United States District Court, N.D. Illinois, Eastern Division
DONALD BATOR, EDMOND W. MOSES, CHRISTOPHER O'MALLEY, MICHAEL ANTHONY PAPPA and ROGELIO JIMENEZ, JR. on behalf of themselves and all others similarly situated, Plaintiffs
THE BOARD OF TRUSTEES OF THE INTER- LOCAL PENSION FUND of the Graphic Communications Conference of the International Brotherhood of Teamsters, LOCAL NO. 458-M GRAPHIC COMMUNICATIONS INTERNATIONAL UNION, DISTRICT COUNCIL NO. 4 GRAPHIC COMMUNICATIONS CONFERENCE OF THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, and THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, Defendants.
MEMORANDUM OPINION AND ORDER
J. Tharp, Jr. United States District Judge
plaintiffs, former members of local union that participates
in an employee benefits plan, allege that both the union and
the pension plan board of trustees violated the Employee
Retirement Income Security Act of 1974, 29 U.S.C. § 1001
et seq. by breaching their fiduciary duties to the
plan. The defendants moved to dismiss the case for lack of
subject matter jurisdiction and failure to state a claim.
While the plaintiffs may properly invoke federal
jurisdiction, they have failed to state a claim upon which
relief can be granted, so the defendants' motions are
issue here is the administration and alleged underfunding of
the Inter-Local Pension Fund of the Graphic Communications
Conference of the International Brotherhood of Teamsters
(“the Fund”), a defined benefit plan designed to
provide retirement and other benefits to members of
participating local unions. Compl. ¶ 15. Unlike most
defined benefit plans, the Fund is not collectively
bargained. Rather, it is organized as a trust described in
§ 501(c)(18) of the U.S. Internal Revenue Code. As such,
it is completely employee funded-employers do not contribute
or participate in Fund governance. Id. at Ex. A. The
Fund is governed by a Trust Indenture and administered by a
board of trustees (the “Fund Trustees” or
“Trustees”) consisting of officials from various
participating unions. With respect to contribution levels,
the Trust Indenture provides that members must contribute
$5.00 per week unless the member's union has fixed a
higher contribution amount through official action of its
membership and with the approval of the Fund Trustees.
Id. ¶ 37. Upon retirement, members are entitled
to a monthly lifetime pension. The monthly pension amount is
equal to 2% of the total amount a member contributes during
their time as an employee. Id. at Ex. A, Trust
Indenture 45, ECF No. 4.
plaintiffs Donald Bator, Edmond Moses, Christopher
O'Malley, Michael Anthony Pappa, and Rogelio Jimenez, Jr.
are employees of Bell Litho Inc., a graphic communications
company, and former members of Local No. 458M Graphic
Communications International Union, a Fund
participant. Notably, Local 458M's bylaws require
its members to become members of the Fund and contribute to
the Fund. Id. ¶ 33.
story begins for purposes of this motion in 2008, when Local
458M voted to increase its existing Fund contribution rate
from 6% to 8% of its members' gross weekly
wages. Id. ¶ 39. The increase was
memorialized in a contract between Bell Litho employees and
Local 458M. Several years later in January 2014, the Fund
notified participants that its financial health was
deteriorating and sought to facilitate a membership vote to
cut benefits and increase contribution rates. Id.
¶ 40. The plaintiffs and their co-workers, faced with
the Fund's uncertain financial status and their compelled
participation in the Fund, petitioned Local 458M leadership
to reduce their contribution rate. Local 458M denied the
petition, noting that “individual shops cannot change
the contribution unless there is language in their contract
that allows this.” Id. ¶ 44.
the contract between Bell Litho and Local 458M expired in
2016, the plaintiffs and their co-workers tentatively agreed
to renew its terms excepting the language regarding Fund
contribution rates. Local 458M refused to change the language
regarding contribution rates, so the plaintiffs requested
that wage deductions from their paychecks be discontinued.
