Masters, Mates v. Lowen ( 1998 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
MASTERS, MATES AND PILOTS PENSION
PLAN, an Employee Pension Benefit
Plan; TIMOTHY A. BROWN; RICHARD
CONNELLY; ROBERT DARLEY; FLORIN
DENTE; JAMES HOPKINS; PAUL
NIELSON, fiduciaries of the Masters,
No. 97-2671
Mates and Pilots Pension Plan,
Plaintiffs-Appellees,
v.
ROBERT J. LOWEN,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
William M. Nickerson, District Judge.
(CA-94-4006-WMN)
Argued: June 2, 1998
Decided: September 9, 1998
Before WILKINS and LUTTIG, Circuit Judges, and FABER,
United States District Judge for the Southern District
of West Virginia, sitting by designation.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
ARGUED: Charles B. Wayne, SCHWALB, DONNENFELD & SIL-
BERT, P.C., Washington, D.C., for Appellant. Ronald Glenn Dean,
Pacific Palisades, California, for Appellees.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
From 1958 through 1960, Robert Lowen ("Lowen") was employed
by States Marine Lines ("SML") as an owner's representative, work-
ing shoreside in Korea. At the time, the collective bargaining agree-
ment between SML and Master, Mates & Pilots ("MMP") required
pension contributions for Licensed Deck Officers and Masters, but
not owners' representatives. In 1961, according to Lowen, SML
"begged" him to return to Korea. Lowen states that he agreed to the
request, with the following three conditions: (1) that he not be left
stranded in Korea; (2) that after his second tour there, he would be
given a ship to sail; and (3) that SML would make pension contribu-
tions for him, for both past and future work in Korea. There was no
documentation of this agreement, nor are there any witnesses, other
than Lowen, with first-hand knowledge of the agreement.
Ten years later, in 1971, Lowen accepted a temporary assignment
with the union, MMP. At that time, Lowen discovered that SML had
failed to make the agreed-upon contribution pursuant to his 1961
agreement. The union president, Captain Thomas O'Callahan, con-
tacted the president of SML to inquire into the matter. Subsequently,
a check for $2,761.30 was sent to the union pension plan ("the Plan"),
with a stub indicating that the payment was for"P&W [Pension and
Welfare] Contributions" for "Captain Robert Lowen." Additionally,
SML sent a document which falsely represented that Lowen had been
employed aboard two ships, the "Cotton State" and the "Palmetto
State," during the 1958-1961 period that he was actually working
shoreside in Korea.
Lowen retired in 1993 and subsequently submitted his application
for pension benefits. Lowen's application was administratively
approved, with the contribution from SML included in the calculation
of his pension benefits. Lowen received a lump sum distribution in
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the amount of $903,598.24, subject to ratification by the Plan's trust-
ees. The trustees ultimately decided not to ratify the distribution and
requested that Lowen return $98,216.69 which the trustees attributed
to the 1971 SML contribution.
Lowen refused the trustees' request, and the trustees filed suit in
the United States District Court for the District of Maryland. Follow-
ing discovery, Lowen filed a motion for leave to file various counter-
claims under ERISA, including allegations of the breach of loyalty
and the breach of fiduciary duties. The trustees moved for summary
judgment, contending that the Plan could not legally allow Lowen to
retain any amount of the distribution based on the 1971 SML contri-
bution because that contribution was violative of§ 302 of the Taft-
Hartley Act of 1947, 29 U.S.C. § 186. By Order entered on October
28, 1997, the district court granted the trustees' motion for summary
judgment and denied Lowen's motion for leave to file a counterclaim.
I
When reviewing a district court's determination that summary
judgment is appropriate, we apply a de novo standard of review, see
Higgins v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1167 (4th
Cir. 1988), and view the facts in the light most favorable to the non-
moving party, see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986). A summary judgment movant must demonstrate that "there is
no genuine issue as to any material fact and that[it] is entitled to a
judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986); Anderson , 477 U.S. at 250.
The trustees of an ERISA qualified plan have the discretionary
authority to interpret and apply the plan terms. Firestone Tire & Rub-
ber Co. v. Bruch, 489 U.S. 101 (1989); Sheppard & Enoch Pratt
Hosp. v. Travelers Ins. Co., 32 F.3d 120 (4th Cir. 1994). Accordingly,
a decision made by such a trustee is reviewed only for abuse of dis-
cretion. However, special circumstances, including allegations of con-
flict of interest and breaches of the duty of loyalty, require a court to
review decisions of trustees de novo. In light of Lowen's claims that
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the trustees acted under a conflict of interest, this court has reviewed
the decision of the trustees de novo.1
II
Section 302 of the Taft-Hartley Act generally prohibits payments
from employers to employee representatives, including trustees
administering a pension trust fund. Section 302 further precludes the
receipt of such payments by employee representatives. The statute
was passed "to curb the abuses . . . which seemed to be inherent in
funds created and maintained by contributions exacted from employ-
ers but which were administered by union officials without any obli-
gation to account to the contributors or to the union membership."
Moglia v. Geoghegan, 403 F.2d 110 (2d Cir. 1968).
Section 302 does, however, provide a limited exception to the gen-
eral prohibition against employer payments. Subsection (c)(5)(B) per-
mits employers to make payments to trust funds established for the
benefit of employees. This limited exception requires that "the
detailed basis on which such payments are to be made[must be] spec-
ified in a written agreement with the employer." 29 U.S.C.
§ 186(c)(5)(B). As explained in Moglia, failure to abide by the writ-
ing requirement undermines the employer's attempted contribution:
[I]n the case of a legally established union pension trust
fund, the only employer contributions which may be
accepted by the trustees administering the fund are those
contributions from employers who have a written agreement
with the union as required by subsection 302(c)(5)(B).
