Employees Win Pension Suit

The U.S. Court of Appeals for the Fourth Cir. ruled May 20 that a pension plan amendment adopted by the governing body of Dist. 1 of the merged Marine Eng’rs Beneficial Ass’n and Nat’l Maritime Union was not invalidated after union corruption was discovered and the merger rescinded.The governing plan documents clearly gave the merged union the authority to amend the plan unilaterally, said the opinion written by U.S. Cir. Judge Cynthia H. Hall (9th Cir., Reagan), sitting by designation, in affirming the finding of U.S. Dist. Judge Andre M. Davis (D. Md., Clinton) that the plan amendment, which enabled certain plan participants to obtain pension credits for past service with affiliated unions, was validly adopted.

In 1972, a defined benefit pension plan was created for employees of MEBA Dist. 1 (a.k.a. Pacific Coast Dist.).  In 1987, MEBA merged with NMU to become Dist. 1-MEBA/NMU. The merger was rescinded six years later after it was discovered that the merger was the product of corrupt practices.  During the six-year existence of MEBA/NMU, the merged union was governed by a body called the Dist. Executive Committee (DEC). In 1992, the committee voted to amend the pension plan’s provision governing service credit and passed a resolution amending the plan to grant pension credits to plan participants for past service with affiliated unions and other entities. The individual named as the plan’s administrator refused to recognize the validity of the 1992 amendment and denied three plan participants’ request for service credit under the amendment.

The three participants/union employees denied credit under the amendment brought a suit under the Employee Retirement Income Security Act of 1974 challenging the administrator’s refusal to recognize the 1992 amendment. The administrator and MEBA argued in the lawsuit that the amendment was unenforceable because the committee lacked the power to amend the plan, because the plan was inadequately funded to support the amendment, and because the amendment was the product of union corruption.

The appellate court upheld the validity the amendment and held that plan administrator abused his discretion in applying the amendment. The court further sided with the union employees in remanding the case to district court to determine the correct monetary award and attorneys’ fees.

U.S. Cir. Judges Karen J. Williams (4th Cir., G.H.W. Bush) and William B. Traxler Jr. (4th Cir., Clinton) joined the opinion. Cyril V. Smith, Deborah S. Richardson, and Carole J. Yanofsky of Zuckerman Spaeder in Baltimore and Washington, D.C., represented the union employees. Christine A. Williams of Gordon, Feinblatt, Rothhman, Hoffberger & Hollander in Baltimore, represented the plan. [BNA 5/22/02]

DOL Sues to Invalidate Tainted Election at North Carolina Local
On May 2, the Dep’t of Labor filed a federal lawsuit against Am. Postal Workers Union Local 984 in Fayetteville, N.C., alleging violations of Title IV of the Labor-Mgmt Reporting & Disclosure Act of 1959, which regulates union elections. A DOL investigation, prompted by a union members’ complaint, found that the incumbent/winning candidate for local president misused nonpublic union information about the member in the president’s campaign literature. DOL’s suit seeks a new election for the office of local president. [DOL 5/2/02]