiaries, and consequently [the plaintiff-labor union] does not fall within this provision" and cannot bring suit. 747 F.2d 891, 893 (3d Cir. 1984). Many district courts have adopted this view.4 The Eastern District of Pennsylvania subsequently construed New Jersey State AFL-CIO in Pennsylvania Federation, Brotherhood of Maintenance of Way Employees v. Norfolk Southern Corp. Thoroughbred Retirement Investment Plan, and observed that the Third Circuit in that case was considering whether "a union suing in its own stead" may sue under ERISA, and did not consider "whether the union could bring suit as an association." No. 02-9049, 2004 U.S. Dist. LEXIS 1987, at *34-35 (E.D. Pa. Feb. 4, 2004). Recognizing this distinction, the Seventh Circuit rejected the Third Circuit's view "that by confining the right to sue under Section 1132(a)(1) to plan participants and beneficiaries Congress intended to prevent unions from suing on behalf of participants." S. Ill. Carpenters Welfare Fund, 326 F.3d at 922; cf. Beck v. Pace Int'l Union, 427 F.3d 668, 679 (9th Cir. 2005) (holding that unions have standing to seek equitable relief for
See, e.g., Soc'y of Prof'l Eng'g Employees in Aerospace, 2006 U.S. Dist. LEXIS 71712, at *10-12; Toussaint v. JJ Weiser & Co., No. 04-2592, 2005 U.S. Dist. LEXIS 2133, at *17-18 (S.D.N.Y. Feb. 13, 2005); Dist. 65, UAW v. Harper & Row Publishers Inc., 576 F. Supp. 1468, 1476 (S.D.N.Y. 1983); United Food & Commercial Workers Local 204 v. Harris-Teeter Super Mkts., Inc., 716 F. Supp. 1551, 1561 (W.D.N.C. 1989); Commc'ns Workers of Am. v. SBC Disability Income Plan, 80 F. Supp. 2d 631, 632-33 (W.D. Tex. 1999); Int'l Union, United Auto. Aerospace & Agric. Implement Workers of Am. v. Auto Glass Employees Fed. Credit Union, 858 F. Supp. 711, 722 (M.D. Tenn. 1994); Abels v. Titan Int'l, 85 F. Supp. 2d 924, 930 (S.D. Iowa 2000); see also Local 6-0682 Int'l Union of Paper, Allied-Indus., Chem. & Energy Workers v. Nat'l Indus. Group Pension Plan, 342 F.3d 606, 609 n.1 (6th Cir. 2003) ("Unions are not included in the § 502 list, and though a union might qualify as a `fiduciary' under § 502(a)(3), the Union makes no effort to show how it fits in this category." (citations omitted)).
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violations of ERISA relating to "termination procedures"), rev'd on other grounds, 551 U.S. 96 (2007). The Seventh Circuit concluded that "[t]he union in such a case is not seeking anything for itself; the real plaintiffs in interest are plan participants." S. Ill. Carpenters Welfare Fund, 326 F.3d at 922. Consistent with the Seventh Circuit, the district court in Pennsylvania Federation concluded that even though ERISA precludes a union from suing solely on its own behalf, a union "may sue under ERISA using associational standing," and thereby found no conflict between the Third Circuit and the Seventh Circuit. 2004 U.S. Dist. LEXIS 1987, at *35-36. Other courts have reached similar conclusions.5 In light of the circumstances of this case, the Court concludes that Local 512 has standing. First, the parties do not dispute that the Court has jurisdiction under ERISA to hear the claims. The Individual Plaintiffs are participants in the Duluth Fund and
therefore ERISA allows them to bring this civil action. Even if Congress intended to prohibit unions from bringing ERISA claims when acting in their own stead, here Local 512 is bringing suit on behalf of its members, as evidenced in part by the fact that plaintiffs have asked the Court to certify a class of all Local 512 members who participate in the Duluth Fund. There is no evidence in the record to suggest that Local
See, e.g., Commc'ns Workers of Am. v. Am. Tel. & Tel., 828 F. Supp. 73, 74-75 (D.D.C. 1993) (concluding that a union has standing under ERISA if it satisfies the requirements for Article III associational standing), rev'd on other grounds, 40 F.3d 426 (D.C. Cir. 1994); Haw. Teamsters & Allied Workers, Local 996 v. City Express, Inc., 751 F. Supp. 1426, 1430 (D. Haw. 1990) (holding that a union has standing under ERISA if it suffered injury in fact, arguably falls within the zone of interests protected by ERISA, and shows that ERISA does not preclude suit); see also 2-29 Employee Benefits Guide § 29.02 (2009) ("It seems clear that employees' collective bargaining agents may bring ERISA actions in their behalf.").
