The opinion of the court was delivered by: MEANOR
This complex litigation concerns the pensions of certain former employees of the P. Ballantine & Sons (Ballantine) brewery formerly located in Newark, New Jersey.
In 1956, Ballantine, along with several other employers, entered into an Agreement and Declaration of Trust with the Brewery Workers Joint Local Executive Board of New Jersey (Teamsters Locals 843 and 153, hereinafter the Union) and the New Jersey Brewers Association. The Agreement was denominated "New Jersey Brewery Employees Pension Trust Fund" (hereinafter Trust Fund). Among the other participating employers were Anheuser-Busch, Inc. (Budweiser), Pabst Brewing Co. (Pabst) and Liebmann Breweries, Inc. (Rheingold). The Trust Fund was jointly administered under § 302(c)(5) of the Labor-Management Relations Act of 1947 (LMRA), 29 U.S.C. § 186(c)(5). In June 1956, the trustees of the Trust Fund established a pension plan (hereinafter Brewery Plan) effective August 1, 1955.
To lend context to the facts leading to the institution of this lawsuit, some explication of the salient provisions of the Trust Fund and Brewery Plan is necessary.
Article V, § 5.1 of the Trust Fund required "(e)ach Employer ... (to) pay ... the Trustees the Employer contributions required ... by the current and effective (CBA)." Article VI, § 6.1(a) provided that "(an) Employer shall cease to be an Employer under this Agreement whenever ... his obligation to make contributions to the Trust Fund is no longer required by a (CBA)." When this eventuality occurred, Article VI, § 6.2(a) provided
The Employees of such Employer who have not begun to receive a pension under the Pension Plan shall cease being Employees for the purpose of this Trust and their rights and benefits shall be determined in accordance with the Pension Plan as it applies to Employees whose service has terminated; provided that if any Employees of such Employer enter service with another Employer and have contributions made on their behalf within such a period that their service is not considered broken or lost for the purpose of the Pension Plan, such Employees shall remain Employees under the Trust.
Additionally, upon withdrawal an employer had, with certain irrelevant exceptions, "no further ... obligations ... under this Trust Agreement." Article VI, § 6.2(b).
Article VIII, § 8.2(a) provided
No Employee nor any person claiming by or through such Employee shall have any right, title or interest in or to the funds or other property of the Trust Fund ... except as specifically provided herein and in the Pension Plan.
Article VIII, § 8.3 provided, in pertinent part,
Neither this Trust nor the Pension Plan imposes any obligation on any Employer to make any payments to the Fund; any such obligations are, as to Employers, derived solely from whatever provisions there may be in the Collective Bargaining Agreement from time to time ....
Finally, Article VIII, § 8.4 provided, in pertinent part,
No dispute or question arising under this Trust or the Pension Plan shall be subject to the grievance or arbitration procedure provided for in the Collective Bargaining Agreement. All such disputes or questions ... shall be resolved by the Trustees in the manner herein provided.
Ballantine's Newark brewery terminated operations effective April 1, 1972. As of that date,
the Brewery Plan contained the following relevant provisions.
Article I, § 14 of the Brewery Plan defined "Credited Service" as "the years of an Employee's past service and future service credit." Past service referred to the years an employee had worked prior to his employer becoming a contributor to the Trust Fund. Article I, § 14(b). Future service referred to credit received by an employee for employment from the time his employer was obligated to contribute. Article I, § 14(a). As in the Trust Fund, the term "Employer" in the Brewery Plan referred to an employer obligated to contribute to the Trust Fund by the terms of a CBA. Article I, § 9. An "Employee" meant "an employee on behalf of whom contributions shall be required" by virtue of a CBA. Article I, § 11.