Absent the written agreement, there is no valid Section 302
trust as to those employer contributions; the parties making
and accepting such contributions are violating Section 302,
and the intended beneficiary of the illegal employer contri-
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1 Lowen's proposed counterclaims alleged that the trustees had
breached their fiduciary duties owed to the Plan because they acted out
of animus toward Lowen in filing this action to recover the illegal distri-
butions. In light of our decision regarding the propriety of summary
judgment in favor of the trustees, we agree with the district court that
there is no basis for Lowen's proposed counterclaims.
4
butions has no legal right under Section 302 to the benefits
normally derived from employer contributions to the trust
fund.
403 F.2d at 116 (emphasis added, citations omitted).
We agree with the district court's finding that the SML contribu-
tion was illegal because it was not made pursuant to a "written agree-
ment" and, thus, Lowen has no right to benefits derived from that
contribution. Although the writing requirement is not formalistic,2
Lowen cannot establish any written agreement that satisfies section
302. Lowen points to three possible documents: (1) the plan docu-
ments in force in 1971 when the contributions were made; (2) docu-
ments generated by SML in 1971 explaining the contributions; and
(3) the collective bargaining agreement in force in 1971, as well as
the agreements applicable to the period from 1958-1961. Although
any of the above documents theoretically may satisfy the writing
requirement of section 302, none are adequate in the specific context
of this action.
Regarding the Plan document in force at the time Lowen allegedly
made the agreement and performed the services, he contends that the
contribution was permissible because it was not specifically excluded
under the Plan documents or the CBA. As the district court found, this
argument is incredulous and illogical:
[Lowen's] reasoning that a contribution can be made pursu-
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2 Writings that have been held sufficient to satisfy section 302 include:
(1) payroll sheets and fringe benefit forms, Trustees of the Flint Michi-
gan Laborers' Pension Fund v. In-Puls Constr. Co. , 835 F. Supp. 972(E.D. Mich. 1993); (2) remittance reports detailing the contributions and
the employees to be credited, Crouch v. Mo-Kan Iron Workers Welfare
Fund, 740 F.2d 805 (10th Cir. 1984); (3) a letter to employees adopting
the benefits and hourly wage terms of a collective bargaining agreement,
Florida West Coast Operating Eng'rs Local 925 Welfare Fund v. Sunbelt
Sales & Rentals, Inc., 732 F. Supp. 1135, aff'd, 932 F.2d 977 (11th Cir.
1991); and (4) an expired collective bargaining agreement, Denver
Metro. Ass'n of Plumbing, Heating, Cooling Contractors v. Journeyman
Plumbers & Gas Fitters Local No. 3, 586 F.2d 1367 (10th Cir. 1978).
5
ant to the CBA as long as a contribution was not expressly
prohibited under the CBA would completely eviscerate the
requirement under § 302(c)(5)(B) that contributions be
made only pursuant to a detailed written agreement. Under
[Lowen's] theory, anyone could send a contribution to the
Plan.
(J.A. at 96.)
As for Lowen's reliance on subsequent documents, his argument
has a gaping hole. The key point, which Lowen glosses over, involves
the sequence of events in this case. At the time Lowen performed the
work for which the disputed contribution was made, there was no
written agreement of any kind which permitted such action. Lowen
cannot, and does not, refute this. By the time the contribution was
actually made, the Plan documents had been amended to specifically
cover the disputed contribution. The district court rejected Lowen's
arguments because Lowen failed to prove that the amendments to the
Plan documents "were to be given retroactive effect to convert
employment that was non-covered at the time it was accomplished
into covered employment." (J.A. at 96.)
Lowen must establish that either the contract or section 302 itself
permits later agreements in support of contributions made for prior
work. As to the former, he never makes such an argument, nor do the
Plan documents speak to retroactivity at all. Moreover, there is no
need for interpretation of the Plan documents, as amended, because
there is no ambiguity regarding retroactivity. With regard to the stat-
ute, the trustees suggest that section 302 contemplates a prior written
agreement, not a memorialization of a prior oral understanding. The
court agrees with this position. If a simple memorialization of a prior
agreement was sufficient, the writing requirement set forth in section
302 would have no teeth. Parties could readily undermine the pur-
poses of the Taft-Hartley Act, namely "prevent[ing] employers from
bribing union officers and union officers from extorting money from
employers . . . [and] limit[ing] the discretion of unions in administer-
ing such funds, lest union officers use the discretion to punish their
enemies and reward their friends." Tyson v. Int'l Bhd. of Teamsters,
Local 710 Pension Fund, 811 F.2d at 1148-49.
6
This conclusion is supported by use of the future tense in 29 U.S.C.
§ 186(c)(5)(B). That statute requires that"the detailed basis on which
such payments are to be made [shall be] specified in a written agree-
ment with the employer. . . ." The language of the statute clearly con-
templates payments made subsequent to the writing setting forth the
detailed basis on which they are to be made; under the plain meaning
of the statute, the writing must come first.
We conclude, therefore, that neither the statute nor the amendments
to the Plan documents authorizes a contribution based on the
sequence of events presented in this case. Consequently, the contribu-
tions were not made in compliance with section 302 (c)(5)(B).
III
Section 302 of the Taft-Hartley Act requires a written agreement
in support of employer contributions to employee benefit plans and
funds. At the time of the agreement between Lowen and his
employer, SML, there was no writing authorizing the arrangement.
Thus, the contributions made by SML violated section 302 and
Lowen must account for the benefits derived from the illegal contri-
bution. Accordingly, the judgment of the district court is
AFFIRMED.
7