Opposition Brief — Duluth-Superior ILA Marine Ass'n Restated Pension Plan v. Seaway Port Authority

Supreme Court, U.S.

FILED

WAY 2 44

No. 90-1636 991

QESICE—SE-FHE CLERK

In The

Supreme Court of the United States

October Term, 1990

¢

DULUTH-SUPERIOR ILA MARINE ASSOCIATION

RESTATED PENSION PLAN; AND THE BOARD OF

TRUSTEES OF THE DULUTH-SUPERIOR ILA MARINE

ASSOCIATION RESTATED PENSION PLAN,

Petitioners,

VS.

SEAWAY PORT AUTHORITY OF DULUTH,

Respondent.

¢ a

Petition For Writ Of Certiorari To The United States

Court Of Appeals For The Eighth Circuit

¢

BRIEF IN OPPOSITION TO PETITION FOR WRIT

°

Rosert C. Maki* |

Maki & Overom, Chartered

31 W. Superior Street

Suite 402

Duluth, MN 55802

(218) 726-0805

Counsel for Respondent

May 24, 1991

Counsel of Record

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (492) 342-2831

Sfp.

TABLE OF CONTENTS

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APPENDIX

A. Restated Agreement and Declaration of Trust

Under Duluth-Superior ILA Marine Association

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TABLE OF AUTHORITIES

Page

FEDERAL CASES

Abbot Labs v. Gardner, 387 U.S. 136, 87 S.Ct. 1507,

18 L.Ed. 2d. 661 (9967). 6 oe a hl eee 14

Bowers v. Transportacion Maritima Mexicana, S.A.,

901 F.26 256 (ind Cie. TRUE isc ei ee eee eens 6

Carriers Container Council, Inc. v. Mobile S. & S.

Ass’n, Inc. — Int’! Longshoremen’s Ass'n, AFL-CIO

Pension Plan and Trust, 896 F.2d 1330, 904 F.2d 28

(11th Cir. 1990), petition for cert. denied, 111 S.Ct.

308 (U.S. Oct. 15, 1990) (No. 90-323) ....-.-.....<: 7,9

Communist Party v. Subversive Activities Control

Bd., 367 U.S. 1, 81 S.Ct. 1357, 6 L.Ed.2d 625

CEIIB ED oxic wee Vee a ek 0 te ee 14

Fort Halifax Packing Co. v. Coyne, 432 U.S. 1 (1987)..... 2

H.C. Elliot, Inc. v. Carpenters Pension Trust Fund,

859 F2d G06 Gth Cit. 1906). ... 6crccsscivavsisevins 7

Ingersoll-Rand Company v. Perry McClendon, 111

BAK OU CHORD), gk ea 1

Korea Shipping Corp. v. New York Shipping Ass‘n

Int’l Longshoremen’s Ass'n Pension Trust Fund,

680 F.2d 1531 Gad Cir. 1900)... 2... 000005005; > & 7,3

Laborers Local 938 v. B.R. Starnes Co., 827 F.2d 1454

62: Be ey. Mr rere, Say te nr ony ae 7

Pension Benefit Guaranty Corp. v. Center City

Motors, Inc., 609 F.Supp 409 (S.D. Cal 1984)....... 16

ili

TABLE OF AUTHORITIES - Continued

Pension Benefit Guaranty Corp. v. Ouimet, 470

F.Supp 945 (D. Mass 1979, aff'd, 630 F.2d 4 (1st

Cir. 1980), cert. denied, 450 U.S. 914, 101 S.Ct.

Some ee Games SOP CIOB1) ... 05.2... cee.

Philippines Micronesia & Orient Navigation Company

v. N.Y.S.A. — ILA Pension Trust Fund, 909 F.2d 39

(2nd Cir. 1990) (per curiam), petition for cert.

denied, 111 S.Ct. 515, 112 L.Ed.2d 1527 (US.

November 26, 1990) (No. 90-576) ..............

OTHER CASES

Albrecht v. Sell, 260 Minn. 566, 110 N.W.2d 895

eg sche SNE bh bv vb hs beac cess

Port Authority of City of Saint Paul v. Fisher, 269

Minn. 276, 132 N.W.2d 183 (1964)..............

STATUTES

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OPINIONS BELOW

The opinion of the District Court (Petitioner’s

Appendix C) is not officially reported. The opinion of the

Court of Appeals for the Eighth Circuit (Petitioner’s

Appendix A) is reported at 920 F.2d 503 (8th Cir. 1990).

¢

JURISDICTION

The jurisdictional requisites are adequately set forth

in the Petition.

QUESTION PRESENTED

Whether Respondent is an “employer” within the

meaning of the MPPAA. ;

STATEMENT

The facts of the case are stated fully in the decision of

the Court of Appeals (Petitioner’s Appendix A, at A2-

A4).

’ ¢

ARGUMENT

1. The Eighth Circuit’s Decision Does Not Conflict

With The Decisions Of This Court

Petitioner claims that the decision below is in conflict

with the decisions of this Court, citing Ingersoll-Rand

Company v. Perry McClendon, 498 U.S. __, 111 S.Ct. 478,

ho

482, 112 L.Ed.2d 474, 483 (1990); Fort Halifax Packing Co. v.

Coyne, 482 U.S. 1, 12, 107 S.Ct. 2211, 2218, 96 L.Ed.2d 1

(1987). In particular, Petitioner contends that the Eighth

Circuit’s decision failed to follow this Court’s lead in

recognizing the pre-emption of state laws insofar as they

relate to an employee benefit plan described in 29 U.S.C.

Section 1003(b). See 29 U.S.C. Section 1144(a)

Contrary to Petitioner’s argument, the Eighth Cir-

cuit’s reasoning in its decision below is in complete har-

mony with the decisions of this Court. The Eighth Circuit

was fully aware that ERISA pre-empts state law relating

to an employee benefit plan. For example, in footnote 3 of

the decision below, the Eighth Circuit explicitly recog-

nized the dynamics of pre-emption, noting:

“The circuits that have addressed the definition

of employer under ERISA and MPPAA, how-

ever, have uniformly rejected the use of state

common law.”

Rather than resting its definitional analysis upon

state law, the Eighth Circuit borrowed the well-recog-

nized federal “contributing obligor” test first adopted by

the Second Circuit in Korea Shipping Corp. v. New York

Shipping Ass‘n-Int’l Longshoreman’s Ass'n Pension Trust

Fund, 880 F.2d 1531, 1537 (2nd Cir. 1989), wherein the

Second Court stated:

[T]he term employer in 29 U.S.C. Section 1381 (a)

means ‘a person who is obligated to contribute

to a plan either as a direct employer or in the

interest of an employer of the plan’s partici-

pants.’

(See Petitioner’s Appendix A at A10). Applying this test,

without regard to state law of any kind, the Eighth Cir-

cuit concluded SPAD was not an employer under

MPPAA:

Our review of the record does not reveai any

contracts SPAD signed explicitly obligating it to

make pension contributions. (footnote omitted).

| Thus, applying the relevant case law, SPAD is

not obligated to contribute and is not an

employer under MPPAA.

(Petitioner’s Appendix at A, A14-A15).

The Eighth Circuit’s primary reference to state law is

found in a lone short paragraph on page A15 of Peti-

tioner’s Appendix. In that paragraph, as further support

for its conclusion that SPAD was not a contributing

obligor, the court gave due recognition to the nature of

SPAD. The court observed that SPAD, unlike any of the

other employers in the case law, is a creature of state law.

As a public body using public funds, SPAD operates only

within a strict statutory framework. Under the Minnesota

Statutes, SPAD was given the power to hire a managing

agent, if it so chose, and to specify that “employees

engaged by the agent are employers of the agent and not

of the port authority” and that “the agent is responsible

to pay the employees and to comply with * * * federal

laws affecting employees.”

Nowhere in the above-mentioned paragraph did the

| court imply that states have the power, by state legisla-

tion, to “isolate” themselves from federal laws such as

ERISA and MPPAA. (See Petitioner’s Brief at 9). Rather,

the Eighth Circuit cited these Minnesota statutes merely

to convey that although SPAD was unique compared to

—— EE

the private-sector employers in case law, it had authority,

like private sector employers, to hire an independent

agent which, by state statute, was placed in a position

free of political influence to hire, fire and make its own

contracts regarding employment and benefits. Like pri-

vate-sector employers, SPAD had the power to sign, or

not sign, collective bargaining contracts and other docu-

ments evidencing an obligation to contribute to a plan.

This power was expressly granted by state statute, which

law Petitioner is presumed to know. Albrecht v. Sell, 260

Minn. 566, 110 N.W.2d 895, 897 (1961). By lawfully exer-

cising its power to hire an independent agent that was

free and unfettered in determining which employees to

hire and which agreements to sign as a contributing

obligor, SPAD is entitled to be free from any obligor

liability arising out of the managing agent’s contract with

the ILA Plan. This is true not because the Minnesota

Statutes superseded the MPPAA but because within the

confines of the MPPAA, the state of Minnesota gave

SPAD express legislative authority to hire independent

agents who, as a result of agreements made solely by the

agent, become contributing obligors, thereby protecting

SPAD’s limited public treasury.' (Without the existence of

this state legislation, and the reference to it by the Eighth

Circuit, Petitioner would argue that SPAD’s contract with

1 SPAD has no general taxing authority. See Minn. Stat.

Section 469.053, subd. 1 (1990). Moreover, SPAD may not incur

an obligation or expense unless existing appropriations

together with reasonably expected SPAD revenue from other

sources are sufficient to discharge the obligation or expense

when due. Minn. Stat. Sec. 469.056, subd. 2 (1990).