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512 is seeking anything for itself. Instead, it is seeking to vindicate the rights of its members. Second, as discussed in greater detail below, the Court is certifying a class of all members of Local 512 who are participants in the Duluth Fund. To dismiss Local 512 for lack of standing while certifying a class of all Local 512 members who participate in the Duluth Fund would be an unnecessary exercise in formalism. Third, it is likely that Local 512 "has institutional resources and experience to enforce ERISA, and it may be in a better position to protect the rights of all of its members." Beck, 427 F.3d at 679. Local 512 will likely play an important role in identifying class members and communicating with them about the litigation. Local 512's continued participation in the case will allow all parties to proceed with greater efficiency in this class action. 2. Ripeness
The Duluth Fund argues that "Plaintiffs' suit is not ripe, as the Plaintiffs have not been denied benefits provided for by the Plan." (Duluth Fund Mem. in Supp. of Mot. for Summ. J. at 12, Docket No. 29.) The Named Trustees argue that the suit is not ripe because "none of the Plaintiffs with standing to make a claim have actually done so. Allowing this matter to proceed to trial on a hypothetical claim that has yet to materialize causes just the quagmire that the [ripeness] doctrine intended to avoid." (Trustees' Mem. of P. & A. at 9, Docket No. 48.) Defendants further assert that the Claim Letter was merely "seeking an advisory opinion." (Duluth Fund's Statement of the Case at 1, Docket No. 10; Named Trustees' Statement of the Case at 2, Docket No. 9.) Defendants' ripeness arguments fail on both statutory and prudential grounds. First, Section 502(a)(1)(B) of ERISA expressly authorizes plan participants to bring a
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civil action "to clarify [their] rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). As the Eighth Circuit has noted, "[m]anifestly included within that authorization . . . is the power for a district court to determine what benefits are due and to award them." Welsh v. Burlington N., Inc., Employee Benefits Plan, 54 F.3d 1331, 1340 (8th Cir. 1995). Section 502(a)(1)(B) allows courts to entertain "hypotheticals" about future benefits. Janowski v. Int'l Bd. of Teamsters, 673 F.2d 931, 935 (7th Cir. 1982), vacated on other grounds, 463 U.S. 1222 (1983). "This action is precisely the type of action contemplated by the statute." Id. Second, the dispute is more than hypothetical. On December 26, 2007, Local 512 expressed its intent to withdraw from the Plan. Local 512's current collective bargaining agreement authorizes the union to direct that employer contributions to the Duluth Fund cease and be made instead to the TCIW Fund. Indeed, the record reflects that the only obstacle to Local 512 taking this action is the fear that Local 512 members will lose their banked hours. Even without § 502(a)(1)(B), the case presents an actual controversy ripe for adjudication. 3. Statute of Limitations
The Named Trustees argue that plaintiffs' claim for breach of fiduciary duties is time-barred. (Trustees Mem. of P. & A. at 9-11, Docket No. 48.) They misunderstand the nature of the claim for breach of fiduciary duties. Plaintiffs argue that the Named Trustees breached their fiduciary duties when they allegedly excluded Trustee Godbout from the Board meeting on January 11, 2008, when they failed to address all of Local 512's arguments in rejecting the Claim Letter on January 31, 2008, and when they failed to produce the plan documents requested in the Claim Letter. Plaintiffs filed suit on
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May 15, 2008, less than six months after the incidents in which the Named Trustees allegedly breached their fiduciary duties. The statute of limitations for this claim is six years. Minn. Stat. § 541.05 subd. 1(1). Plaintiffs' claim for breach of fiduciary duties is not time-barred. 4. Failure to Exhaust Administrative Remedies
"[A]lthough ERISA itself contains no exhaustion requirement," Burds v. Union Pac. Corp., 223 F.3d 814, 817 (8th Cir. 2000), federal courts "have read an exhaustion of administrative remedies requirement into the statute." Fallick v. Nationwide Mut. Ins. Co., 162 F.3d 410, 418 & n.4 (6th Cir. 1998). Defendants argue that because Local 512 was not authorized to bring an administrative claim, the December 26, 2007 letter was not a claim. They further argue that the Individual Plaintiffs, who, according to
defendants, are the only plaintiffs entitled to bring an administrative claim, never brought such a claim, and therefore plaintiffs have failed to exhaust remedies under the plan. (Trustees' Mem. of P. & A. at 9, Docket No. 48.) As discussed in Part I.B.1.a above, Local 512 acted as an authorized representative of at least some of its members who had banked hours. Therefore, the fact that
Local 512, rather than an individual participant, wrote the December 26 letter is not a procedural bar to the claims in this suit. The futility exception applies to plaintiffs' claims. Plan participants are not
"required to exhaust if doing so would prove futile." Brown v. J.B. Hunt Transp. Servs., Inc., 586 F.3d 1079, 1085 (8th Cir. 2009). Here, defendants failed to recognize that Local 512 was acting as an authorized representative of plan participants, and also
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incorrectly insisted that Local 512 was merely seeking an "advisory opinion," rather than seeking to clarify rights to future benefits. In light of defendants' position, no further administrative procedures would have helped to develop the record for this Court or to provide the parties with any additional relevant information. The Duluth Fund's pattern of conduct in addressing banked hours demonstrates that the Fund would not change its position through any administrative process. No. 43.) C. Production of Plan Documents (Count 3) (See also Severson Aff. ¶ 10, Docket
The Court finds that plaintiffs are entitled to summary judgment on Count 3 and are entitled to civil penalties, but denies without prejudice plaintiffs' request for additional equitable relief. Viewing the evidence in the light most favorable to
defendants, no reasonable trier of fact could conclude that defendants did not violate § 104(b)(2) of ERISA by failing to produce requested plan documents. Section 502(a)(1)(A) of ERISA allows plan participants and beneficiaries to bring a cause of action against a plan administrator if the administrator "refus[es] to supply requested information" where ERISA requires the administrator to disclose such information. 29 U.S.C. § 1132(a)(1)(A), (c). The purpose of the disclosure provision is to ensure that "the individual participant knows exactly where he stands with respect to the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 118 (1989) (internal quotation marks omitted). "This suggests that, all other things being equal, courts should favor disclosure where it would help participants understand their rights." Bartling v. Fruehauf Corp., 29 F.3d 1062, 1070 (6th Cir. 1994).
