# Petition — Miles v. New York State Teamsters Conference Pension & Retirement Fund Employee Pension Benefit Plan

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1983
- **Citation:** 464 U.S. 829

## Text

ee Caen eee

te. | SUM 27 1983

IN THE

Supreme Court of the United States

October Term, 1982

HAROLD MILES, EUGENE DARLAK, TIMOTHY MORIARTY,
JAMES STUERMER and EDWARD ZASTROW,
Petitioners,
vs.

THE NEW YORK STATE TEAMSTERS CONFERENCE
PENSION AND RETIREMENT FUND EMPLOYEE
PENSION BENEFIT PLAN,
Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

IRVING M. SHUMAN, ESQ.
2600 Main Place Tower
Buffalo, New York 14202

Counsel for Petitioners

Gross, SHUMAN, BRIZDLE,
Laus & GILFILLAN, P.C.
2600 Main Place Tower

I

[
4

— ae

i.
Questions Presented for Review

1. Is a determination of the Board of Trustees of a
multi-employer/union pension fund arbitrary and
capricious where the Trustees fail to provide
fundamental procedural rights to the affected employees,
base their decision on incorrect factual assumptions
(despite efforts by one of the Trustees to explain this
error to the others) and fail to notify the affected
employees of the determination at a time when the same
could have been acted upon by the employees?

2. Should an Appellate Court assume or guess at
what action Trustees would have taken based upon
correct factual assumptions, where the Trustees acted
upon incorrect factual assumptions, or should the matter
be remanded to the Trustees for further proceedings?

ii.

Parties to the Proceeding in
the Court Below
Plaintiffs:
HAROLD MILES
EUGENE DARLAK
TIMOTHY MORIARTY
JAMES STUERMER
EDWARD ZASTROW

Defendart<

THE NEW YORK STATE TEAMSTERS
CONFERENCE PENSION AND RETIREMENT
FUND EMPLOYEE PENSION BENEFIT PLAN

ERVIN WALKER

STANLEY CLAYTON

TABLE OF CONTENTS.

Page
Questions Presented for Review.................. i
Parties to the Proceeding in the Court Below....... ii
ee ad at os sw ive ace ev aaws.Cun iii
Ta GE AMOR 5 Soo aay cbii'e ba SE SS iii
INS ine win Spec cecntcctsemesvanespal 2
SE Lait. Ph GU G 004% » (Ee AYRE OC eRE 2
Statutory ID ain ein Ck 5 SRDS 0 ADO SRS OO EER On 2
Statement of the Case............... cece eee eees 3
NEG V's o di epce Kad ewe hers cueeate eee’ 7
EE Stak; he is ak obs he's ne chtetaaweee’ 11
I oc tian Will oth n hp cu gah ¥ 0 aah ope en ee's la-82a

TABLE OF AUTHORITIES.

Kosty v. Lewis, 319 F.2d 744 (DC Cir.,

Maggerd v. O’Connell, 671 F.2d 568 (DC Cir., 1982). 8

Paris v. Profit Sharing Plan, Etc., 637 Fed 357 (5th

UE EE in hid ill, Les bate ben 6 Abe Negus « bawia h 7
Riley v. MEBA Pension Trust, 570 Fed 406 (2nd

Rey ROR S oS de cwilals eae hat caeaae sed nupewnes 7
Saunders v. Teamsters Local 639, Employees

Pension Trust, 667 F.2d 146 (DC Cir., 1981) ..... 7

Wardle v. Central States, Southeast and Southwest
Areas Pension Fund, 627 F.2d 820 (7th Cir., 1980) 10

z

iv.

Page

APPENDIX.

Decision of the United States Court of Appeals For
the Second Circuit Decided January 20, 1983 (698

Ps COONS Ap Ray cho ake’ see b Ad til eb hes ss la
Findings of Fact, Conclusions of Law and Order of
Elfvin, U.S.D.J., Dated March 11, 1982......... 2la

Order of the United States Court of Appeals For the
Second Circuit Denying Petition For Rehearing

Filed March 29, 1983.................cceeeces 76a
Plaintiffs’ Exhibit 19— ension and Retirement
PE IO gia e che cicccevicvccesende 78a

IN THE

Supreme Court of the United States

October Term, 1982

No.

HAROLD MILES, EUGENE DARLAK, TIMOTHY
MORIARTY, JAMES STUERMER and
EDWARD ZASTROW,
Petitioners,

vs.

THE NEW YORK STATE TEAMSTERS CONFERENCE
PENSION AND RETIREMENT FUND EMPLOYEE

PENSION BENEFIT PLAN,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

The Petitioners, HAROLD MILES, EUGENE
DARLAK, TIMOTHY MORIARTY, JAMES
STUERMER and EDWARD ZASTROW, respectfully
pray that a Writ of Certiorari issue to review the
Judgment and Decision of the United States Court of
Appeals for the Second Circuit entered in this proceeding
on January 20, 1983.

2
Opinions Below

The opinion of the United States Court of Appeals for
the Second Circuit from which the Petitioners seek
certiorari is contained in the Appendix hereto at page la.
The original Findings of Fact and Conclusions of Law
and Order of the District Court for the Western District
of New York and the final Order of the United States
Court of Appeals for the Second Circuit denying
Petitioners’ motion for rehearing are also contained in
the Appendix.

Jurisdiction

The Judgment and Decision of the United States Court
of Appeals for the Second Circuit was entered on
January 20, 1983. A timely motion for rehearing was
made, and was denied by the United States Court of
Appeals for the Second Circuit on March 29, 1983, and
this Petition for Certiorari was filed within ninety days
of that date. This Court’s jurisdiction is invoked under
28 U.S.C. $1254.

Statutory Provisions
29 U.S.C. $1132(a)(1) and (g)

(a) A civil action may be brought

(1) By a participant or beneficiary

(A) for the relief provided for in subsection
(c) of this section, or

(B) to recover benefits due to him under the
terms of his plan, to enforce his rights under
the terms of the plan, or to clarify his rights to
future benefits under the terms of the plan.

(g) In any action under this subchapter by a
participant, beneficiary or fiduciary, the court in its
discretion may allow a reasonable attorney's fee and
costs of action to either party.

3

Statement of the Case

This action was commenced by the Petitioners, four
employees and one former employee of the Continental
Can Co., Inc. (Continental) pursuant to 11 U.S.C.
$1132(a) of the Employee Retirement Income Security
Act of 1974 (ERISA) to determine their eligibility for
pension benefits from the Respondent, THE NEW
YORK STATE TEAMSTERS CONFERENCE
PENSION AND RETIREMENT FUND EMPLOYEE
PENSION BENEFIT PLAN (the Teamsters Plan), and
in particular to determine their right to past service
credit for years during which they were employed by
Continental but for which contributions were not made
to the Teamsters Plan.

Prior to July 1, 1969 the Petitioners were employed by
Continental in its trucking division No. 506, operating
out of Continental’s Shawnee Road Plant in the City of
Buffalo, New York. The Petitioner's were, at that time,
represented by Local 375 of the International
Brotherhood of Teamsters, Chauffeurs, Warehousemen
and Helpers of America (Local 375), and participated in a
non-contributory pension plan administered by
Continental (the Continental Plan). At that same time,
Continental operated a separate trucking division No.
418 out of its Clay Street Plant in the Town of
Tonawanda, New York (a suburb of Buffalo), as well as a
third separate trucking division No. 81 out of its Colvin
Avenue Plant, in the City of Buffalo, New York. The
employees of trucking divisions 418 and 81 were
represented by Local 449 of the _ International
Brotherhood of Teamsters, Chauffeurs, Warehousemen
and Helpers of America (Local 449), and both groups of
employees participated in the Teamsters Plan prior to
July 1, 1969.

4

On or about July 1, 1969 Continental merged the three
trucking divisions into a single and newly formed
division No. 490, which replaced the three prior trucking
divisions, and whose employees were represented by
Local 449. Commencing as of July 1, 1969, contributions
were made on behalf of the Petitioners and all of the
other employees of division 490 to the Teamsters Plan,
and on July 26, 1970 a pension and retirement fund
stipulation (the Stipulation) effective as of July 1, 1969
was entered into between Local 449 and Continental
requiring contributions by Continental to the Teamsters
Fund on behalf of each of the employees in Continental's
division 490 (Petitioner’s Exhibit 19, a copy of which is
appended hereto as part of the Appendix). Application
was made by Continental to the Teamsters Plan to have
the Petitioners accepted as part of the new group
(Division 490), with the right to have past service credits
under the terms of the Plan for prior years in the employ
of Continental granted to a maximum of 20 years, after 5
years of future service credit. The application was
rejected by the Plan Trustees, at least in part upon the
incorrect assumption by the Trustees that the
Petitioners were not a part of the newly formed division,
but were rather transferred to the pre-existing division
which already participated in the Teamsters Plan. The
incorrect factual assumption was made despite repeated
attempts by Stanley Clayton, who was one of the
Trustees as well as the president of Local 375, to advise
the other Trustees of their error. No independent
investigation was made by or on behalf of the Trustees
to verify either their own erroneous assumption or
Clayton’s correct version of the facts. While the
determination was communicated to Continental and the
President of Local 375, it was never communicated

5

directly to the Petitioners and none of the Petitioners
became aware of the fact that they were not to receive
past service credits until Petitioner MILES retired better
than 6 years later.

Petitioner MILES retired effective as of January of
1976 and made application for pension funds from the
Teamsters Plan commencing on January 9, 1976. On
January 16, 1976, MILES received a notice from the
Teamsters Plan indicating that he was not eligible for
benefits due to the fact that he had only six years and
five months of credit and service and that he was not
credited with any service prior to July 1, 1969. This was
the first time any of the Petitioners knew of or were
informed that they were not going to receive past service
credits for the period of time employed with Continental
and as members of Teamsters Local 375 prior to
September 1, 1969. The Trustees offered no explanation
or reason to Miles or the other Petitioners as to why
credit had not been grantec for the period prior to July
1, 1969.

After a trial before the Court, the United States
District Court for the Western District of New York
granted Judgment to the Petitioners on their second and
fifth causes of action, alleging arbitrary and capricious
conduct on the part of the Trustees. The Court, inter
alia, held that the Trustees’ actions were arbitrary and
capricious in that they acted upon incorrect factual
assumptions despite Clayton’s repeated explanations to
them that the Petitioners were not being merged into a
pre-existing group already participating in the Teamsters
Pian, but were rather merged into a new group which
had just commenced to participate in the Teamsters Plan
pursuant to the Stipulation. The Court also found that

6

the plain language of the Plan itself required past service
credits to be granted to the Peticioners and further found
the conduct of the Trustees to be arbitrary and capricious
in that they failed to make any investigation whatsoever
into the facts, either in 1969 or in 1976, and completely
failed to communicate their original decision to the
Petitioners.

At trial the Teamsters Plan argued that the provisions
of the Plan relating to past service credit were not
applicable in that they were intended to induce new
groups to participate in the Plan which would not
otherwise be required to participate, whereas, they
contended, the Petitioners were required to participate in
the Teamsters Plan immediately upon what they still
erroneously believed to be the Petitioner's transfer to a
“pre-existing division. The Teamsters Plan, however,
failed to explain why a new agreement (the Stipulation)
would be required whereby Continental agreed to make
contributions to the Teamsters Plan on behalf of newly
formed division 490 employees, and the Court below
found this to be strong evidence that the interpretation
offered by the Trustees was arbitrary and capricious.

On Appeal, the United States Court of Appeals for the
Second Circuit reversed the Judgment in favor of
Petitioners and vacated the award of attorneys fees to
Petitioners’ counsel. The Court changed but one of the
lower Court's Findings of Fact, and determined that
contributions were indeed required to be made to the
Teamsters Plan on behalf of the Petitioners immediately
upon their merger into newly formed division 490, due to
the fact that division 490 was represented by Teamsters
Local 449, which was already participating in the
Teamsters Plan. The Court offered no explanation for the

7

existence of the Stipulation. Further, despite
acknowledging the fact that the Board of Trustees of the
Teamsters Plan had made its determination to deny past
service credits to the Petitioners upon incorrect factual
assumptions, the Court nevertheless determined that
“we cannot say that [the Board’s} conclusion was
irrational”, and further held that “the Board's
misunderstanding of the facts does not appear to have
effected its decision’. The Court of Appeals did not
address the Teamsters Plan's failure to communicate its
determination to the Petitioners in a timely fashion in
1969 as it related to the issue of whether or not the
Trustees acted in an arbitrary and capricious manner.