North Central was outside its statutory authority, there-

fore ultra vires, with SPAD liability presumed on an ultra

vires contract).

SPAD’s unique status is also relevant in that, as a

governmental non-profit body, SPAD had no incentive to

hire a managing agent for an improper purpose. Peti-

tioner’s fears of a “sham” arrangement and “dummy”

agents are simply unfounded in a public sector context

such as this. (See Petitioner’s Appendix A at A16). This is

especially true under the particular facts of the instant

case, where SPAD’s sole concern was to find a private

entity to manage and assume responsibility for the port

terminal. SPAD’s only “crime” was that it did not want to

be in the day-to-day port management business. Peti-

tioner does not and cannot point to any “hidden” or

inappropriate motives behind the SPAD/North Central

managing agent contract. That Petitioner’s fears of

impropriety and fraud with regard to SPAD’s contractual

arrangements are without foundation is only reaffirmed

by a recognition of SPAD’s government nature.”

? Government plans are exempt from the requirements of

ERISA and the MPPAA. 29 U.S.C. 1103(b)(1). SPAD’‘s real

employees (office personnel, etc.) have always been partici-

pants in a government plan. Assuming, arguendo, that SPAD

employed the longshoremen, SPAD could have avoided pen-

sion liability by obliging itself to make contributions to a

government plan. Thus, although private sector employers

might find a method to unfairly use intricate corporate struc-

tures to avoid withdrawal liability, public entities such as

SPAD have no incentive to do so.

a

Thus, a closer examination of the Eighth Circuit’s

analysis reveals that the Eighth Circuit’s opinion is com-

pletely consistent with the decisions of this Court. Peti-

tioner is in error when it attempts to portray the Court of

Appeal’s relatively short references to state law as a

separate, independent decisional basis for the court’s

opinion. To the contrary, the court rested its decision

upon the contributing obligor test alone. Reference to the

unique nature of SPAD bolstered the Eighth Circuit’s

conclusion that an extension of the contributing obligor

test would be unwise in light of the absence of any

evidence that SPAD either acted outside its authority or

acted with improper motives.

Assuming, arguendo, that the court’s state law anal-

ysis formed a separate and inaccurate basis for the court’s

decision, the court’s ultimate conclusion of law (i.e. SPAD

is not an employer within the meaning of MPPAA), is

fully supported by the court’s contributing obligor anal-

ysis, without regard to state law.

2. The Eighth Circuit’s Decision Is Not Erroneous And

Does Not Conflict With Other Appellate Decisions.

Petitioner acknowledges that in all of the appellate

decisions where an entity has been held liable for

“employer” withdrawal liability under MPPAA, the

entity had a contractual obligation to make contributions

to a multi-employer plan. (Petitioner’s Brief at 11). See

Korea Shipping Corp.; Bowers v. Transportacion Martima

Mexicana, S.A., 901 F.2d 258 (2nd Cir. 1990); Philippines

Micronesia & Orient Navigation Company v. NYSA - ILA

Pension Trust Fund, 909 F.2d 39 (2nd Cir. 1990) (per cur-

ium), Petition for cert. filed, 59 U.S.L.2. 3295 (U.S. Oct. 3,

1990) (No. 90-576); Carriers Container Council, Inc. v.

Mobile S. & S. Ass'n, Inc — Int'l Longshoremen’s Ass'n, AFL-

CIO Pension Plan and Trust, 896 F.2d 1330, 904 F.2d 28

(11th Cir. 1990) petition for cert. denied, 111 S.Ct. 308 (U.S.

October 15th, 1990) (No. 90-323); Laborers Local 938 v. B.R.

Starnes Co., 827 F.2d 1454 (11th Cir. 1987) (per curium);

H.C. Elliot, Inc. v. Carpenters Pension Trust Fund, 859 F.2d

808 (9th Cir. 1988). The Eight Circuit, after reviewing this

case law, determined that since SPAD had no contractual

obligation to contribute to the Plan, SPAD was not an

employer within the meaning of MPPAA. This analysis

by the Eighth Circuit is perfectly consonant with the

decisions of the other circuits.

The so-called “contributing obligor” test adopted by

the Eighth Circuit is premised upon the remedial and

protective policies underlying the MPPAA. This test

derives its authority from the congressional concern for

the financial stability of multi-employer plans. Korea Ship-

ping Corp., 880 F.2d 1531, 1536-37. As noted by the Elev-

enth Circuit,

The contributing obligor test drawn from Title I

of ERISA furthers Congress’ purposes in pass-

ing the MPPAA because it prevents a contribu-

tor to a plan from withdrawing its support

without covering its share of unfunded lia-

bilities.

Carriers Container Council, 896 F.2d 1330, 1343.

Rather than challenging the Eighth Circuit’s adoption

of the contributing obligor test, as developed by the

Second, Ninth, and Eleventh Circuits, for determining

whether an entity is an employer within the meaning of

MPPAA, Petitioner challenges the Eighth Circuit’s applica-

tion of the test. (Petitioner’s Brief at 13.) Petitioner argues

that the Appellate Court “simply erred when it concluded

that there was no contractual obligation on the part of

SPAD” to make contributions to a malti-employer plan.

(Petitioner’s Brief at 14.) Thus, Petitioner’s disagreement

with the Eighth Circuit is exceedingly narrow compared

to the larger issue concerning the general meaning of the

term “employer.”

In contending that SPAD was coniractually bound to

make contributions to the ILA plan, Petitioner quotes

Article III of the Managing Agent Agreements between

SPAD and North Central, which provided as follows:

FUNDS

All funds which are required for or arise out of

the operations conducted by the Agent shall be

deposited in an account or accounts in deposito-

ries to be designated by SPAD. Such accounts

shall be designated ‘North Central Terminal

Operators, Inc., Managing Agent, Public Marine

Terminal Division, Seaway Port Authority of

Duluth’. All such funds shall be considered the

property of SPAD and not of the Agent. SPAD

will provide Agent with sufficient funds in said

accounts to carry on the operations.

Agent will have a separate bank account to be

called a payroll account into which deposits will

be made from the operating account above

described in order to enable Agent to meet its

payroll expenses and related fringe benefits.

ALL SUCH FUNDS SHALL CONTINUE TO BE

THE PROPERTY OF SPAD UNTIL DISBURSED

TO OR FOR THE ACCOUNT OF EMPLOYEES

FOR PAYROLL EXPENSES AND RELATED

FRINGE BENEFITS.

(Emphasis added.)

Petitioner somehow interprets this language as a con-

tractual obligation undertaken by SPAD to make contri-

butions to a multi-employer plan. Such en interpretation

is inaccurate for several reasons. First, the above-quoted

language fails to even mention a multi-employer plan. In

fact, unlike the contractual documents relied upon in the

cases cited by Petitioner, nowhere in the entire managing

agent agreement is there any reference to a multi-

employer plan. Compare Korea Shipping Corp. (document

provided that “assessment shall be collected by the direct

employer from each of the carriers and shall be paid to

the NYSA for immediate transmittal to the NYSA-ILA

Fringe Benefits Escrow Fund . . . Pension payment shall

be made by the NYSA directly to the NYSA-ILA Pension

Trust Fund”); Carriers Container Council, 896 F.2d at 1344

(document provided that “assessment amounts shall be

collected as necessary from the carriers by . . . [CCC]

which shall pay out the [multi-employer pension plan]

shortfall payments. . . . ) With respect to the managing

agent agreements, neither North Central nor SPAD made

promises regarding the maintenance of a multi-employer

plan. Although it is true that SPAD agreed to advance

Operating capital to North Central for North Central’s

payment of “fringe benefits” to the employees, such an

agreement is in no way comparable to the pension fund

obligations undertaken by the contributing obligors of

previous case law, as the agreement established no duty

running from SPAD to the ILA Plan that SPAD would

make contributions to the Plan. Accordingly, SPAD could

10

not possibly incur withdrawal liability for failing to make

contributions which were never promised the Plan in the

first place.

Second, Petitioner misunderstands the purpose of the

above-quoted language in the managing agent agree-

ments. The monies that were deposited into the payroll

account were public monies. As such, under the Minne-

sota Constitution, the monies had to be used for public

purposes only, and not in the furtherance of any private

purpose or in the aid of any private individual or entity.

See Port Authority of City of Saint Paul v. Fisher, 132 N.W.2d

183, 192, 196 (Minn. 1964). Respondent, recognizing this

constitutional limitation, reserved limited control of the

funds until final disbursement to ensure that the funds

would not be co-mingled with private funds but instead

used by North Central for a public purpose. To suggest

that this sound fiscal management somehow evidenced a

contractual commitment on the part of SPAD obligating it

to make contributions to the ILA plan is a distortion of

the facts. SPAD never contractually obliged itself to the

ILA plan.

