Document: 472 U.S. 559 105 S.Ct. 2833 86 L.Ed.2d 447 CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, et al., Petitionersv.CENTRAL TRANSPORT, INC., al. No. 82-2157. Argued Nov. 27, 1984. Decided June 19, 1985. Rehearing Denied Aug. 28, See 473 926, 106 17. Syllabus Petitioners are multiemployer benefit plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). The operate under trust agreements for purpose providing health, welfare, and pension benefits to employees performing work that is covered collective-bargaining negotiated between a labor union respondent trucking companies. Under these agreements, each employer must make weekly contributions petitioners such employee, agrees be bound agreements. Because they so large, rely on self-reporting determine extent an employer's contribution liability, police this system conducting random audits participating employers' records. When respondents refused allow petitioners' requested audit respondents' payroll, tax, personnel records, including records who claimed were not plan participants, filed action in Federal District Court seeking order permitting audit. granted summary judgment favor petitioners. Appeals reversed, holding had show "reasonable cause" believe specific employee was before gaining right access employee's Held: Respondents conduct Pp. 565-581. (a) Various provisions granting trustees power enable them administer trusts properly, provision demand examine pertinent support Moreover, assertion highly relevant agreements' legitimate interests fully conforms generally accepted auditing standards. 565-568. (b) Petitioners' trustees' interpretation as authorizing inconsistent with ERISA, indeed, entirely reasonable light ERISA's policies. Rather than explicitly enumerating all powers duties trustees, Congress invoked common law define scope their authority responsibility. law, have necessary or appropriate carrying out purposes, examination structure leaves no doubt validity weight goals which rely. Both concerns informing participants rights status assuring financial integrity determining class potential claimants employers full prompt fulfillment obligations proper weighty within framework. 568-574. (c) A should monitoring compliance its alternative themselves. Cf. Schneider Moving & Storage Co. v. Robbins, 466 ----, 104 1844, 80 366. trustee's duty extends beneficiaries plan, whereas union's confined current employed bargaining unit it has representational rights. Nor would Department Labor's policing acceptable alternative. That insufficient resources policing, neither nor legislative history shows any congressional intent primarily centralized federal requirements. 575-579. (d) To themselves come forward assure required feasible. While reporting requirements designed receive information about rights, do placing plans. Thus, give initial notice status, need know participants' identities, very here sought verify. 579. (e) fact could bring against delinquent breaches discovered does foreclose from deter discover early. suggest foreclosed ignores various fiduciary ERISA conflicts concern adequate funding promptly collecting contributions. 580-581. 698 F.2d 802 (CA 6 1983), reversed. Russell N. Luplow, Bloomfield Hills, Mich., Joshua I. Schwartz, Washington, D.C., amicus curiae petitioners, special leave Court. Patrick A. Moran, Birmingham, respondents. Justice MARSHALL delivered opinion 1 issue presented whether participates 1974, 29 U.S.C. § 1001 seq., involving denies plan. 2 * 3 two large plans, Central States, Southeast Southwest Areas Pension Fund Health Welfare (hereinafter referred collectively States).1 Governed 302(c)(5) Labor Management Relations Act, 1947, 186(c)(5), (ERISA), 88 Stat. 829, amended Multiemployer Plan Amendments 1980, Pub.L. 96-364, 94 1208, specified affiliates International Brotherhood Teamsters, Chauffeurs, Warehousemen Helpers America (Teamsters). 4 Transport) 16 interstate companies, which, either individually through association, engages collective Teamsters. Pursuant bargaining, become signatory National Master Freight Agreement supplemental, individual States performs govern States. 5 large—with thousands employers—Central relies principally liability.2 polices employers. B On December 5, 1979, contacted Transport arrange audit, described part program " 'periodic reviews Participants Beneficiaries.' 522 F.Supp. 658, 662 (ED Mich.1981). take place at Transport's offices encompass, among other subjects, '[d]etermination eligible Collective Bargaining Agreements.' Ibid. Among documents auditors those participants. 