The opinion of the court was delivered by: COAR
Before this court is plaintiffs Central States, Southeast and Southwest Areas Pension Fund's, Central States, Southeast and Southwest Health and Welfare Fund's, and Fund trustee Howard McDougall's ("plaintiffs" or "funds") motion for summary judgment against defendant Transport, Inc. ("Transport" or "defendant") for past due contribution payments, interest, liquidated damages, attorney's fees, audit costs, and costs pursuant to 29 U.S.C. § 1132(g)(2).
For the reasons set forth below, plaintiffs' motion for summary judgment is GRANTED.
The Funds are separate employee benefit plans and trusts. (Ptfs' 12(M) Stmt. P 1.) Each of the Funds is primarily funded by contributions remitted by multiple participating employers pursuant to collective bargaining agreements ("CBA") negotiated with local unions affiliated with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America ("IBT") on behalf of employees of those same employers. (Ptfs' 12(M) Stmt. PP 2, 4.) All principal and income from the contributed monies are held and used for providing benefits (pension benefits by the Pension Fund and health and welfare benefits by the Health and Welfare Benefits) to the participants and beneficiaries of each Fund, as well as to pay for the administrative expenses of each Fund. (Ptfs' 12(M) Stmt. P 3, 5.) Plaintiff McDougall is a Trustee and a fiduciary of each of the Funds as that term is defined under § 3(21)(A) of the Employee Retirement Income Security Act of 1974 ("ERISA"). 29 U.S.C. § 1002(21)(A). (Ptf's 12(M) Stmt. P 6.)
The Funds each have rules prohibiting the Funds from accepting CBAs which permit employers to contribute to the Funds for some, but not all, of the employees within a particular class of workers, i.e., for some truck drivers but not all of them. (Ptfs' 12(M) Stmt. PP 13, 15; Ptfs' Ex. F (Pension Fund's Special Bulletin 90-7); Ptfs' Ex. G (Health and Welfare Fund's Special Bulletin 77-19).)
When establishing the contribution rates necessary to support benefit levels, the Funds rely upon the cost estimates of actuaries. (Ptfs' 12(M) Stmt. P 17.) In making their calculations, one of the assumptions that the actuaries make is that each employer will pay equal contributions for all employees with the same job classification. (Ptfs' 12(M) Stmt. P 18.)
Another assumption that the actuaries make is that some participants who have contributions paid on their behalf will never receive any pension benefits or have less expensive health and welfare benefits than other participants. (Ptfs' 12(M) Stmt. P 19.) In fact, the contributions paid for participants who either never receive benefits or receive fewer benefits from the Funds are necessary to support the level of benefits provided to other employees and, without contributions on all employees, including those less likely to receive benefits, the actuarial assumptions are unsound and there may not be sufficient assets to pay the promised benefits. (Ptfs' 12(M) PP 20-21.)
B. The CBA between Transport and Union as received by the Funds (1992-95)
Transport is a Minnesota corporation and an "employer" and a "party-in-interest" as those terms are defined by §§ 3(5) and 3(14)(C) of ERISA, 29 U.S.C. §§ 1002(5) and 1002(14)(C). (Ptfs' 12(M) Stmt. PP 22-23.) Local Union No. 116 ("Union") of the IBT is a labor organization which represents for the purpose of collective bargaining, certain Transport employees; the Union has represented Transport employees at all times during the period from January 1, 1990 to the present, including employees who perform work as truck drivers. (Ptfs' 12(M) Stmt. PP 24-25.) From February 15, 1988, through February 29, 1992, Transport was bound by a CBA with the Union which was captioned "NORTH DAKOTA RIDER TO THE CENTRAL STATES AREA TANK TRUCK AGREEMENT" ("1988-92 Rider"); this is a rider to "Central States Area TANK TRUCK AGREEMENT -- period covered -- November 15, 1988 to November 14, 1991" (1988-91 Agreement"). (Ptfs' 12(M) Stmt. PP 26-28.) On July 21, 1992, the Funds received a CBA signed by the Union and by Transport captioned "NORTH DAKOTA RIDER TO THE CENTRAL STATES AREA TANK TRUCK AGREEMENT FOR THE PERIOD March 1, 1992 to February 28, 1995" ("1992-92 Rider"); this is a rider to "CENTRAL STATES AREA TANK TRUCK AGREEMENT -- Period Covered -- November 15, 1991 to November 14, 1991" (1991-94 Agreement"). (Ptfs' 12(M) Stmt. PP 29-31.)