Third, Petitioner’s ill-conceived expansion of the con-

tributing obligor contractual test leaves SPAD and sim-

ilarly situated public bodies at the mercy of their private

managing agents. Carrying Petitioner’s position to a logi-

cal conclusion, a managing agent’s unilateral decision to

join and then withdraw from a multi-employer plan

would expose the public body to unexpected and unini-

tiated pension liability. The public body would bear the

full financial consequences of a decision in which it had

no participation. This is not the result intended by the

11

MPPAA nor was this result contemplated by the originators

of the contributing obligor test. Under the contributing

obligor test adopted by the Second, Eighth, Ninth and Elev-

enth Circuits, the public body is not held liable for an

unfunded multi-employer plan unless it expressly enters into

a bargaining agreement or similar contract whereby it agrees

to fund that particular plan. By contrast, in the instant case,

SPAD never asked North Certral to join the ILA plan or, for

that matter, any plan whatsoever. North Central never

sought SPAD’s approval for North Central’s acts relating to

the Plan or the employees. SPAD had no opportunity to stop

North Central from withdrawing from the ILA plan. To

impose unfunded pension liability upon SPAD under these

circumstances is unreasonable and unfair. Protecting the

financial viability of multi-employer plans should not come

at the expense of the victimization of public bodies who hire

independent managing agents. This is particularly true in the

instant case, where Petitioner has made no attempt to

recover its loss from North Central, the only entity which

had a choice as to whether or not withdrawal liability was to

be incurred.

Fourth, it is important to note that before the MPPAA

was enacted, SPAD at one time had contractually obli-

gated itself to contribute to the ILA multi-employer plan.

(See Respondent’s Appendix A at Al). In 1979, SPAD was

removed as a signatory to the Restated Trust Agreement.

(See Petitioner’s Appendix A at A33-A35).3 The 1979

Restated Trust Agreement also provided that,

3 In Section 1.5(d) of the Restated Trust Agreement, the

agreement provided that SPAD and certain other original

(Continued on following page)

12

Employers, who are not signatory to this Agree-

ment but who have persons in their employ

coming within the classifications represented by

the Unions signators hereto and who have col-

lective bargaining agreements with such Unions,

may become a participating employer under the

terms of this Agreement and make contributions

to the Trust, with the consent of the Trustees, on

the signing of a Participation Agreement and/or

a labor agreement, where applicable, providing

for participation in the Trust containing such

terms as required by the Trustees and on such

basis as agreed upon by such new contributing

Employers and the Trustees respecting the con-

tributions to be made and the coverages to be

afforded to the employees.

(Respondent’s Appendix A at A6, Section 2.2.) It is undis-

puted that SPAD never signed a Participation Agreement

or labor agreement providing for participation in the

Trust. Thus, by its own terms, the Restated Trust Agree-

ment disavows any SPAD responsibility for plan contri-

butions. Had Petitioner intended to hold SPAD

contractually liable for plan contributions, it never would

have expressly excluded SPAD by the very language of

the Restated Trust Agreement.

Finally, it is important to note that Petitioner has not

cited a single appellate case which is in conflict with the

Eighth Circuit’s decision. Petitioner cannot dispute the

fact that not a single appellate decision has imposed

withdrawal liability upon an entity that has such a ten-

uous, if any, connection to a plan. Nor has any appellate

(Continued from previous page)

signatories “are no longer parties to this restated Agreement

and Declaration of Trust” (Respondent’s Appendix A at A4).

13

decision imposed withdrawal liability upon a public

entity. In every case cited by Petitioner, the “contributing

obligor” was a private sector entity which signed a con-

tract expressly requiring it to contribute to a particular

multi-employer plan.

3. National Importance Of The Case.

Petitioner argues that the Court of Appeals’s decision

below unwisely permits an “employer” to “contract

away” its withdrawal liability by entering into an agree-

ment with a third party for that purpose. (See Petitioner’s

Brief at 15). To begin with, this argument begs the ques-

tion with respect to who is an “employer.” The Second,

Eighth, Ninth and Eleventh Circuits have defined

“employer” as an entity that obligates itself to make

contributions to a multi-employer plan. Under such a

definition, an employer who withdraws from a plan will

be liable for such withdrawal regardless of any contracts

to the contrary. In other words, it is impossible to be an

“employer” and at the same time be absolved of with-

drawal liability.

Second, Petitioner’s use of the term “contract away”

is misleading. SPAD cannot “contract away” something it

never had to begin with.

Boiled to its essence, Petitioner’s position is that

principals should not be able to hire managing agents to

serve as both common law employer and sole “contribut-

ing” employer. But as the Eighth Circuit stated succinctly,

“There is nothing inherently improper in this,

however, because parties may contract as they

see fit, within certain limitations. A pension

14

plan’s proper recourse is to assess withdrawal

liability against the managing agent.”

(See Petitioner’s Appendix A at A16). Petitioner has

made no attempt to hold North Central liable for its

withdrawal from the Plan. Instead, it leapfrogged the

managing agent and sought recourse directly from SPAD,

a public body with limited funds. Now Petitioner asks

this Court to extend the contributing obligor test when it

has not even exhausted the remedies it already has.

Petitioner seeks to distract the Court from Peti-

tioner’s ability to redress its own withdrawal liability

situation by conjuring up scenarios where entities

attempt to circumvent the MPPAA by the use of “intricate

corporate structures.” (Petitioner’s Brief at 16-17). This

circumvention argument is unpersuasive. For one thing,

Petitioner’s fears of sham, insolvent entities circumvent-

ing the MPPAA are entirely hypothetical and conjectural.

Petitioner does not assert that North Central was an

insolvent or undercapitalized entity, nor is there an alle-

gation that SPAD encouraged North Central to join a

multi-employer plan.* Petitioner merely asserts that some

entity under some circumstance might employ an insol-

vent agent to assume pension liability, thereby undermin-

ing the financial stability of a plan. The Court is well

aware that rules of law are best decided upon specific

concrete facts, not abstract, hypothetical scenarios. See

Abbott Labs v. Gardner, 387 U.S. 136, 148, 87 S.Ct. 1507,

1515, 18 L.Ed.2d 681 (1967); Communist Party v. Subversive

Activities Control Bd., 367 U.S. 1, 72, 81 S.Ct. 1357, 1397, 6

4 As observed in footnote 2 of this brief, SPAD had no

incentive to circumvent ERISA or MPPAA.

15

L.Ed.2d 625 (1961). The Eighth Circuit, recognizing this

principle, refused to be drawn into an abstract analysis.

Instead, it correctly concluded that if and when there is

evidence of a particular “sham” or insolvent entity

assuming pension fund liability, the judicial response can

be decided at that time, under the clear light on concrete,

specific facts.

Also, Petitioner’s fears of a sham entity circumvent-

ing the MPPAA are totally unfounded. The trustees of

multi-employer pension plans are perfectly capable of

protecting their plans from “sham” contributors. If the

plan trustees are uncertain as to the financial viability of

a potential contributor, the trustees can require financial

assurances and/or refuse the entity admission to the

plan. Labor organizations are also capable ef monitoring

the financial health of bargaining agreement signatories.

This self-help is far more likely to protect the financial

stability of multi-employer plans than Petitioner's

scheme in which entities associated with contributing

obligors are unsure whether or not they may be held

liable for millions of dollars in unfunded pension obliga-

tions.

Finally, the MPPAA already has a special provision

by which corporations are prohibited from utilizing intri-

cate corporate structures in order to avoid withdrawal

liability. Section 1301(b) provides that:

For purposes of this subchapter, under regula- \

tions prescribed by the corporation, all *

employees of trades or businesses (whether or

not incorporated) which are under common con-

trol shall be treated as employed by a single

employer and all such trades and businesses as

a single employer.

16

Treasury Regulation 11.-414(c)-1(a) provides in pertinent

part:

[T]he term “two or more trades or businesses

under common control” means_any group of

trades or businesses which is either a “parent-

subsidiary group of trades or businesses under

common control” ...,a “brother sister group of

trades or businesses under common con-

trol” ..., or a “combined group of trades or

businesses under common control”. . . .

Under the “controlled group” concept, a business may

not “limit its responsibilities under [the MPPAA] by frac-

tionalization of its business operations. Pension Benefit

Guaranty Corp. v. Center City Motors, Inc., 609 F.Supp. 409,

412 (S.D. Cal. 1984); see also Pension Benefit Guaranty Corp.

v. Ouimet, 470 F.Supp. 945 (D. Mass 1979), aff'd, 630 F.2d 4

(1st Cir. 1980), cert. denied, 450 U.S. 914, 101 S.Ct. 1356, 67

L.Ed.2d 339 (1981). Thus, congress foresaw the problem

of business fractionalization and devised a limited special

remedy to prevent its occurrence. Interestingly, by con-

trast, congress made no attempt to forbid principals from

hiring managing agents to serve as common law

employer and sole “contributing” employer. One can only

conclude that had congress intended to hold all princi-

pals, even those who have signed nothing obligating

them to contribute to a multi-employer plan, responsible

for the withdrawal liability of independent managing

agents, congress would have adopted a framework more

expansive than the “controlled group” concept.

17

CONCLUSION

As discussed at length above, it is both premature

and unnecessary to grant the petition for certiorari with

respect to the legal issues now before the Court. It is

premature for three reasons. First, as noted by the Eighth

Circuit, there is a paucity of case law from which the

Court can gather insight with regard to the definition of

“employer” as used by the MPPAA. (Petitioner’s Appen-

dix A at A10). In fact, only the Eighth Circuit has

addressed the question of whether withdrawal liability

may be imposed upon a public body like SPAD which

had such a tenuous connection with a multi-employer

plan. Second, as noted by the Eighth Circuit, the Court is

not faced with a sham insolvent agent in the instant case;

accordingly that issue should be left for another day.