Argument

It is undisputed “black letter” law that a Court will
not interfere to substitute its Judgment for that of a
Board of Trustees of a Pension Fund absent a showing
that the Board's determination is arbitrary and
capricious. Paris v. Profit Sharing Plan, Etc., 637 Fed
357 (5th Cir., 1981); Riley v. MEBA Pension Trust, 570
Fed 406 (2nd Cir., 1977). However, it has been held that,
in making its determinations, not only must the
substance of a determination of a Board of Trustees not
be arbitrary and capricious, but that the procedures
followed in the making and enforcing the determination
must also not be arbitrary and capricious. The United
States Court of Appeals for the District of Columbia, in
Saunders v. Teamsters Local 639, Employees Pension
Trust, 667 F. 2d 146 (DC Cir., 1981), held that:

“Trustees thus are accountable for procedural
fairness, and must support their factual findings by
substantial evicence’’. 667 F. 2d 146, 148.

8

In that case, the Court held that the procedure employed
by the trustees in implementing an amendment to the
plan was arbitrary and capricious, in that the affected
employees were not notified of the amendment at a time
when they could have attempted to protect their
interests. Similarly, the same United States Court of
Appeals for the District of Columbia had previously held
in the case of Kosty v. Lewis, 319 F. 2d 744 (DC Cir.,
1963) that the limitations of fundamental fairness which
are imposed upon pension plan trustees were exceeded
by the failure of trustees to afford any notice or period of
grace with respect to a plan amendment, so as to afford
the affected employees an opportunity to protect their
previously vested rights. It appears clear that the
procedural fairness which trustees are required to afford
to plan participants includes the obligation to examine
saliently the facts of a given situation and to make
reasoned decision based upon that examination. Thus, it
was held, again by the Court of Appeals for the District
of Columbia in the case of Maggerd v. O'Connell, 671
F.2d 568 (DC Cir., 1982) that:

“Judicial intervention is required ‘if the Court
becomes aware, especially from a combination of
danger signals, that the [Tribunal] has not really
taken a ‘hard look’ at the salient problems, and has
not genuinely engaged in reasoned decision
making’ "’. 671 F. 2d 568, 571.

It is respectfully submitted that the determination in
this case made by the United States Court of Appeals
for the Second Circuit is in conflict with the decisions of
the United States Court of Appeals for the District of
Columbia, as cited above, in that it permits a
determination of the Plan Trustees denying past service
credits to the Petitioners to stand, notwithstanding the

9

absence of any of the aspects of procedural fairness
which would appear to be required of the Plan Trustees.
Not only did the Trustees in the instant case fail to
conduct their own investigation into any of the factual
circumstances surrounding the application to have the
Petitioners treated as a new group, but indeed acted
upon a misapprehension of the facts despite repeated
explanations by one of the Plan Trustees, as to what the
actual facts were. Further, it is undisputed that there
was a complete failure on the part of the Plan or its
Trustees to communicate its decision to the Petitioners
at any time prior to the retirement of HAROLD MILES,
more than six years after the decision-making process
had come to an end. Each of the Petitioners had
previously accumulated substantial periods of credited
time with the Continental Plan, and it would appear that
had the Petitioners been promptly notified of the
Trustees’ decision, at least some investigation could have
been undertaken as to the possibility of taking such
action as would have allowed them to remain as
participants in the Continental Plan. The failure of the
Trustees to communicate their decision denying new
group status and past service credits to the Petitioners
completely denied them this opportunity. The decision of
the Court of Appeals acknowledges that the decision of
the Trustees was made based upon erroneous facts, that
no independent investigation of the facts was ever
undertaken by the Trustees and that there was no
communication of the decision to the Petitioners, and
nevertheless upholds the decision and the decision-
making process, finding that it is not to be characterized
as “arbitrary or capricious’. It is submitted that this
decision squarely conflicts with those of the United
States Court of Appeals for the District of Columbia. It

10

appears that there is presently no decision of this Court
providing the Circuit Courts and District Courts with
guidance as to what procedural standards must be
allowed by pension plan boards of trustees in the
decision-making process.

Inasmuch as there would appear to be a conflict be-
tween the Second Circuit and the District of Columbia
Circuit as to those procedural rights which must be
afforded to plan beneficiaries by trustees in their
decision-making processes and inasmuch as the issue
clearly affects millions of employees who are participants
in and beneficiaries of plans governed by the Employee
Retirement Income Security Act of 1974, it is respectfully
submitted that the issue is one that is proper for review
by this Court.

Additionally, it has been held by the United States
Court of Appeals for the Seventh Circuit in the case of
Wardle v. Central States, Southeast and Southwest
Areas Pension Fund, 627 F.2d 820 (7th Cir., 1980) that:

‘“... As a general matter a Court should not resolve
the eligibility question on the basis of evidence
never presented to a pension fund’s trustees but
should remand to the trustees for a new
determination.’’ Wardle, supra, at 824.

Here, facts were presented to the trustees by Clayton
but were never considered by the trustees in making
their determination to deny new group status to the
Petitioners. While acknowledging this error, the Second
Circuit did not require a remand. Instead it proceeds to
determine how the trustees would have acted had they
considered the additional facts. This ruling conflicts with
the decision of the Seventh Circuit in Wardle, supra,
which conflict should be resolved by this Court.

11

Conclusion

For the reasons cited above, a writ of certiorari should
issue to review the Decision and Judgment of the United
States Court of Appeals for the Second Circuit.

Respectfully submitted,

IRVING M. SHUMAN, ESQ.
GROSS, SHUMAN, BRIZDLE,
LAUB & GILFILLAN, P.C.

2600 Main Place Tower
Buffalo, New York 14202
Counsel for Petitioners

June 20, 1983

[1321] APPENDIX

Decision of the United States Court of Appeals
for the Second Circuit Decided
January 20, 1983

UNITED STATES COURT OF APPEALS
For the Second Circuit

No. 202—August Term, 1982
(Argued September 20, 1982 Decided January 20, 1983)
Docket No. 82-7274

HAROLD MILES, EUGENE DARLAK, TIMOTHY
MORIARTY, JAMES STUERMER and
EDWARD ZASTROW,
Plaintiffs-Appellees,
against

THE NEW YORK STATE TEAMSTERS CONFERENCE
PENSION AND RETIREMENT FUND EMPLOYEE
PENSION BENEFIT PLAN,

Defendant-Appellant.

ERVIN WALKER, as President of Local Union No. 449
of International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America,
an Unincorporated Association, and STANLEY
CLAYTON, Individually and as President of Local
Union No. 375 of the International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of
America, an Unincorporated Association,

Defendants.

2a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

[1322] Before: LUMBARD, MESKILL AND
CARDAMONE,
Circuit Judges.

Appeal from a judgment of the United States District
Court for the Western District of New York, John T.
Elfvin, Judge, holding, in an action under ERISA, that
the Board of Trustees of the defendant pension fund had
acted arbitrarily and capriciously in denying the plaintiff
employees credit under the plan for years of service
during which employer contributions were not paid on
their behalf, and ordering the defendant to grant the
plaintiffs such credit. The district judge also awarded
attorney’s fees to the plaintiffs.

Judgment reversed; award of attorneys’ fees vacated.

ROBERT J. FELDMAN, ESQ., Buffalo,, New York
(Gross, Schuman, Brizdle, Laub & Gilfillan, P-C., Buffalo,
N.Y., David C. Laub, Esq., of counsel), for Plaintiffs-Ap-
pellees.

PETER P. PARAVATI, P.C., Utica, New York, for
Defendant-Appellant.

{1323} LUMBARD, Circuit Judge:

Plaintiffs, four employees and one former employee of
the Continental Can Co., Inc., commenced this action in
the Western District of New York in August 1977 under

3a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

the Employee Retirement Income Security Act of 1974,
29 U.S.C. § 1001 et seg. (1976) (ERISA), to determine
their eligibility for pension benefits from the defendant
New York State Teamsters Conference Pension and
Retirement Fund Employee Pension Benefit Plan (the
Teamsters Plan). The plaintiffs, all of whom had worked
for Continental for some years before Continental began
to contribute to the Teamsters Plan on their behalf,
sought through this action to establish their right to
past service credit for years during which employer
contributions were not paid. Judge Elfvin conducted a
bench trial of the action from August 25th to August
28th, 1980, after which, on March 11, 1982 he ruled that
the decision of the Teamsters Plan's Board of Trustees
to deny the plaintiffs ‘‘new group” status, and with it,
past service credit, was “arbitrary and capricious.” He
ordered the Teamsters Plan to grant the plaintiffs past
service credit and to pay benefits accordingly. On June
7, 1982 Judge Elfvin granted the plaintiffs’ post-trial
motion for attorneys’ fees under 29 U.S.C. § 1132(g)(1)
(Supp. IV 1980). The Teamsters Plan now appeals from
the judgment against it and the award of attorneys’ fees.
We reserve the judgment appealed from, and vacate the
award of attorneys’ fees.

With one exception to be noted later, the facts, for
purposes of this appeal, are those found by the district
court. Continental, at all relevant times, has operated
three plants in the Buffalo, New York area. Prior to July
1, 1969 the plants’ truck drivers were assigned to
separate [1324] corporate divisions: the drivers at the
Clay Street plant in Tonawanda, New York to Plant No.
418; the drivers at the Colvin Boulevard plant in Buffalo

4a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

to Plant No. 81; and the drivers at the Shawnee Road
plant in North Tonawanda, New York to Plant No. 506.

The plaintiffs are five drivers who prior to July 1, 1969
were assigned to Plant No. 506 at Shawnee Road.
Teamsters Union Local 449 represented the drivers at
the Clay Street and Colvin Boulevard plants and
Teamsters Union Local 375 represented the plaintiffs. In
a letter to Local 449 dated December 11, 1967
Continenta! agreed to abide by the terms of the so-called
“National Master Freight Agreement’’ (NMFA). The
NMFA required Continental to contribute to the
Teamsters Plan on behalf of the Local 449 drivers.
Continental did not contribute to the Teamsters Plan on
behalf of the plaintiffs, who instead participated in a
corporate pension plan.

On July 1, 1969 Continental merged the three trucking
divisions into a single Plant No. 490. The merger did not
entail a physical transfer of drivers but involved only
minor changes in route assignments and the introduction
of a central dispatch system. Because Local 449 had a
union shop agreement with Continental, the merger of
the drivers into a single bargaining unit required the
plaintiffs to transfer their membership from Local 375 to
Local 449. Concerned that the plaintiffs would not
receive past service credit under the Teamsters Plan for
pre-merger employment,' the president of Local 375,
‘ All of the plaintiffs had worked for Continental or a
corporation for a substantial number of years prior to July 1, 1969.
Harold Miles began employment with Continental in March, 1953,
Eugene Darlak in March, 1959, Timothy Moriarty in February, 1953,

James Stuermer in January, 1957, and Edward Zastrow in December,
1948.

5a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

[1325] Stanley Clayton, asked Continental to apply to the
Teamsters Plan to have the plaintiffs treated as a ‘“‘new
group.”” The new group rule is incorporated in section
3(2) of the Teamsters Plan.’ Under the rule, an employee
who joins the Teamsters Plan as part of a new group is
entitled to receive credit for past service with the
employer, up to a maximum of twenty years, if the
employee works for the employer for another five years
and the employer contributes to the Teamsters Plan on
behalf of the employee for those five years. A new group
is a unit of employees which commences participation in
the Teamsters Plan on the same date that the relevant
employer (the “Participating Employer”’), first becomes
obligated to and does make contributions to the Plan on

* Section 3(2) provides:

shall later occur, he was an Employee of the class for whom
Contributions have been made since January 1, 1954. Such
service shall be credited for the following periods and the
member shall have the right to designate the alternative of his

(a) Credit for service prior to January 1, 1954;

... if a member becomes a member on or after January 1, 1959,
he shall be limited to a maximum of 20 years’ credit for service
as an Employee...

6a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

its employees’ behalf. (The ‘‘Applicable Effective Date’’).’
The Participating [1326] Employer need not be the
corporation as a whole, but may instead be a corporate
division or plant. The purpose of the rule is to encourage
new bargaining units to join the Teamsters Plan.

In response to Clayton’s request, Continental on
September 9, 1969 sent a letter to the Teamsters Plan’s
Board of Trustees requesting that the plaintiff's be
accepted into the plan as a new group. in the letter,
Continental offered to pay five years’ worth of
contributions on behalf of any Local 375 driver who
retired before completing five years of service under the
Teamsters Plan. The letter in this respect conflicted with
the new group rule, since the rule requires the employee
to be employed under the Teamsters Plan for at least
five years in order to receive past service credit.

The Board of Trustees considered Continental’s letter
at its September, 1969 meeting. The Board voted
unanimously to treat the plaintiffs as new employees not
entitled to past service credit. The Board apparently

*“Participating Employer" and “Applicable Effective Date,’ are
defined in sections 1(2) and 1(13) of the Plan:

(2) “Participating Employer" means any person, firm, or
corporation having a collective bargaining agreement with the
Union which is authorized by the Board of Trustees to
participate in the Plan upon appropriate action by such
em>loyer acceptable to the Board of Trustees.

