Agathos v. Motel , 60 F.3d 143 ( 1995 )

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
3-31-1995
Agathos v Motel
Precedential or Non-Precedential:
Docket 94-5382
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Recommended Citation
"Agathos v Motel" (1995). 1995 Decisions. Paper 89.
http://digitalcommons.law.villanova.edu/thirdcircuit_1995/89
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 94-5382
JOHN AGATHOS; and LEONARD DEMARSICO,
as Trustees of the Local 4-69 Welfare
Fund and the Local 4-69 Pension Fund and
Local 69, Hotel Employees and Restaurant
Employees International Union, by its
President, John Agathos
Appellants
v.
STARLITE MOTEL
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 89-cv-02429)
Argued: February 17, 1995
BEFORE: STAPLETON and COWEN, Circuit Judges
HUYETT, District Judge*
(Filed March 31, 1995)
Diana L.S. Peters
Gerald M. Feder (argued)
Feder & Associates, P.C.
1350 Connecticut Avenue, N.W.
Suite 600
Washington, D.C. 20036
Counsel for Appellants
John Agathos and Leonard DeMarsico
*Honorable Daniel H. Huyett 3rd, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.
John A. Craner (argued)
Craner, Nelson, Satkin & Scheer
320 Park Avenue
P.O. Box 367
Scotch Plains, NJ 07076
Counsel for Appellee
Starlite Motel
OPINION OF THE COURT
Cowen, Circuit Judge:
John Agathos and Leonard DeMarsico, plaintiff trustees (the
"Trustees") of the jointly administered Local 4-69 Welfare Fund
(the "Welfare Fund") and the Local 4-69 Pension Fund (the
"Pension Fund") appeal from an order of the district court that
granted judgment in favor of defendant Starlite Motel
("Starlite") on claims under a collective bargaining agreement.1
In essence, the Trustees argue that the district court erred in:
(1) determining that the Welfare Fund was not legally entitled to
recover benefits paid to an ineligible employee in reliance on
false statements made by Starlite; (2) concluding that only
current Starlite employees could have colorable claims against
the Pension Fund for benefits; (3) concluding that two current
1
. In the original complaint in this matter, Local 69 (the
"Union") also sought union dues on behalf of Starlite's
unreported employees. The Union is not pursuing its claims in
this appeal.
employees do not have colorable claims for pension benefits; and
(4) concluding that a one year time limit for filing precludes
claims for welfare benefits. Because the district court
correctly determined that the Welfare Fund was not entitled to
recover benefits paid to the ineligible employee, we will affirm
the district court's order in part. Nevertheless, because we
conclude that the district court failed to make factual findings
and conclusions of law sufficient to determine whether the past
and present employees of Starlite have colorable claims for
pension and welfare benefits, we will reverse and remand on the
remaining issues raised by the Trustees.
I.
The Local 4-69 Welfare Fund and the Local 4-69 Pension Fund
(collectively "the Funds") are multiemployer employee benefit
plans that were established in accordance with Section 302(c)(5)
of the Labor-Management Relations Act of 1947 (as amended), and
that are within the purview of the Employee Retirement Income
Security Act of 1974 (as amended) ("ERISA"). Pursuant to ERISA
and the Labor-Management Relations Act, contributions that
employers owe under collective bargaining agreements are pooled
to provide the benefits for all the participants and
beneficiaries of the Funds.
On May 31, 1979, Starlite entered into a collective
bargaining agreement that required it to make contributions to
the Welfare and Pension Funds on behalf of its employees.
Zuzanna Podkowa ("Podkowa") was an employee of Starlite until
June 30, 1986. At that time, she terminated her employment.
After leaving Starlite, Podkowa submitted medical claims to the
Welfare Fund even though she was no longer eligible for such
benefits. The Welfare Fund paid her $11,203.67 in benefits
relying on a false report from Starlite that Podkowa was still
employed.
Because of information disclosed as the result of Podkowa's
claim, the Funds sought an audit of Starlite's books. Starlite
refused the audit and the Funds sued. An audit of Starlite's
records covering the period from January 1, 1984 to December 31,
1990 conducted during discovery demonstrated that Starlite failed
to report a number of employees who were covered by the
collective bargaining agreement. In addition, Starlite failed to
make contributions to the Funds on behalf of these employees.