(Petitioner’s Appendix A at A16). Finally, Petitioner has

not cited a single appellate case which conflicts with the

Eighth Circuit’s decision. Prudence dictates that other

circuits should be given the first opportunity to deter-

mine whether the Eighth Circuit’s analysis is correct.

It is unnecessary for this Court to grant the petition

for certiorari because the Eighth Circuit properly adjudi-

cated the issues before it. The Eighth Circuit correctly

recognized that SPAD never obligated itself to make con-

tributions to a multi-employer plan. (Petitioner’s Appen-

dix A at Al4). SPAD did not sign any collective

bargaining agreements, shipping association agreements,

or pension plan trust agreements obligating itself to con-

tribute to the Plan. The Plan was well aware both prac-

tically and legally that by the terms of its Restated Trust

Agreement and the Minnesota Statutes governing the

managing agent arrangement, it could not look to SPAD

18

for financial support. To impose withdrawal liability on a

public body such as SPAD (which made no decision,

evidenced by the execution of any documents, to join the

Plan, nor did it engage in contractual avoidance by

encouraging its managing agent to join the Plan) is com-

pletely contrary to the spirit behind the MPPAA and the

well-reasoned law of the circuit courts.

For the reasons set forth above, the petition for cer-

tiorari should be denied.

Dated: April 24, 1991

Respectfully submitted,

Rosert C. Maki

Attorney I.D. No. 66771

Maki & Overom, Chartered

31 W. Superior Street

Suite 402

Duluth, MN 55802

(218) 726-0805

Attorney for Respondent,

Seaway Port Authority of Duluth

A-1

APPENDIX A

RESTATED AGREEMENT AND DECLARATION OF

TRUST UNDER DULUTH-SUPERIOR ILA MARINE

ASSOCIATION RESTATED PENSION PLAN

THIS RESTATED TRUST AGREEMENT, made and

entered into as of the 13th day of December 1979, by and

between the undersigned Union Trustees and Employer

Trustees, who, together with their successor Trustees des-

ignated in the manner hereafter provided, are hereinafter

collectively referred to as “Trustees”.

WHEREAS, an Agreement and Declaration of Trust

for the purpose of providing and maintaining insured

pensions for participating employees was made and

entered into effective the 10th day of December 1964,

between General Cargo Workers, Local No. 1366, Duluth,

Minnesota, an affiliate of the International Longshore-

men’s Association, AFL-CIO, and General Cargo

Workers, Local No. 1037, Superior, Wisconsin, an affiliate

of the International Longshoremen’s Association, AFL-

CIO, and the International Longshoremen’s Association,

AFL-CIO, hereinafter called the Union, and Duluth-Supe-

rior Marine Association, American Grain Trimmers, Inc.,

Atlantic & Gulf Grain Stevedoring Associates, Boland &

Cornelius, Cullen Stevedoring Company, Ltd., Duluth

Seaway Agency, Inc., Ceres Stevedoring, Inc., Alastair

Guthrie, Incorporated, The M. A. Hanna Company, S.A.

McLennan, J. F. McNamara Corp., Nicholson Transit Co.,

Pearson Stevedoring Co., Rogers Terminal and Shipping

Corporation, Sauter Stevedoring Corp., Sealanes Interna-

tional, Inc., Seaway Port Authority of Duluth, Svensson &

Baker, Inc., and Twin Ports Ship Cleaners, Incorporated,

hereinafter called the Employers, and the individual

A-2

employers who employ members of “the Unions” and

who have individually entered into a collective bargain-

ing agreement with “the Unions”, hereinafter referred to

collectively as “the Employer”, which agreement has her-

.etofore been amended; and

WHEREAS, said Agreement and Declaration of Trust

provides that it is subject to amendment from time to

time by an agreement in writing signed by the Board of

Trustees; and

WHEREAS, the Trustees desire to amend, continue

and restate this Trust Agreement and maintain the

Duluth-Superior, ILA Marine Association Pension Trust

to conform with the requirements of the Employee Retire-

ment Income Security Act of 1974 and any subsequent

amendments thereto and regulations promulgated pur-

suant to and any other federal or state law as may or

become applicable.

NOW, THEREFORE, in consideration of the promises

and in order to continue and provide for the maintenance

of the Duluth-Superior, ILA Marine Association Pension

Trust, hereinafter referred to as the “Trust”, the under-

signed Union Trustees and Employer Trustees declare

that they will receive and hold such contributions and

other money or property which may come inte the Trust

pursuant to the following powers and duties and for the

following uses, and none other, to-wit:

ARTICLE I.

DEFINITIONS

1.1 Act. The term “Act” as used herein shall mean the

Employee Retirement Income Security Act of 1974, any

A-3

“amendments as may from time to time be made and any

regulations promulgated pursuant to the provisions of

the said Act.

1.2 Administrator. “Administrator” means the

Trustees, collectively, of this Trust.

1.3 Collective Bargaining Agreement. Any collective

bargaining agreement now or hereafter in effect, includ-

ing any extensions, amendments and renewals that, pur-

suant to which payments are made by the Employer into

the Trust.

1.4 Employee. Any employee with respect to whose

employment payments are required to be made to the

Trust by an Employer pursuant to a Collective Bargaining

Agreement or pursuant to any written agreement here-

inafter described. The term “Employee” also includes

employees of “the Unions”, and employees of the Duluth-

Superior Marine Association General Cargo Workers,

Local No. 1366 and Local No. 1037 and International

Longshoremen’s Association Health and Welfare Fund.

1.5 Employer.

a. The term “Emplover” as used herein shall mean

any employer (1) who has a Collective Bargaining Agree-

ment with the Unions requiring periodic contributions to

be made to the Trust and who are or become parties to

this Agreement or (2) who are not parties to this Agree-

ment but who have persons in their employ coming

within the classifications represented by the Unions and

have collective bargaining agreements with the Unions

and who consent to be bound by the terms of this Trust

A-4

Agreement and are bound in writing to make contribu-

tions te the Trust with respect to Employees, or (3)

Employers who are not parties to this Agreement and do

not have a collective bargaining agreement in the Unions

but who on occasion use members of the Union and who

have agreed in writing to make contributions to the Trust

with respect to those employees.

b. The term “Employer” also includes a Union affili-

ated with “the Unions”, and the Duluth-Superior Marine

Association General Cargo Workers, Local No. 1366 and

Local No. 1037 and International Longshoremen’s Asso-

ciation Health and Welfare Fund, providing any such

organization shail first become contractually obligated to

make similar contributions on behalf of its employees in

accordance with the Trust, signs a Participation Agree-

ment, is accepted for participation by the Trustees in

accordance with the provisions of the Plan and makes

contributions to the Trust as required by the Plan. Neither

a Union affiliated with “the Unions”, nor the Duluth-

Superior Marine Association General Cargo Workers,

Local No. 1366 and Local No. 1037 and International

Longshoremen’s Association Health and Welfare Fund

becoming an Employer pursuant to this paragraph shall

become entitled to participate in the selection or replace-

ment of Union or Employer Trustees by virtue of being an

Employer hereunder.

c. If an Employer has more than one place of busi-

ness, the term “Employer” shall only apply to the place

or places of business covered by the Collective Bargain-

ing Agreement requiring contributions to the Health and

Welfare Fund.

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d. The term “Employer” includes the following

Employers and all other subsequent employers who fall

within the definition of an “Employer” as contained in this

Article I., Section 1.5: Ceres Stevedoring, Inc.; American

Grain Trimmers, Inc.; Guthrie Hubner, Inc.; Hanna Mining

Company, Agent; S.A. McLennan; Rogers Terminal and Ship-

ping Corporation; the Svensson Shipping Agency, Inc.;

Empire Stevedoring Company, Inc.; Federal Marine Termi-

nal, Inc.; Great Lakes Storage and Contracting Company,

Inc.; and North Central Terminal Operators, Inc.; and the

Duluth-Superior Marine Association General Cargo Workers,

Local No. 1366 and Local No. 1037 and International Long-

shoremen’s Association Health and Welfare Fund. Those

other employers who signed the original Agreement and

Declaration of Trust who are not described immediately

above are no longer parties to this restated Agreement and

Declaration of Trust.

1.6 Union. The term Union shall mean the General

Cargo Workers, Local No. 1366, Duluth, Minnesota and

affiliate of the International Longshoremen’s Association,

AFL-CIO, and General Cargo Workers, Local No. 1037,

Superior Wisconsin, an affiliate of the International Long-

shoremen’s Association, AFL-CIO.

1.7 Trust Agreement. The terms “Trust Agreement”,

“Trust” or “Restated Agreement and Declaration of

Trust” as used herein shall mean this instrument, includ-

ing any amendments or modifications which may from

time to time be made.

1.8 Pension Plan or Plan. “Pension Plan or Plan”

shall mean the Duluth-Superior, ILA Marine Association

Restated Pension Plan, as amended.

A-6

1.9 Administrative Manager. The individual, firm or

corporation employed by the Trustees to administer the

office or offices of the Trust Fund as set forth in Article

7.6 of this Trust Agreement.