(13) “Applicable Effective Date’ means such date after
January 1, 1954 on which a Participating Employer, as herein
defined, shall first become obligated to make and does make
Contributions to the Fund on behalf of Employees in accordance
with the provisions of the Collective Bargaining Agreement and
the rules and regulations of this Fund.

Ja

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

believed that Continental had physically transferred the
plaintiffs from their previous plant to a plant already
participating in the Teamsters Plan. Clayton was a
member of the Board and was present at the meeting.
He attempted to explain to the other Board members
that there had been no physical transfer but merely a
merger of operating divisions. However, Clayton agreed
that Continental’s request for new group status for the
plaintiffs could not be approved because of the conflict
be- [1327] tween Continental’s offer and the new group
rule’s requirement of five vears actual service. Clayton
told the Board that he would request Continental to
provide further information on the facts of the plaintiff's
case. On October 15, 1969, before receiving any
additional information, the Board told Continental by
letter that its application on behalf of the plaintiffs had
been rejected.

In early September, 1969, an accident required one of
the Local 375 drivers, Timothy Moriarty, to be
hospitalized for several weeks. Moriarty applied for
disability benefits from the New York State Teamsters
Health and Hospital Fund. The Health and Hospital
Fund and the Teamsters Plan had the same address and
manager and very similar provisions. Approximately one
month after his accident Moriarty began to receive
benefits from the Health and Hospital Fund. Those
benefits should not have been paid unless Moriarty
qualified for past service credit under the new group rule

of the Health and Hospital Fund.

In January, 1970, Local 449 and Continental executed
a new participation agreement that required Continental

8a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

to contribute to the Teamsters Plan on behalf of
employees of ‘‘Continental Can Co., Inc. #490, Clay
Street, Tonawanda, N.Y.’’ The agreement required
Continental to make payments retroactive from July 1,
1969. Ervin Walker, the president of Local 449 and a
defendant in this proceeding, testified that the new
participation agreement must have been executed
because a new group joined the plan.

At the January, 1970, meeting of the Teamsters Plan
Board of Trustees, Clayton again brought the plaintiffs’
situation to the attention of the Board. He argued that
the plaintiffs constituted a new group and were entitled
to past service credit. The Board did not take formal
action [1328] on the request for new group status, but
instead asked Clayton to provide a letter describing
Continental’s merger of its trucking operations. Clayton
apparently never sent the requested letter.

Clayton again raised the matter at the Board's next
meeting, held from February 26 to March 2, 1970.
According to Clayton, several of the Trustees began at
this meeting to understand that Continental had not
physically transferred the plaintiffs. The Board, however,
again took no formal action on the request for new group
status, but instead tabled further review of the plaintiffs’
case until it received a letter from Local 449 detailing the
plaintiffs’ situation. Apparently the Board did not,
following the meeting, request Local 449 to send it a
letter, nor was such a letter ever received. The Board did
not, at any time, formally rescind its September, 1969
vote denying the plaintiffs new group status.

9a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

The Board did not again consider the plaintiffs’ status
until the issue was raised by the retirement of plaintiff
Harold Miles on January 9, 1976. Several months prior
to his retirement Miles had submitted an application for
pension benefits. On January 14, 1976 the administrator
of the Teamsters Plan informed Miles by letter that his
application for a pension had been rejected because he
had only six and one-half years credited service under
the plan. The plan required fifteen years service for
payment of a pension. Miles complained to Clayton that
the Teamsters Plan had not granted him past service
credit, Clayton raised Miles’ entitlement to past service
credit at several Board meetings in 1976. In response,
the Board referred to the minutes of its 1969 and 1970
meetings and again concluded that the plaintiffs were
not entitled to past service credit under the new group
rule. Although the membership of the Board had
partially changed between [1329] 1969 and 1976, the
1976 Board did not attempt to investigate the facts
itself.

This action was brought on August 8, 1977 when Miles
and the other drivers who belonged to Local 375 prior to
July 1, 1969—Eugene Darlak, Timothy Moriarty, James
Stuermer and Edward Zastrow—filed their complaint.

The plaintiffs’ second amended complaint, filed on
August 7, 1980, named as defendants the Teamsters
Plan, Ervin Walker in his official capacity as president of
Local 449, and Clayton, individually and in his official
capacity as president of Local 375. The second amended
complaint alleged seven causes of action, six pursuant to
29 U.S.C. § 1132(a)1) and one under state law. The first

10a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

three causes of action were asserted by Miles against the
Teamsters Plan. The next three causes of action
corresponded to the first three, except that they were
asserted by Darlak, Moriarty, Stuermer and Zastrow. In
the first and fourth causes of action the plaintiffs alleged
that they, Continental, and Locals 375 and 449 had
agreed at the time of the 1969 transfer that the plaintiffs
would be accepted into the Teamsters Plan as a new
group and would receive past service credit. In the
second and fifth causes of action the plaintiffs alleged
that the Board of Trustees had acted arbitrarily and
capriciously in denying them new group status. In the
third and sixth causes of action the plaintiffs alleged
that the Board had approved their request for new group
status at a meeting held in late 1969 or early 1970. The
seventh cause of action, asserted by the plaintiffs jointly
against Walker in his official capacity and against
Clayton personally and in his official capacity, alleged
that Clayton and Locals 375 and 449 fraudulently
misrepresented to the plaintiffs in 1969 that they would
receive past service credit if they transferred
membership from Local 375 to Local 449 and [1330]
worked for five years under the plan. As relief, Miles
requested the court to order the Teamsters Plan to pay
him a pension on the basis of full credit or past service.
The other four plaintiffs, who had not retired, requested
an order granting them past service credit under the
plan. All of the plaintiffs also sought compensatory and
punitive damages from Walker and Clayton.

In Judge Elfvin’s decision, filed March 11, 1982, he
concluded that the Board of Trustees had acted

lla

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

arbitrarily and capriciously in denying the plaintiffs
past service credit, and he granted judgment to the
plaintiffs on their second and fifth causes of action. He
concluded that the plaintiffs’ remaining causes of action
were unsupported by the facts. On June 7, 1982, Judge
Elfvin granted the plaintiffs’ post-trial motion for an
award of attorneys’ fees under 29 U.S.C. § 1132(g)(1).
The judge ruled that the relative merits of the parties’
positions, the ‘‘extremely cavalier’’ attitude of the Board
toward the plaintiffs’ application for new group status,
and the need to deter “‘callous” behavior by pension plan
trustees justified an award of attorneys’ fees against the
Teamsters Plan. Finding that the plaintiffs’ attorneys
were entitled to compensation for the risk they had
assumed in representing plaintiffs on a contingent fee
basis, the judge increased the final award of attorneys’
fees by fifty percent over the ‘lodestar’ figure
submitted by the attorneys. The Teamsters Plan appeals
from the judgment for the plaintiffs and from the award
of attorneys’ fees.‘

The Teamsters Plan argues that the plaintiffs’ claims
are barred by the statute of limitations. We disagree. As
ERISA does not prescribe a limitations period for
actions [1331] under § 1132, the controlling limitations
period is that specified in the most nearly analogous
state limitations statute. See Board of Regents v.
Tomanio, 446 U.S. 478, 483-84 (1980). Here, the six-year
limitations period prescribed by New York’s C.P.L.R.
§$ 213 controls. See Valle v. Joint Plumbing Indus. Bd., 623
‘The plaintiffs do not appeal from the judgment granted the

defendants on their first, third, fourth, sixth, and seventh causes of
action.

12a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

F.2d 196, 202 n.10 (2d Cir. 1980). A plaintiff's ERISA
cause of action accrues, and the six-year limitations
period begins to run, ‘‘when there has been ‘a repudiation
by the fiduciary which is clear and made known to the
beneficiaries.’ "’ Jd., quoting In re Barabash, 31 N.Y.2d
76, 80, 334 N.Y.S.2d 890, 893 (1972). See also Kosty v.
Lewis, 319 F.2d 744, 750 (D.C. Cir. 1963), cert. denied,
375 U.S. 964 (1964). The Teamsters Plan argues that the
plaintiffs had clear notice in 1969 that they would not be
treated as a new group, and that the plaintiffs’ suit is
therefore barred by their failure to commence suit by
1975. Judge Elfvin, however, found that the plaintiffs
did not receive clear notice that the Board repudiated
their claim until the Teamsters Plan in 1976 denied Miles
a pension. This finding of fact is not clearly erroneous.
We therefore proceed on the basis that the plaintiffs’ suit
was timely filed.

The Teamsters Plan argues that Judge Elfvin, in
analyzing the plaintiffs’ claim, exceeded the scope of
judicial review which may properly be applied to the
actions of pension plan administrators. We agree.
Moreover, in our view of the record, we cannot say that
the Board's conduct was arbitrary and capricious.

In order to avoid excessive judicial interference with
pension plan administration, the federal courts of appeals
generally have applied an “arbitrary and capricious”
standard of review in actions challenging the decisions of
plan administrators. See Dennard v. Richards Group,
Inc., 681 F.2d-306, 313 & n.11 (5th Cir. 1982) and cases
[1332] cited therein. We have stated that the lawful,
discretionary acts of a pension committee should not be

13a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

disturbed, absent a showing of bad faith or arbitrariness.
Pompano v. Michael Schiavone & Sons, Inc., 680 F.2d
911, 915 (2d Cir. 1982). Accord, Haeberle v. Board of
Trustees of Buffalo Carpenters, 624 F.2d 1132, 1136 n.6
(2d Cir. 1980); Riley v. MEBA Pension Trust, 570 F.2d
406, 410 (2d Cir. 1977); Wyper v. Providence Washington
Ins. Co., 533 F.2d 57, 62 (2d Cir. 1976); Beam uv.
International Org. of Masters, Mates & Pilots, 511 F.2d
975, 980 (2d Cir. 1975). Where the trustees of a plan
impose a standard not required by the plan’s provisions,
or interpret the plan in a manner inconsistent with its
plain words, or by their interpretation render some
provisions of the plan superfluous, their actions may well
be found to be arbitrary and capricious. See Morgan uv.
Mullins, 643 F.2d 1320, 1321, 1324 (8th Cir. 1981);
Maness v. Williams, 513 F.2d 1264, 1267 (8th Cir. 1975).
However, the limited standard or review applied in these
cases does mean that the trial court should not conduct a
de novo hearing on a rejected applicant's eligibility for
benefits, see Wardle v. Central States, Southeast &
Southwest Areas Pension Fund, 627 F.2d 820, 824 (7th
Cir. 1980), cert. denied, 449 U.S. 1112 (1981), or disregard
a pension committee’s reasonable interpretation of plan
provisions. We fear that the district judge, in reviewing
the plaintiffs’ claim, failed to adhere to these limitations.

The district judge analyzed the plaintiffs’ claim in two
steps. First he decided upon a “‘correct”’ interpretation of
the new group rule. Second he considered whether the
Board’s failure to adopt the ‘‘correct”’ interpretation was
arbitrary and capricious.

T4a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

The district judge found that under the “correct”
interpretation of the new group rule the plaintiffs consti-
[1333] tuted a new group. He cited four principal items of
evidence as supporting his interpretation of the rule: (1)
the testimony of Walker and Clayton that the plaintiffs
were a new group; (2) the January, 1970 execution of a
new participation agreement between Local 449 and
Continental requiring Continental to make contributions
to the Teamsters Plan on behalf of employees of
“Continental Can Co., Inc. #490;"’ (3) Moriarty's receipt
of benefits from the Health and Hospital Fund, which
suggested that Moriarty was a new group member under
the Fund’s rule; and (4) the “‘fact,’’ found by him, that
the plaintiffs did not have to join the Teamsters Plan
when they joined Local 449, but that Local 449 could
instead have negotiated a separate pension agreement on
their behalf. (From this latter finding the judge
concluded that the plaintiffs’ entry into the Teamsters
Plan was consistent with the purpose of the new group
rule to add new bargaining units to the plan). On the
basis of this evidence the district judge found that in
merging its trucking operations Continental created a
new “Participating Employer,’’ Plant No. 490, and that
the plaintiffs were employed by that employer at the
time it first became obligated to contribute to the
Teamsters Plan, i.e., January, 1970. The judge therefore
concluded that the plaintiffs were employed by the
Participating Employer (Plant No. 490) at the Applicable
Effective Date (January 1970), and hence were entitled
to past service credit under the new group rule.

15a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

As the second step in his analysis, the district judge
found that the Board had acted arbitrarily and
capriciously in failing to reach the ‘correct”’
interpretation of the new group rule. The district judge
found that the Board in 1969 and 1970 mistakenly
believed that a transfer rather than a merger had
occurred. Although in- [1334] formed by Clayton that its
understanding was incorrect, the Board denied the
plaintiffs’ claim without further investigation. The
district judge concluded that in failing to investigate the
plaintiffs’ situation when clearly informed that its factual
assumptions were incorrect, in failing to notify either the
plaintiffs or Local 449 of the 1969 vote, and in failing in
1976 to initiate a new investigation when Miles applied
for a pension, the Board acted arbitrarily and
capriciously.

