Eckert et al v. Chauffeurs, Teamsters and Helpers Local Union 776 Profit Sharing Plan et al
Filing
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MEMORANDUM (Order to follow as separate docket entry) re: 31 MOTION for Summary Judgment filed by Chauffeurs, Teamsters and Helpers Local Union 776 Profit Sharing Plan, Chauffeurs, Teamsters and Helpers Local Union 776. (See memo for complete details.) Signed by Chief Judge Christopher C. Conner on 3/13/17. (ki)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
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,
Plaintiffs,
v.
CHAUFFEURS, TEAMSTERS AND
HELPERS LOCAL UNION 776
PROFIT SHARING PLAN,
CHAUFFEURS, TEAMSTERS AND
HELPERS LOCAL UNION 776,
EDGAR H. THOMPSON, and
RONALD W. HICKS,
Defendants
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CIVIL ACTION NO. 15-CV-1920
(Chief Judge Conner)
MEMORANDUM
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 History1
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.
1
Local Rule 56.1 requires that a motion for summary judgment pursuant to
Federal Rule of Civil Procedure 56 be supported “by a separate, short, and concise
statement of the material facts, in numbered paragraphs, as to which the moving
party contends there is no genuine issue to be tried.” LOCAL RULE OF COURT 56.1.
A party opposing a motion for summary judgment must file a separate statement
of material facts, responding to the numbered paragraphs set forth in the moving
party’s statement and identifying genuine issues to be tried. Id. Unless otherwise
noted, the factual background herein derives from the parties’ Rule 56.1 statements
of material facts. (See Docs. 31-2, 36). To the extent the parties’ statements are
undisputed or supported by uncontroverted record evidence, the court cites
directly to the statements of material facts.
2
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).
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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 1112; 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
2
From 2008 until 2012, Pension Alliance, Inc. served as the Plan’s third-party
administrator. (Doc. 31-2 ¶ 15; Doc. 36 ¶ 15; see Doc. 31-14). The Board replaced
Pension Alliance, Inc. with Continental Benefit Group in 2012. (Doc. 31-2 ¶ 21; Doc.
36 ¶ 21).
4
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
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fiduciary duty in violation of ERISA, 28 U.S.C. § 1104(a)(1)(D) against Garofalo.
(Doc. 27). On August 5, 2016, the Union filed its motion for summary judgment
(Doc. 31) on plaintiffs’ claims and on the Union’s counterclaims. The motion is fully
briefed (Docs. 32, 35, 37) and ripe for disposition.
II.
Legal Standard
Through summary adjudication, the court may dispose of those claims that
do not present a “genuine dispute as to any material fact” and for which a jury trial
would be an empty and unnecessary formality. FED. R. CIV. P. 56(a). The burden of
proof tasks the non-moving party to come forth with “affirmative evidence, beyond
the allegations of the pleadings,” in support of its right to relief. Pappas v. City of
Lebanon, 331 F. Supp. 2d 311, 315 (M.D. Pa. 2004); see also Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986). This evidence must be adequate, as a matter of law, to
sustain a judgment in favor of the non-moving party on the claims. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250-57 (1986); Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587-89 (1986). Only if this threshold is met may
the cause of action proceed. See Pappas, 331 F. Supp. 2d at 315.
III.
Discussion
The Union avers that the disputed waiver permitting Plan contributions
during a Union employee’s first year of service is unenforceable. (See Doc. 32 at 1112). The Union argues that the Board cannot amend the Plan unilaterally and that
no evidence supports approval of said amendment by the Board. (Doc. 32 at 12-18).
The Union also counterclaims that Wilson, Garofalo, and Garber breached fiduciary
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duties under the LMRDA and that Garofalo breached fiduciary duties pursuant to
ERISA. (Doc. 27 ¶¶ 71-79). The court will address these issues seriatim.
A.
Procedure for Amending Plan Documentation
The Union contends that its membership did not ratify the disputed
amendment, rendering it inoperative. (Doc. 32 at 16-18). Plaintiffs rejoin that
membership did not need to ratify this decision as the Board may amend the Plan
unilaterally. (Doc. 35 at 17-22). The parties cite Section 15(D) of the Union’s Bylaws
as basis for the procedure to amend the Plan. (Doc. 32 at 16-18; Doc. 35 at 20; see
Doc. 31-10).
The bylaws and constitution of an association embody the contract between
the association and its members. See Petition of Bd. of Directors of State Police
Civic Ass’n, 472 A.2d 731, 736 (Pa. Commw. Ct. 1984); see also O’Neill v. United
Ass’n of Journeymen Plumbers & Steam-Fitters of U.S. & Canada, 36 A.2d 325, 327
(Pa. 1944). In Pennsylvania, contract interpretation is a question of law, tasking the
court to discern the parties’ intent through the prism of the written agreement.
Dep’t of Transp. v. Pa. Indus. for the Blind & Handicapped, 886 A.2d 706, 711 (Pa.
Commw. Ct. 2005) (citing Robert F. Felte, Inc. v. White, 302 A.2d 347, 351 (Pa. 1973)).
The court must determine whether the contract’s language is ambiguous, meaning,
“subject to more than one reasonable interpretation when applied to a particular
set of facts.” Murphy v. Duquesne Univ. of the Holy Ghost, 777 A.2d 418, 430 (Pa.
2001).
Courts consider the language of the contract itself, alternative meanings
tendered by the parties, and the nature of any objective evidence offered in support
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of the proposed constructions in evaluating ambiguity. Bohler-Uddeholm Am., Inc.
v. Ellwood Grp., Inc., 247 F.3d 79, 93 (3d Cir. 2001) (quoting Mellon Bank, N.A. v.