Pursuant to Article I, § 14(c), an employee lost his credited service if the employee "(ceased) to be employed by an Employer ... and (did) not become re-employed by such Employer or employed by another Employer within ... one year following ... cessation of employment, except as provided in Article X." Section 2 of Article X provided that "(notwithstanding) the provisions of (s 14(c)) ... an Employee whose employment is terminated shall be eligible for a pension (at) age 65 provided that at the time his employment is terminated he has completed ... the number of years of Credited Service for future service" determined by reference to a table set forth in the Brewery Plan. That table provided that, for plan years 1965 and later, 10 years of credited service for future service was necessary for an employee to come within Article X, § 2. This section was apparently derived from a proviso contained in earlier versions of Article I, § 14(c) which stated that the forfeiture provisions did not "apply as to loss of Credited Service if an Employee has completed at least 10 years of Credited Service for future service (when) he ceases to be employed by an Employer."
Eligibility for pension benefits was outlined in Article II. As provided in the Brewery Plan, an employee was eligible when he had "completed at least ten (10) years of Credited Service and attained age 65," had "completed at least thirty (30) years of Credited Service" or reached the compulsory retirement age of 67. Furthermore, Article II, § 2 provided for an early retirement option for an employee who had reached age 60 and had obtained between 15 and 30 years of credited service. That section included "a terminated Employee ... entitled to a deferred pension as provided in Article X." See also Article X, § 3 (prescribing procedural requirements for employees "eligible for a pension as provided in Section 2 of ... Article X").
The pivotal section of the Brewery Plan-Article VII-was inserted in the following form by an amendment in May 1970. Deposition of Horst Poeschla at 132; Exhibit 2 annexed to Afft. of William F. Griffin (Feb. 16, 1978). Prior to that time, withdrawal of an employer did not operate to divest an employee of those benefits "vested" by application of Article X, § 2.
As inserted in May 1970, Article VII provided
The term employees as used in this Section 1 shall mean persons covered by the current Collective Bargaining Agreements between the Employers and the Unions.
Section 2. If an Employer ceases to be an Employer as defined herein, the Trustees shall instruct the actuary for the Plan to conduct a valuation of the Plan as of the date such Employer ceased to be an Employer, taking into consideration the total funds available and the actuarial liabilities for benefits accrued by all Employees based on the Credited Service in effect after the cancellation of Credited Service as defined in Section 1 of this Article VII. Based upon the results of this valuation, the monthly retirement pension payable in accordance with the provisions of Article II, Article III, Article IX and Article X shall be reduced for all eligible Employees who make application for pension on or after the date such Employer ceased to be an Employer and for all Employees who made application for retirement within the three month period immediately preceding the date on which such Employer ceased to be an Employer. The reduction in the monthly retirement pension payable referred to in the preceding sentence shall apply uniformly to all Credited Service in effect after the cancellation of Credited Service as defined in Section 1 of this Article VII. This reduction in monthly retirement pensions shall be determined by the actuary of the Plan in such a manner that the rate at which the unfunded accrued liability was being funded according to the actuarial valuation on the July 31 preceding the date such Employer ceased to be an Employer shall be estimated to continue to be the rate at which the unfunded accrued liability is being funded on the day after such Employer ceased to be an Employer.
Subsequently, on September 22, 1972 (several months after Ballantine had closed), Article VII, § 1(e) was amended. Rather than saving service credit by virtue of covered days "on the regular seniority list of a remaining employer," this subsection was amended to permit accumulation of sufficient time "employed by another single Employer under" the Brewery Plan. At oral argument, counsel for the Pension Benefit Guaranty Corporation (PBGC) asserted that the 1972 amendment had an ameliorative effect in that the requirement that an employee be a regular employee on the seniority list was eliminated and mere employment would count toward the requirements of Article VII, § 1(e). In both instances the PBGC contended that an employee was required to accumulate the time with a single employer rather than with the other industry employers as a group. (Tr. 6/23/80 at 5-6). The extent to which these amendments were publicized to the employees is a matter in dispute between the parties.
I note also that Article X, § 2 was not eliminated or amended upon adoption of the revised Article VII.