7 explained independently membership entitled participate thus verify making contributions.3 Transport, however, insisted 60% noncovered employees. "order independent verification complete payroll been accurately reported Transport." Id. 660.4 8 parties agreed facts case dispute, court treat pleadings cross-motions judgment. After examining States' contractual relationship responsibilities concluded means "independently verify[ing] individuals insure payments being made." ordered "that provide representatives documentation procedure undertaken allowed continue." Ibid.5 9 Sixth Circuit (1983). Interpreting held Id., 809-812. We certiorari, 467 1250, 3531, 82 837 (1984), we now reverse Appeals. II 10 governing include Teamsters Generally, obligate signed operation 11 These number supportive trustees. 12 note first agreement6 places responsibility "continuing Trust applicable agreement." App. Pet. Cert. A-44 (Art. III, 1). designated recipients "vested right, title interest moneys." 3). 13 agreement contains general grants properly. Most generally, authorize "do acts, expressly authorized . ., [they] may deem protection property [under agreement]." A-47 IV, 14(e)). also broad relating collection contributions, "to collect Employers Fund," id., A-45 4), "take steps Trustees discretion best effectuate preservation owed Fund." 14 more trustee records: 15 "Production Records—Each shall furnish Trustees, upon names addresses Employees, Social numbers, hours worked past industry employment files reasonably require connection administration Trust. may, representatives, Employer Employer's business whenever deemed advisable Trust." A-46 5) (emphasis added). interpret field like one case. In particular, argue not-concededly-covered "pertinent records" because "proper" verifying determined substantial determination participant argue, failure report perform prevent notifying entitlements create unfunded liabilities chargeable plans.7 incentive underreport covered, underreporting reduce his liability 17 reasonableness propriety confirmed, accounting profession's standards, articulate elementary principle auditor certain selection decision, he refer universe broader itself: 18 "When planning particular sample, consider objective achieved procedure, combination procedures applied will achieve objective. population draws sample For example, able detect understatements account due omitted items sampling recorded items. An detecting involve selecting source included." American Institute Certified Public Accountants, Codification Statements Auditing Standards, AU 350.17, p. 223 (1985) 19 dispute significant weight, provides "any construction [of agreement's provisions] adopted good faith binding Union, Employees Employers." A-48 17).8 There evidence bad-faith motive behind program's propriety. assert trust's interests, if our inquiry merely into question seem clear. III 20 Appeals, nonetheless, rejected power. court's view, unreasonable policies protections embodied ERISA. agree cannot excuse construed policies, see 1104(a)(1)(D), but find inherent inconsistency offered Indeed, 21 based, makes clear concerns. 22 This occasions discussed policy Nachman Corp. Benefit Guaranty Corp., 446 359, 361, 100 1723, 1726, 64 354 (1980), noted enacted after "almost decade studying Nation's private plans" plans.9 found there "rapid substantial" growth "size, scope, numbers" "the continued well-being security millions dependents directly affected plans." 1001(a). But recognized "owing inadequacy [pre-ERISA] minimum soundness stability respect funds pay promised [have been] endangered." principal purposes correct condition sure worker defined retirement—and fulfilled whatever conditions obtain vested benefit—he actually it." U.S., 375, S.Ct., 1733. One methods accomplishing "minimum standards" "assur[e] equitable character [employee plans] soundness." 23 general, reflect Congress' "assuring character" rather fiduciaries, responsibility.10 trusts, understood "such trust." Scott, Law Trusts 186, 1496 (3d ed. 1967) Scott).11 24 manner exercised, further statute strict standards conduct, derived trusts—most prominently, standard loyalty care. former, "shall discharge solely exclusive beneficiaries; defraying expenses administering plan." 1104(a)(1)(A). 1103(c)(1); cf. 186(c)(5). latter, care, skill, prudence, diligence circumstances then prevailing prudent man acting capacity familiar matters use enterprise aims." 1104(a)(1)(B).12 25 relies. clearly assumes act ensure receives entitled, can used behalf beneficiaries, identify aware terms. C 26 fundamental common-law preserve maintain assets, Bogert 582, 346, encompasses "determin[ing] exactly what forms subject-matter [and] beneficiaries." 