Opinion ID: 1232908
Heading Depth: 3
Heading Rank: 1

Heading: Central States's Expulsion Authority

Text: CRST and the Participants first argue Central States did not have the contractual authority to expel CRST based upon the use of independent contractors and a decline in employee participation. CRST and the Participants concede Central States can expel an employer for adverse selection in certain circumstances involving the employer's employees. However, CRST and the Participants contend the collective bargaining agreements, the Participation Agreement, and the Trust Agreement do not allow Central States to expel CRST based upon alleged adverse selection involving the use of independent contractors because (1) the documents authorize CRST to use independent contractors who are barred by federal law to participate in Central States, and (2) under the doctrine of ejusdem generis, the language and examples of adverse selection in the Trust Agreement and Special Bulletin 90-7 limit expulsion based upon adverse selection to employment practices involving employees, not independent contractors. CRST and the Participants contend Central States's expulsion of CRST was unlawful because CRST had enrolled all eligible employees in Central States, and CRST was not in violation of the collective bargaining agreements, Participation Agreement, or the Trust Agreement. We review the terms of a contract de novo. See Cardinal Health, 560 F.3d at 898 (citation omitted). Central States's authority under the collective bargaining agreements, the Participation Agreement, and the Trust Agreement is freely reviewable. [2] Cent. Hardware, 770 F.2d at 109 (internal marks and citations omitted). However, Central States's determination that the trust documents authorize their [actions] has significant weight, for the trust agreement explicitly provides that `any construction [of the agreement's provisions] adopted by the Trustees in good faith shall be binding upon the Union, Employees and Employers.' Cent. States, Se. and Sw. Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 568, 105 S.Ct. 2833, 86 L.Ed.2d 447 (1985); see also Cent. Hardware, 770 F.2d at 110. Central States did have the contractual authority to expel CRST. Article III § 1 of the Trust Agreement allows Central States to reject any collective bargaining agreement... [when] the Employer is engaged in one or more practices or arrangements that threaten to cause economic harm to, and/or impairment of the actuarial soundness of, the Fund. This language does not limit Central States's authority to certain forms of employment practices. Central States only has to find an employer is engaged in one or more employment practices which may threaten the financial or actuarial viability of the fund. Once Central States makes such a determination, it is authorized to act. See Cent. Hardware, 770 F.2d at 110 (concluding the trust agreement gives [Central States] authority to reject payments from participating employers which threaten [Central States's] actuarial soundness); see also Cent. Transp., 472 U.S. at 570-71, 105 S.Ct. 2833 (stating Central States has all such powers as are necessary or appropriate for the carrying out of the purposes of the trust, including the authority to fulfill fiduciary duties to protect plan beneficiaries (internal marks and citations omitted)). The examples provided in Article III § 1 and Special Bulletin 90-7 do not limit Central States's authority, because the examples are not all-encompassing. The example in Article III § 1 is preceded by included but not limited to, and Special Bulletin 90-7 states the list of examples is not exhaustive and not intended to be an all inclusive list of unacceptable arrangements. Special Bulletin 90-7 further disclaims that [a]ny collective bargaining arrangement that encourages adverse selection is subject to rejection by the Board of Trustees. The examples, thus, did not limit Central States's authority to expel an employer if the employer uses an employment practice which threatens to harm or impair the fund. CRST's legal right to use independent contractors also does not affect Central States's authority to expel CRST under the adverse selection rule. Central States did not expel CRST because CRST was using independent contractors. There is no evidence in the record indicating Central States was attempting to prohibit CRST's use of independent contractors or require contributions on behalf of independent contractors. Central States expelled CRST because CRST had an actuarially adverse employment group when CRST shifted work to independent contractors rather than hiring new employees. Central States's determination that this transfer of work was adverse to the fund was permissible under Article III § 1. Similarly, CRST's compliance with the collective bargaining agreements does not impair Central States's expulsion authority. The bargaining agreements do not override the authority granted Central States in Article III § 1 of the Trust Agreement. See Cent. Hardware, 770 F.2d at 108, 110 (holding Central States had authority under the Trust Agreement to expel an employer even though the employer had tendered payments to Central States in compliance with a collective bargaining agreement); see also Schneider Moving & Storage, 466 U.S. at 373-74, 104 S.Ct. 1844 (explaining Central States was not bound by an arbitration provision found in collective bargaining agreements). Given the broad language of Article III § 1 of the Trust Agreement and the significant weight afforded Central States's determination that it had the authority to expel CRST, we are convinced Central States did have the authority to expel CRST. See Cent. Hardware, 770 F.2d at 110.