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Section 104(b)(4) of ERISA requires a plan administrator6 to provide upon request copies of all instruments under which the plan is established or operated. 29 U.S.C. § 1024(b)(4). It states: The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated. 29 U.S.C. § 1024(b)(4) (emphasis added). The Eighth Circuit has construed this "other instruments" language narrowly: The statute does not define the term "other instruments under which the plan is established or operated." . . . In common legal parlance, that means instruments which govern the plan, rather than those which simply evidence its operation. . . . [W]e agree with the circuits that have construed "other instruments" as meaning, not any document relating to a plan, but only formal documents that establish or govern the plan. Brown v. Am. Life Holdings, Inc., 190 F.3d 856, 861 (8th Cir. 1999). Defendants contend that, from October 1, 1998, until January 1, 2003, the November 1998 Board resolution and the undated "Dear Participant" letter regarding that resolution governed the plan.7 Those documents appear to be the only documents that memorialize that particular amendment language. Defendants do not dispute that the Duluth Fund applied that resolution in addressing the withdrawals of BendTec, Cement
Defendants do not dispute that they are plan administrators governed by these disclosure provisions. Cf. Brown, 586 F.3d at 1088. (See Duluth Fund Mem. in Supp. of Mot. for Summ. J. at 21, Docket No. 29 (conceding that the Trustees "are, by operation of law, both the `plan administrator' as well as fiduciaries'").) 7 The Court notes that it is possible that a different Board resolution or plan instrument governed the plan during part of this period, as evidenced by the substantive differences between the November 1998 Board resolution and the 2003 SPD, and as further evidenced by the July 31, 2001 letter from Sheet Metal Workers Local 10, which suggests that the Board had recently modified the relevant language adopted in the November 1998 Board resolution.
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Masons Local 633, Sheet Metal Workers Local 10, and Bricklayers Local 1 from the Fund. (See Named Trustees' Mem. in Supp. of Mot. for Summ. J. at 6, Docket No. 48; Duluth Fund's Mem. in Supp. of Mot. for Summ. J. at 5-6, Docket No. 29.) Local 512 requested the November 1998 Board resolution in writing, but the Duluth Fund's response to the request suggested that there was no such resolution. In the December 26, 2007 Claim Letter, Local 512 requested "[a]ny board resolutions . . . regarding any amendments to the Duluth Plan or Trust Agreement concerning banked hours." In response to this request, the Duluth Fund stated, "You are in possession of all such documents." None of the documents attached to the Claim Letter made any
reference to the November 1998 resolution or its effective date. Nothing in the Claim Letter suggests that Local 512 was in possession of the requested documents. The requested documents fall within the scope of § 104(b)(4) because they implicate the issue of vesting.8 "[P]rior versions of the summary plan descriptions requested by a plan participant fall within the scope of the penalty provisions of [§ 104(b)(4)] if they are material to an evaluation of the claimant's rights." Huss v. IBM Med. & Dental Plan, No. 07-7028, 2009 WL 780048, at *10 (N.D. Ill. Mar. 20, 2009). Because defendants argue that the Reduced to Zero provision went into effect in 1998, governing documents regarding the effective date of the language are material to a determination of whether and when banked hours ceased to be vested benefits.
Although plaintiffs argue that defendants were obligated to produce the requested documents under 29 C.F.R. § 2560.503-1, the Eighth Circuit recently held that "a plan administrator may not be penalized under § 1132(c) for a violation of the regulations to § 1133." Brown, 586 F.3d at 1088.
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The maximum statutory penalty for defendants' failure to produce the November 1998 Board resolution is $42,020.9 Section 502(c)(1)(B) "authorizes the district court to impose statutory penalties upon a plan administrator if the plan administrator `fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant.'" Brown, 586 F.3d at 1088. The statutory penalty provision states: Any administrator . . . (B) who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court's discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper. 29 U.S.C. § 1132(c)(1)(B). The Secretary of Labor increased the maximum daily penalty to $110. 29 C.F.R. § 2575.502c-1. Defendants had 30 days from December 26, 2007, to produce the resolution. They produced the resolution on February 10, 2009, 382 days late. "The purpose of ERISA's statutory penalty is to punish noncompliance. The employer's good faith and the absence of harm are relevant in deciding whether to award a statutory penalty." Chesnut
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