The contributions due from Starlite totalled $52,665.00 for the
Welfare Fund and $14,756.00 for the Pension Fund.
Without taking further evidence, the district court heard
legal arguments on the above stipulated facts. The court
concluded that the payments made to Podkowa were made as a result
of the failure of the Funds to conduct even the most minimal
policing of Starlite's account, and denied recovery. Agathos v.
Starlite Motel, No. 89-2429, slip op. at 11 (D.N.J. Dec. 20,
1991). Concerning the unreported employees, the district court
concluded that the Funds suffered no damages because the
unreported employees were never covered by the Funds and thus
could not have made any claims for pension or welfare benefits.
Id. at 8-9. An appeal to this Court followed.
On appeal, we vacated the district court's judgment and
remanded for further proceedings. Agathos v. Starlite Motel, 977
F.2d 1500, 1510 (3d Cir. 1992). We determined that the district
court failed to make clear the precise legal principles it
considered in reaching its decision concerning the benefits paid
to Podkowa. Id. at 1508. Accordingly, we remanded to the
district court for it to decide whether the Funds could meet
their burden of proving either fraud or breach of contract on the
part of Starlite. Id.
With respect to the claims for Welfare and Pension Fund
contribution, we determined that we were unable to discern from
the record which employees, if any, presently could bring a valid
claim for benefits. Id. at 1507. We explained that if the
employees cannot assert such claims, then a judgment for the
Funds would compel Starlite to contribute to plans from which its
employees obtained no benefits in the past and are powerless to
derive any benefits in the future, a result that we described as
a "pure windfall." Id. We therefore directed the district court
to conduct an evidentiary hearing to determine which, if any,
unreported employees currently have colorable claims against the
Funds for benefits. Id. Further, we explicitly placed the
burden of proof on Starlite to demonstrate that particular
employees no longer had colorable claims for benefits if Starlite
wished to avoid making contributions on behalf of those
employees. Id. at 1507-08.
The district court on remand held an evidentiary hearing.
At the hearing, the Trustees of the Welfare Fund admitted into
evidence a written document attesting to the fact that on
December 2, 1992 (after our first decision in this matter), the
Trustees unanimously adopted a resolution to waive the time
limits on submission of medical claims to the Welfare Fund for
individuals for whom contributions should have been made by
Starlite. According to the Trustees, this waiver allows each of
these employees to submit claims for welfare benefits without
regard to any previously imposed time bar.
The district court rendered its decision following this
hearing in a three page order. The court determined that the
Funds had not met their burden of proof in proving fraud or
breach of contract with regard to their claim for monies paid to
Podkowa. According to the court, the Funds had not proven that
they "were justified in relying" on Starlite's misrepresentation
to their detriment and the Funds had not proven that the damages
they sought flowed foreseeably from Starlite's breach. Agathos
v. Starlite Motel, No. 89-2429, slip op. at 3 (D.N.J. May 27,
1994). The court again cited the failure of the Funds to police
the Starlite account as the source of the damages at issue. Id.
With respect to the claims for contribution, the district
court stated that:
[H]aving determined that only two current employees of
Starlite -- Luba Siemienuk and Mieczslaw Zielinski -- were
also employed by Starlite during the period for which
contributions are sought, and it having been represented to
the court that neither employee presently could bring a
valid claim for benefits accruing during the period for
which contributions are now sought, and, indeed, that
neither employee even has a claim for either welfare or
pension benefits and, thus, as a matter of law any judgment
for the Funds under the circumstances would be a pure
windfall . . . judgment will be entered in favor of
defendant.
Id. at 2-3 (internal quotation marks and citations omitted). The
district court also stated in a footnote that:
There are no medical bills to submit, there are no claims
for pensions because pensions have not vested, and, in any
event, claims must be and were not submitted within one year
from the date the claim was first incurred. Def. Exh. 4, 8.
While, following the Court of Appeals' decision and based on
the "tenor" of that decision, the Funds purported to waive
the time limits for the submission of medical claims during
the period for which contributions were sought (thus
implicitly requiring those contributions to be made in an
attempt to back door both this court and the Court of
Appeals, see Def. Exh. 5), the undisputed fact remains that
only Ms. Siemienuk and Mr. Zielinski continue to work for
Starlite and only they would qualify for benefits if they
had colorable claims, which they do not.
