to judgment on the third count of his complaint.
Defendants argue, however, that, to the extent that the Agreement requires that a further payment is to be made to Hoffa, it is void as against public policy.
The Agreement explicitly states that the parties had the necessary legal capacity to enter into a binding contract, and that the provisions creating the escrow accounts and restricting a portion of the lump sum benefit were included to effect compliance with both the IRS regulations and the Plan's own articles. Thus, it clearly was not entered into for an illegal purpose,
but was, on the contrary, designed to assure compliance with federal governmental requirements and the rules of an international labor organization pension plan.
Defendants' illegality and public policy arguments to the contrary rest on the proposition that under the Agreement Hoffa would be paid a benefit greater than that permitted by the terms of the Plan. More specifically, the contention is that the Agreement contravenes the terms and conditions of section 501 of the Labor-Management Reporting and Disclosure Act, 29 U.S.C. § 501, as well as common law fiduciary obligations of union representatives, and that a judgment for plaintiff would work a violation of defendants' fiduciary duties under section 501.
That argument misconceives the relative duties and obligations of the parties. The issue before the Court in this lawsuit is not whether the defendants breached their fiduciary duties to their pension plan or its members, but whether these defendants bound themselves to an enforceable contract with plaintiff. If defendants did indeed violate their fiduciary duties, they may well have a legal problem vis-a-vis the Teamsters or the members of the Plan, and any judgment rendered here on the validity of the Agreement will not insulate them from liability in that respect, whether under section 501 or on some other basis. But their violation in that regard, if any,
will not defeat the effort of an innocent party
to enforce a good faith written contract
containing safeguards designed to insure compliance with federal laws and regulations.
Consideration of the Employment Retirement Security Act of 1974, 29 U.S.C. § 1001 et seq. (ERISA) in conjunction with defendants' public policy arguments likewise fails to assist their case.
Defendants assert in this respect that Hoffa should be required to repay the Plan for an alleged overpayment
because recovery of such overpayment is mandated by ERISA. That argument, too, suffers from several defects.
In the first place, it is not at all clear that there was an overpayment. Defendants assert that the Plan's actuary chose the wrong mortality table to calculate Hoffa's benefit, and that, had the correct table been used, the amount due to Hoffa would have been no more than $ 1,109,733.91.
In support of this theory, defendants proffer only the fact that, upon a review of the Plan and Hoffa's employment history, the Internal Revenue Service issued a "Technical Advice Memorandum" in November of 1975, "determining that the correct amount due Hoffa under the correct" actuary method would have been $ 1,109,733.91.
Neither the IRS ruling nor the investigation underlying it is dispositive of the issue, and indeed, because of problems relating to admissibility of evidence, they do not even create a genuine issue of material fact.
The IRS ruling was issued solely on the basis of facts submitted to that agency by defendants' attorneys, and for that reason it clearly does not qualify as an independent factual investigation of the Plan or of the lump sum payment. Moreover, the IRS chose not to litigate the validity of the lump sum payment to conclusion before the U. S. Tax Court but instead settled on an alternative approach embodied in a "closing agreement."
That agreement required the defendants to file the counterclaim present in this suit, and it further provided that, irrespective of the Court's ruling on the counterclaim, defendants were required to repay the Plan from Teamster funds
for any improper overpayment to Hoffa.
The agreement itself is nothing more than a settlement and it is not probative of facts in issue between the parties to the present lawsuit.
The possibility of testimony by the IRS agents who conducted the underlying investigation and who were otherwise involved in defendants' dispute with that agency likewise fails to create a genuine issue of material fact. These agents have indicated that they were not acting as expert witnesses, and they have acknowledged that IRS restrictions (26 U.S.C. § 6103) would require them to treat the investigation as confidential. Thus, their testimony would not be admissible at any trial in this Court. See Rule 56(e), Fed.R.Civ.P.; Rule 701, Fed.Rules of Evidence.
Beyond that, defendants' reliance on ERISA faces obstacles in the rules which govern the application of that statute to the present situation.
It has consistently been held that ERISA operates prospectively only, and that it may not be applied to affect the pension benefits of an employee whose work terminated prior to passage of the statute (even in situations where failure to pay a benefit may be regarded as a continuing breach of duty). Martin v. Bankers Trust Co., 417 F. Supp. 923 (W.D.Va.1976), aff'd, 565 F.2d 1276 (4th Cir. 1977); accord, Blazquez v. New York City District Council of Carpenters Pension Fund, 463 F. Supp. 727 (S.D.N.Y.1979). ERISA was enacted in September of 1974, and it took effect in January 1975, while the facts giving rise to the present dispute of course long predate either event. ERISA also prohibits the restitution of benefits paid based on mistake of law ( Bacon v. Wong, 445 F. Supp. 1189 (N.D.Cal.1978), and the general fiduciary obligations it creates are intended to apply to the merits of investments made on behalf of a beneficiary, not to correct mistakes made by the pension plan itself. See Note, Fiduciary Standards and the Prudent Man Rule Under the Employee Retirement Income Security Act of 1974, 88 Harv.L.Rev. 960, 965-6 (1975).
Finally, defendants argue that their Agreement with Hoffa is unenforceable because it is not supported by consideration.
Courts do not generally inquire into the adequacy of consideration, and "any consideration, however slight, is legally sufficient to support a promise." Sambo's Restaurants v. City of Ann Arbor, 473 F. Supp. 41, at 45 (E.D.Mich.1979); 1 Williston on Contracts, § 103 (3d ed., 1957); 17 Am.Jur.2d § 85.
As the court stated in Higgins v. Monroe Evening News, 404 Mich. 1, 6, 272 N.W.2d 537, 543 (1978)
The essence of consideration ... is legal detriment that has been bargained for and exchanged for the promise .... The two parties must have agreed and intended that the benefits each derived be the consideration for a contract.