Aetna Bus. Credit, Inc., 619 F.2d 1001, 1011 (3d Cir. 1980)). A term is not rendered
ambiguous merely because the parties disagree on the proper interpretation. See
Stewart v. SWEPI, LP, 918 F. Supp. 2d 333, 341-42 (M.D. Pa. 2013) (quoting Baney v.
Eoute, 784 A.2d 132, 136 (Pa. Super. Ct. 2001)). Absent ambiguity, the plain
language of the agreement as written must be interpreted and enforced by the
court. See Murphy, 777 A.2d at 429. The court must be guided by the plain
meaning of the language employed by the parties rather than their “silent
intentions.” T.W. Phillips Gas & Oil Co. v. Jedlicka, 42 A.3d 261, 267 (Pa. 2012).
The plain language of Section 15(D) of the Union’s Bylaws is unambiguous.
Section 15(D) states in pertinent part: “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 . . . retirement benefits
[and] may from time to time provide changes therein[.]” (Doc. 31-10 at 18). The
court interprets this plain language to mean that the Board has authority to change
retirement benefits, which are indisputably set forth in the Plan documentation.
(Doc. 32 at 17; Doc. 35 at 14).
The Union alternatively proposes that the succeeding paragraph in Section
15(D) restricts the unilateral authority of the Board: “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 (emphasis added)). The Union posits that because the Board has
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sole authority to set or adjust salaries, it does not have sole authority to implement
changes articulated in the preceding paragraph. (Doc. 32 at 17-18). This proffered
meaning of Section 15(D) is not a reasonable interpretation of its plain language.
See Bohler-Uddeholm, 247 F.3d at 93; Murphy, 777 A.2d at 429. The plain language
of the Union’s Bylaws states that the Board has the authority to change retirement
benefits as well as “sole authority” to adjust salaries for staff and clerical employees
of the Union. (Doc. 31-10 at 18). These two paragraphs articulate separate powers
of the Board. The second paragraph does not implicitly limit the unequivocal
authority of the Board to change retirement benefits.
The Union’s interpolation of a restriction on the Board’s power to change
retirement benefits is simply not written in the Union’s Bylaws. It is significant that
other sections of the Union’s Bylaws that delineate the parameters of Board
authority expressly include the Union’s proposed restriction. For example, Section
13(A)(11) specifies that the Board may create or terminate trusts that provide
benefits to Union members “all subject to approval by the membership.” (Id. at 13).
This express condition does not exist in Section 15(D). (See id. at 18). The court
must rely on the plain language of Section 15(D), not the contrived meaning
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proposed by the Union. See Jedlicka, 42 A.3d at 267. The plain language of the
Union’s Bylaws indicates that the Board may unilaterally change terms of the Plan.3
B.
The Board’s Approval of the Amendment
The Union asserts that the Board did not approve the disputed amendment.
(Doc. 32 at 11-16). The Union highlights that the pertinent meeting minutes do not
indicate passage of the amendment and asserts that Garofalo unilaterally included
the waiver in the 2012 Adoption Agreement. (Id. at 12, 15; Doc. 37 at 3, 5). Plaintiffs
remonstrate that meeting minutes function only as a summary of events at a Board
meeting and that Garofalo acted at the direction of the Board. (Doc. 35 at 11-14).
Impassable disputes of fact remain concerning these dispositive issues.
Plaintiffs provide affirmative evidence that the Board may have approved the
disputed amendment, namely deposition testimony that meeting minutes may not
reflect the exact decisions of the Board, (see Doc. 35 at 11-12; Doc. 35-5 at 16:1-4;
Doc. 35-18 at 21:10-15), and affidavits detailing Board approval of the amendment,
(see Doc. 35 at 13-14; Doc. 35-17). See Pappas, 331 F. Supp. 2d at 315. Plaintiffs
thus create material factual disputes that preclude Rule 56 judgment for the Union.
FED. R. CIV. P. 56(a). The court will accordingly deny the Union summary judgment
on plaintiffs’ claims.
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The Union also argues that the International Brotherhood of Teamsters
Constitution, Article XXII, Section 4(e), prohibits this type of unilateral action.
(Doc. 32 at 16-17). Plaintiffs provided the court with this document, as the Union
failed to do so in its exhibits, and cited the entire relevant section which clearly does
not support the Union’s argument. (Doc. 35 at 17-18; Doc. 35-23 at 11). The Union
did not respond to this proposition in its briefing. The court finds that the Union
has therefore waived this argument. See D’Angio v. Borough of Nescopeck, 34 F.
Supp. 2d 256, 265 (M.D. Pa. 1999).
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C.
The Union’s Counterclaims
The Union counterclaims that Wilson, Garofalo, and Garber breached their
fiduciary duties under the LMRDA and that Garofalo also breached his fiduciary
duties under ERISA. (Doc. 27 ¶¶ 71-79). These claims depend upon whether the
Board approved the disputed waiver, as fiduciaries breach their duties under both
statutes if they do not act in accordance with union bylaws. See 29 U.S.C. § 501(a);
29 U.S.C. § 1104(a)(1)(D). As noted supra, material disputes of fact concerning
compliance with the Union’s Bylaws still exist sub judice. The court consequently
denies summary judgment for the Union on its counterclaims.
IV.
Conclusion
For all of the reasons set forth above, the court will deny the Union’s motion
(Doc. 31). An appropriate order shall issue.
/S/ CHRISTOPHER C. CONNER
Christopher C. Conner, Chief Judge
United States District Court
Middle District of Pennsylvania
Dated:
March 13, 2017
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