Court Opinion

ID: 8929157
Source: CourtListenerOpinion
Date Created: 2022-11-27 06:54:59.880766+00
Date Added: 2024-06-11T17:09:28.115781
License: Public Domain

BECKER, Circuit Judge,
concurring:
While I join in the opinion and judgment of the court, I write separately to express my belief that our holding — that the inclusion of an amendment to a pension plan in the collective bargaining agreement constitutes constructive notice to the beneficiaries of the pension trust — might not apply in other factual situations.
A helpful way of framing the issue in this case is to ask whether the pension trustees violated their fiduciary duty to the beneficiaries of the fund by relying on the inclusion of the Partial Termination Clause (“PTC”) in the collective bargaining agreement to provide the beneficiaries with notice of this detrimental change in the plan. The trustees had a “fiduciary duty to preserve the financial security of [the] pension fund and to apply the assets of the fund for the benefit of the employees to the greatest extent possible.” Adams v. New Jersey Brewery Employees’ Pension Trust Fund, Local Union 843, 670 F.2d 387, 397 (3d Cir.1982). Because they were balancing conflicting obligations — between present and future beneficiaries, and between financial security and the payment of benefits — these trustees were obligated to avoid acting in an arbitrary and capricious manner. Id. at 398; see Struble v. New Jersey Brewery Employees’ Welfare Trust Fund, 732 F.2d 325, 334 (3d Cir. 1984).1
By stating that, because the PTC was “included verbatim in the 1970 collective bargaining agreement” which “was ratified by union members by a large majority[, t]hose same members may therefore not now assert that they cannot be bound by the terms of that agreement,” at 336, we have held, in effect, that the trustees did not act arbitrarily when they decided to notify their beneficiaries through the contract and its ratification procedure. I believe that this holding is correct here, where the clause in dispute affected active *337participants in the collective bargaining process — primarily current employees (and some former employees who had retired no more than ninety days earlier).2 It is also supported by the fact that these persons had earlier ratified a collective bargaining agreement which put them on notice that a partial termination clause of some sort was in the making. See id.
I can, however, posit a set of circumstances where the same result would not follow. For example, if the clause in question operated mainly to the detriment of retired workers, the fact that it was in the collective bargaining contract would not, in my opinion, necessarily constitute adequate notice. Retirees are not employees within the meaning of the National Labor Relations Act, 29 U.S.C. § 151 et seq., and they cannot properly be included in a bargaining unit with active employees. Allied Chemical & Alkali Workers of America, Local 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 172-75, 92 S.Ct. 383, 393-96, 30 L.Ed.2d 341 (1971). Retirees’ benefits, moreover, are not a mandatory subject of bargaining, id. at 176-82, 92 S.Ct. at 396-99; consequently, a union is under no statutory duty to bargain for these benefits in negotiations with the employer. Id. at 181 n. 20, 92 S.Ct. at 398 n. 20. A union may, of course, choose to bargain on behalf of retirees, id.; see, e.g., Adams v. Gould Inc., 739 F.2d 858, 861-62 (3d Cir.1984), but, in practical terms, union leaders have little incentive to obtain benefits for former employees at the expense of present workers. As a result, retired workers generally do not participate in the collective bargaining ratification process. To hold retirees automatically bound by a change in the pension trust agreement (for which they are entitled to notice) because it is included in the collective bargaining agreement would, in my view, create problems of extending the notion of constructive notice so far as to be unfair. Moreover, trustees who rely on the ratification process for notice under such circumstances might well be acting in an arbitrary and capricious manner. I therefore join in the opinion on the understanding that it does not extend beyond the facts of this case.3

. Subsequent to the action of the trustees at issue in this case, Congress codified the fiduciary duty owed by benefit plan fiduciaries in title I of ERISA. See 29 U.S.C. § 1104. Congress also set out detailed requirements for notice to plan beneficiaries of plan provisions and modifications. 29 U.S.C. §§ 1021-31.

. I note my agreement with the district court’s conclusion that, in the absence of the actual inclusion of the PTC in the collective bargaining contract, the trustees’ reliance on mere oral discussions of the PTC at union meetings would have been insufficient to meet their fiduciary duty. See Appendix at 125a.

. Because of my just expressed concern as to the scope of our holding on the notice issue, I feel constrained to note that counsel for the employees represented at oral argument that, prior to the ratification vote, the unions concealed from the employees the fact that the PTC was included in the tentative agreement. Counsel further alleged that the clause was not included in a copy of the contract distributed to union members. These allegations are not touched upon in appellants’ briefs, and the record on the point is apparently not developed. I therefore have no knowledge of the validity of the charges, or how much evidence there is to support them. However, because the allegations are offered to undermine the position advanced by appellees (and adopted by the panel) on the question of adequacy of notice, I observe that, if they are true, plaintiffs may not be without a remedy because the allegations raise the possibility that the local unions representing them breached their duty of fair representation. The requirements of fair representation were summarized by the Supreme Court in Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967):
tT]he exclusive agent’s statutory authority to represent all members of a designated unit includes a statutory obligation to serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct.
Id. at 177, 87 S.Ct. at 910. In Deboles v. Trans World Airlines, Inc., 552 F.2d 1005 (3d Cir.1977), we extended the duty of fair representation to union conduct during contract ratification voting, holding that the union leaders must act in good faith with honesty of purpose; they cannot secure the ratification of a contract by misleading their constituents as to its contents. Id. at 1018.
The fiduciary duties owed by pension trustees to plan beneficiaries are thus manifestly different from the duties owed by union representatives to their constituents. See Rosen v. Hotel and Restaurant Employees & Bartenders Union, 637 F.2d 592, 599-600 & n. 10 (3d Cir.1981) (holding that union has no fiduciary duty to oversee an employer’s payments into pension fund but pension trustees have fiduciary duty to oversee such payments and notify employee of employer's non-payment). Our holding that the trustees did not violate their fiduciary duty by relying on the contract ratification process and the incor*338poration of the PTC in the contract as notice of the change therefore would not, absent some other defense, such as time-bar, appear to bar a suit charging the unions with a breach of their duty of fair representation for actively concealing the existence of the clause in the collective bargaining agreement.