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United Food and Commercial Workers v. Super Fresh Food Markets Inc.

March 6, 2009

UNITED FOOD AND COMMERCIAL WORKERS AND PARTICIPATING FOOD INDUSTRY EMPLOYERS TRI-STATE HEALTH AND WELFARE FUND, ET AL., PLAINTIFFS,
v.
SUPER FRESH FOOD MARKETS INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: RENÉE Marie Bumb United States District Judge

OPINION

This matter comes before the Court upon a motion by the Defendants, Super Fresh Food Markets, Inc. ("Super Fresh"), and the Great Atlantic and Pacific Tea Company, Inc. ("A&P") (collectively the "Defendants"), for an award of attorney's fees and costs from the Plaintiffs, United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Health and Welfare Fund (the "Plaintiff Fund"), Clay Bowman and John Calleri (collectively the "Plaintiffs"). For the reasons set forth below, Defendants' motion is denied, in part, and granted, in part.

I. Background*fn1

In the Amended Complaint, Plaintiffs alleged that the Defendants failed to pay the Plaintiff Fund the full amount for retiree medical coverage in violation of section 515 of The Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1145. Defendants contended, in part, that the Plaintiffs' efforts to collect the full amount violated the terms of the collective bargaining agreements. Plaintiffs also alleged that the Defendants were jointly and severally liable to pay all retiree contributions due to the Fund because Super Fresh and A&P constituted a single employer.

On June 28, 2007, the Court ruled that there were relevant disputed issues of fact that precluded it from granting summary judgment. The Court found that it was presented with four disputed issues: 1) whether A&P or Super Fresh was obligated to contribute for their retirees' benefits; 2) whether the cost of A&P's retirees could be allocated to Super Fresh because both entities were, in fact, one employer; 3) whether A&P was obligated to contribute for its own retirees despite having no active employees; and 4) whether the agreement regarding the return of Super Fresh's employees (including retirees), who were members of United Food and Commercial Workers ("UFCW") Union Local 27 ("Local 27"), from the UFCW Local 56 Fund to the Plaintiff's Fund included Local 27 members who had been former A&P employees.

This Court held a 21-day bench trial on two of the above issues. For ease of administration, the Court divided the trial so that the issues could be presented in a logical fashion. The Court held it would first address the legality of the Trustees' change in methodology, discussed below. If it found that the change was lawful, it would then address the reasonableness of the change and the entity status of Super Fresh and A&P. The Court addressed the fourth issue, the Local 27 claim, discussed below, in the initial stage as well.

The primary issue before the Court involved the interpretation of the relevant collective bargaining agreements and other related Plan documents, i.e., did they contain a method for employer contributions for their retirees to the Fund, and did the Trustees of the Fund have the authority to change the contribution methodology on May 6, 2003, (hereinafter referred to as the "Change in Methodology Claim"). The other issue involved Plaintiffs' allegation that the Defendants breached the Participation Agreement dated October 13, 2005. Plaintiffs alleged that the Defendants had agreed to pay for former A&P retirees who were re-transferred to the Fund from the Local 56 Fund. Defendants countered that the explicit language of the Participation Agreement soundly defeated such claim (hereinafter referred to as the "Breach of the Participation Agreement Claim").

II. Discussion

A prevailing party in an action under ERISA (here, the Defendants) may seek an award of attorney's fees and costs of action. 29 U.S.C. § 1322(g)(1). As the district exercises its discretion in reviewing a request for a fee award, the Court must consider:

1. the culpability or bad faith of the offending party;

2. the ability of the offending party to satisfy an award of attorney's fees;

3. the deterrent effect of an award of attorney's fees against the offending party;

4. the benefit conferred on members of the plan as a whole; and

5. the relative merits of the parties' position.

Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983). No single factor is decisive. Rather, the Court must examine all of the factors and make its decision based on the weight of each. The Court must also articulate its analysis and conclusions as to each Ursic factor. McPherson v. Employees' Pension Plan of American Re-Insurance Company, Inc., 33F.3d 253, 254 (3d Cir. 1994), citing Anthuis v. Colt Industries Operating Corp., 971 F.2d 999, 1012 (3d Cir. 1992).

A. Plaintiffs' Change in Methodology Claim

The Court turns first to the primary issue litigated before it, the Change ...


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