As noted previously, Ballantine ceased operations as of April 1, 1972. It is beyond dispute that the Ballantine closing effected a major dislocation in the brewery industry in New Jersey. The loss of Ballantine contributions certainly had an impact on the solvency of the Brewery Plan. On May 31, 1973, the CBAs obligating Pabst and Budweiser to contribute to the Trust Fund expired. Pabst and Budweiser withdrew from the Trust Fund and, pursuant to the 1973-1976 CBAs, established individual plans for their own employees. Falstaff Brewing Corp. (Falstaff), which had purchased certain assets of Ballantine, was obligated by its CBA to follow the lead of Pabst and, after arbitration, established a plan for its own employees. Rheingold, the last employer contributing to the Trust Fund, ceased operations at its Orange, New Jersey brewery in late 1977. At that time, Rheingold ceased making contributions to the Trust Fund. In June 1978, the Brewery Plan was terminated, effective December 31, 1977 pursuant to ERISA § 4048(1), 29 U.S.C. § 1348(1). The PBGC was appointed successor trustee of the Brewery Plan pursuant to § 4042(c) of ERISA, 29 U.S.C. § 1342(c).
After the Ballantine closing, many of its former employees left the beer industry. Some obtained work with Falstaff, which required a large temporary work force to move inventory from Newark to its North Bergen, New Jersey distribution center. Falstaff did not have a CBA with the Unions, but agreed to follow the Ballantine CBA for a limited period. When this temporary agreement expired, Falstaff took the position that no CBA was in effect. By November 1972, the movement of inventory, etc., was complete and over 100 men were laid-off by Falstaff.
During the period of the employment of these individuals, Falstaff contributed pension monies into an escrow fund rather than into the Trust Fund. As noted above, Falstaff established its own plan pursuant to its 1973-1976 CBA. The contributions that had been paid into escrow were deposited in the Falstaff plan pursuant to an arbitration award. After negotiations with the Unions, a "supplemental list" was created whereby the 100 plus laid-off men were to be offered jobs prior to Falstaff hiring other personnel. Falstaff also agreed that, when rehired, these men would retain seniority for purposes of fringe benefits. Thereafter, in early December 1974, Falstaff offered employment to the men on the "supplemental list." Few accepted. Since Falstaff was not obligated by a CBA to make contributions to the Trust Fund, the employment with Falstaff was not considered covered employment. Thus, pursuant to Article VII, § 1 the credited service of the former Ballantine employees that had been temporarily employed by Falstaff was forfeited. The circumstances surrounding Falstaff's employment of these individuals were litigated before me previously in Balback v. Teamsters Local 153, et al., Civ. No. 1604-73. As detailed infra, Falstaff contends that the findings of fact and conclusions of law in Balback are determinative with respect to its asserted liability.
Other former Ballantine employees obtained employment by "shaping up" at the union hall, i. e., appearing at the union hall and reporting to whichever brewery needed help on a given day. E. g., Afft. of Bruno Michota, P 16 (Mar. 14, 1978). Pursuant to the CBAs in effect at that time, regular employees had "reciprocal" rights, i. e., had the right to assume a spot at the bottom of the regular seniority roster in another brewery upon being laid-off by their original employer. The newly-formed Budweiser and Pabst plans recognized the industry service of their employees for purposes of benefits under the respective plans. However, the Budweiser Plan required that an employee be on its regular seniority list as of June 1, 1973 in order to gain credit for benefit purposes for past service in the Brewery Plan. Budweiser Pension Plan, Article I, §§ 6, 13. Budweiser did not place the former Ballantine employees on its seniority roster, taking the position that no reciprocity was required since regular employment was not available. Deposition of Horst Poeschla at 160-165. In October 1973, an amendment to the CBA between Budweiser and the union was adopted which required an "unattached regular" to work 225 days prior to being placed on the Budweiser seniority list.