583, 348 (footnotes omitted). expected "use location control without unnecessary delay." 355.13 similarly "investigate identity beneficiary when fix party" "notify gifts made them." 348-349, n. 40. 27 subject responsibilities, only result borrowed itemized Act. Act's disclosure see, e.g., §§ 1021, 1022, 1024(b),14 task certainly participant.15 requires even temporary assets 1106(a)(1)(B) (prohibiting "caus[ing] engage transaction, transaction constitutes direct indirect extension credit" employer), requirement plan.16 28 strongly suggested well positions administrative agencies charged 209 supplements plans' reports requiring needed duties. 1059. Secretary interpreted creating determinations adopt systems And endorsed appropriateness programs purpose. notes "many multiple written orderly reasonable, diligent systematic review accounts of, audits." Department's "which establish implement [such] procedures" "by failing contributions" violated 406's prohibition extensions credit Prohibited Transaction Exemption 76-1, 41 Fed.Reg. 12740, 12741 (1976); accord, Advisory Op. 78-28A (Dec. 1978) (reprinted A71-A74). statute, conclude conflict justify program. framework IV 30 reasons why nevertheless improper matter law. largely relied presence protecting plan's safely limited instances where participant. speculated "[t]he Funds enjoy called dispense whose made," F.2d, 813, did own safeguard therefore possibility [could] [the trustees] seek." 31 effectively policed interested unions Labor, diminishing compliance. reliance Government oversight consistent fields sort here. 32 (1) 33 notion favors enforcement bargained exclusion simply survive last Term's decision 364, 366 (1984). Schneider, judicial obligations, proposition favoring dependence grievance arbitration enforcement.17 34 Of greatest significance Court's conclusion compelling erode assures diminishment necessarily up union. unions' toward quite different scope. 35 while local breadth view situations exist single unit, and, arrangements might compromise whole: 36 "These funds. Each employer. Any diminution fund caused adverse effect participants." 373, 1850 37 Lewis Benedict Coal Co., 361 459, 469, 489, 495, 442 (1960). supra, 376, 22, 1851, (the "runs members coextensive statutory representative unit").18 38 Similarly, bargaining-unit workers group's regarding overall terms employment. duty, contrast, accordance nature less cases, accordingly refrained rest action. Barrentine Arkansas-Best System, Inc., 450 728, 742, 101 1437, 1445, 67 641 (1981) (union goal maximizing compensation whole payment wages). context primary "wide protection," ensure: 39 "A 'to maximize members.' sacrifice elements package 'if expenditure increased whole.' (citation 40 NLRB Amax 453 322, 336, 2789, 2797, 69 672 ("The atmosphere fiduciaries operate, mandated [29 186(c)(5) ] wholly th[e] process economic pressure [that characterizes bargaining]"). rationale cases area precludes obligations.19 (2) 42 intend lessen fiduciaries. 43 First, day-to-day operations Nation. United amicus, informs us approximately 900,000 file annual 11,000 12,000 As illustrate, some large. 1, supra. It surprising argues "[i]t unrealistic centralizing comparable afforded Brief Amicus Curiae 20, 11. 44 Second, although investigatory powers, 1134, withheld initiate actions enforce obligations. 1132(b)(2), 1145. noted, given sue 1132. 45 challenged likelihood behalf. emphasized provisions. 813 (citing 1021). identities nn. 14, 15, accompanying text. is, course, precisely audit.20 46 Appeals' remaining reason questioning focused claims ever never reject ultimate ability remedy breach forecloses Such suggestion inform gain immediate trust, avoid time expense litigation, eventually prove uncollectable insolvencies. passively jeopardize beneficiaries' properly comply 17, 1850, 47 argument obviously motivating passage contributions.21 "[a]ll accruals based service [would] paid immediately." H.R.Rep. 93-533, (1973), U.S.Code Cong. Admin.News 4652. 1082. Reports bills declared: 48 "The offers funded accumulated least equal accrued liabilities, rate sufficient times." 7; S.Rep. 93-127, pp. 9-10 (1973) (identical language), 4645, 4846.22 V 49 Given vision little difficulty outlined documents. specify hold. hold identifying question. involves kind program, so. occasion confer demanded face limit 1104(a)(1)(D). Last, analyze factual showing claim conducted Although furthering should, considered outside administration.23 50 51 ordered. 