The Board had interpreted the new group rule quite
differently than did the district court. The Board
apparently believed that the Participating Employer was,
in general terms, the Clay Street plant, and that the
Applicable Effective Date was December 11, 1967, the
date on which contributions were first made on behalf of
the employees belonging to the Clay Street bargaining
unit (Local 449). The Board knew that the plaintiffs had
joined the covered bargaining unit (Local 449) in the
summer of 1969, and that Continental had not made
contributions on the plaintiffs’ behalf prior to that time.
The Board therefore concluded that the plaintiffs were
not employed by the Participating Employer at the
Applicable Effective Date and hence did not qualify for
new group status. We cannot say that this conclusion

16a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

was irrational. The district judge himself found that an
“employee [who] becomes a member of a particular
bargaining unit after the date on which the bargaining
unit first participates in the Teamsters Plan...is not
entitled to receive past service credit.’’ Equally
important, both the policy underlying the new group rule
and the rule’s financial implications suggest that the
Board acted rationally. As the district judge found, the
rule is intended to induce independent bargaining units
to join the Teamsters Plan. The inducement offered is
the guarantee of [1335] past service credit to the members
of the independent units. The district judge found that
the plaintiffs did not have to participate in the
Teamsters Plan when they joined Local 449, and that
Local 449 could have negotiated a separate pension
agreement on their behalf. He therefore concluded that
extension of new group status to the plaintiffs would
have been consistent with the rule's policy. We believe,
however, that the district judge’s finding of fact on this
issue is clearly erroneous. The clear weight of the
evidence indicates that the plaintiffs were not an
independent unit, but instead had to join the Teamsters
Plan upon joining Local 449.° As the Board, therefore,
* The district judge's finding is supported only by certain testimony
by Clayton. Clayton, however, later contradicted that testimony and
in his clearest testimony on the point indicated that the plaintiffs’
participation was mandatory. Miles, Moriarty, Stuermer, and Zastrow
all testified to their understanding that they had to join the
Teamsters Plan when they joined Local 449. The National Master

Freight Agreemett unambiguously required Continental to contribute
to the Teamsters Plan on the Plaintiffs’ behalf as soon as the
plaintiffs joined Local 449. See Articles 38(1)a) and 53(1) of the New
York State Teamsters Joint Council Freight Division Local Cartage

(Footnote continued on following page)

17a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

did not need to grant the plaintiffs special treatment in
order to add them to the plan, we reject the district
judge’s conclusion that the policy behind the rule
supported the plaintiffs’ application. Instead, because
the plaintiffs could not freely accept or reject
participation in the plan, the rule’s policy was not
implicated. With regard to the financial consequences of
granting new group status, it must be remembered that
a grant of past service credit requires the Teamsters
Plan to pay benefits [1336] for which the appropriate
employer contributions were never paid. It thus appears
that in denying the plaintiffs new group status the
Board merely declined to impair the plan’s financial
condition for the benefit of employees who had to
participate. Where both the trustees of a pension fund
and a_ rejected applicant offer rational, though
conflicting, interpretations of plan provisions, the
trustees’ interpretation must be allowed to control.
Lowenstern v. International Ass'n of Machinists and
Aerospace Workers, 479 F.2d 1211, 1213 (D.C. Cir. 1973).
The facts and policies discussed immediately above
convince us that the Board’s interpretation of the rule

(Footnote continued from preceding page)

Supplemental Agreement for the period April 1, 1967 to March 31,
1970 (supplement to and part of the National Master Freight
Agreement for the period commencing April 1, 1967). Because we are
left with a “definite and firm conviction that a mistake has been
committed,"’ the fact that some evidence supports the district judge's
finding does not preclude us from treating that finding as clearly
erroneous. United States v. United States Gypsum Co., 333 U.S. 364,
395 (1948).

18a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

was rational. The district judge should not have
overturned the Board's decision.*

Our conclusion that the Board's interpretation of the
new group rule was rational, and should not be set aside,
disposes of the claim that the Board’s decision-making
process was arbitrary and capricious. Nonetheless, we
think it necessary to note our disagreement with the
district judge’s statement that that the Board exhibited
“‘an extremely cavalier attitude’’ toward the plaintiffs. The
Board’s misunderstanding of the facts does not appear
to have affected its decision. Although Sol Tabor, the
actuarial consultant to the Teamsters Plan, testified that
if two corporate divisions merge, and enter into a new
bargaining agreement providing for contributions, [1337]
the employees will be entitled to past service credit, it
does not adequately appear that Tabor’s testimony was
directed to a situation where, as here, one of the merged
divisions previously was participating in the plan.
Instead, under the Board’s interpretation of the new
group rule, the new employees of a_ previously
participating Participating Employer are not entitled to

* We believe, moreover, that the evidentiary support for the district
judge's interpretation of the rule was not so great as the judge
himself believed. As previously noted, the district judge's finding that
the plaintiffs could have refused participation in the Teamsters Plan
is clearly erroneous. Moreover, we would have evaluated the
testimony of Walker and Clayton cognizant that both were
defendants in this action and present or former union representatives
of the plaintiffs. As no evidence or testimony was received to explain
the operation of the Health and Hospital Fund's new group rule, we
SHEE Ren Hepes Tile: Sap aaeE ae SEES See
from the Fund.

19a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

past service credit regardless of whether they are merged
or transferred into the «pplicable bargaining unit. Thus
Tabor testified that the plaintiffs could not have
obtained past service credit by entering into employment
with the previously participating Clay Street
Participating Employer, but only by forming a separate
bargaining unit at the Shawnee Road plant (which then
would be a separate Participating Employer) and
independently joining the plan. Nor do we see “‘cavalier”’
behavior in the Board’s failure to initiate its own
investigation into the plaintiffs’ circumstances. The
district judge found that “the Board demonstrated
repeated willingness to receive and consider additional
information concerning plaintiffs’ status.’ Given that
finding, the mere failure to initiate an investigation
cannot support a charge of gross disregard of duty.’

We conclude, therefore, that the Board interpreted the
new group rule rationally and did so with adequate
regard to the duties it owed the plaintiffs. We
accordingly reverse the judgment granted the plaintiffs
on their second and fifth causes of action.

{1338] Our reversal of the judgment also requires that
the award of attorneys’ fees to the plaintiffs be set aside.
Although success on the merits is not, in theory,

"The Board did not individually notify the plaintiffs of the
September, 1969 vote denying Continental's application to have them
treated as a new group. We see no reason why the Board could not
have given such notice. However, the Board did communicate the
vote to Continental, and the plaintiffs’ union representative, Clayton,
was present at and had knowledge of the vote. The Board could
reasonably have believed that Clayton or Continental would inform
the plaintiffs.

20a

Appendix—Decision of the United States Court of
Appeals for the Second Circuit
Decided January 20, 1983.

indispensable to an award of attorneys’ fees under 29
U.S.C. § 1132(g)(1),* rarely will a losing party in an action
such as this be entitled to fees. At least three of the five
factors ordinarily considered in reviewing requests for
attorneys’ fees under § 1132(g)(1) are affected by success
on the merits.’ Thus, in an action brought to redress the
private rights of individual applicants, ‘‘(a)n altogether
sufficient support for (a) court’s decision not to award
attorney’s fees under ERISA is that the attorney
obtained no relief under that statute.’’ Fase v. Seafarers
Weifare & Pension Plan, 589 F.2d 112, 116 (2d Cir. 1978).
In the present case, the three reasons cited by the
district court to support the award of attorneys’
fees—the relative merits of the parties’ positions, the
need to deter ‘“‘callous’’ behavior by pension plan
trustees, and the Board’s “gross and deliberate
indifference” to the plaintiffs’ claam—no longer are valid
under our view of the case.

The judgment for the plaintiffs is reversed; the award
of attorneys’ fees is vacated.

* Section 1132(g)\1) states:

In any action under this subchapter... by a participant,
beneficiary, or fiduciary. the court in its discretion may allow a
reasonable attorney's fee and costs of action to either party.

(Emphasis added).

*The five factors are: (1) the degree of the offending party's
culpability or bad faith, (2) the ability of the offending party to
satisfy an award of attorney's fees, (3) whether an award of fees
would deter other persons from acting similarly under like
circumstances, (4) the relative merits of the parties’ positions, and (5)
whether the action sought to confer a common benefit on a group of
pension plan participants. Ford v. New York Central Teamsters
Pension Fund, 506 F.Supp. 180, 183 (W.D.N.Y. 1980) (Elfvin, J.),
aff'd., 642 F.2d 664 (2d Cir. 1981).

2la

[1078] Findings of Fact, Conclusions of Law and Order
of Elfvin, U.S.D.J., Dated March 11, 1982

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

HAROLD MILES, EUGENE DARLAK, TIMOTHY
MORIARTY, JAMES STUERMER, and
EDWARD ZASTROW,
Plaintiffs,
vs.

THE NEW YORK STATE TEAMSTERS CONFERENCE
PENSION AND RETIREMENT FUND EMPLOYEE
PENSION BENEFIT PLAN, ERVIN WALKER, as
President of Local Union No. 449 of the International
Brotherhood of Teamsters, Chauffeurs, Warehousemen
and Helpers of America, and Unincorporated
Association, and STANLEY CLAYTON, Individually
and as President of Local Union No. 375 of the
International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America, and
Unincorporated Association,

Defendants.

CIV. 77-432E

Plaintiffs, four employees and one former employee of
Continental Can Co., Inc. (‘Continental’), commenced
this action under the Employee Retirement Insurance
Security Act of 1974 (“ERISA”), 29 U.S.C. §1001 et segq.,

22a

Appendix— Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

to determine their entitlement to receive benefits from
the defendant New York State Teamsters Conference
Pension and Retirement Fund Employee Pension Benefit
Plan (‘‘the Teamsters Plan’). The action arises out of a
consolidation or merger of operations by Continental in
1969 whereby plaintiffs were transferred from defendant
Local Union No. 375 of the International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of
America (“Local 375’’) to defendant Local Union No. 449
of said International (‘‘Local 449’’). Prior to the transfer,
plaintiffs had [1079] been participants in a pension plan
operated by Continental, but thereafter became
participants in the Teamsters Plan. Plaintiffs claim to be
entitled to receive pension benefits from the Teamsters
Plan based on credit for service prior to the transfer.

Plaintiffs’ Second Amended Complaint, filed August 7,
1980, asserts seven causes of action. The first three
causes of action are asserted against the Teamsters Plan
by plaintiff Miles, who retired from Continental in 1975
and was denied benefits by the Teamsters Plan’s Board
of Trustees. In his first cause of action, Miles claims that
he is entitled to receive a pension based on past service
credits pursuant to an agreement between the parties at
the time of the transfer. Miles’s second cause of action
asserts that the denial of his application for benefits
under the Teamsters Plan was arbitrary and capricious.
His third cause of action alleges that the Board of
Trustees of the Teamsters Plan approved his application
for benefits based on past service credit at a meeting
some time in late 1969 or early 1970. The fourth, fifth
and sixth causes of action are asserted by plaintiffs

23a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

Darlak, Moriarty, Stuermer and Zastrow and correspond
to Miles’s first, second and third causes of action, respec-
tively, except that said four plaintiffs are still employed
at Continental and seek a determination of their future
rights to receive benefits from the Teamsters Plan. The
seventh cause of action, asserted by all five plaintiffs, is
based on alleged fraudulent [1080] misrepresentations by
Local 375 and its President, defendant Clayton, and by
Local 449 in connection with the transfer. Defendant
Walker is sued in his capacity as President of Local 449
and Clayton is sued both personally and as President of
Local 375. Clayton was also a member of the Teamsters
Plan’s Board of Trustees from 1965 to 1976, but is not
sued in his capacity as trustee.

The case is currently pending before me for
preparation of findings of fact and conclusions of law fol-
lowing a non-jury trial conducted from August 25, 1980
to August 28, 1980. I issued a Memorandum and Order
concerning certain evidentiary motions on March 12,
1981 and directed the parties to submit proposed find-
ings of fact and conclusions of law by April 16, 1981.
After such proposals and all trial exhibits were belatedly
submitted to me in July, 1981, I took the matter under
advisement. Upon consideration of the evidence pre-
sented at trial and review of the parties’ proposed find-
ings of fact and conclusions of law, I conclude that
plaintiffs are entitled to judgment on their second and
fifth causes of action.

