Opinion ID: 775358
Heading Depth: 2
Heading Rank: 1

Heading: ERISA &#167 404(a)(1)(D)

Text: 7 ERISA &#167 404(a)(1)(D) provides in relevant part that a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and in accordance with the documents and instruments governing the plan. . . . Sprague makes two claims that are mutually exclusive. First, he argues that if UPS was obligated under the governing documents to contribute to the Fund during the abatement period, then the trustees' failure to enforce that obligation violates the provision. Second, he argues that if UPS was not obligated to contribute, then the trustees' award of service credit and retirement benefits to UPS employees during the abatement period violated the provision because the Pension Fund's Plan provides that [a] participant shall earn contributory service for any employment with a contributing employer required to make employer contributions on his behalf according to a collective bargaining agreement. Both of these claims, Sprague contends, should have been presented to a jury. 8 Although they hinge on different legal theories, each contention relies on a faulty premise: that the CBA and the Central Supplement constitute the entirety of the governing documents. We agree with the district court's finding that this is not so. When interpreting a collective bargaining agreement, a court must consider the scope of other related collective bargaining agreements, as well as the practices, usage and customs pertaining to such agreement. Transportation-Communication Employees Union v. Union Pacific Railroad Co., 385 U.S. 157, 161 (1966). The Kubalanza letter and the letter of agreement, laying out the abatement plan which the parties entered into before the 1997- 2002 CBA was created, are key components of the overarching agreement between UPS and IBT, and must be included within the scope of governing documents. The Fund, UPS, and IBT all clearly intended that the abatement plan be considered in conjunction with the CBA. The terms of the abatement plan were negotiated along with the CBA. Furthermore, each of the three negotiating parties agrees that no abatement plan would exist without the new CBA and, more importantly, no new CBA would exist without the abatement plan. See Central States, Southeast and Southwest Areas Pension Fund v. Kroger Co., 73 F.3d 727, 731-32 (7th Cir. 1996) (noting the importance of the negotiating parties' intent in defining the scope of the collective bargaining agreement); Murphy v. Keystone Steel & Wire Co., 61 F.3d 560, 567 (7th Cir. 1995) (emphasizing that when a specific plan is negotiated along with a CBA, the plan should be read together with the CBA). The abatement plan need not have been expressly incorporated into the CBA to be considered part of the overall agreement. Central States, Southeast and Southwest Areas Pension Fund v. Kroger Co. at 731. 9 Construing the governing documents under ERISA &#167 404(a)(1)(D) to include those that describe the abatement plan does not end our discussion, however. Two questions remain: (1) Under the governing documents, was UPS obligated to contribute during the abatement period? and (2) If not, do the governing documents require that no service credit be granted to UPS employees during the abatement period?
10 Sprague contends that the CBA suggests, and the Central Supplement mandates, that UPS contribute to the Fund during each month of the five-year term of the CBA, including the abatement period. Article 14 of the Central Supplement states: 11 Effective on the dates listed below [including the abatement period], the Employer shall contribute to [the Fund] the corresponding dollar amounts for each full-time seniority employee covered by this Agreement (except as may be modified by an approved Local Union Rider). 12 By ignoring this provision, Sprague argues, the trustees have breached their fiduciary duties under ERISA &#167 404(a) (1)(D), which requires them to discharge their duties in accordance with the governing documents. When we consider the governing documents as a whole, however, as the district court did, it is clear that the trustees have not violated the provision. As discussed above, the Kubalanza letter and letter of agreement state that [UPS] shall temporarily cease contributing to the Pension Fund during the period August 1, 1997 to and including December 31, 1997. IBT, UPS, and the Fund each properly assumed that the documents of the abatement plan were controlling. The Central Supplement, and the CBA itself, were written after the abatement plan was accepted, and concerned the multiple funds of which UPS was a member; they were not written with the intention to override the Central States abatement plan. When read holistically, the governing documents do not require UPS to contribute to the Fund during the abatement period. Therefore, the trustees did not violate ERISA &#167 404(a)(1)(D) by failing to require such contributions.
13 Sprague next advances that if UPS had no obligation to contribute during the abatement period, then the Fund's award of service credit and retirement benefits to UPS employees during that time was a violation of the Fund's governing documents and, therefore, of ERISA &#167 404(a) (1)(D). This argument is nearly impossible to support because we find, as the district court did, that UPS had no contribution obligation because the Kubalanza letter and the letter of agreement are integral components of the governing documents. Therefore, the argument that the award of credits and benefits violates the documents of the agreement is belied by the language of the letter of agreement--a crucial governing document--itself: 14 During this period, the Pension Fund shall grant contributory service credit for all purposes on behalf of all eligible employees of the Company who worked and were entitled under the new collective bargaining agreement to have pension contributions on their behalf. 15 The analysis here is the same as that above. UPS, IBT, and the Fund intended for the documents comprising the abatement plan to be controlling as to the behavior of UPS and the Fund during the months of August through December 1997. The trustees, therefore, did not fail to act in accordance with the governing documents and did not breach their fiduciary duty under ERISA &#167 404(a)(1)(D). The Fund's Plan does state that [a] participant shall earn contributory service credit for any employment with a contributing employer required to make employer contributions on his behalf according to a collective bargaining agreement. However, the governing documents must be read together in a way that reconciles provisions of a bargaining agreement. Diehl v. Twin Disc, Inc., 102 F.3d 301, 306 (7th Cir. 1996). The abatement plan provided a way for the Fund to remain financially sound by keeping UPS as a member who was obligated, but for five months, to contribute to the Fund through 2002. It is part of the overall collective bargaining agreement; UPS's employees, then, were entitled to credit so long as UPS was contributing according to the overall abatement agreement. It was, and no violation occurred.