Id. at 2 n.2. Accordingly, the district court entered judgment
in favor of Starlite on May 27, 1994. This appeal followed.
II.
The district court had jurisdiction in this matter by virtue
of Section 502(e)(1) of ERISA, codified at 29 U.S.C. §
1132(e)(1). We exercise jurisdiction in this matter pursuant to
28 U.S.C. § 1291 following the remand that we directed and the
final judgment entered by the district court.
III.
The Trustees argue that the district court erred in denying
the Welfare Fund recovery for the benefits it paid to Podkowa.
According to the Trustees, Starlite committed fraud and breached
its contractual obligations by misrepresenting that Podkowa was a
current employee at the time she made her claim for welfare
benefits. Further, the Trustees assert that the district court
failed to take into account the realities in which multiemployer
plans operate with respect to their abilities to police
employer's accounts. We are unpersuaded by the Trustees'
arguments.
In our previous decision, we outlined the applicable legal
principles for the district court to consider in assessing
whether the Trustees could meet their burden of proving fraud or
breach of contract. Agathos, 977 F.2d at 1508. We explained
that under general principles of tort law, the elements of fraud
are: (1) a material factual misrepresentation; (2) made with
knowledge or belief of its falsity; (3) with the intention that
the other party rely thereon; (4) resulting in justifiable
reliance to that party to his detriment. Id. (citing Restatement
(Second) of Torts §§ 525-26 (1977)). Further, we explained that
for the Funds to recover for breach of the collective bargaining
agreement, the Funds had to show that: (1) Starlite had a
contractual obligation not to make reports or to remit
contributions on behalf of individuals no longer in Starlite's
employ; (2) Starlite breached this obligation; and (3) the
damages sought by the Funds foreseeably flowed from the breach.
Id. at 1509. We directed the district court to make clear the
precise legal principles it considered in reaching its decision.
Id. at 1508.
 Upon remand, the district court did make clear the precise
legal principles it relied upon in denying the Welfare Fund2
recovery for the benefits it paid to Podkowa. With respect to
the fraud claim, the district court found that while the Welfare
Fund proved that Starlite made a material factual
misrepresentation with knowledge of its falsity and with the
intent that the Fund would rely on it, the Fund did not prove
that it was "justified in relying on that misrepresentation"
because the Fund "`failed to engage in even the most minimal
policing of the Starlite account.'" Agathos, No. 89-2429, slip
op. at 3 (D.N.J. May 27, 1994) (quoting Agathos, 977 F.2d at
1508). According to the district court, it was the Welfare
Fund's inaction that caused it to pay money to Podkowa that
otherwise would not have been paid. Id. Because the district
court determined that the Welfare Fund failed to meet its burden
of proof on the element of justifiable reliance, we find that the
court satisfied its obligation to articulate the precise legal
principle under which it denied the Welfare Fund recovery.
Similarly, with respect to the breach of contract claim, the
district court concluded that while the Welfare Fund proved that
Starlite breached its contractual obligation not to make reports
on behalf of individuals no longer in its employ, the Fund did
2
. In its decision concerning the benefits paid to Podkowa, the
district court consistently referred to "the Funds" as the entity
with the dispute and burden of proof. Agathos, No. 89-2429, slip
op. at 3 (D.N.J. May 27, 1994). Since the benefits paid to
Podkowa were paid pursuant to the policies of the Welfare Fund,
it is more precise to refer specifically to that entity rather
than to "the Funds" in general when discussing this claim.
not prove that the damages it sought flowed from that breach
rather than from the Welfare Fund's failure even minimally to
police the Starlite account. Id. Since the district court
determined that the Fund failed to satisfy an essential element
of a breach of contract claim -- that the damages flow
"foreseeably from the breach" -- the court also fulfilled its
obligation to articulate the precise legal principle by which it
denied the Fund recovery on that claim. Accordingly, we will
affirm the district court's decision to deny the Welfare Fund
recovery for benefits paid to Podkowa.