1.10 Trustees. Trustees are those persons selected from

time to time by both the Employer and Union pursuant to

section 3.2 of Article III of this Agreement to administer

the Trust.

1.11 Contract or Group Insurance Contract. The term

“Contract” or “Group Insurance Contract” as used herein

means a group annuity policy issued by an insurance

company which provides for the accumulation of funds

and the purchase of annuities at a participant’s retirement

date.

ARTICLE II.

CONTRIBUTIONS

2.1 Contributions. Each participating Employer shall

pay to the Trustees, on or before the 15th day of each

month the contribution required to be made by the

Employer, such contributions to be in such amount as the

parties may by their collective bargaining agreement

determine from time to time between them. Such date or

payments may be adjusted by the Trustees as they may

determine pursuant to their rules of procedure.

2.2 New Employers. Employers, who are not signatory

to this Agreement but who have persons in their employ

coming within the classifications represented by the

A-7

Unions signators hereto and who have collective bargain-

ing agreements with such Unions, may become a partici-

pating employer under the terms of this Agreement, and

make contributions to the Trust, with the consent of the

Trustees, on the signing of a Participation Agreement

and/or a labor agreement, where applicable, providing

for participation in the Trust containing such terms as

required by the Trustees and on such basis as agreed

upen by such new contributing Employers and the

Trustees respecting the contributions to be made and the

coverages to be afforded to the employees covered.

ARTICLE III.

DESIGNATION OF TRUSTEES

3.1. Number of Trustees. The Trust shall be adminis-

tered by a Board of Trustees, two of whom shall be

chosen by the Employers and two of whom shall be

chosen by the Union.

3.2 Selection of Trustees. The two Employer Trustees

shall be selected by the Employers, and two Union

Trustees shall be selected by the Unions. Both the

Employers and the Unions may also select up to two (2)

alternate Trustees for each group.

The term “Trustees” as used herein shall include an

Alternate Trustee when he is acting in the place of a

Trustee.

The Trustees shall consent to their appointment as

Trustees and accept such appointment in writing.

3.3 Identity of Trustees. As of the effective date of this

Restated Trust Agreement, the Trustees are as follows:

A-8

Employer Trustees Union Trustees

; :

2. 2.

3.4 Tenure. Each Trustee shall continue to serve dur-

ing the existence of the Trust until his death, incapacity,

resignation or removal.

3.5 Resignation or Removal of Trustees. A Trustee may

resign at any time by giving a ten (10) day notice in

writing to the remaining Trustees, which notice shall state

the effective date of the resignation, when it shall take

effect. In the event of the death, incapacity, removal or

resignation of a Trustee, a successor Trustee shall be

appointed within thirty (30) days of the effective date of

the vacancy as follows: At any time for good cause, after

notice and hearing with the Trustee present, a Union

Trustee may be removed or appointed by a written

instrument signed by the Union. Similarly, any Employer

Trustee may be removed or appointed at any time by a

written instrument signed by not less than three of those

Employers employing a majority of the Employees cov-

ered by this Trust Agreement. In such event of party

removing a Trustee shall give the other Trustees five (5)

days written notice prior to the effective date of such

removal of such action and shall designate in such notice

the successor Trustee. The Trustees may require a special

accounting before a deceased, retired, or removed Trustee

is relieved of his responsibility as a Trustee.

In no event shall this Trust or the operation of the

Board of Trustees be impaired by the death, incapacity,

resignation or removal of a Trustee, and in the event of a

vacancy on the Board of Trustees, the remaining Trustees

A-9

shall have full power to act until the designation of a

successor Trustee.

As long as a vacancy exists on the Board of Trustees,

or in the temporary absence of a Trustee, any alternate

Trustee designated by the Employer may act in the place

and stead of an absent or deceased Trustee designated by

the Employer, and any alternate Trustee designated by

the Union may act in the place and stead of an absent or

deceased Trustee designated by the Union, and any alter-

nate Trustee shall be vested with all the property, rights,

power and duties of a Trustee.

3.6 Successor Trustee. In the event of the death, inca-

pacity, removal or resignation of a Trustee, a Successor

Trustee shall be appointed within thirty (30) days of the

effective date of the vacancy by a written instrument

signed by the chief executive officer of the Union, if a

Successor Union Trustee, and by a written instrument

signed by a majority of the Employers party to this

Agreement or by Employers employing a majority of

employees covered by this Agreement. In the event of

conflicting action, action by Employers employing a

majority of the covered employees shall control. Written

notice of the appointment shall be served upon the other

Trustees with said time.

Any Successor Trustee shall immediately upon his

designation as a Successor Trustee and his acceptance

thereof in writing, as provided in Section 3.7, become

vested with all the property, rights, power and duties of a

Trustee hereunder with like effect as if originally named a

Trustee without necessity of any formal conveyance of

other instrument of title. No Successor Trustee shall in

A-10

any way be liable or responsible for any act or omission

in the administration of the Trust prior to the date any

such Trustee becomes a Trustee.

3.7 Acceptance of the Trust by Trustees. A Trustee shall

execute a written acceptance in a form satisfactory to the

Trustees and consistent with the Act and thereby shall be

deemed to have accepted the Trust created and estab-

lished by this Trust Agreement and to have consented to

act as Trustee and to have agreed to administer the Trust

Fund as provided herein. Such written acceptance shall

be filed with the Trust’s Administrative Manager, who

shall notify the remaining Trustees of the Receipt of such

acceptance.

3.8 Limitation of Liability of Trustees. No Trustee shall

be liable or responsible for his own acts or for any acts or

defaults of any other fiduciary or party in interest or any

other person except in accordance with applicable federal

law. The Trustee shall not be liable for the acts or omis-

sions of any investment manager, attorney, agent or assis-

tant employed by them in pursuance of this Agreement,

provided such investment manager, attorney, agent or

assistant was selected pursuant to this Trust Agreement.

ARTICLE IV.

NAME AND PRINCIPAL OFFICE OF TRUST

4.1 The Trustees shall be known in their joint capacity

as the “Trustees of the Duluth-Superior, ILA Marine

Association Pension Trust.

4.2 The principal office of said Trust shall be located

at 2904 West Third Street, in the City of Duluth, St. Louis

A-11

County, Minnesota 55806, unless otherwise designated by

the Trustees.

ARTICLE V.

ADMINISTRATION OF TRUST FUND

5.1 Meetings. The Trustees shall meet at least once

each fiscal year at the principal office of the Trust and at

such other times at the Trustees shall deem necessary. The

Chairman shall set the date, time and call the annual

meeting, and, if he fails within the year to do so, the

Secretary shall do so. The Chairman or Secretary or any

two or more Trustees may call a special meeting of the

Board of Trustees. Any annual or special meeting shall be

called by giving the Trustees twenty (20) days’ notice if

an annual meeting or two (2) days’ notice in writing if a

special meeting, stating the time and place of such meet-

ing. The attendance of a Trustee at a meeting shall consti-

tute a waiver of notice of such meeting, except where a

Trustee attends a meeting, and objects thereat to the

transaction of any business because the meeting is not

lawfully called or convened. Notice of substance of all

matters to be acted upon at any meeting shall be con-

tained in the notice of the meeting unless all the Trustees

shall be present at the meeting. A quorum of the Trustees

for the transaction of business except as otherwise pro-

vided herein shall consist of one Trustee appointed by the

Union and one Trustee appointed by the Employers. !t is

the intention of the parties that at any time any vote or

other action is taken by the Board of Trustees the number

of Union Trustees and Employers Trustees qualified to

act, vote and constitute a quorum shall always be equal.

A-12

5.2 Voting. All actions by and decisions of the Board

of Trustees at a meeting at which a quorum is present

shall be by the affirmative vote of a majority of the total

number of the Trustees authorized. Each Trustee shall

have one (1) vote. An alternate Trustee cannot vote except

if acting in behalf of an absent Trustee.

5.3 Organization and Operation of Trustees. At the com-

mencement of each fiscal year of the Trust, the Trustees

shall select from among them a Chairman and a Secretary

who shall each serve for a period of one (1) year. One

officer shall be a Union Trustee and one officer shall be an

Employer Trustee. The Secretary shall cause to have kept

an accurate record of the proceedings at all meetings of

the Trustees and of any action taken. The minutes of all

meetings and a record of action take shall be transcribed

and a copy retained by the Secretary as a trust record and

a copy distributed to each Trustee at the cost of the Trust.

5.4 Procedure in Event of Deadlock of Trustees. In the

event that a majority of Trustees are unable to agree upon

any matter in connection with the administration of this

Trust, then the Trustees shall select a neutral person as an

impartial arbitrator who is willing to act in the deter-

mination of such dispute. In the event a majority of the

Trustees fail to agree upon the selection of an impartial

arbitrator, then any one or more of said Trustees may

petition the U.S. District Court, District of Minnesota, to

make the appointment of an impartial umpire to decide

such dispute. The reasonable compensation of such

umpire and the costs and expenses (including, without

limitation, attorneys’ and reporter fees) incidental to any

proceedings instituted to break a deadlock shall be paid

by the Trust. Proceedings hereunder shall be conducted

A-13

pursuant to Minnesota Statutes, Chapter 572. The impar-

tial arbitrator shall have no power to alter, delete, amend,

add to, take away from or disregard any of the provisions

of this Agreement and Declaration of Trust. The decision

of the impartial arbitrator shall be final and binding upon

the Trustees, all parties hereto, the employees and their

beneficiaries, and upon all persons involved in any way

with the Trust or claiming any benefit thereunder.

