Opinion ID: 6982231
Heading Depth: 2
Heading Rank: 1

Heading: Death Benefit Fund Elimination

Text: The district court held that the elimination of the Death Benefit Fund (“the Fund”) was lawful. The court held that the plaintiffs’ contentions that the elimination of the Fund violated ERISA could not be sustained because (1) the Fund was not a “welfare benefit plan” or “pension benefit plan” subject to ERISA, 29 U.S.C. § 1002 (1999); and (2) even if the Fund were a plan under ERISA, the Fund did not vest such that it could not be amended in accordance with the TCU’s constitutional amendment procedures, the court holding that it was so amended. Further, the court held that the elimination of the Fund did not violate the ADEA because the plaintiffs could not show discrimination, much less unlawful discrimination. The Fund was terminated as to all members and retirees, not just the older constituents. The court also held that the plaintiffs could not establish that the elimination of the Fund was discriminatory in impact because they could not make a showing that there was a disparate impact on a protected class.
Appellants argue that the district court erred in holding that the Fund was a gift outside the reaches of ERISA. The appellants point to both the fact that the TCU members paid into the Fund and the fact that requests for death benefits were processed by the Fund as “claims” to support the argument that the Fund provided a welfare or pension benefit within the meaning of ERISA. The appellants maintain that, at a minimum, there are disputed fact issues precluding dismissal or summary judgment. We disagree with the appellants. The district court correctly held that the Death Remembrance Fund did not come within the ERISA definitions of an “employee welfare benefit plan” or “welfare plan.” 4 While those terms are not specifically defined as they apply in this situation by the text of 29 U.S.C. § 1002 (“Definitions”), 29 C.F.R. Pt. 2510 specifies that the type of payment at issue here is excluded from the meanings of “employee welfare benefit plan” and “welfare plan.” The relevant portion of the regulations provides that the terms “employee welfare benefit plan” and “welfare plan” shall not include a program under which contributions are made to provide remembrances such as flowers, an obituary notice in a newspaper or a small gift on occasions such as the ... death ... of employees, or members of an employee organization, or members of their families. 29 C.F.R § 2510.3—1(g). While appellants argue that this is not a “small gift” made as a “remembrance! ],” we disagree. Plaintiffs maintain that “in 1931, when the fund was initially established at $300 ... the amount would almost suffice to buy a new car.” We do not find this consideration compelling. What is compelling is that the $300 figure was not increased at least for the past 50 years, and should now certainly be considered a “small gift.” Appellants have offered us no indication that the money provided by the Death Benefit Fund was—by the time of its elimination—intended to be anything other than a small remembrance. The Union President, Robert Scardelletti, maintained that since the 1959 Regular Convention of the Union, it had been recognized that the $300 was a token gift, as opposed to a benefit useful for funeral expenses. While the appellants argue that the 1922 issue of the Union newsletter, The Railway Clerk, makes clear that the Fund was intended to be a benefit fund of a sort that would now fall within ERISA parameters, we do not find this argument persuasive. An examination of the newsletter reveals that the “process” for paying the $300, to which the appellants give much import, simply ensures that it is only members in good standing who have paid their dues who can receive (or have their beneficiary receive) the money. While appellants also argue that the fact that the members are required to designate a “beneficiary” for receipt of the money is telling, we disagree. Such is akin to specifying an address to which flowers should be sent in the event of death: It is not a legally meaningful act.
The appellants contend that the district court erred in determining that a prima facie case of age discrimination was not established. We disagree. Every member, officer, or retiree of the TCU will be denied the $300 now that the Death Benefit Fund has been eliminated. We can take judicial notice of the fact that everyone ultimately dies and the fact that more people die when they are older than when they are younger, but we do not find these facts sufficient to sustain an age discrimination claim against the TCU. This portion of the district court’s decision is affirmed.
The appellants argue that a state-law cause of action for the tort of conversion can stand. However, the district court did not address the issue of whether an action for conversion of the Death Benefit Fund by the defendants could be sustained. The plaintiffs’ complaint did plead such a claim. See Complaint, ¶ 23, at 6 (“Defendants have acted to appropriate to themselves or for their benefit the $4,600,-000 million [sic] Death Benefit Fund.... ”). Though we could entertain this claim for the first time at the appellate level, see Commercial Union Assurance Co. v. Milken, 17 F.3d 608, 615 (2d Cir.1994), we instead leave it to the district court to “pass on the issue in the first instance,” Brocklesby Transp. v. Eastern States Escort Services, 904 F.2d 131, 134 (2d Cir.1990). We therefore remand this issue to the district court.-