The Trustees assert that the district court failed to take
into account the realities within which multiemployer plans
operate in determining that the Welfare Fund did not adequately
police the Starlite account.3 According to the Trustees, most
multiemployer plans are forced to operate under a self-reporting
system in which the plans must rely on contributing employers to
provide information as to which employees are working at any
given time. While we are sympathetic to the problems such plans
face in obtaining accurate information, we noted in our previous
opinion that there was ample record support for the district
court's finding that the Funds failed to engage in even the most
minimal policing of the Starlite account. Agathos, 977 F.2d at
1508. Under such circumstances, we cannot disagree with the
3
. The Trustees also argue that the district court's ruling is
inconsistent with ERISA and applicable precedent. We find
nothing in the language of ERISA or in the precedents that the
Trustees cite that creates an inconsistency.
district court's conclusion that the damages at issue flowed from
the Welfare Fund's failure to police adequately the Starlite
account, rather than from the misrepresentation by Starlite.
Moreover, we believe that such an argument is an attempt by the
Trustees to relitigate an issue already passed upon by the
district court and implicitly affirmed by our previous decision
in this matter. Accordingly, we are unpersuaded by the Trustees'
arguments and we will uphold the decision of the district court.
IV.
The Trustees' next argument is that the district court erred
by concluding that only current Starlite employees could have
colorable claims against the Pension Fund for benefits.
According to the Trustees, the district court erroneously
interpreted our previous opinion to preclude colorable claims
against Pension Fund benefits by employees who worked for
Starlite in the past. This error, the Trustees argue, improperly
led the district court to limit its evidentiary hearing to a
consideration of only those employees who had both worked for
Starlite during the period for which contribution is sought4 and
who are presently still working for Starlite. The Trustees
assert that the district court erred by failing to consider
4
. The "period for which contribution is sought" is defined by
the audit of Starlite's records conducted during discovery. The
audit covered the period from January 1, 1984 to December 31,
1990. Employees who worked for Starlite during the period for
which contribution is sought, but who are not currently working
for Starlite, are sometimes referred to in this opinion as "past
employees" for purposes of convenience.
employees who had earned credits toward pension vesting for time
worked during the period for which contribution is sought, but
who have now moved on to other employment.
The district court's three page decision in this matter does
not provide an adequate basis to defeat the Trustees' argument.
The district court's opinion states that "having determined that
only two current employees of Starlite . . . were also employed
by Starlite during the period for which contributions were
sought, and it having been represented to the court that neither
employee `presently could bring a valid claim for benefits,'"
any judgment for the Funds "`would be a pure windfall.'"
Agathos, No. 89-2429, slip op. at 2 (D.N.J. May 27, 1994) (citing
Agathos, 977 F.2d at 1507). This statement fuels the Trustees'
argument that the district court limited the evidentiary hearing
to present employees. Even more importantly, however, the
district court simply made no findings concerning whether any
past employees currently have a colorable claim for pension
benefits. Accordingly, we must determine whether the district
court erred by failing to make such findings.
In our previous opinion, we explained that whether employees
presently have a colorable claim for benefits depends on whether
they would be able to submit claims against fully back-dated
coverage once Starlite makes the requested contributions.
Agathos, 977 F.2d at 1508. We further explained that:
An employee has no colorable claim if a plan would not
properly entertain the claim because it is time-barred, the
employee has ceased working for Starlite and therefore no
longer qualifies, or federal labor law precludes recovery.
If, however, a Fund would be required to honor an employee's
claim, then Starlite must contribute for that employee
regardless of whether he or she in fact has a meritorious
claim.
Id. (emphasis added). Concededly, one possible reading of this
language in our previous opinion is that if an employee has
ceased working for Starlite, the employee no longer has a
colorable claim for any benefits. Such a reading, however, does
not give full effect to all the words in the above-quoted
passage, and is certainly contrary to this Court's intentions.
The key phrase in the quoted passage that defines when an
employee no longer has a colorable claim is, "if the plan would
not properly entertain the claim." Our list of possible
scenarios when the plan might not entertain such claims, such as
when a claim is time-barred, when an employee has ceased working
for Starlite, or when Federal labor law precludes recovery, was
not intended to be applied by mere incantation. This principle
is made clear by our final sentence which states that "if,
however, a Fund would be required to honor an employee's claim,
then Starlite must contribute for that employee regardless of
whether he or she in fact has a meritorious claim."