Miles became a member of Local 375 in 1946 and
' began working for Continental as a truck driver in

3

24a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

March, 1953.' He worked in such capacity until his
[1081] retirement in 1975. Moriarty became a member of
Local 375 in 1949. He began working for Continental as a
truck driver in February, 1953 and has worked there ever
since. Zastrow has been employed by Continental since
1948 but did not begin driving trucks until May, 1956, at
which time he also joined Local 375. Stuermer has been
working for Continental since 1951. He became a truck
driver in November, 1961 and presumably joined Local
375 at that time. Darlak began working for Continental
in 1959. He joined Local 375 in September, 1960 and has
been a truck driver for Continental since that time. Until
1969, all of the plaintiffs worked out of Continental's
plant number 506 located on Shawnee Road in North
Tonawanda, N.Y. (‘‘the Shawnee Road plant”) and were
represented by Local 375. Under an agreement between
Local 375 and Continental, plaintiffs participated in a
pension plan operated by Continental. Plaintiffs were the
only drivers employed by Continental at the Shawnee
Road plant.

In 1969 Continental decided to consolidate its trucking
operations by merging the Shawnee Road plant with
plant number 418, which was located on Clay Street in
Tonawanda, N.Y. (“the Clay Street plant’), and plant
number 81, which was located on Colvin Boulevard. The
merger did not entail the actual physical transfer of
' Miles, Moriarty and Stuermer began working for the Robert Gair
Company, which apparently was taken over by Continental some time
in the mid or late 1950’s. Their pension rights do not appear to have
been affected by the takeover, however, and I have therefore utilized

the date on which they began working for Robert Gair as the date of
commencement of their employment with Continental.

25a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

drivers f:om the Shawnee Road plant to the Clay Street
plant but rather involved the manner in which the
Shawnee Road drivers were supervised. After the
merger, drivers from the Shawnee Road plant telephoned
a dispatcher at [1082] the Clay Street plant to receive
their driving assignments for the following day. They
also delivered shipments of waste to the Clay Street
plant on their return trips, whereas prior to the merger
they had returned directly to Shawnee Road. The
consolidated trucking operation was denominated “plant
number 490°’ by Continental, and the old denominations
506, 418, and 81 were apparently discarded.

Drivers at the Clay Street plant were required to belong
to Local 449, which had a union shop agreement with
Continental. Consequently, the merger necessitated that
plaintiffs transfer their union membership from Local 375
to Local 449.” In a letter to Local 449 dated December 11,

*This transfer was required under the terms of the International
Union's Constitution. Clayton, who had become president of Local
375 in 1955 and continued in such capacity until 1976, testified at
trial that Local 375 could have staged a jurisdictional dispute with
Local 449 concerning representation of the Shawnee Road drivers
after the merger but that such a dispute would probably have been
resolved in favor of Local 449. Walker, who became president of Local
449 in December 1975, also indicated at trial that Local 375 probably
could not have waged a successful fight over representation of
plaintiffs. Walker further testified, however, that in his opinion Local
449 probably would have avoided a jurisdictional dispute with Local
375 if it had appeared that plaintiffs would lose pension benefits by
being forced to transfer their union membership. Welker’s testimony
in this regard is, of course, highly speculative, particularly in view of
the fact that he was not President of Local 449 at the time of the
merger. At any rate. the question whether plaintiffs were technically
required to transfer their union membership is not crucial to my
decision.

26a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

1967 (Plaintiffs’ Exhibit 20), Continental had agreed to
[1083] abide by the terms of the so-called ‘‘National Master
Freight Agreement,’’ which required Continental to make
contributions to the Teamsters Plan on behalf of the
drivers at the Clay Street plant. Thus, at the time of the
merger, the Clay Street drivers had been participants in
the Teamsters Plan for approximately two years.

The basis for plaintiff's claim that they are entitled to
receive credit under the Teamsters Plan for time spent in
the employ of Continental as members of Local 375 is
the Teamsters Plan’s so-called ‘“‘new group rule.’’ Under
this rule, an employee who is a member of a group of
employees which comes into the Teamsters Plan as a
new group is entitled to receive credit for past service
with the employer (up to a maximum of twenty years) if
the employee continues to work for the employer for
another five years and the employer makes contributions
to the Teamsters Plan on behalf of the employee for
those five years. However, if the employee becomes a
member of a particular bargaining unit after the date on
which the bargaining unit first participates in the
Teamsters Plan, he is not entitled to receive past service
credit. The rule is intended to encourage new bargaining
units to join the Teamsters Pian. Plaintiffs claim that
they are entitled to be treated as a new group within the
meaning of the rule.

The new group rule is incorporated in section 3 of the
Teamsters Plan, which section provides as follows:

27a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

[1084] ‘(2) A member [of the Tes .sters Plan] who
becomes a member after January 1, 1954 [the
effective date of the Teamsters Plan] shall be
entitled to credit for service as an Employee * * *
pursuant to (a) or (b) of this subsection, only for the
time spent in the employ of one or more
Participating Employers in contractural relations
with the Union, provided on January 1, 1954, or the
Applicable Effective Date, whichever shall later
occur, he was an Employee of the class for whom
Contributions have been made since January l,
1954. Such service shall be credited for the following
periods and the member shall have the right to
designate the alternative of his choice:

‘(a) Credit for service prior to January 1, 1954.

‘“(b) Credit for service prior to the Applicable
Effective Date * * *.

“Anything herein to the contrary notwithstand-
ing, if a member becomes a member on or after
January 1, 1959, he shall be limited to a maximum
of 20 years’ credit for service as an Employee * * *
prior to January 1, 1954 or the Applicable Effective
Date, depending on his choice as herein set forth
* **.” Plaintiffs’ Exhibits 1 and 2.)

Section 1 of the Teamsters Plan, which contains
definitional provisions, provided in pertinent part:

“(1) ‘Employee’ means a person who is in a
collective bargaining unit represented by the Union,
who is in the employ of any one of the participating
employers, and for whom the participating employer
has agreed to make contributions * * *.

28a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

‘(2) ‘Participating Employer’ means any person,
firm, or corporation having a collective bargaining
agreement with the Union which is authorized to
participate in the Plan upon appropriate action by
such employer acceptable to the Board of Trustees.

(3) ‘Union’ means one of the Local Unions * * *
375 [or] 449 * * * of the International Brotherhood
of Teamsters * * *.

* * * * &

[1085] ‘(5) ‘Contributions’ means the payment to
the [Teamsters] Fund [i.e., the Teamsters Plan] by
_ Participating Employers of such amount or amounts
‘as are specified in Collective Bargaining Agreements
. between the Union and Employers * * * or as the
same may be amended from time to time.

* * * *& *

‘(13) ‘Applicable Effective Date’ means such
date after January 1, 1954 on which a Participating
Employer, as herein defined, shall first become
obligated to make and does make Contributions to
the Fund [i.e., the Teamster Plan] on behalf of
Employees in accordance with the provisions of the
Collective Bargaining Agreement and the rules and
regulations of this Fund [i.e., the Teamsters Plan].”’
Plaintiffs’ Exhibits 1 and 2.

With regard to section 3(2) of the Teamsters Plan,
there is no dispute that plaintiffs became members of the
Teamsters Plan after January 1, 1954 and that
Continental is a participating employer in contractual
relations with the union as defined in section 1(2). The
controverted issue is whether on the Applicable Effective
Date plaintiffs were employees of the class for whom

29a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

contributions had been made since January 1, 1954. In
particular, plaintiffs and the Teamsters Plan offer
conflicting interpretations of the term ‘Applicable
Effective Date” as it is defined in section 1(13). Plaintiffs
argue that the Applicable Effective Date, as applied in
this action, means the date that Continental first became
obligated to make contributions to the Teamsters Fund
on their behalf—to wit, at the time they transferred from
a Local 375 bargaining unit to a Local 449 bargaining
unit. [1086] The Teamsters Plan urges that the
Applicable Effective Date means the date that
Continental first became obligated to make such
contributions on behalf of the drivers at the Clay Street
plant—viz., December 11, 1967. As I noted in my
Memorandum and Order entered February 25, 1980 (which
denied cross-motions by plaintiffs and the Teamsters
Plan for summary judgment), both interpretations of the
plan are tenable. I further indicated in said
Memorandum and Order that parole evidence concerning
interpretation of the Teamsters Plan would be admissible
because the intent and purpose of the Applicable
Effective Date provision could not be ascertained from
the language employed therein.

Although the sequence of events leading up to the
merger is somewhat confused, it seems clear that the
merger took place July 1, 1969 and that a series of meet-
ings among Local 375, Local 449, Continental and
drivers from all three plants was conducted prior
thereto. Considering that the trial of this action was
conducted some eleven years after the merger occurred,
it is not surprising that there was conflicting testimony

30a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

concerning the dates of the merger and the meetings. For
example, Miles testified that the merger occurred
September 1, 1969 and Stuermer testified that it took
place at the end of August. Moriarty, on the other hand,
testified that the merger occurred in July or early
August. Plaintiffs’ Exhibit 4, a letter to the Teamsters
Plan’s Board of Trustees from Continental dated
September 9, 1969, also [1087] suggests that the merger
occurred September 1, 1969; the letter requests the
Board to accept plaintiffs into the Teamsters Plan
effective as of said date.

However, the most persuasive evidence concerning the
date of the merger is provided by Plaintiffs’ Exhibit 19,
whick is an agreement entitled ‘‘Pension and Retirement
Fund Stipulation’”’ executed by Local 449 and
Continental January 26, 1970. The Stipulation requires
Continental to make contributions to the Teamsters Plan
on behalf of employees of plant number 490 as of July 1,
1969, thereby implying that the merger took effect on
that date. This inference is supported by Walker’s
testimony, based on his appointment book for the year
1969, that he attended a meeting at the Clay Street plant
among Local 449, Continental and drivers from both the
Shawnee Road and Clay Street plants June 12, 1969.
This meeting was held immediately prior to the merger.’

*It is clear from all of the testimony in the case that only one
meeting was held which was attended by drivers from both the
Shawnee Road and Clay Street plants, that this meeting was the last
of the series of meetings held prior to the merger and that this
meeting was held only a short while before the merger took place.

3la

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

Further evidence that the merger occurred July 1 rather
than September 1 is provided by Plaintiffs’ Exhibit 9, a
letter dated January 14, 1976 from the Administrator of
the Teamsters Plan to Miles denying Miles’s application
for pension benefits due to lack of sufficient service. The
letter states that as of January, 1976 Miles had only “6
years and 5 tenths” credit. Such credit represents the
amount of time Miles worked under the Teamsters Plan
following [1088] the merger. Counting backwards, six and
one-half years from January, 1976 is July, 1969. Finally,
there is testimony that certain union records indicate
that some of the plaintiffs transferred their union
membership from Local 375 to Local 449 in July, 1969.

Local 375 was first informed of the forthcoming
merger in a telephone conversation between Fred Moss, a
business agent for Local 375, and one Schultz, who was
the supervisor of the Shawnee Road plant. During this
conversation, Local 375 was told that Continental was
creating a new trucking division and that it did not want
to renew the collective bargaining agreement then
applicable to the Shawnee Road drivers. The agreement
was due to expire at the end of July, 1969. At Clayton’s
request, a meeting was held at the Shawnee Road plant
the following day among Schultz, Moss, Clayton and one
Nieman, a management representative sent by
Continental to Buffalo from New York to handle the
merger.‘ At the meeting, Continental informed Local 375

‘Clayton testified that Nieman was at this meeting. Tr.Tr., Vol. III,
at 58. Miles, who came into the meeting later on, testified that
Nieman was not present. Tr.Tr., Vol. II, at 225. It seems probable
that Clayton's testimony is correct in this regard.

32a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

in general terms that there would be a consolidation of
trucking operations. [1089] The major concern of Local

75 at this meeting was the Shawnee Road drivers’
seniority and the drivers’ pension righis were not then
discussed. Miles, who apparently had happened by or
upon the meeting while it was going on, was invited to ©
sit in and was told that the merger was going to take
place. No other drivers were present at this meeting, but
Clayton testified that Moriarty telephoned him following
the meeting and that he, Clayton, informed Moriarty
what had occurred.’

According to Clayton’s testimony, a second meeting
between Local 375 and Continental was held two days
later. At this meeting, Clayton was informed that drivers
from Shawnee Road would not be physically transferred
to the Clay Street Plant but that they would receive
driving assignments from the Clay Street plant. Clayton
was also told, apparently for the first time, that drivers
at the Clay Street plant were participants in the
Teamsters Plan and that the Shawnee Road drivers
would no longer be covered under the Continental
pension plan. Clayton suggested that, in order to avoid a
loss of credit for past service by the Shawnee Road drivers,
Continental should apply to the Teamsters Plan to have
the drivers treated as a new group. [1090] Clayton
explained to Continental that employees brought into the
Teamsters Plan as part of a new group would receive
credit for past service with an employer, up to a

*Moriarty did not give specific testimony concerning this
conversation, but he did testify that he spoke with Clayton “‘now and
then” before the merger. Tr.Tr., Vol. I, at 152.

