Local 144 Nursing Home Pension Fund v. Demisay

PETITIONER: Local 144 Nursing Home Pension Fund et al.
RESPONDENT: Demisay et al.
LOCATION: Austin's Auto Body Shop and mobile home

DOCKET NO.: 91-610
DECIDED BY: Rehnquist Court (1991-1993)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 508 US 581 (1993)
ARGUED: Jan 11, 1993
DECIDED: Jun 14, 1993

ADVOCATES:
Henry Rose - on behalf of the Petitioners
Ronald E. Richman - on behalf of the Respondents

Facts of the case

Question

Media for Local 144 Nursing Home Pension Fund v. Demisay

Audio Transcription for Oral Argument - January 11, 1993 in Local 144 Nursing Home Pension Fund v. Demisay

William H. Rehnquist:

We'll hear argument first this morning in Number 91-610, Local 144 Nursing Home Pension Fund v. Nicholas Demisay.

Mr. Rose.

Henry Rose:

Mr. Chief Justice, and may it please the Court:

The genesis of this action occurred when the respondent employers withdrew from the petitioner multiemployer pension and welfare benefit plans.

In this action, those withdrawing employers seek to require the petitioner benefit funds to transfer a portion of their plan assets to new benefit plans which are not parties to this action which were established after the withdrawal of those withdrawing employers.

The district court granted petitioners' motion for summary judgment.

However, the Second Circuit reversed and held that a fair portion of the reserves reflecting contributions made to the Greater Funds on behalf of the Southern Employees should be reallocated to the Southern Funds.

What is extraordinary and erroneous is that the court below held that section 302(c)(5) of the Labor Management Relations Act, 1947, was the controlling law and that it required the transfer of assets.

302(c)(5) says nothing about transfers of assets, nor does its legislative history even mention such transfers.

The court below has not only misread section 302(c)(5) but has misread and misapplied... failed to apply... this Court's decision in United Mineworkers v. Robinson.

The focus of 302(c)(5) is specific.

In the words of this Court in Robinson, 302(c)(5) was meant to protect employees from the risk that funds contributed by their employers for the benefit of the employees and their families might be diverted to union purposes, or even to the private benefit of faithless union leaders.

There's no such allegation in this case.

With particular reference to the requirement in 302(c)(5) that a benefit plan be maintained for the sole and exclusive benefit of employees, this Court stated that its plain meaning is simply that employer contributions to employee benefit trust funds must accrue to the benefit of employees and their families and dependents to the exclusion of all others, and especially pertinent for the instant action, this Court specifically concluded in Robinson that nothing in 302(c)(5), quote, places any restriction on the allocation of the funds among the persons protected by 302(c)(5).

Even the narrow holding in Robinson is applicable here.

That is, that the Federal courts have no authority under section 302 to review for reasonableness a collectively bargained term of an employee benefit plan.

That describes the present case.

The collective bargaining agreements to which the respondent employers were parties are clear that the terms of the trust agreements are incorporated by reference, and those trust agreements prohibit the payments that the Second Circuit has ordered.

It is submitted that the trustees in this case certainly breached no fiduciary duties in administering the trust in accordance with their trust agreements.

Antonin Scalia:

Mr. Rose, if they had done so, would there have been a remedy against them under 302... under 302(e)?

Henry Rose:

If the trustees had transferred assets?

Antonin Scalia:

Yes.

If they had transferred... not just transferred it, but had transferred assets to a union official.

Henry Rose:

To a union official--

Right.

Henry Rose:

--Yes.

Antonin Scalia:

So you... it's your--

Henry Rose:

To a union official, that would have--

Antonin Scalia:

--You see, I'm not sure what your theory of the operation of 302(c) and 302(e)... what you theory is.

Does it not operate at all, once the trust is established... so long as you establish a trust which on its face meets the requirements, that's the end of the application of 302, or does it continue to have some application, at least if you violate the term of the trust by turning over the money to union officials?