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Sydney v. Sheet M Workers National Pension Fund

United States District Court, D. Massachusetts

February 7, 2017

EARL T. SYDNEY & SYDNEY SHEET METAL, INC., Plaintiffs,
v.
SHEET M WORKERS' PENSION FUND, Defendant.

          ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT (DOCS. 52, 54)

          Leo T. Sorokin United States District Judge

         For years, Defendant Sheet M Workers' National Pension Fund (“Fund”), a multiemployer pension plan, sent Plaintiff Earl T. Sydney statements showing that he was accruing pension credits, presumably based on contributions that his company, Sydney Sheet Metal, Inc. (“SSM”), made to the Fund. Under the plan's provisions, however, the statements were wrong, and Mr. Sydney was not accruing those credits. The Fund only informed Mr. Sydney of its error after he suffered a stroke and requested his pension. Plaintiffs ask the Court to order the Fund to give Mr. Sydney the credits that he was told he was accruing or, in the alternative, to return money that SSM contributed to the Fund. The Court sympathizes with Plaintiffs' situation, but there is no remedy available under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., or under federal common law. Thus, the Court ALLOWS Defendant's Motion for Summary Judgment (Doc. 52) and DENIES Plaintiffs' Motion for Summary Judgment (Doc. 54).

         I. STATEMENT OF FACTS[1]

         A. Plaintiffs' Union Membership and the Union's Contribution Requirements

         Starting in 1983, Mr. Sydney worked for one or more employers who were parties to collective bargaining agreements (CBAs) with Sheet M Workers Local Union 17 (“Local 17”), which is part of the Sheet M Workers' International Association. Doc. 50 at 38. On June 1, 2001, however, Mr. Sydney formed and incorporated his own company, SSM. Id. at 3, 38.

         On September 1, 2001, December 24, 2002, and April 7, 2003, Mr. Sydney, on behalf of SSM, signed CBAs with Local 17. Id. at 39. Under those CBAs, Mr. Sydney was considered an “Owner-Member, ” as he owned SSM and was a member of Local 17. Id. Mr. Sydney was an Owner-Member of Local 17 from September 1, 2001, until June 2014. Id. at 2, 39.

         Each CBA stated that “[c]ontributions on behalf of Owner/Members shall be made to the [Fund] for all hours for which the Owner/Member is paid or entitled to payment.” Id. at 40 (quoting AR at 570).

         Each CBA further stated:

Contributions to all funds [including the Fund] shall be made by or on behalf of any person who is an Owner-Member . . . on the basis of 40 hours per week, payable monthly, plus actual hours in excess of forty (40). If such contributions are not timely paid by or on behalf of the Owner-Member, he shall be terminated from all participation in the funds . . . .

Id. at 39-40; see also Doc. 21-2 at 25.

         B. The Fund's Former Registration Requirement

         Before January 1, 2002, contributing employers to the Fund which employed Owner-Members needed to file a Registration Statement with the Fund to ensure that the Owner-Members received pension credit for hours worked. See AR at 586. Effective January 1, 2002, however, Owner-Members no longer needed to file Registration Statements to receive pension credit. Id.

         On August 5, 2002, the Fund informed SSM that although the company reported hours worked by an Owner-Member (i.e., Mr. Sydney) before January 1, 2002, it had not filed a Registration Statement, so Mr. Sydney was at risk of losing pension credit for hours he worked before January 1, 2002. Id. The Fund “strongly urged” SSM to file a Registration Statement. Id.

         On or about December 30, 2002, SSM filed an Owner-Member Registration Statement with the Fund. Doc. 50 at 5. Mr. Sydney later told the Fund that the only reason he became an Owner-Member was to actively participate in the Fund's retirement plan. Id.

         On June 13, 2003, the Fund issued a letter approving Mr. Sydney's Owner-Member Registration Statement retroactively to August 1, 2001. Id. Thus, Mr. Sydney received pension credit for hours he worked from August 1, 2001, until January 1, 2002, when the Fund no longer required Owner-Members to file a Registration Statement in order to participate in the Fund. The Fund's letter stated: “Effective January 1, 2002 contributions for all Owner/Members are due in accordance to your collective bargaining agreement with [Local 17].” AR at 584.