33a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

maximum of twenty years, if the employee continued to
work for the employer for at least five more years and
the employer made contributions on behalf of the
employee for those five years. Clayton also suggested
that Continental should offer to pay two years of
retroactive contributions on behalf of the Shawnee Road
drivers in order to place the Shawnee Road drivers in the
same relative position as the Clay Street drivers.*
Payment of retroactive contributions was not a
prerequisite to treatment as a new group, but Clayton
indicated that Continental might make such an offer as a
gesture of “good faith.’’ Clayton testified that,
subsequent to this second meeting, Nieman telephoned
him and stated that Local 449 and Continental had
agreed to Clayton’s proposals regarding seniority and
that Continental would apply to the Teamsters Plan to
have the Shawnee Road drivers treated as a new group.

Clayton also testified that, following the second
meeting, he explained the five-year requirement of the
new group rule to Miles.’ Clayton further testified that
Moriarty [1091] again telephoned him after this second
meeting. According to Clayton, he told Moriarty that
Continental would not renew its contract with Local 375
and that the Shawnee Road drivers had no alternative
but to join Local 449. Clayton also stated that he told
Moriarty that matters would be handled by Local 449.
Tr.Tr., Vol. III, at 86.

*As previously noted, in 1969 Continental had been making

contributions to the Teamsters Plan on behalf of the Clay Street
drivers for about two years.

’ Apparently, Miles could not recall this conversation with Clayton,
as he testified that he did not discuss the merger with Clayton until
after it had occurred. Tr.Tr., Vol. II, at 165.

34a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

Subsequently, a meeting was held among Continental,
Local 449, Local 375 and the Shawnee Road drivers at
the Shawnee Road plant.’ This meeting was fairly brief
and provided the drivers with general information
concerning the merger. The meeting was run by Bill
Buckinroth, a business agent for Local 449, and was
attended by the plaintiffs and by Nieman, Schultz and
Moss.’ Apparently, plaintiffs were informed that an
arrangement would be worked out whereby they would
not lose credit for past service under the Continental
pension plan. Tr.Tr., Vol. II, at 226 (Miles’s testimony);
Vol. III, at 77 (Clayton’s testimony)."°

[1092] A final meeting was held at the Clay Street plant
about two weeks before the merger. This meeting was
also run by Buckinroth and was attended by Nieman and
other Continental representatives, Walker, and the
drivers from all three of the merged plants, including all
of the plaintiffs... No one from Local 375 attended

‘ Again, the date of this meeting is somewhat unclear. However, it
occurred prior to the meeting attended by the drivers from all three
plants.
* Stuermer, Zastrow and Darlak all testified that Walker was present
at this meeting. See, Tr.Tr., Vol. II, at 286 and 344; Vol. III, at 28.
However, Walker testified that he did not attend such a meeting, and
Miles also testified that Walker was not present. See, Tr.Tr., Vol. II,
at 254; Vol. III, at 342. I see no reason to doubt the veracity of
Walker's and Miles’s testimony in this regard.
'® Because Clayton himself did not attend the meeting, his testimony
is based on what Moss told him and is therefore hearsay.
'' Miles and Stuermer testified that one Kowalski, a supervisor at the
Clay Street plant, was present but that Schultz was not. Tr.Tr., Vol.
II, at 228, 287. Darlak testified that Schultz did attend. Tr.Tr., Vol.
III, at 29.

Stuermer also testified that Nieman was not present (Tr.Tr., Vol.
II, at 287), but other testimony is to the contrary.

35a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

because, as Clayton explained, by then the merger
concerned only Local 449.'* During the meeting,
plaintiffs were told that they would be covered by a
collective bargaining agreement between Local 449 and
Continental and that they would participate in the
Teamsters Plan. .

Plaintiffs’ rights under the Teamsters Plan were
discussed at this meeting but it is unclear whether they
were expressly told that they would definitely receive
credit for past service. Miles testified that plaintiffs were
told by Buckinroth that they would receive “past
pension rights,’’ provided that they worked an additional
five years. Tr.Tr., Vol. II, at 163-164. However, on cross-
examination, Miles [1093] testified that Buckinroth stated
that “everything would be taken care of,” and that
Nieman stated that ‘they [Continental and Local 449]
were working it out.” Jd., at 229-30. Miles’s testimony
on cross-examination indicates that no _ definitive
arrangement concerning past credit had been made.
Moriarty testified that the plaintiffs were told that they
would enter the Teamsters Plan ‘“‘as a group,’’ impliedly
with past service credit. Tr.Tr., Vol. I, at 145; Vol. II, at
76. Stuermer, Zastrow and Darlak also testified that
Buckinroth stated that plaintiffs would receive credit or
past service, provided that they worked for Continental
under the Teamsters Plan an additional five years.
Tr.Tr., Vol. II, at 290, 346; Vol. III, at 31. However,
Stuermer’s testimony on cross-examination that
plaintiffs were told that their pension rights were ‘‘being
"* Moriarty telephoned Clayton prior to the meeting and asked him to
attend, but Clayton declined.

36a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

taken care of”’ indicates that a firm arrangement had not
been made. Tr.Tr., Vol. II, at 303. Walker, who was in
training to become a business agent at the time, testified
that plaintiffs were told that they would be covered by
the Teamsters Plan but that there was no discussion
about their receipt of past service credit. Tr.Tr., Vol. III,
at 340. However, I find it unlikely that there would have
been no discussion concerning plaintiffs’ rights to receive
credit for past service. On balance. the evidence shows
that plaintiffs were most likely told that some
arrangement would be made (impliedly with the
Teamsters Plan) for them to receive past service credit.

[1094] Notes of the meeting were taken by Walker. At
some point during the meeting, Moriarty asked that the
“minutes” reflect that plaintiffs would be entitled to
past service credit as a new group. Moriarty also asked
that he be provided with a copy of the minutes, but such
a copy was never received by him. Walker testified that
he gave his notes on the meeting to Buckinroth but that
he could not find the notes in Buckinroth’s files. Tr.Tr.,
Vol. III, at 344.

Moriarty and Miles appear to have been the most
active of the plaintiffs with regard to past service credits
inasmuch as each had over fifteen years of service under
Continental’s pension plan. They dealt primarily with
Clayton because Clayton was a member of the Board of
Trustees of the Teamsters Plan and because he was
President of the local union from which they were
transferring their membership. Moriarty testified that he
telephoned Clayton several times prior to the merger and
that he also saw Clayton at a boat race in June, 1969.

37a

Appendix— Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

According to Moriarty, Clayton assured him that
plaintiffs’ rights would be protected. On _ cross-
examination, he testified that Clayton told him that he
would receive credit from the Teamsters Plan for service
under the Continental pension plan. Tr.Tr., Vol. II, at 59.
In general, however, Moriarty’s testimony was vague,
contradictory and not very credible.

Miles testified that he discussed his pension rights
with Clayton after the merger had occurred. According
to [1095] Miles, he saw Clayton at the union hall and
Clayton told him that plaintiffs would receive a ‘paper’
from the Board of Trustees of the Teamsters Plan
indicating that they would be entitled to past service
credit as a new group. Tr.Tr., Vol. II, at 165-67. No
such paper was ever received by Miles or any of the
other plaintiffs. Miles further testified that, in several
telephone conversations, Clayton told him that plaintiffs’
pension benefits were “being taken care of.’’ Tr.Tr., Vol.
II, at 205. He also testified that, at the time of the
merger, he knew that the question whether plaintiffs
would receive past service credit had not been resolved.
Tr.Tr., Vol. II, at 202."

Moriarty and Zastrow also discussed their pension

inquired the status of his pension rights, and he, Clayton,
replied that there could be no resolution of the matter until
Continental applied to the Board of Trustees to have plaintiffs

38a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

taken care of.’ Tr.Tr., Vol. II, at 347. Moriarty testified
that Nieman had informed him that there was some
question whether Continental would be required to
contribute a certain amount of money to the Teamsters
Plan in order [1096] to have plaintiffs receive past service
credit. Tr.Tr., Vol. I, at 155-56. He also testified that
Nieman told him that an arrangement whereby plaintiffs
would receive past service credit would be made, but
that such an arrangement had not been finalized. Tr.Tr.,
Vol. i, at 178. Nieman apparently returned to his office
in New York shortly after the merger and no longer was
in Buffalo.

Sometime in September, discussions were held among
the plaintiffs concerning the possibility that they might
hire an attorney to clarify their pension rights.'* The idea
was initially proposed by Stuermer to Moriarty.
Apparently, both felt that an attorney might be helpful
in obtaining some firm indication that plaintiffs would
receive past service credit. However, Miles, Darlak and
Zastrow were satisfied that an arrangement would be
made [1097] so that they would not lose their past

39a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

service credit and that a lawyer was not necessary."
Thus, no action was taken by any of the plaintiffs to hire
a lawyer until the beginning of this lawsuit.

Continental sent a letter to the Teamsters Plan's
Board of Trustees September 9, 1969 requesting that
plaintiffs be accepted into the plan as a new group and
that they receive past service credit. Plaintiff's Exhibit
4.'* [1098] The letter stated that, if any of the plaintiffs
became eligible for and exercised retirement before five
years of service under the Teamsters Plan, Continental
would pay an amount of money sufficient to provide a
total of five years’ worth of contributions on behalf of
that particular employee. In this respect, the terms of
the letter were contrary to the Teamsters Plan's new

'* Darlak testified that he didn't ‘‘want no part of no lawyers because
I was..completely satisfied that it was all taken care of.’ Tr.Tr., Vol.
III, at 33. Zastrow testified that he was opposed to hiring a lawyer
because he believed that the union should have handled plaintiffs’
pension rights. Tr.Tr., Vol. Il, at 347. Miles testified that he trusted
Clayton and believed that Clayton would take care of the matter. /d..
at 168.

* Plaintiff's Exhibit 4 is an unsigned copy of the letter addressed to
the Board of Trustees and reads in pertinent part as follows:

“Please accept the following Teamster Employees of
Continental Can Company, Inc. Plant 490 into the Pension
Fund effective September 1, 1969.

“(Darlak, Miles, Moriarty, Stuermer, Zastrow * * *|
“It is agreed that should any of these men become eligible for

40a

Appendix—Findings of Fact, Conciusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

group rule, which requires the employee to be employed
under the Teamsters Plan for at least five years in order
to receive past service credit.

Sol Tabor, an actuarial consultant for the Board of
Trustees who also handled administrative matters,
presented the letter to the Board at its meeting held
from September 18 to September 20, 1969. The Board
rejected Continental’s application to treat plaintiffs as a
new group.’’ Tabor testified that the basis for [1099] this
rejection was that plaintiffs had been transferred from
one plant to another and that transferred employees were
not entitled to new group status.'* Clayton concurred in

‘'The minutes of the meeting held September 18, to September 20,
1969 read in pertinent part as follows:

“A letter dated September 9, 1969 from the Continental Can
Company, Inc., Buffalo Plant, was read. The Company had
transferred five employees from another Plant into the Buffalo
Plant. These employees had been covered by another Pension
Plan with another Union at this other Plant. The Buffalo Plant
is covered by the Teamsters Contract. The company is
requesting that these five persons be granted past service credit
for their employment in the other Plant not covered by the
Teamsters Contract, inasmuch as they would be considered as a
new group entering the Buffalo Plant. After discussion, on
motion made and seconded, the Trustees unanimously voted
that these five employees be treated as new employees, not as a
new group, and therefore not entitled to past service credit.”
Plaintiff's Exhibit 6.
“It is understood that these men will be treated as a new group
and their past service will be recognized by your Pension Fund
after five years of contributions on behalf of these men. * * *”’
“* Tabor testified that his understanding at the time of Continental's
application was that plaintiffs had been transferred to a new plant
rather than that a new division composed of three formerly separate
plants had been created. Tr.Tr., Vol. III, at 318-19.

4la

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

the Board’s conclusion that new group status could not
be granted on the basis of the September 9th letter
because the letter was contrary to the new group rule’s
requirement that an employee must continue to work for
the employer for five years following his entry into the
Teamsters Plan. Additionally, the letter did not offer to
make retroactive contributions on plaintiffs’ behalf as
Clayton had suggested and did not sufficiently describe
that there had been a [1100] merger rather than a mere
transfer of employees. Clayton believed, however, that
plaintiffs were entitled to be treated as a new group
because they had not merely been transferred to an
existing unit; rather, in Clayton's view, plaintiffs were
part of an entirely new division.’ [1101] Clayton stated
this belief to the Board and also told the Board that the
letter did not adequately describe the change that had

'* Clayton testified that:

“** * * while I could well realize that the [Teamsters Plan], under
no conditions, could accept what the company was proposing
insofar as the five year requirement was concerned, that, in my
opinion, did not alter the fact that this was a new group.* * *

“I tried to explain to the trustees again, the setup in the
Buffalo area, that the people in Shawnee Road had remained at
the Shawnee Road plant, the people at the 490 plant remained
at the 490 plant, that no merge—physical merge had taken
place outside of control. * * * I turned to Mr. Tabor, who had
read the communication, and I said, ‘* * * If these people were
still members of 375, it would be no problem here, and the mere
fact that 375 was obligated to transfer them to Local 449
should make no difference. It can make no difference. It’s still a
new group into the [Teamsters Plan]. We're not physically
involved with these people at the 490 plant. This is an entirely
new division.’ Tr.Tr., Vol. III, at 96-97.