The error in an interpretation which prevents consideration
of past employees who may have claims for pension5 benefits is
aptly pointed out by the Trustees' argument. As the Trustees
5
. Further supporting our reasoning in this case is the fact
that in the paragraph at issue in our original decision we did
not distinguish between the Pension Fund and the Welfare Fund.
Accordingly, we were not focusing on the intricacies of each
specific Fund's requirements for bringing claims for benefits
based on past employment.
correctly state, there may be employees who worked for Starlite
during the period for which contribution is sought, who are not
presently working for Starlite, but who nevertheless earned
credit toward pension vesting. It is undisputed that under the
terms of the Pension Plan, an employee is required to work for
ten years before the employee's pension vests. It is also
undisputed that if an employee ceases working for Starlite but
obtains covered employment6 with another employer, that
employee's years of service at Starlite will be counted toward
the employee's retirement benefits unless he or she incurs a
break in service that is not cured under the rules of the plan
and/or under ERISA. Thus, there may well be employees who worked
for Starlite in the past, who are not working for Starlite now,
but who moved on to other covered employment. Such employees
would have claims for benefits once they have completed the
requisite number of years of service. Accordingly, an
interpretation of our previous opinion which does not provide for
consideration of these past employees is erroneous.7
6
. "Covered employment" is defined as employment with employers
who: (1) have been accepted for participation in the plan by the
Trustees; (2) have collective bargaining agreements requiring
contributions to be made to the Fund; and (3) have become a party
to the pension trust agreement. Local No. 4-69 Pension Fund of
the Hotel & Restaurant Employees & Bartenders Union; App. at
136(a). Thus, under the plan, an employee is able to move from
one participating employer to another without loss of years
earned toward vesting.
7
. In arguing that the analysis of colorable claims for pension
benefits should not be limited to current employees, the Trustees
referenced past employees who continued in covered employment
after leaving Starlite. We perceive no reason why past employees
Starlite countered this position at oral argument by
suggesting that all past employees have incurred a break in
service.8 Because the district court made no findings concerning
past employees, we are unable to determine from this record
whether these past employees have incurred a break in service.
We do point out, however, that our previous opinion explicitly
placed the burden on Starlite to prove which, if any, employees
do not have colorable claims against the Pension Fund in order to
avoid making contributions for those employees. If Starlite is
unable to fulfill its burden, it must make the requisite
contributions.9 Accordingly, we will again reverse and remand
this case to the district court for an evidentiary hearing to
determine which, if any, unreported past Starlite employees
currently have colorable claims for benefits. At this hearing,
the district court must focus on the specific reasons why the
past employees do not have a colorable claim for benefits and
must make appropriate findings as to those employees that
Starlite has demonstrated do not have a colorable claim for
benefits.
(..continued)
who worked in covered employment before their tenure with
Starlite could not also have colorable claims for benefits.
8
. A "break in service" is defined by the plan and occurs when
an employee fails to work a requisite number of hours in two
consecutive years in "covered employment." App. at 137a.
9
. Starlite argues that the Trustees have the burden of proving
that its past employees have not incurred a break in service.
Appellee's Brief at 19 n.7. We are puzzled by Starlite's
position since our previous opinion was explicit on the question
of who bears the burden of proof and it makes clear that the
burden falls on Starlite. Agathos, 977 F.2d at 1507-08.
V.
We next address the Trustees' claim that the district court
erred in determining that the two current employees who also
worked for Starlite during the period for which contribution is
sought do not have colorable claims for pension benefits.
According to the Trustees, the district court confused a
colorable claim with a present claim for vested pension benefits
in evaluating whether Starlite should make contributions on
behalf of these employees. The Trustees once again press their
claim that while these employees have not yet worked enough years
to have vested pensions, they may combine past years of service
with future years of service and therefore they have potential
claims against the Pension Fund.
We review the district court's findings of fact for clear
error. Epstein Family Partnership v. Kmart Corp., 13 F.3d 762,
765-66 (3d Cir. 1994). We exercise plenary review over the
district court's application of the law to those facts. Id. at
766. The district court found that Luba Siemienuk and Mieczslaw
Zielinski, the two current employees who also worked for Starlite
during the period for which contribution is sought, do not have
colorable claims for pension benefits. Agathos, No. 89-24-29,
slip op. at 2 n.2 (D.N.J. May 27, 1994). According to the
district court, there are no claims for pensions because pensions
have not vested. Id.