Thus, with respect to most former Ballantine employees the service earned in the Brewery Plan was not credited for benefit purposes in the Budweiser Plan. As with the individuals that worked for Falstaff, the past service of many Ballantine employees was forfeited pursuant to Article VII, § 1.
The facts with respect to Pabst and Rheingold are much more sketchy. There is some allegation made that Pabst, like Budweiser, "froze" its seniority roster. No specific allegations are made with respect to the conduct of Rheingold. As set forth below, none of the named plaintiffs were ever regularly employed by Pabst or Rheingold. All of the named plaintiffs eventually secured full-time employment with Budweiser prior to June 1, 1973.
The complaint in this action was filed on December 12, 1977.
The named plaintiffs (hereinafter "Michota" plaintiffs) included 18 former Ballantine employees that had been employed by Falstaff between April and November 1972 and subsequently obtained employment by Budweiser. These individuals were denominated in the complaint as "Ballantine-Falstaff-Budweiser" plaintiffs. Complaint P 4. Additionally, one widow of a former "Ballantine-Falstaff-Budweiser" employee was named as a plaintiff. Complaint P 6. The "Michota" plaintiffs also include 10 individuals, denominated "Ballantine-Budweiser" plaintiffs who secured full-time employment with Budweiser after the Ballantine closing. Complaint P 5.
Named as defendants were Budweiser, Pabst, Falstaff, Rheingold, Ballantine, Investors Funding Corp. (the former owner of Ballantine), the Trust Fund, the PBGC and the individual trustees of the Trust Fund.
The complaint asserted that the action "arises under" §§ 301 and 302 of the LMRA, 29 U.S.C. §§ 185, 186, §§ 10 and 27 of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j, 78aa and Rule 10(b)5 promulgated thereunder, the Declaratory Judgment Act, 28 U.S.C. § 2201, the Employee Retirement Income Security Act of 1974, §§ 502, 4002 and 4003, 29 U.S.C. §§ 1132, 1302, 1303 and "common law principles." Complaint P 1. Jurisdiction is alleged under § 4003 of ERISA, § 27 of the Securities Exchange Act of 1934 and 28 U.S.C. §§ 1331, 1337, as well as "the principles of pendent jurisdiction." Complaint P 2.
The substantive allegations of the complaint are somewhat vague and conclusory. For the sake of brevity, I summarize the allegations contained therein and the various theories of liability asserted against the defendants. The overriding theme of the first, second and fourth counts is the imposition of direct liability on one or more of the defendants for the funding of lifetime pension benefits for the "Michota" plaintiffs.
The complaint clearly states that the "Michota" plaintiffs were not eligible, as of April 1, 1972, to commence receiving pension benefits. However, each "Michota" plaintiff had between 12 and 28 years of service as of that date and benefits were allegedly "vested" as of that date. Complaint PP 24-26. As to Pabst, Rheingold and Budweiser, the following theories are discernible in the first and fourth counts: (1) By virtue of their status as former contributors to the Trust Fund, Pabst, Budweiser and Rheingold are obligated to fund pension benefits for the "Michota" plaintiffs; (2) Pabst, Budweiser and Rheingold promised to fund pension benefits for the "Michota" plaintiffs, which promises were relied upon to plaintiffs' detriment and, therefore, the employers should be estopped from denying liability for the pensions of the "Michota" plaintiffs; (3) Pabst, Budweiser and Rheingold failed to disclose the manner in which credited service might be forfeited, thereby working a fraud upon the "Michota" plaintiffs, and (4) Pabst, Budweiser and Rheingold are derivatively liable for alleged breach of fiduciary duty by the trustees in the adoption and application of the break-in-service rule of Article VII, § 1 to the "Michota" plaintiffs.
An additional theory of liability against Budweiser is discernible in the first, second and fourth counts. See Complaint PP 23, 30-36, 38-41, 50. In essence, the "Michota" plaintiffs claim that Budweiser's refusal to place them on Budweiser's regular seniority list as of June 1, 1973 was a violation of the applicable CBAs. The result was that Ballantine ...