         C. The Fund's Contribution Requirements

         Effective January 1, 2002, Section 1.13(d) of the Fund's Plan Document stated:

If a Contributing Employer [i.e., SSM] employing an Owner-Member fails to make contributions to the [Fund] with respect to any Covered Employee, [2] including the Owner-Member, the Owner-Member shall cease to be a Covered Employee [i.e., will cease to receive pension credits] as of the first day of the month that follows the due date of the unpaid contribution. In such case, the Owner-Member shall become a Covered Employee again when the Contributing Employer resumes making timely contributions to the [Fund] on behalf of all its Covered Employees, including the Owner-Member; provided, however, that the Owner-Member shall not be in Covered Employment for the one-year period commencing on the date of such resumption.

Doc. 50 at 47-48.

         In an August 5, 2002, letter to SSM, the Fund summarized Section 1.13(d), stating: “You should . . . be aware that if your company becomes delinquent [in making contributions to the Fund], your Owner/Members will not receive Pension Credit until the delinquency is resolved and until 12 months of timely contributions have been made on behalf of all Covered Employees, including the Owner/Members.” Id. at 52 (citing AR at 587). According to the Fund's Director of Operations, Debbie Elkins, the purpose of Section 1.13(d) was to prevent Owner-Members from being “able to benefit from their companies' participation in the [Fund] if their companies were not making contributions on time, . . . which impaired the [Fund's] funded status.” Id. at ¶ 2008, the Fund included a description of Section 1.13(d) in its Summary Plan Description. Id. at 14; AR at 7.

         From July 2010 through August 2014, the Fund sent multiple delinquency notices to SSM; those notices summarized Section 1.13(d)'s consequences for Owner-Members of delinquent Contributing Employers. See AR at 594-643.

         In May 2013, Section 1.13(d) was amended to state:

If a Contributing Employer employing an Owner-Member fails to make contributions to the [Fund] with respect to any Covered Employee, [3]including the Owner-Member, the Owner-Member shall cease to be a Covered Employee as of the first day of the month that follows the due date of the unpaid contribution. With respect to any delinquency identified by the [Fund] after May 1, 2013, the preceding sentence shall apply only if the Contributing Employer knowingly failed to make contributions to the [Fund] with respect to any Covered Employee. In such case, the Owner-Member shall become a Covered Employee again when the Contributing Employer resumes making timely contributions to the [Fund] on behalf of all its Covered Employees, including the Owner-Member; provided, however, that the Owner-Member shall not be in Covered Employment for the one-year period commencing on the date of such resumption.

AR at 482-83 (italics in original to show amendment); see also id. at 657. This amendment “was intended to take account of situations where a Contributing Employer made an honest mistake.” Id. at 483.

         D. SSM's Delinquency and the Fund's Collection Litigation

         From February 2006 to January 2011, SSM failed to make timely contributions to the Fund and failed to cure by making a full continuous year of timely contributions. AR at 8, 43. In 2011, the Fund filed suit against SSM to collect delinquent contributions, a “substantial portion” of which related to contributions on behalf of Mr. Sydney. Doc. 50 at 9. On November 9, 2011, Mr. Sydney, in his capacity as Owner/President of SSM, signed a settlement agreement with the Fund, in which he agreed to contribute to the Fund. Doc. 21-1 at 4. Plaintiffs allege, without citation to any supporting evidence, that Mr. Sydney signed the settlement agreement before the Fund informed him or SSM that contributions made on his behalf since April 30, 2006, and as part of the settlement agreement “would not inure to [his] benefit.” Doc. 50 at 26-27.

         On March 13, 2014, the Fund filed an Amended Complaint against SSM to collect delinquent contributions, a “substantial portion” of which related to contributions on behalf of Mr. Sydney as an Owner-Member and Covered Employee. Id. at 9; Doc. 27 at 10. On July 17, 2014, Mr. Sydney, on behalf of SSM, signed another settlement agreement, covering collection of delinquent contributions from July 1, 2011, through May 31, 2014. Doc. 50 at 30. Section 12 of the settlement agreement stated:

Notwithstanding anything to the contrary contained herein, nothing in this [agreement] shall modify, amend, or alter any provision of any document governing the payment of benefits by the [Fund], including, but not limited to, any provision pertaining to or governing: Covered Employment (including, but not limited to, any rules pertaining to an Owner-Member's status as a Covered Employee), the accrual of benefits or crediting of service, participation in the Plan as a Contributing Employer or a Participant, credited service, and eligibility for benefits.

Id. Plaintiffs allege that the language in Section 12 “was not in earlier versions of the settlement agreements prepared by the [Fund] and signed by ...


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