Differences arising as to the interpretation or applica-

tion of the provisions of this Trust Agreement or relating

to Employee benefits provided for hereunder shall not be

subject to the grievance or arbitration procedure estab-

lished in any collective bargaining agreement.

5.5 Office of the Trust. The Trustees shall establish an

office in Duluth, Minnesota, the address being 2902 West

Third Street, Duluth, Minnesota 55806 for the transaction

of the business of the Trust. At such office and at such

other places as may be required by law there shall be

maintained the books and records pertaining to the Trust

and its administration.

5.6 Removal of Trustee (Violation of Act). The Board of

Trustees shall initiate action to cause the removal of any

fellow member Trustee who may be serving as a Trustee

in violation of the Act. The vacancy or vacancies caused

by such a removal shall be filled in accordance with

Section 3.5 of this Agreement.

ARTICLE VI

POWERS AND DUTIES OF TRUSTEES

6.1 Conduct of Trust Business. The Trustees shall have

general supervision of the operation of this Trust and

A-14

shall conduct the business and activities of the Trust in

accordance with this Trust Agreement and applicable law.

The Trustees shall hold, manage and protect the Trust and

collect the income therefrom and contributions thereto.

The Trustees may, in the course of conducting the busi-

ness of the Trust, execute all instruments in the name of

the Duluth-Superior, ILA Marine Association Pension

Trust, which instruments shall be signed by at least one

Employer and one Union Trustee; provided, however, any

one Trustee may execute legal documents to commence

and process lawsuits to enforce trust collections on behalf

of the Trustees.

6.2 Employers, Expert Assistance and Delegation. The

Trustees shall have the power and authority to use and

apply the Trust for the following purposes:

a. To pay or provide for the payment of all reason-

able and necessary expenses of collecting Employer con-

tributions and administering the affairs of this Trust,

including but not limited to, the employment of such

administrative, legal, expert, investment, advisory, cleri-

cal or other assistance, the purchase or lease of such

premises, materials, supplies and equipment and the per-

formance of such other acts as the Trustees, in their sole

discretion, find necessary or appropriate in the perfor-

mance of their duties.

-

6.3 Investments.

a. The Trustees shall have the power and authority,

in their sole discretion, to invest and reinvest such funds

as are not necessary for current expenditures or liquid

reserves, as they may from time to time determine, in

A-15

such investments as are legal investments under applica-

ble state and federal law relating to the investment of the

employee Trust, not limited, however, by any limitation

restricting investments in common stocks to a percentage

of the Trust or to a percentage of the total market value of

the Trust. The Trustees may sell, exchange or otherwise

dispose of such investments at any time and from time to

time. The Trustees shall also have power and authority

(in addition to, and not in limitation of, common law and

Statutory authority) to invest in any stocks, bonds or

other property, real or personal, including improved or

unimproved real estate and equity interests in real estate,

where such an investment appears to the Trustees, in

their discretion and consistent with their fiduciary obliga-

tions, to be in the best interest of the Trust and its

Participants and Beneficiaries, judged by then prevailing

business conditions and standards. The Trustees shall

have the authority, ‘n respect to any stocks, bonds or

other property, real or personal, held by them as Trustees,

to exercise all such rights, power and privileges as might

be lawfully exercised by any person owning similar

stocks, bonds er other property in his own right.

b. Delegation and Allocation of Investment Functions.

(1) The Trustees are authorized, in their discre-

tion, by resolution, to allocate to a committee of Trustees

such duties and responsibilities to invest and reinvest

such Trust assets as they shall specify in such allocation.

(2) The Trustees shall have the power and

authority to appoint one or more investment managers

(as defined in Section 3(38) of the Act) who shall be

responsible for the management, acquisition, disposition,

A-16

investing and reinvesting of such of the assets of the

Trust as the Trustees shall specify. Any such appointment

may be terminated by the Trustees upon thirty (30) days’

written notice. The fees of such investment manager, and

its expenses to the extent permitted by law, shall be paid

out of the Trust.

(3) In connection with any allocation or delega-

tion of investment functions under paragraphs (1) and (2)

of this Subsection b, the Trustees shali, from time to time,

adopt appropriate investment policies or guidelines.

6.4 Deposits and Disbursements. All Trust funds not

invested shall be deposited by the Trustees in such depos-

itory or depositories as the Trustees shall from time to

time select, and any such deposit or deposits, or disburse-

ments therefrom, shall be made in the name of the Trust

in the manner designated by the Trustees and upon the

signature(s) of the persons designated and authorized by

the Trustees or by the Investment Manager appointed in

accordance with Section 3b(2) of this Article.

6.5 Allocation and Delegation of Fiduciary Respon-

sibilities. The Trustees may, by resolution or bylaw or by

provisions of this Trust Agreement, allocate fiduciary

responsibilities and various administrative duties to com-

mittees or subcommittees of the Board of Trustees, and

they may delegate such responsibilities and duties to

other individuals, as they may deem appropriate or nec-

essary in their sole discretion and consistent with the Act.

The Trustees shall not be deemed responsible for any

errors or omissions of persons to whom such respon-

sibilities or duties have been properly allocated or dele-

gated.

A-17

6.6 Administrative Manager. The Trustees may employ

cr contract for the services of an individual, firm or

corporation, to be known as “Administrative Manager”,

who shall, under the direction of the Trustees or under

the direction of any appropriate committee of the

Trustees, administer the office or offices of the Trust and

of the Trustees, coordinate and administer the account-

ing, bookkeeping, and clerical services, provide for the

coordination of actuarial services furnished by the con-

sulting actuary, prepare (in cooperation where appropri-

ate with the consulting actuary, and independent auditor)

all reports and other documents to be prepared, filed or

disseminated by or on behalf of the Trust in accordance

with law, assist in the collection of contributions required

to be paid to the Trust by Employers and perform such

other duties and furnish such other services as may be

assigned, delegated or directed or as may be contracted

by or on behalf of the Trustees. The Administrative Man-

ager shall be the custodian on behalf of the Trustees of all

documents and other records of the Trustees and of the

Trust.

6.7 Bylaws, Rules and Regulations.

a. The Trustees are hereby empowered and autho-

rized to adopt bylaws and to promulgate any and all

necessary rules and regulations which they deem neces-

sary or desirable to facilitate the proper administration of

the Trust, provided the same are not inconsistent with the

terms of this Trust Agreements. All bylaws, rules and

regulations adopted by action of the Trustees shall be

binding upon all parties hereto, all parties dealing with

the Trust and all persons claiming and benefits here-

under.

A-18

b. The Trustees shall, by the affirmative vote of at

least two (2) Employer Trustee votes and two (2) Union

Trustee votes, adopt the Plan and bylaws, rules or regula-

tions in respect to the Plan or eligibility of Participants

and Beneficiaries for the benefits herein provided, which

Plan, bylaws, rules or regulations may, by the above-

specified vote, be changed and modified from time to

time in such manner and to such extent as the Trustees

may deem expedient and necessary in the proper admin-

istration of the Trust.

c. No bylaw, regulation, rule, action or determina-

tion made or adopted by the Trustees, nor any decision or

determination made by any impartial umpire appointed

pursuant to Section 6.4 of this Agreement, shall in any

manner conflict or be inconsistent (1) with any provision

of the applicable current collective bargaining agreement

in effect or, which may be made, between the Employers

and the Union, (2) with this Trust Agreement, and (3)

with any applicable federal, state or local law.

6.8 Additional Authority. The Trustees are hereby

empowered, in addition to such other powers as are set

forth herein or conferred by law:

a. To enter into any and all contracts and agree-

ments for carrying out the terms of this Trust Agreement

and for the administration of the Trust and to do all acts

as they, in their discretion, may deem necessary or advis-

able, and such contracts and agreements and acts shall be

binding and conclusive on the parties hereto and on the

Participants involved, except as may be limited by law;

b. To keep property and securities registered in the

names of the Trustees or of the Trust or in the name of

A-19

any other individual or entity nominee or nominees duly

designated by the Trustees with disclosure of any fiduci-

ary relationship;

c. To establish and accumulate as part of the Trust

such reasonable reserve funds as the Trustees, in their

sole discretion, deem necessary or desirable to carry out

the purposes of such Trust;

d. To pay out of the Trust all real and personal

property taxes, income taxes and other taxes of any and

all kinds levied or assessed under existing, or future laws

or upon or in respect to the Trust or any money, property

or securities forming a part thereof;

e. To do all acts, whether or not expressly autho-

rized herein, which the Trustees may deem necessary or

proper for the protection of the property held hereunder;

f. To sell, exchange, lease, convey, mortgage or dis-

pose of any property, whether real or personal, at any

time forming a part of the Trust upon such terms as they

may deem proper and to execute and deliver any and all

instruments of conveyance, lease, mortgage and transfer

in connection therewith; and

g. To establish and carry out a funding policy and

method consistent with the objectives of this Trust Agree-

ment and the Act.

6.9 Bonds. The Trustees shall obtain from an autho-

rized surety company such bonds as may be required by

law, covering such persons and in such amounts (but not

less than required by law) as the Trustees, in their discre-

tion, may determine. [The cost of premiums for such

bonds shall be an expense of the Trust.]