Local 458M responded via letter in February 2016, noting that
the plaintiffs were required to make their contributions and
that failure to do so could result in expulsion from the
union. Id. ¶ 46. In a separate letter, it noted
that Local 458M's by-laws required all its members to
become members of the Fund. It also admitted, however, that
certain Local 458M members working for employers other than
Bell Litho, who had been brought in when Local 458M merged
with a different union, were not
participating in the Fund. Id. ¶¶ 46, 47.
According to the Union, the Fund's Trust Indenture allows
locals to participate in “segments” and the
non-participating members who had been brought in pursuant to
the merger belonged to such segments. Id. ¶ 50.
2016, contract negotiations between the Bell Litho employees
and Local 458M had come to a standstill. In September 2016,
the plaintiffs and other Bell Litho employees met with Fund
Executive Director Larry Mitchell, who was unable to answer
questions regarding the number of Local 458M members who
contributed less than the voted upon 8% contribution rate.
Id. ¶ 67. Mitchell stated that the Fund did not
monitor or police the local unions; rather, it received a
list of participants and contribution rates from the unions
and took the unions at their word that all who were required
to participate were doing so at the required rate.
Id. ¶ 71.
November 2016, the President of Local 458M sent a letter to
all Local 458M members employed by Bell Litho. The letter
stated that Fund contribution levels were set by Local 458M
membership and could not be changed without membership
approval, and that the Bell Litho shop steward had failed in
his attempts to have the Local 458M membership authorize a
vote. It went on to explain that Local 458 members employed
at Bell Litho would no longer be governed by any collective
bargaining agreements and that their contributions to the
Fund would become vested. Id. at Ex. N. According to
the Trust Indenture, a member entitled to a vested benefit
may not make further contributions to the Fund and is
eligible for benefits upon retirement at the rate which was
in effect at the time of termination of active membership.
Id. at Ex. A, Trust Indenture 50.
plaintiffs subsequently filed a putative class action suit in
this district. In Count I, the plaintiffs allege that the
Fund Trustees breached their fiduciary duties in violation of
ERISA by failing to enforce terms of the Trust Indenture
which required local unions to apply the same contribution
rate formula to all participating union members and causing
the Fund to become underfunded. In Count II, the plaintiffs
allege that Local 458M breached its fiduciary duties in
violation of ERISA by selectively enforcing its bylaws.
Counts III and IV allege state law breach of contract and
common law fraud theories against Local 458M. Both the Fund
Trustees and the Union filed motions to dismiss for failure
to state a claim; the Trustees also argue that the Court
lacks subject matter jurisdiction to hear the claim asserted
in Count I.
motion to dismiss brought pursuant to Federal Rule of Civil
Procedure 12(b)(6) should be granted if the complaint fails
to state a claim to relief that is plausible on its face.
Ashcroft v. Iqbal, 556 U.S. 662 (2009). When
considering a Rule 12(b)(6) motion, courts must accept the
facts alleged in the complaint as true and draw all
reasonable inferences in the plaintiff's favor.
Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir.
2008). The standard is the same for a motion to dismiss for
lack of Article III standing-a complaint must allege facts
which plausibly support the invocation of subject matter
jurisdiction. Silha v. ACT, Inc., 807 F.3d 169, 174
(7th Cir. 2015) (“[W]hen evaluating a facial challenge
to subject matter jurisdiction under Rule 12(b)(1), a court
should use Twombly-Iqbal's
‘plausibility' requirement.”) (citing
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)
and Iqbal, 556 U.S. 662 (2009)).
Count I: Fund Trustees
Fund Trustees argue in their motion to dismiss that the
plaintiffs failed to allege a plausible violation of ERISA
and failed to demonstrate Article III standing. Because
constitutional standing to sue is a threshold jurisdictional
question, see Steel Co. v. Citizens for a Better
Env't, 523 U.S. 83, 102 (1998), the Court addresses
that issue first.