52 STEVENS, whom THE CHIEF JUSTICE REHNQUIST join, concurring dissenting part. 53 If enters authorizes prohibited I understand announce today it. 54 my opinion, involved contract; conferred itself. My disagreement differing interpretations contract 55 quotes, "each demand" concerning "its Employees." A-46. term "Employees," letter capitalized comprise Instead, Article I, 3, 'Employee' herein include," part, persons both pursuant A-43.* 56 acquiesce understandable investigate necessary. true majority "in A-48. pointed out, language "does carte blanche undertake [respondents'] They concept her authority." 802, 810 57 sum, acknowledge quoted lend conclusion, painstaking accurate analysis set Judge Kennedy's far persuasive. 806-810. over meaning public interest, record contract. extent, respectfully dissent. noted: indicates largest Taft-Hartley 13,000 serve 500,000 job classifications agreements." 811 1983). 16, follows: "Traditionally, operated basis, initially base group [Central States] monthly fluctuations agreement. Transport] compute invoice statement forwards Transport. termination layoff formerly agreement, adjust defendant's change. Conversely, addition new employees, increase amount corresponds figure multiplied hired employees." infra, 566-568. 301(a) 185(a), 502 reaching "mindful ha[d] repeatedly stated confidential data copied removed premises once satisfied [bargaining] work." F.Supp., 664. identical respects. References that, participation, vesting, accrual 1052, 1053, 1054, award "solely basis performed employer, regardless [of] contribute defaulted contributions." Secretary's judgment, "[a]ny Trustees' resolution contrary unlawful unenforceable." 76-89 (Aug. 31, 1976) A70-A71); "ratif[ied] already taken [Trustees] 661 (quoting Agreement, Art. 60). "participation agreement" entered similar effect, "assent[s] rules adopted." paragraph participation agreement). most studied developed regulatory respecting reporting, disclosure, apply 1021-1031, 1101-1114. 1001(a) (stating findings "employee plans"); 1002(3) (defining plan" "pension plan[s]" "welfare plan[s]"). Shaw Delta Air Lines, 463 85, 91, 103 2890, 2896, 77 490 See, 1103(a) ("assets trust"); 4639, 4865 section, essence, codifies principles evolution trusts"); 4649 language); 329-334, 2794-2796, (Congress intended welfare regulated traditional principles, desire became explicit ERISA). Accord, G. Bogert, 551, (2d rev. 1980) Bogert) (trustee "ordinary natural means" objective); Restatement (Second) 186(b) (1959) Restatement) "necessary carry trust"). correctly request illegitimate effort expand coverage beyond acquire advance goals. imprudent wasteful unrelated submitted actual provided goals; submit unjustifiably costly. analyzed rested Agreements,' Transport), indeed contributing amounts 355 (where settlor retains possession [his] obligation"); Scott 175, 1415 ("trustee secure keep it"). CFR 2520.104b-1—2520.104b-30 presuppose knowledge highlighted "must [send prescribed material] method delivery likely distribution." 2520.104b-1 Mail distribution methods, importantly, cautions [for plan] copies material frequented participants" complying requirements). 1103(c)(1) (providing inure employer"); 1145 (requiring fulfill documents). detailed discussion Part IV-C, infra. same here, Chemical Alkali Workers Pittsburgh Plate Glass 404 157, 171-175, 92 383, 393-395, 341 (1971), retirees substantially active workers. conflicts, represented retirees' mandatory subjects union-employer bargaining. Retirees, owe duty. costs produce few presumption arbitrability derive promote alternatives strikes, lockouts, exercises relevance administration, disputes normally results. 372, 13, 1849 13. questioned importance audit's goal, speculating deny notified contributed 813. Obviously, "estoppel argument" flaw participant, himself: Before notify identified him, identification addition, major problems. consistently position document denying violate unenforceable. 7, At minimum, operating assumption liable contend sends burden manners, finding done III-C, floor debate protect managers problems obligations: "Failure timely fashion imposes variety remain unpaid, loses investment income earned received invested time. additional incurred delinquencies. Attorneys' fees legal arise efforts. detract formulate meet adversely affect health honor obligation bear heavier cost delinquencies form lower higher rates. uncollected add employers." 126 Cong.Rec. 23039 (1980) (statement Rep. Thompson). limits exceed purposes. reach ordering could, accordingly. Theut Products, Civ. 82-71080 Oct. 21, 1982) (Cohn, J.) A-96) (ordering allowing withhold restrict auditors' copy disclose so). italicized Court, ante, 566, specifically listed, encompass limitations preceding sentence read

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