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6.10 Insurance. The Trustees may, in their discretion,

obtain and maintain policies of insurance, to the extent

permitted by law, to insure themselves, the Trust as such,

as well as employees or agents of the Trustees and of the

Trust, while engaged in business and related activities for

and on behalf of the Trust (1) with respect to liability to

others as a result of acts, errors or omissions of such

Trustee or Trustees, employees or agents, respectively,

provided such insurance policy shall provide recourse by

the insurer against Trustees as may be required by law,

and (2) with respect to injuries received or property dam-

age suffered by them. The cost of the premiums for such

policies of insurance except for recourse insurance shall

be an expense of the Trust.

6.11 Information to Participants and Beneficiaries. The

Trustees will provide Participants and Beneficiaries such

information as may be required by law.

6.12 Accountants and Actuaries. The Trustees shall

engage one or more independent qualified public accoun-

tants and one or more enrolled actuaries to perform all

services as may be required by applicable law and such

other services as the Trustees may deem necessary.

6.13 Compensation. The Trustees and their successors

shall receive reasonable compensation for services ren-

dered, and shall be reimbursed for expenses properly and

actually incurred in the performance of their duties with

the plan; provided, however, that no Trustee who receives

full-time pay from an employer or an association of

employers, whose employees are participants in the

Trust, or from an employee organization whose members

are participants in such Trust shall receive compensation

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from such Trust, except for reimbursement of expenses

properly and actually incurred.

6.14 Reports. All reports required by law to be

signed by one or more Trustees shall be signed by all of

the Trustees, provided that all of the Trustees may

appoint, in writing and by resolution adopted and spread

on the minutes, one or more of their members to sign

such report on behalf of the Trustees.

6.15 Records of Trustee Transactions. The Trustees

shall keep true and accurate books of account and a

record of all of their transactions and meetings (including

actions taken at such meetings and by informal action of

the Trustees), which records and books shall be audited at

least annually by a certified public accountant. A copy of

each audit report shall be furnished both to the Trustees

and shall be available for inspection by interested per-

sons at the principal office of the Trustees.

6.16 Construction and Determinations by Trustees.

Subject to the stated purposes of the Trust and the provi-

sions of this Agreement, the Trustees shall have full and

exclusive authority to determine all questions of eligi-

bility, amount of benefits payable under the Pension

Trust, methods of providing or arranging for benefits and

all other related matters. They shall have full power to

construe the provisions of this Agreement, the terms used

herein, and the Pension Trust, bylaws and regulations

issued hereunder. Any such determination and any such

construction adopted by the Trustees in good faith shall

be binding upon all of the parties hereto and the

employees, Participants and Beneficiaries hereof to the

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extent permitted by law. No matter respecting the forego-

ing or any difference arising thereunder or any matter

involved in or arising under this Trust Agreement shall

be subject to the grievance or arbitration procedure estab-

lished in any collective bargaining agreement between

the Employer and the Union, provided, however, that this

clause shall not affect the rights and liabilities of any of

the parties under any of such collective bargaining agree-

ments.

6.17 Liability.

a. Every act done, power exercised or obligation

assumed by the Trustees pursuant to the provisions of

this Agreement or in carrying out this Trust shall be done,

exercised or assumed, as the case may be, by the Trustees

in their capacity as Trustees and not otherwise, and every

person, corporation, partnership, association or firm con-

tracting or otherwise dealing with the Trustees shall look

only to the Trust for payment under such contract or any

obligation arising under this Agreement, in whole or in

part.

b. Except as provided by law, no Trustee shall be

liable for any act, ommission or failure to act or for any

mistake of fact or law or error of judgment or for loss or

depreciation in the value of the Trust occurring by reason

thereof, nor shall any Trustee be liable for the acts or

defaults of any other Trustee under this Trust Agreement

or for any acts or defaults of any officer, agent, attorney

or employee in whose appointment the Trustee shall have

exercised reasonable care and diligence.

6.18 Reliance on Written Instruments. Each of the

Trustees shall be protected in acting upon any paper or

-

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document believed by him to be genuine and to have

been made, executed or delivered by the proper parties

purporting to have made, executed or delivered the same

and shall be protected in relying and acting upon the

opinion of legal counsel in connection with any matter

pertaining to the administration or execution of the Plan.

The Trustees may rely upon an instrument in writing

purporting to have been signed by, or upon telegrams

purporting to have been transmitted by, any Trustee,

Employer or the Unions as conclusive evidence of the fact

that the said Trustee, Employer or the Unions have duly

taken the action stated to have been taken in such instru-

ment or telegram.

6.19 Reliance by Others. No party dealing with the

Trustees shall be obligated (1) to see to the application to

the stated Trust purposes of any funds or property of the

Trust or (2) to see that the terms of this Trust Agreement

have been complied with or (3) to inquire into the neces-

sity or expediency of any act of the Trustees. Every

instrument executed by the Trustees shall be conclusive

evidence in favor of every person relying thereon (1) that

at the time of the execution of said instrument the Trust

was in full force and effect, (2) that the instrument was

executed in accordance with the terms and conditions of

this Trust Agreement, and (3) that the Trustees were duly

authorized and empowered to execute the instrument.

6.20 Discharge of Liability. The receipt of the Trustees

for any money or property or checks (after such checks

are honored at the bank and paid to the Trust) shall

discharge the person or persons paying or transferring

the same.

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6.21 Muitiple Benefit Schedules. The Trustees shall be

authorized to accept contributions at more than one rate

and they shall provide in the Pension Trust for levels of

benefits appropriate for each such rate of contribution.

However, it is the intention of the parties hereto that

contributing Employers hereto shall, to the extent feas-

ible, negotiate identical contribution rates.

ARTICLE VII.

CONTRIBUTIONS AND COLLECTIONS

7.1. Employer Contributions. Each Employer shall

make prompt contributions or payments to the Trust in

such amount and under the terms as are provided for in

the applicable collective bargaining agreement in effect

from time to time between the Employer may also be

required to make contributions in such amount and

under such terms as such Employer may be obligated, in

writing, to make, provided that such contributions shall

be subject to acceptance by the Trustees. The employer

agrees that such contributions shall constitute an absolute

obligation to the Trust, and such obligation shall not be

subject to set-off or counterclaim which the Employer

may have for any liability of the Union or of an

Employee.

7.2 Transmission of Reports and Contributions. The

Trustees shall establish a uniform system among the

Employers for the timely transmission of reports and

contributions and shall also establish a periodic date on

which such reports and contributions shall be due. The

Trustees shall immediately notify any Employer of a

delinquency, mistake or discrepancy in such Employer's

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report or contribution. The Trustees may at any time have

an audit made by an accountant or any representative or

employee of the Trust of the payroll and wage records of

any Employer in connection with the said contributions

and/or reports.

7.3. Trustees Sanctions.

a. Collection and Enforcement of Payments. The

Trustees, or such committee of the Trustees as the Board

of Trustees shall appoint, or the Administrative Manager

if one has been appointed and when directed by such

committee or by the Board of Trustees, shall have the

power to demand, collect and receive Employer pay-

ments and all other money and property to which the

Trustees may be entitled and shall hold the same until

applied to the purposes provided in this Trust Agree-

ment. They shall take such steps, including the institution

and prosecution of, or the intervention in, such legal or

administrative proceedings as the Trustees, in their sole

discretion, determine to be in the best interest of the Trust

for the purpose of collecting such payments, money and

property, without prejudice, however, to the rights of the

Union to take whatever steps it deems necessary and

wishes to undertake for such purposes.

b. Contributions to the Trust shall be due and pay-

able fifteen (15) days following the end of the preceding

month. The failure of an Employer to pay all amounts

due within thirty (30) days following the due date,

whether willful or otherwise, shall subject the delinquent

Employer to a payment of liquidated damages of an

additional ten percent (10%) of the amount due plus all

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costs and reasonable attorneys’ fees incurred in connec-

tion therewith. Payments and liquidated damages unpaid

by the first day of the following month shall be subject to

an interest charge of eight percent (8%) per annum on the

payments and liquidated damages.

If legal action is taken to recover the amount due the

Trust, the delinquent Empioyer shall also be required to

pay all court costs, including reasonable attorneys’ fees.

In addition to the other provisions as herein set forth, any

Employer who is delinquent in his payment to the Trust

shall make such Employer primarily liable and respons-

ible to its employees or employees’ estates for any claim

for benefits accruing to such employees or employees’

estates which would otherwise be due such employees or

employees’ estates under the administration of this Trust.

The payment of any and all such claims shall not operate

to relieve such Employer from his liability to make the

payments due the Trust, including the liquidated damage

payment.

Any Employer who on more than one occasion dur-

ing any one year becomes delinquent in its payment to

the Trust shall be required to post a bond with the

Trustees in an amount equivalent to the total contribu-

tions which it was obligated to make during the preced-

ing calendar year.

Nonpayment by any Employer of any contribution or

other monies owed to the Trust shall not relieve any other

Employer from his or its obligation to make required

payments to the Trust.

c. Each Employer shall promptly furnish to the

Trustees, on demand, the names of employees, their

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social security numbers, the hours worked by each

employee and such other information as the Trustees may

reasonably require in connection with the administration

of the Trust and for no other purposes. The Trustees may

by their Administrative Manager or Certified Public

Accountant examine the pertinent employment and pay-

roll records of each Employer at the Employer’s place of

business whenever such examination is deemed neces-

sary or advisable by majority vote of the Trustees in

connection with the proper administration of the Trust.