While we accept the district court's factual conclusion that
no pensions have vested, we are unable to find that this fact is
dispositive of the relevant issue. As the Trustees point out, a
colorable claim for pension benefits does not depend on whether
the employees' pensions have vested. These employees may not yet
have worked the requisite number of years for vesting, but the
pension plan permits them to combine the time they have worked in
the past with additional years worked in the future in order to
complete the requisite number of years (assuming they have
incurred no break in service).10
Once again, Starlite argues in its brief that these two
employees have incurred a break in service. Appellee's Brief at
14. Unfortunately, there is nothing in the district court's
factual findings to support this conclusion. Starlite may be
correct, but sitting as an appellate court we are not in a
position to make findings of fact. See, e.g., Gilgillan v. City
of Philadelphia, 637 F.2d 924, 931 n.6 (3d Cir. 1980), cert.
denied, 451 U.S. 987, 101 S. Ct. 2322 (1981). Accordingly, we
will also reverse and remand on the question of whether Starlite
is liable for contributions to the Pension Fund on behalf of Luba
Siemienuk and Mieczslaw Zielinski. On remand, the district court
10
. These employees would have claims for "credited service."
We have previously held that a claim for credited service does
not give rise to a "colorable claim" to vested benefits. Shawley
v. Bethlehem Steel Corp., 989 F.2d 652, 656 (3d Cir. 1993). In
Shawley, we said "neither plaintiffs' credited service . . . nor
the accrued benefit to which it gives rise is a `vested' benefit
under [a pension plan] that would grant participant status" and
give the employees standing to sue the pension plan under ERISA.
Id. Shawley does not preclude the existence of colorable claims
in this case because the issue here is not whether former
employees may currently sue the Pension Fund, but whether a
future liability is sufficiently likely to justify requiring the
employer to contribute to the Fund.
must make a finding as to whether these employees incurred a
break in service or another deficiency that would prevent them
from having colorable claims for pension benefits. If no such
break in service or other deficiency exists, Starlite must make
the requisite contributions on behalf of these employees.
VI.
The Trustees' final claim is that the district court erred
by concluding that no one who worked for Starlite during the
period for which contribution is sought has a colorable claim for
welfare benefits. According to the Trustees, the district court
erroneously concluded that a one year time bar for submission of
claims against the Welfare Fund could not be waived and barred
all subsequent claims.11 The Trustees assert that they validly
waived the time bar for submission of claims against the Welfare
Fund in order to allow those employees who were covered for
medical benefits, but who never received notice of such coverage,
to submit claims.
11
. Counsel for the Trustees points out in its brief that
according to the Summary Plan Description of the Local 4-69
Welfare Fund, a document inadvertently not offered into evidence
at the evidentiary hearing, the actual time for submitting a
claim for benefits is 90 days from the date on which a loss was
first sustained. Appellants' Brief at 35. The Trustees explain
that the one year time bar derives solely from a letter from the
Fund's former counsel which was admitted into evidence. We are
not inclined to comment on the appropriate time period that
governs such claims given the fact that the Summary Plan
Description was not offered into evidence. Nevertheless, the
difference between the one year and 90 day rules does not appear
relevant to the claim of the appellants that the district court
erred in determining that the Trustees could not waive the time
limitation.
Our review over questions of law such as the validity of the
waiver is plenary. Epstein, 13 F.3d at 766. The district court
engaged in a two-part analysis on the question of whether
Starlite was liable for Welfare Fund contributions. First, the
district court determined that only two current employees -- Luba
Siemienuk and Mieczslaw Zielinski -- were also employed by
Starlite during the period for which contributions were sought.
Agathos, No. 89-2429, slip op. at 2 (D.N.J. May 27, 1994).
Second, the district court determined that these two employees
did not have medical claims to submit and "in any event, claims
must be and were not submitted within one year from the date the
claim was first incurred." Id. at 2 n.2.