It should be noted that Clayton's reference to the existing Clay
Street plant as ‘‘the 490 plant” is erroneous.

42a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

occurred. Clayton indicated to the Board that he would
contact Continental to have it provide further
information regarding the merger of its trucking
operations. However, before any further information was
obtained, a letter dated October 15, 1969 was sent to
Continental informing it that its application on behalf of
plaintiffs had been rejected. Plaintiffs were not formally
told, either by Continental, the Teamsters Plan or the
unions, that the Board had voted to reject Continental's
application to treat them as a new group.

In early September, 1969 Moriarty had been injured in
a boating accident which took place shortly after the
merger. As a result of the accident, Moriarty was
hospitalized and unable to work for several weeks.
Moriarty testified that he telephoned Clayton about a
month after the accident to inquire how he should go
about applying for disability benefits from the New York
State Teamsters Health and Hospital Fund (‘‘the Health
and Hospital Fund’’). Tabor also served as consultant
and in an administrative capacity for the Health and
Hospital Fund, which had the same address as the
Teamsters Plan. In response to Moriarty’s inquiry,
Clayton called Ann Stucko, who was manager of both
the Teamsters Plan and the Health and Hospital Fund.
According to Clayton, Stucko told him to have Moriarty
mail in the appropriate application [1102] forms and that
the Health and Hospital Fund would begin paying
disability benefits to Moriarty. Clayton also testified
that Stucko told him she could not pay Moriarty’s
hospital bills without Tabor’s approval. Stucko told
Clayton that T bor’s approval was necessary because

43a

Appendix— Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

plaintiffs had been rejected as a new group by the Board
of Trustees of the pension plan. See, Tr.Tr., Vol. III, at
117-19. Moriarty subsequently obtained the proper forms
and mailed them to the Health and Hospital Fund, but
still did not receive benefits. He apparently telephoned
Clayton again, who in turn telephoned Don Wells, who
was President of Local 449 at the time. Moriarty
testified that he began receiving benefits (including
payment of his hospital bills) about a month or six weeks
after sending in the completed forms.

Moriarty testified that he had telephoned Clayton
three or four times in connection with his claim for
disability benefits. He also testified that he did not
discuss the status of plaintiffs’ pension rights with
Clayton during these conversations and that Clayton
never advised him that the Teamsters Plan’s Board of
Trustees had refused to accept plaintiffs as a new group.
Tr.Tr., Vol. I, at 158-59, 161. However Clayton testified
that, when Moriarty called to inquire about disability
benefits, he, Clayton, informed Moriarty that the Board
had in fact rejected the application which had been made
by Continental on plaintiffs’ behalf. Because [1103]
Clayton’s testimony was generally far more credible than
Moriarty’s, it seems likely that such a conversation did
take place. However, according to Clayton, he also told
Moriarty that the matter was still pending and that it
would be “clarified’’ and ‘‘takjen] care of.” Tr.Tr., Vol.
Ill, at 116-19, 248-49.

The October meeting of the Teamsters Plan’s Board of
Trustees was held after the 15th, the date of the letter to
Continental informing it that the Board had rejected its

44a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

application to treat plaintiffs as a new group. It is
unclear why the Board sent such a rejection letter to
Continental without first obtaining additional
information, as Clayton had indicated he would do. At
any rate, Clayton testified that he was unable to contact
Nieman before either the October or November meeting
of the Board. Finally, later in November, Nieman
returned Clayton’s telephone calls. Clayton testified that
he told Nieman that Continental’s application had been
rejected because its proposal concerning the five-year
provision was unacceptable and because the letter did
not make clear that plaintiffs had not been merely
transferred. Tr.Tr., Vol. III, at 110. According to
Clayton, he told Nieman to contact Tabor and clarify the
matter. Clayton further testified that in December, 1969
Nieman telephoned him a second time and informed him
that he, Nieman, had spoken with someone (not Tabor) at
the Teamsters Plan’s office and explained what had
[1104] occurred at the Shawnee Road and Clay Street
plants. Jd., at 210-11. Clayton presumed that Nieman had
spoken with Stucko. Of course, Clayton's testimony
concerning Nieman’s statement that he, Nieman, had
telephoned the Teamsters Plan is pure hearsay entitled
to little or no evidentiary weight. Tabor testified that he
had not received a phone call from anyone at Continental
nor had he received any message of such a phone call.
Id., at 287.

45a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

In November, 1969 Stuermer telephoned Clayton and
inquired about plaintiffs’ pension rights. Stuermer
testified that Clayton told him that the matter had been
resolved and that by Christmas he, Clayton, would send
Stuermer a letter to such effect. Tr.Tr., Vol. II, at 292-93.
Stuermer never received such a letter. Clayton’s account
of the November telephone conversation differs from
Stuermer’s. According to Clayton, he told Stuermer that
the application to treat plaintiffs as a new group had
been rejected and that he, Clayton, had been instructed
to contact Nieman to resolve the matter. Clayton also
testified that he told Stuermer that, if a new application
were submitted to the Board of Trustees by Continental,
he would have a copy sent to Stuermer. Tr.Tr., Vol. III,
at 126.

At the January, 1970 meeting of the Board of
Trustees,” Clayton again raised the question whether
plaintiffs would [1105] be entitled to receive past service
credits. The minutes of the meeting, held January 12th,
indicate that Clayton argued that plaintiffs should have
been treated as a new group and that they were entitled
to past service credit. Plaintiffs’ Exhibit 7. The minutes
also state that, “After discussion, at the request of the
Trustees, Mr. Clayton agreed to send in a letter
describing the actual condition and situation.” Ibid.
Clayton and Tabor also testified that Clayton was to
provide a letter setting forth the circumstances of
Continental’s merger of its trucking operations. Clayton
testified that he did send such a letter to the Board of
Trustees, but Tabor testified that such a letter was never

.* No meeting was held in December, 1969.

46a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

received by the Board. Because no copy of such a letter
was produced, it appears that Clayton failed to send it.

Clayton again raised the matter at the Board’s next
meeting, which was held from February 26 to March 2,
1970 in Miami Beach, Florida. Clayton testified that,
although he had written a letter to the Board explaining
why plaintiffs should be treated as a new group, the
Board did not have the letter before it at this meeting
because the letter had not been brought to Florida.
Tr.Tr., Vol. III, at 130. Clayton testified that, at this
meeting, several of the trustees began to understand his
argument that Continental had really only set up a
central dispatch system, that plaintiffs had not actually
been transferred to the Clay Street plant and that
plaintiffs were indeed [1106] a new group. Jd., at 138. He
further testified, however, that, at the suggestion of
William Mosley, an employer trustee, the Board
requested a letter from Local 449 confirming the facts
that had been outlined by Clayton. Jd., at 131-32. The
basis for Mosley’s suggestion was that plaintiffs were
then members of Local 449. According to Clayton, the
Teamsters Plan’s office was to contact Local 449 to
request Local 449 to submit such a letter. However, it
does not appear that any request for information
concerning plaintiffs’ status was ever made to Local 449,
nor was any such written information received by the
Teamsters Plan.

_ The minutes of the February-March meeting of the
Board of Trustees state that:

“The Trustees again discussed the inclusion in the

Pension Fund of a group of employees of

47a

Appendix— Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

Continental Can Company who had been transferred
from one plant to another. See Minutes of
September 18-20, 1969 and January 12, 1970. Since
these employees were formerly members of Local
449 and were now members of Local 375, the
Trustees tabled further review pending receipt of a
letter from Local 449 describing the circumstances
in this matter.” Plaintiffs’ Exhibit 8.”'
It appears that the Board’s meetings were run
informally, and that technically there was no pending
motion which [1107] was ‘‘tabled.’’ Tabor testified that
the Board was willing to receive and consider new
information concerning plaintiffs’ status, and that in
doing so it was acting out of ‘‘courtesy”’ to Clayton. He
further testified that the Board never formally altered its
position, taken at the September meeting, that plaintiffs
were not a new group. See, Tr.Tr., Vol. III, at 279-83.

In March, 1970 certain negotiations involving the
Teamsters were held in Washington, D.C. The
negotiations were attended by Clayton, Mosley and
Wells, among others. Clayton testified that, at the end of
a negotiating session, he was seated in a hotel lobby with
Mosley and Wells. According to Clayton, he suggested
that, inasmuch as the Board of Trustees had indicated a
desire to receive further information concerning plaintiffs
from Local 449, Wells could explain the matter to
Mosley. Clayton testified that Wells did in fact explain
that there had been no physical transfer of plaintiffs
from one plant to another, that upon such explanation
Mosley agreed with Clayton that plaintiffs were indeed a
new group, and that Mosley stated that he would take
care of the matter. Tr.Tr., Vol. III, at 134-35.

*' The minutes’ statement that plaintiffs ‘“‘were formerly members of
Local 449 and were now members of Local 375”’ is erroneous.

Ka “4 2
ye ne

48a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11. 1982.

Neither Mosley nor Clayton raised the matter at the
next meeting of the Board. However, Clayton testified
that he believed that Mosley could have arranged with
Tabor to have plaintiffs treated as a new group and that
no formal action by the Board was necessary. Tr.Tr.,
{1108] Vol. III, at 136, 255. Thus, Clayton thought that
the matter had been finally resolved. Tabor testified that
he did have authority to grant applications for treatment
of employees as a new group, if he felt the application
was routine. Jd, at 295, 308. However, Tabor also
testified that he did not discuss Continental’s application
to treat plaintiffs as a new group with Mosley at any
time after the Board’s February-March meeting. Jd., at
301. The Board took no further action on Continental’s
application, nor was any discussion held with respect
thereto, until Miles retired in 1976.

Clayton had no further conversations with any of the
plaintiffs concerning their pension rights until 1976.
However, Walker testified that in January, 1971 he and
Buckinroth attended a meeting concerning certain
operational problems at the Shawnee Road plant.
According to Walker, Moriarty asked Buckinroth about
plaintiffs’ pension rights. Walker testified that
Buckinroth replied that he didn’t know about the status
of plaintiffs’ pensions and that he would have to “check
it.” Tr.Tr., Vol. III, at 343; Vol. IV, at 29-30.

Miles retired from Continental January 9, 1976. He
had submitted an application for pension benefits to the
Teamsters Plan several months prior to his retirement.
Mosley, who by then had become Administrator of the

cae y >:

49a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

Teamsters Plan, sent a letter to Miles dated January 14,
1976 indicating that Miles was not eligible to receive
[1109] a pension from the Teamsters Plan. Plaintiff's
Exhibit 9. Mosley’s letter states in part that “‘you [Miles]
only have credit for the years 1969 through 1975, giving
you a total of 6 years and 5 tenths. This is less than the
15 years required by the Plan.” Miles testified that he
thereupon telephoned Walker, who had just become
President of Local 449 in December, 1975, but Walker
told Miles that the pension arrangements had been ‘“‘Mr.
Clayton’s deal.” Tr.Tr., Vol. II, at 176.” Miles also
testified that he contacted Clayton in April, 1976.
Clayton was still a member of the Teamsters Plan’s
Board of Trustees at that time. Apparently, he had
already learned from Local 375 that Miles’s application
had been rejected,” and had sent a letter to Continental
requesting its assistance. Plaintiff's Exhibit 11.%* Miles
testified that Clayton [1110] told him that he, Clayton,
“would see what he could do.”’ Tr.Tr., Vol. II, at 250.

Clayton testified that he requested the Board of
Trustees to resolve Miles’s application at three separate
meetings in 1976. However, a number of trustees who

** Walker did not give any testimony concerning conversations with
Miles following Miles’s rejection.

* Clayton testified that he had learned that Miles’s application for a
pension had been rejected in March, 1976 while he was in Florida.
Tr.Tr., Vol. III, at 143.

* Plaintiffs’ Exhibit 11 is a letter dated March 5, 1976 addressed to
Continental and bears the signature “Stanley Clayton."’ Clayton
testified that the signature was not his and that he did not recall
writing this letter. However, it seems likely that the letter was
dictated by Clayton and signed in his name by his secretary. See,
Tr.Tr., Vol. III, at 144-146.