On March 1, 1992, Transport and the Union entered into a Participation Agreement. (Ptfs' 12(M) Stmt. PP 32-33.)
These documents included certain obligations for Transport and the Union. Article 28 of the 1992-95 Rider received by the Funds and stated that "Contributions to the Health and Welfare Fund must be made for each week on each regular or extra employee, even though such employee may work only part time under the provisions of this Contract, including weeks where work is performed for the Employer but not under the provisions of the Contract, and although contributions may be made for those weeks into some other Health and Welfare Fund." (Ptf's Ex. J, Art. 28 (emphasis added).) Similarly, Article 29 of the 1992-95 Rider stated that "Effective March 1, 1992 the employer shall contribute to the Central States Southeast and Southwest Areas Pension Fund the sum of sixteen dollars and sixty cents, ($ 16.60) per day for each employee covered by this agreement who has been on the payroll thirty (30 days or more. The amount will be increased to seventeen dollars and forty cents ($ 17.40) per day effective March 1, 1993 and seven dollars and eighty cents ($ 17.80) per day effective March 1, 1994." (Ptf's Ex. J, Art. 29 (emphasis added); "Contributions to the Pension Fund must be made for each week on each regular or extra employee, even though such employee may work only part time under the provisions of this Contract, including weeks where work is performed for the Employer but not under the provisions of the Contract, and although contributions may be made for those weeks into some other pension fund." The Participation Agreement signed by the Union and Transport states: "The Union and the Employer agree to be bound by, and hereby assent to, all of the terms of the Trust Agreement(s) creating said CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION AND/OR HEALTH AND WELFARE FUND, as amended, all of the rules and regulations heretofore adopted by the Trustees of said Trust Fund(s) pursuant to said Trust Agreement(s), and all of the actions of the Trustees in administering such Trust Fund(s) in accordance with the Trust Agreement(s) and rules adopted." (Ptf's Ex. L, P 1.) Under the Trust Agreements which Transport and the Union agreed to follow, Transport is obligated to submit "each new or successive collective bargaining agreement, including not but limited to interim bargaining agreements and memoranda of understanding between the parties" to the Funds. (Ptf's Ex. C (Pension Fund Trust Agreement) & E (Health and Welfare Fund Trust Agreement), Art. III, § 1.) The Trust Agreements specifically state what the consequence of nondisclosure where an employer fails to submit such an agreement:
Any agreement or understanding between the parties that in any way alters or affects the Employer's contribution obligation as set forth in the collective bargaining agreement shall be submitted promptly to the Fund in the same manner as the collective bargaining agreement; any such agreement that has not been disclosed to the Fund as required by this paragraph shall not be binding on the Trustees and shall not affect the terms of the collective bargaining agreement which alone shall be enforceable.
(Ptf's Ex. C (Pension Fund Trust Agreement) & E (Health and Welfare Fund Trust Agreement), Art. III, § 1.) The Participation Agreement also reiterates that the Employer shall contribute the funds required under the contract "for its bargaining unit Employees pursuant to the terms of the collective bargaining agreement, and only for such Employees" and states "If the Employer signs and enters into a new collective bargaining agreement with the Union, or modifies such current collective bargaining agreement, the Employer must notify the Trust Fund(s) of such contractual change, and further agrees that no applicable Statute of Limitations shall begin to run until such notice of contract change has been received by the Fund(s)." (Ptf's Ex. L, PP 5(a), (b), (c).)
C. The Extra Drivers Agreement
If the 1992-95 Rider as sent to the Funds was the entirety of the agreement made between the Union and Transport on June 26, 1992, there would be no dispute. However, unknown to the Funds until April 17, 1995, there was another agreement, "TRANSPORT INCORPORATED AND TEAMSTERS LOCAL 116 NORTH DAKOTA, MINNESOTA, EXTRA DRIVERS AGREEMENT" ("Extra Drivers Agreement"), signed on June 26, 1992. (Ptfs' 12(M) Stmt. P 39.) Neither the Contract Update Checklist nor any other records of the Funds discloses the existence of the Extra Drivers Agreement, which was received by the Funds ...