The Union shall, upon the request of the Trustees,

promptly furnish information in respect to an employee's

employment status.

ARTICLE VIII.

BENEFICIAL RIGHTS

8.1. No Rights, Title or Interest of Employers and Union.

No Employer or Union shall have any right, title or

interest in or to the Trust or any part thereof except that,

upon either the written request of the Employer or Union,

the Trustees shall return to the Employer or Union the

amount of the Employer’s or Union’s contribution made

by the Employer or Union by good faith mistake of fact or

the amount of the Employer’s or Union’s contribution

disallowed as a deduction under Code Section 404.

The Trustees shall not return any portion of the

Employer’s or Union’s contribution made pursuant to

Article II more than one (1) year after:

(a) The Employer or the Union made the contribu-

tion by good faith mistake of fact; or

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(b) The disallowance of the contribution as a deduc-

tion, and then, only to the extent of the disallowance.

Except as herein before provided, no Employer shall

directly or indirectly, receive any refund on contributions

made by it to the Trust, or directly or indirectly partici-

pate in the disposition of the Trustor receive any benefits

from the Trust. No employee shall have any individual

right, title, interest, or claim against any Employer,

Employer’s contribution, or the Trust, except as may be

expressly provided for in the Plan and in this Agreement

and Declaration of Trust.

8.2 Limitations Upon Beneficial Rights of Employees.

No employee, Participant, or any Beneficiary of a Partici-

pant shall have any right, title or interest in or to the

Trust or any part thereof, provided, however, that any

Participant who shall be covered by the Plan, or his

Beneficiaries under such Plan, shall be entitled to the

benefits in the forms and amounts and subject to the

terms and conditions of this Trust; provided, further,

however, the benefits shall be free from the interference

and control of any creditor, and no benefits shall be

subject to any assignment or other anticipation or subject

to seizure or sale under any legal, equitable or any other

process, and, in the event that any claim or, benefit shall,

because of any debt incurred by or resulting from any

other claim or liability against any Participant or Benefici-

ary, by reason of any sale, assignment, transfer,

encumbrance, anticipation or other disposition made or

attempted by said Participant or Beneficiary, or by reason

of any seizure or sale or attempted sale under any legal,

equitable or other process, or in any suit or proceeding,

become payable, or be liable to become payable, to any

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person other than the Participant or Beneficiary for

whom the same is intended, as provided herein and in

the Trust.

ARTICLE IX.

TERMINATION OF TRUST

9.1 Conditions of Termination. This Trust Agreement

shall cease and terminate upon the happening of any one

or more of the following events:

a. In the event the Trust shall, in the opinion of the

Trustees, be inadequate to carry out the intent and pur-

pose of this Trust Agreement or be inadequate to meet the

payments due or to become due under this Trust Agree-

ment and under the plan of benefits to Participants and

Beneficiaries already drawing benefits;

b. In the event there are no individuals living who

can qualify as employees hereunder;

c. In the event of termination by action of the Union

and the Employers;

d. In the event of termination as may be otherwise

provided by law.

9.2 Procedures in Event of Termination. In the event of

termination, the Trustees shall:

a. Make provisions out of the Trust for the payment

of expenses incurred up to the date of termination of the

Trust and the expenses incidental to such termination;

b. Arrange for a final audit and report of their

transactions and accounts for the purpose of termination

of their Trusteeship;

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c. Apply the Trust to pay any and all (or provide for

the payment of) benefits accrued prior to the date of

termination in the manner and order of preference set

forth in provisions of the Plan then in effect;

d. Give any notices and prepare and file any reports

which may be required by law.

ARTICLE X.

MISCELLANEOUS

10.1 Law Applicable. This Trust is created and

accepted in the State of Minnesota, and all questions

pertaining to the validity or construction of this Trust

Agreement and of the acts and transactions of the parties

hereto shall be determined in accordance with the laws of

the State of Minnesota, except as to matters governed by

federal law.

10.2 Refund of Contributions. In no event shall any

Employer, directly or indirectly, receive any refund on

contributions made by them to the Trust (except to the

extent permitted by law), nor shall an Employer directly

or indirectly participate in the disposition of the Trust.

Upon payment of contributions to the Trustees, all

responsibilities of the Employer for each contribution

shall cease, and the Employer shall have no respon-

sibilities for the acts of the Trustees, nor shall an

employer be obliged to see to the application of any

funds or property of the Trust or to see that the terms of

the Trust have been complied with.

10.3 Judicial Settlements and Action by Trustees. The

Trustees shall be entitled, at any time, to have a judicial

A-31

settlement of their accounts and to seek judicial protec-

tion by any action or proceeding they determine neces-

sary and, further, to obtain a judicial determination or

declaratory judgment as to any question or construction

of this Trust Agreement or for instructions as to any

action thereunder and, further, as to any questions relat-

ing to the discharge of their duties and obligations under,

or in connection with the administration of this Trust and

as to the distribution of assets belonging to the Trust. Any

such determination, decision or judgment shall be bind-

ing upon all parties to, or claiming under, this Trust

Agreement.

10.4 Withholding Payment. In the event any question

or dispute shall arise as to the proper person or persons

to whom any payments shall be made hereunder, the

Trustees may withhold such payment until there shall

have been made an adjudication of such question or

dispute which, in the Trustees’ sole judgment, is satisfac-

tory to them or until the Trustees shall have been fully

protected against loss by means of such indemnification

agreement or bond as they, in their sole judgment, deter-

mine to be adequate.

10.5 Gender. Whenever any words are used in this

Trust Agreement in the masculine gender, they shall also

be construed to include the feminine or neuter gender in

all situations where they would so apply; whenever any

words are used in the singular, they shail also be con-

strued to include the plural in all situations where they

would so apply, and wherever any words are used in the

plural they shall also be construed to include the singular.

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10.6 Amendment of Trust Agreement.

a. The provisions of this Trust Agreement may be

amended at any time by either of the following methods:

1. An amendment may be proposed by any Trustee

or any signatory in this Agreement. A majority of the

Trustees voting in accordance with the provisions of Sec-

tion 6.2 shall first concur in the amendment and thereaf-

ter shall submit the same in writing to the Union and the

Employers signatory to the original Trust Agreement.

Within thirty (30) days after the date of mailing of said

amendment, the Union or such Employers signatories

may present in writing to the Trustees objections thereto.

The amendment shall not become effective if (a) the

Union objects to the amendment, or (b) a majority of such

Employers signatories hereto or of such Employers

employing a majority of the employees covered by this

Trust Agreement object to the amendment. If no objec-

tions are made, or if the objections are insufficient in

number pursuant to the provisions of this Section, then

the amendment shall become effective as of the effective

date set forth therein.

2. An amendment may be proposed by any Trustee

and may be adopted by the unanimous vote of the Full

Board of Trustees.

b. No amendment shall be adopted which alters the

basic purpose of this Trust Agreement or of the Plan;

conflicts with any applicable law or government regula-

tion; causes the use or diversion of any part of the Trust

for purposes other than those authorized herein; or so

amend this Trust Agreement that there shall not be an

equal number of Employer Trustee votes and of Union

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Trustee votes in the administration of the Trust. An

amendment may have retroactive effect, if deemed neces-

sary by the Trustees.

10.7. Article and Section Titles. The Article and Sec-

tion titles are included solely for convenience and shall in

no event be construed to affect or modify any part of the

provisions of this Trust Agreement or be construed as

part thereof.

10.8 Counterparts. This Trust Agreement may be exe-

cuted in any number of counterparts, each of which shall

be deemed an original, but all of which shall constitute

one and the same agreement.

IN WITNESS WHEREOF, the Union Trustees and

Employer Trustees have caused this Restated Agreement

and Declaration of Trust to be executed this 13th day of

December, 1979.

In the presence of: EMPLOYER TRUSTEES:

/s/ Mllegible /s/ Illegible

/s/ Fred Beatty /s/ Illegible

UNION TRUSTEES:

/s/ Mlegible ‘/s/ IMllegible

/s/ Fred Beatty

CESES TERMINAL, INC.

BY /s/ Illegible

AMERICAN GRAIN TRIMMERS, INC.

BY /s/ Illegible

A-34

GUTHRIE-HUNTER, INC.

BY /s/ Illegible

HANNA MINING COMPANY, ASSOC.

BY /s/ Illegible

S. A. MCLKHWAN

BY /s/ Illegible

ROCKES TERMINAL & SHIPPING CORPORATION

BY /s/ Illegible

THE SVENSON SHIPPING AGENCY

BY /s/ Illegible

EMPIRE STEVEDORING COMPANY, INC.-

BY /s/ Illegible

FEDERAL MARINE TERMINALS, INC.

BY /s/ Illegible

GREAT LAKES STORAGE & CONTRACTING COM-

PANY, INC.

BY /s/ Illegible

NORTH CENTRAL TERMINAL OPERATIONS, INC.

BY /s/ Illegible

GENERAL CARGO WORKERS, LOCAL NO. 1366

BY /s/ Illegibie

A-35

GENERAL CARGO WORKERS, LOCAL NO. 1037

BY /s/ Illegible

GREAT LAKES ASSOCIATES, INC.

BY /s/ Ilegible