Opinion ID: 431940
Heading Depth: 1
Heading Rank: 3

Heading: the union fraud issue

Text: 9 Bjorklund contends that Warren, acting as an officer of Local 899, induced him into entering the initial agreement by misrepresenting his eligibility for a pension under the agreement. The lower court held that fraud by the union, as opposed to fraud by a trust fund itself, can not serve as an affirmative defense to a trust fund collection action. 10 Under traditional contract law, the Trust Funds, as third party beneficiaries of the collective bargaining agreements, would be subject to any contract defenses generally available against the contracting parties themselves. But the traditional contract law does not apply in full force in suits brought under the LMRA and ERISA to collect delinquent trust fund contributions. See Chicago District Council of Carpenters Pension Fund v. Dombrowski, 545 F.Supp. 325, 326 (N.D.Ill.1982). Under Lewis v. Benedict Coal Corp., 361 U.S. 459, 80 S.Ct. 489, 4 L.Ed.2d 442 (1960), and a section of the Multiemployer Pension Plan Amendments of 1980, the range of defenses to such a suit is severely limited. 11 In Benedict Coal, the employer, sued by trustees for delinquent contributions, argued that the union had violated the no-strike clause of the contract that established the trust fund. The employer attempted to set off any damages caused by the strike against any delinquent contributions it owed the trust fund. The Supreme Court rejected this position by holding that the union's performance of its promises was not a condition precedent to Benedict's duty to make trust fund contributions. 12 Congress included a section in the Multiemployer Pension Plan Amendments Act of 1980 that was designed to further limit the defenses to an action for delinquent trust fund contributions. Section 306(a) provides: 13 Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement. 14 29 U.S.C. Sec. 1145 (Supp. V 1981). According to the Senate Labor Committee, this provision was introduced because simple collection actions brought by plan trustees have been converted into lengthy, costly and complex litigation concerning claims and defenses unrelated to the employer's promise and the plans' entitlement to the contributions. Senate Committee on Labor and Human Resources, S. 1076--The Multiemployer Pension Plan Amendments Act of 1980: Summary and Analysis of Consideration, 96th Cong., 2d Sess., 44 (Comm.Print, Apr. 1980). 15 In Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 102 S.Ct. 851, 70 L.Ed.2d 833 (1982), this section of the 1980 legislation came before the Supreme Court. The defendant employer claimed that its promise to make certain trust fund contributions was illegal. The collective bargaining agreement at issue included a clause requiring the employer to make contributions based on each ton of coal it produced and each hour worked by employees. It also required contributions based on each ton of coal purchased by the employer from a non-union operator who did not make contributions based on coal production. The employer claimed that the latter provision was unenforceable because it violated Sections 1 and 2 of the Sherman Act and Section 8(e) of the National Labor Relations Act (prohibiting hot cargo clauses whereby an employer agrees not to do business with another, presumably nonunion, employer). The Supreme Court held that this was a proper defense. Thus, an employer can successfully defend a suit for delinquent contributions by showing that the promise to make contributions was itself illegal. Id. at 88, 102 S.Ct. at 862. 16 Under Benedict Coal, the 1980 statute, and Kaiser Steel, a defense is properly allowable when it relates to a promise to make contributions that is illegal. Bjorklund does not assert that his promise to make contributions is illegal. Rather, he claims that this promise was fraudulently induced. We hold this defense is not a legitimate defense to the Trust Funds' suit for delinquent contributions. Therefore, summary judgment was properly entered on behalf of the plaintiff Trust Funds. AFFIRMED. 3