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Sunday, January 26, 2020

Judge shuts down class action vs Teamsters local over pension contribution rules

Federal Court

By John Breslin | Jul 11, 2019


CHICAGO -- Former union members have lost their claim that the trustees of a retirement fund failed in their fiduciary duty regarding an employee benefits plan.

The members, who were attempting to initiate a class action against an arm of the International Brotherhood of Teamsters, did not manage to state a proper claim, according to Judge John Tharp of the U.S. District Court of the Northern District of Illinois.

In an action that turned on claims that trustees of the Inter-Local Pension Fund of the Graphic Communications Conference violated provisions of the federal Employee Retirement Income Security Act (ERISA) in collecting contributions to the pension fund from multiple union organizations.

In an opinion issued June 26, Tharp agreed the plaintiffs had standing to sue under the federal law, as they were alleging the union failed to enforce contributions to the fund,causing some members to have paid less into the pot, harming the retirement fund members.

But on the merits of the actual claim, the judge said the terms of the agreement under which the fund was organized allowed "different preapproved segments or groups within a union to contribute to the Fund at different levels."

"The trustees cannot have breached their fiduciary duties merely by failing to require different segments within Local 458M to contribute at the same rate," Tharp concluded. 

The case relates to Local 458M, which included Bell Litho employees as members. It dates back to 2008 when the union local voted to increase the weekly contribution rate to the retirement fund from 6 to 8 percent. Under the benefits plan, employers made no contribution, and members were paid a certain monthly amount at and after retirement.

A dispute arose when the contract expired in 2016. Questions were raised over how much was being held in the fund, and how many members were paying the full 8 percent. The union, for instance, admitted certain members who had come into the union as the result of the merger were not paying into the fund, despite contractual rules seeming to require all union members to pay into the fund through payroll deductions.

The plaintiffs and co-workers agreed to renew the old contract terms "excepting the language regarding fund contribution rates."

Local 458M replied by stating that members were required to pay contributions or be expelled from the union. The plaintiffs alleged the local and fund was unable to answer questions over how many members paid the full amount.

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