As we explained with respect to the Pension Fund, to the
extent that the district court's opinion interprets our previous
decision to summarily exclude past employees from consideration
of whether these employees have "colorable claims," the district
court erred.12 Thus, the essential issue that remains is whether
all claims against the Welfare Fund for the period in question,
by both past and present Starlite employees, are barred by a time
limitation for filing. The district court determined that the
Trustees' purported waiver of the time for filing requirement was
"an attempt to back door both this court and the Court of
Appeals." Id. We disagree.
On December 2, 1992, the Trustees of the Local 4-69
Welfare Fund held a meeting and adopted a unanimous resolution to
12
. See supra part IV.
waive the time limits for submitting medical claims for those
employees for whom contributions should have been made by
Starlite. App. at 225a-27a. According to the minutes of that
meeting, the purpose of the waiver was to:
permit individuals for whom contributions should have been
made under the collective bargaining agreement to submit
medical bills to the Fund and to have the same paid in
accordance with the then coverages of the Fund.
Id. at 226a. The Trustees assert that because the unreported
employees were never made aware that they had coverage under the
Welfare Fund, they could not have previously submitted claims for
benefits and thus should be permitted to file claims now.
The district court did not analyze whether the Trustees were
authorized to waive the time limitation, it merely concluded that
such a "back door" tactic was inappropriate. After examining the
Trust Agreement, we observe that Article V, § 17 vests in the
Trustees the "full and exclusive authority to determine all
questions of coverage and eligibility, methods of providing or
arranging for benefits and all other related matters." App. at
114a. In addition, Article V, § 9(e) grants the Trustees the
power to "do all acts, whether or not expressly authorized herein
which the Trustees may deem necessary or proper for the
protection of the property held hereunder." App. at 109a. Given
such broad powers, and in light of the Trustees' reasonable
position that unreported plan participants could not have
submitted claims within the original claims period if they had
never been notified that they were entitled to benefits, we
cannot agree that the Trustees have acted improperly in lifting
the time bar.13 Accordingly, we will reverse the district court
in its decision to give the time bar preclusive effect.
On remand, the district court should consider the fact that
our previous decision placed the burden of proof on Starlite to
prove whether or not employees have colorable claims for Welfare
benefits. Agathos, 977 F.2d at 1507-08. Accordingly, the
district court must make findings of fact with respect to all the
past and present employees who worked during the period for which
contribution is sought in order to ascertain whether Starlite has
satisfied its burden of proving that particular employees do not
have colorable claims against the Welfare Fund.14 If Starlite
cannot satisfy its burden as to one or more employees, it must
make contributions to the Welfare Fund on behalf of those
employees.
13
. Our position is also in accord with two of the fundamental
assumptions underlying ERISA, i.e., that trustees of plans: (1)
take steps to identify all participants and beneficiaries, so
that the trustees can make them aware of their status and rights
and (2) act to ensure that a plan receives all funds to which it
is entitled. See Central States, Southeast and Southwest Areas
Pension Fund v. Central Transport Inc., 472 U.S. 559, 571-72, 105
S. Ct. 2833, 2841 (1985).
14
. The Trustees assert that our previous opinion defined a
colorable claim to welfare benefits to be a colorable claim to
coverage during the relevant period. We disagree. We believe
that a colorable claim against the Welfare Fund must be based on
an actual illness or injury during the covered period.
With respect to Siemienuk and Zielinski, the district court
stated that there are "no medical bills to submit," but
ultimately rested its conclusion on the applicability of the time
bar. If the district court is satisfied that Starlite has met
its burden of proof concerning these two present employees
(without regard to the time bar) it should so indicate on remand.
CONCLUSION
In sum, because the district court correctly concluded that
the Trustees failed to prove the essential elements of fraud or
breach of contract, we will affirm that court's order denying the
Welfare Fund recovery for benefits paid to Ms. Podkowa.
Nevertheless, because the district court erred in not making
findings concerning whether past employees have colorable claims
against the Pension Fund, we will reverse the district court's
order in part and remand for further proceedings. Further,
because the district court confused a colorable claim with a
vested claim for pension benefits, we will also reverse the
district court's order denying the Pension Fund contribution for
two current employees of Starlite and we will remand for further
findings. Finally, because the district court erred in
concluding that the Trustees could not waive the time requirement
for filing claims against the Welfare Fund, we will also reverse
on this issue and remand for further findings consistent with
this opinion.