IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

ELAINE L. CHAO, SECRETARY : CIVIL ACTION

 OF LABOR, UNITED STATES :

 DEPARTMENT OF LABOR :

:

v. :

:

: 

COMMUNITY TRUST COMPANY : NO. 05-mc-18

MEMORANDUM AND ORDER

McLaughlin, J. October 30, 2008

In January of 2004, the Department of Labor (“DOL”)

initiated an investigation into fiduciary duty violations

involving the Regional Employers’ Assurance Leagues’ Voluntary

Employees’ Beneficiary Association Plan and Trust Agreement (the

“REAL VEBA Trust”) pursuant to the Employee Retirement Income

Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”). The

trust covers multiple single-employer plans. Penn-Mont Benefit

Services, Inc. is the administrator of the Plan, and Community

Trust Company (“CTC”) is the trustee. In connection with this

investigation, the DOL issued a subpoena on December 23, 2004, to

CTC. The Court granted DOL’s petition to enforce this subpoena

after CTC refused to comply with its terms. 

The order granting the petition was appealed to the

United States Court of Appeal for the Third Circuit. That Court

vacated that order on the grounds that the DOL must establish

proper jurisdiction to conduct the investigation, as required

Case 2:05-mc-00018-MAM Document 87 Filed 10/31/08 Page 1 of 5
2

under the Gramm-Leach-Bliley Act, 15 U.S.C. §6801 et seq. 

The Gramm-Leach-Bliley Act permits the disclosure of

nonpublic personal information by a financial institution when

that disclosure is made in order “to comply with a properly

authorized civil, criminal, or regulatory investigation or

subpoena.” 15 U.S.C. 6802(e)(8). An investigation is “properly

authorized” only when the investigating agency has jurisdiction

to conduct that investigation. Chao v. Community Trust Co., 474

F.3d 75 (3d Cir. 2007). Therefore, on remand from the Court of

Appeals, the DOL must establish that the information it seeks

from the respondent in the course of its investigation falls

within the agency’s jurisdiction. 

An employee benefit plan like those comprising REAL

VEBA Trust falls within the scope of ERISA, and therefore under

the jurisdiction of the DOL, in two situations. Gruber v.

Hubbard Bert Karle Weber, Inc., 159 F.3d 780, 786-90 (3d Cir.

1998). The first situation requires that a group of employers

that establishes and maintains the plan be a bona fide

association of employers tied by a common economic or

representation interest. The second situation requires only that

a single employer adopt a program of benefits sponsored by a

group or association that is not itself an employer or employee

organization. In this situation, the plan adopted by the single

employer must itself be an ERISA-covered plan. Id. 

Case 2:05-mc-00018-MAM Document 87 Filed 10/31/08 Page 2 of 5
3

In this case, the DOL is investigating a collection of

single employer plans administered by CTC as trustee, the second

situation discussed above. The DOL must establish that the

single employer “plans” constitute ERISA-covered plans. An ERISA

plan exists if a reasonable person can ascertain the intended

benefits, a class of beneficiaries, the source of financing, and

procedures for receiving benefits from the circumstances

surrounding the plan. Id. at 789. The United States Court of

Appeals for the Third Circuit has stated that “the crucial factor

in determining whether a ‘plan’ has been established is whether

the employer has expressed an intention to provide benefits on a

regular and long-term basis.” Id.

The DOL has provided documentation sufficient to

establish that its investigation falls within its jurisdiction

and is therefore properly authorized. The REAL VEBA “Health and

Welfare Benefit Plan Document,” to which participating employers

were party, provides that benefits may be paid out over the

course of up to 120 months, or as the plan administrator

otherwise decided. Pet. Ex. 4 ¶5.02. The DOL has provided

evidence of several individually covered plans within the REAL

VEBA Trust, demonstrating that the Department’s investigation is

properly within its jurisdiction. Moreover, the DOL has

indicated by way of affidavit that over 100 employers within the

REAL VEBA Trust established benefit plans for their employees

Case 2:05-mc-00018-MAM Document 87 Filed 10/31/08 Page 3 of 5
4

falling within the DOL’s jurisdiction in the context of an ERISA

investigation. “The ongoing, predictable nature of [the]

obligation” created under the REAL VEBA plans implicates ERISA

and the DOL’s jurisdiction over those plans. Fort Halifax

Packing Co. V. Coyne, 482 U.S. 1, 14 n.9 (1987).

The DOL has jurisdiction to conduct the current

investigation into the REAL VEBA Trust. For this reason, and for

the reasons outlined in the Court’s original Order of May 5,

2005, the Court grants the DOL’s petition to enforce its

administrative subpoena.

An appropriate order follows.

Case 2:05-mc-00018-MAM Document 87 Filed 10/31/08 Page 4 of 5
IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

ELAINE L. CHAO, SECRETARY : CIVIL ACTION

 OF LABOR, UNITED STATES :

 DEPARTMENT OF LABOR :

:

v. :

:

: 

COMMUNITY TRUST COMPANY : NO. 05-mc-18

ORDER

AND NOW, this 30 day of October, 2008, upon th

consideration of the parties’ memoranda regarding ERISA coverage

of the REAL VEBA Trust and the Department of Labor’s jurisdiction

over the investigation of CTC as trustee of the REAL VEBA Trust,

and upon consideration of the Petition to Enforce Administrative

Subpoena (Docket No. 1), IT IS HEREBY ORDERED that the Petition

to Enforce Administrative Subpoena is GRANTED for the reasons

outlined in the attached Order of October 30, 2008. It is

further ORDERED that the parties shall discuss the timing of the

defendant’s compliance with the subpoena on or before November 6,

2008. If the parties cannot agree on a schedule, they shall

submit a letter informing the Court of their respective

positions.

BY THE COURT:

/s/Mary A. McLaughlin 

Mary A. McLaughlin, J.

Case 2:05-mc-00018-MAM Document 87 Filed 10/31/08 Page 5 of 5