50a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

were members of the Board in 1969 and 1970 when the
matter had been handled initially were no longer on the
Board and had been replaced by new trustees. According
to Clayton, the Board merely referred back to the
minutes of its September, 1969 meeting and therefore
concluded that plaintiffs were not entitled to be treated
as a new group. Tr.Tr., Vol. III, at 152, 237-38. Although
Clayton testified that he could not remember whether
the Board also referred to the minutes of the meetings
held in January and February-March, 1970, he also
testified that in 1976 he explained to the Board that the
matter had been discussed in 1969 and 1970 for several
months. Jbid. Tabor was still an actuarial consultant for
the Board in 1976 and presumably would have been
present at the meetings in which Miles’s application was
discussed. However, Tabor did not testify concerning
events occurring after Miles had retired.

Clayton also discussed the matter with Mosley after
Miles’s application had been rejected. According to
Clayton, Mosley stated that he could not remember any
of the details concerning the arrangements that had been
made in 1969 and 1970. Tr.Tr., Vol. III, at 150. Clayton
[1111] further testified that Mosley subsequently
contacted him and said that he had only been able to
locate the minutes from the Board’s meetings in
September, 1969 and January and February-March, 1970
but that, if Clayton could obtain any other information,
he would handle the matter. Jbid. Clayton testified that
he replied to. Mosley that he could not provide any
further information. Jbid. Apparently, Clayton also sent

5la

Appendix— Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

a second letter dated May 7, 1976 to Continental
requesting that it contact Mosley. Plaintiff's Exhibit
2.

The Board took no further action with respect to
Miles’s pension application. Moreover, the Board did not
attempt to obtain any information (other than what was
reflected in its own minutes for the years 1969 and 1970)
relating to whether plaintiffs should be treated as a new
group at any time after Miles’s retirement. Miles was
eventually granted a pension by Continental but this
grant does not appear to affect his rights with respect to
the Teamsters Plan. See, Plaintiffs’ Exhibit 10. He
testified that he would have received a pension of
approximately $511 per month if his application for
benefits based on service credit had been granted by the
Teamsters Plan. Tr.Tr., Vol. II, at 181. The Teamsters
Plan has not disputed the amount of the pension [1112]
to which Miles would be entitled.

Subject Matter Jurisdiction

Section 502(a) of ERISA provides that ‘‘{a] civil action
may be brought— (1) by a participant or beneficiary—
* * * (B) to recover benefits due to him under the terms
of his plan, to enforce his rights under the terms of the
plan, or to clarify his rights to future benefits under the
terms of the plan ***.’’ 29 U.S.C. §1132(a). Federal
district courts are granted jurisdiction over actions
pursuant to section 502(a) by section 502(e) of ERISA.
29 U.S.C. §1132(e)1). The Teamsters Plan is a proper
defendant under section 502(d)(1) of ERISA. 29 U.S.C.

“This letter also appears to have been dictated by Clayton and
signed in his name by his secretary. See note 24, supra.

52a

Appendix— Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

$1132(d)\(1). Defendants argue that I lack subject matter
jurisdiction over this action because plaintiffs’ claims
under section 1132(a) arose prior to January 1, 1975, the
effective date of said section.” Thus, defendants argue
that plaintiffs have failed to state any claim for [1113]
relief under section 1132 and that I may not exercise
pendent jurisdiction over plaintiffs’ fraud claims. Of
course, plaintiffs bear the burden of establishing that I
may exercise jurisdiction over this action.”

It is generally held that a cause of action under
ERISA accrues at the time the trustees of a pension plan
deny an application for benefits and that ERISA is
applicable to a cause of action based on a denial of
benefits which occurs after ERISA'’s effective date. Paris
v. Profit Sharing Plan, Etc., 637 F.2d 357, 361 (5th Cir.)
cert. denied, US. , 102 S.Ct. 140 (1981); Reiherzer
v. Shannon, 581 F.2d 1266, 1272 (7th Cir. 1978); Oates v.

** As noted in my Memorandum and Order entered June 14, 1979, at
2, n.2, there is a split of authority whether section 1132(a) is effective
as of the date of ERISA's enactment (September 2, 1974) or as of the
date provided by section 514 of ERISA, 29 U.S.C. §1144 (January 1,
1975). In the present case, the parties have agreed that the effective
date of section 1132 is January 1, 1975. Moreover, as | also noted in
my June 14, 1979 Memorandum and Order, plaintiffs’ claims either

the effective date of section 1132 is January 1, 1975 or September 2,
1974.

*" In my Memorandum and Order filed February 25, 1980, I concluded
that plaintiffs had at least made a sufficient showing of jurisdiction
to withstand defendants’ motion for summary judgment. However

53a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

Teamsters Affiliates Pension, 482 F.Supp. 481, 484, n.7
(D.D.C. 1979); Morgan v. Laborers Pension Trust Fund
for N.Cal., 433 F.Supp. 518, 522-23 (N.D. Cal. 1977). This
holding is premised on the notion that a claim against a
trustee based on a denial of benefits does not accrue
until there has been ‘‘a clear and continuing repudiation
of the right to trust benefits."’ Kostv v. [1114] Lewis, 319
F.2d 744, 750 (D.C.Cir. 1963), cert. denied, 375 U.S. 964
(1964). See, Morgan v. Laborers Pension Trust Fund for
N.Cal., supra, at 523. In the present case, Miles’s
application was denied by the Teamsters Plan’s trustees
in January, 1976—a full year after the effective date of
ERISA. Nevertheless, defendants agrue that the denial
of Miles’s application was based on events occurring in
1969 and 1970. However, I find that there was no ‘‘clear
and continuing repudiation” of plaintiffs’ rights to
receive pension benefits based on past service credit until
Miles's application for benefits was rejected.

The only formal action taken by the Board with regard
to plaintiffs’ pension rights in 1969 and 1970 was, of
course, its rejection of Continental's application to treat
them as a new group at its September, 1969 meeting.
However, because the Board’s meetings were run in an
informal manner, I do not place significant weight on the
fact that the Board voted to reject the application.
Rather, the Board's entire course of conduct in 1969 and
1970 is far more probative on the question whether
plaintiffs’ entitlement to receive past service credit was
clearly repudiated.

54a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

At the September, 1969 meeting of the Board, Clayton
indicated his view that plaintiffs were in fact a new
group and offered to obtain additional information for
the Board. At the Board’s meeting in January, 1970,
Clayton again argued that plaintiffs should be treated
[1115] as a new group. Clayton agreed, at the Board's
request, to send a letter describing the situation in
greater detail. Finally, at the February-March meeting,
Clayton persuaded a number of trustees that plaintiffs
were in fact a new group. In order to confirm the
information which had been orally provided by Clayton,
the Board requested that Local 449 send it a letter.
Thus, the Board demonstrated repeated willingness to
receive and consider additional information concerning
plaintiffs’ status. Moreover, the Board’s own minutes for
the February-March meeting state that ‘“‘the Trustees
tabled further review pending receipt of a letter from
Local 449***.’’ The minutes clearly indicate that
plaintiffs’ status was still under consideration and that
further consideration of the matter was contemplated by
the Board. Tabor testified that the Board would not have
actually re-opened its decision not to grant plaintiffs new
group status unless a letter had been received. See,
Tr.Tr., Vol. III, at 316-18. This testimony suggests that
there was no formal reconsideration or re-opening of the
Board’s decision in the absence of a letter. However,
Tabor’s testimony does not imply or suggest that the
Board’s decision was final in the sense that it could not
be reversed or that the Board was not actually
considering plaintiffs’ status in light of Clayton’s
arguments. Regardless of any formal and technical re-

55a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

opening of the decision to deny new group status to
plaintiffs, the Board was in actuality still [1116]
considering plaintiffs’ status even after it had voted in
September, 1969 not to treat them as a new group.
Viewed in its entirety, the Board’s conduct demonstrates
that it had not clearly repudiated plaintiffs’ entitlement
to be treated as a new group under the Teamsters Plan.

It is also significant that in 1969 and 1970 plaintiffs
were never told in unambiguous terms that they would
not be treated as a new group. Clayton testified that he
informed both Moriarty and Stuermer that in its
September, 1969 meeting the Board of Trustees had
rejected Continental’s application to accord new group
status. Moriarty denied that such a conversation with
Clayton had occurred, but his testimony was not
credible. Stuermer also denied that Clayton told him that
Continental’s application had been rejected, but it seems
probable that he merely misunderstood Clayton.”
However, according to Clayton’s own testimony, Clayton
assured both Moriarty and Stuermer that the matter was

56a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvir, U.S.D.J.,
Dated March 11, 1982.

so notify plaintiffs. Because plaintiffs were not told
plainly and unambiguously that they would not be
treated as a new group and/or that they would not
receive past service credit, there was no clear and
continuing repudiation of plaintiffs’ rights to receive past
service credit until Miles’s application for pension benefits
was denied in 1976.”

Application of ERISA to the claims set forth by
plaintiffs in this action is not inconsistent with section
514(b\1) of ERISA, which states that ‘“‘[tJhis section
shall not apply with respect to any cause of action which
arose, or any act or omission which occurred, before
January 1, 1975.’’ 29 U.S.C. $1144(b)(1). Plaintiffs’ first
six causes of action are all based on or arise out of the
repudiation of their right to receive past service credits
but such repudiation was not clearly accomplished until
1976. A claim based on a denial of [1118] pension
benefits after January 1, 1975 states a cause of action
under ERISA, even though the claim may also involve or
stem from conduct or action which occurred prior to said
date. Woodfork v. Marine Cooks & Stewards Union, 642

service credit. For-purposes of determining the applicability of ERISA,
the pertinent issue is whether plaintiffs’ rights to receive benefits
were clearly and continuously repudiated prior to ERISA's effective
date. No such repudiation occurred until 1976. Moreover, plaintiffs’
reliance on information received from Clayton was entirely
reasonable, inasmuch as Clayton was the President of their former
local union as well as a member of the Board of Trustees.

57a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

over plaintiffs’ common law fraud claim. Mine Workers
v. Gibbs, 383 U.S. 715 (1966).

Statute of Limitations

The Teamsters Plan has also raised a defense that
plaintiffs’ claims under ERISA are barred by the
appropriate statute of limitations. Because ERISA does
not evpressly prescribe a limitations period for actions
under section 1132,% I must look to the most clearly

*The Teamsters Plan has suggested that plaintiffs’ claims are
untimely under section 413 of ERISA, which provides:

“No action may be commenced under this subchapter [29
U.S.C. §§1001-1144] with respect to a fiduciary's breach of any
responsibility, or obligation under this part [29 U.S.C. §§1101-
1114], or with repect to a violation of this part after the earlier
of—

(1) six years after (A) the date of the last action which
constituted a part of the breach or violation, or (B) in the
case of an omission, the latest date on which the fiduciary
could have cured the breach or violation, or

(2) three years after the earliest date (A) on which the
plaintiff had actual knowledge of the breach or violation, or
(B) on which a report from which he could reasonably be
expected to have obtained knowledge of such breach or
violation was filed with the Secretary under this subchapter
***." 29 U.S.C. §1113.

This is an action ‘‘to recover benefits due to [plaintiffs}'' under the
Teamsters Plan pursuant to 29 U.S.C. §§1132(a)1)B) rather then an
action ‘‘with respect to a fiduciary’s breach of any responsibility,
duty or obligation” under 29 U.S.C. §§1101-1114. Thus, by its own
terms, section 413 is inapplicable in the current action.

Moreover, even if section 413 is applicable herein, both the six-year
period set out in section 413(1) and the three-year period set out in
section 413(2) must be measured from the denial of Miles’s
application in 1976. Under either subsection, plaintiffs’ claims are

58a

Appendix— Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

analogous [1119] state statute of limitations. Board of
Regents v. Tomanio, 446 U.S. 478, 483-84 (1980);
Johnson v. Railway Express Agency, 421 U.S. 454, 462
(1975).

Section 213 of New York's Civil Practice Law and
Rules (“‘CPLR’’) provides that:

“The following actions must be commenced within
six years:

1. an action for which no limitation is specifically
prescribed by law;

2. an action upon a contractural obligation or

liability express or implied * * *.”’
The Teamsters Plan concedes that section 213 provides
the state statute of limitations most analogous to an
action [1120] under ERISA but points out that the
limitations period must be measured from the time the
cause of action accrued. CPLR §$203(a). As previously
discussed, plaintiffs’ claims under ERISA did not accrue
until Miles’s application was denied in 1976. Because the
initial Complaint in this action was filed in 1977,
plaintiffs’ claims under ERISA are timely.

Plaintiffs’ Second and Fifth Causes of Action

The captioned causes of action allege that the
Teamsters Plan’s refusal to grant them credit for service
in the employ of Continental prior to 1969 is arbitrary
and capricious. It is clear that, if plaintiffs are deemed to
be a new group as that term is applied under the
Teamster’s Plan, they are entitled to past service

59a

Appendix—Findings of Fact, Conclusions of Law
and Order of Elfvin, U.S.D.J.,
Dated March 11, 1982.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_1226%3A1. Public record. Not legal advice.