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MASON CONTRS. ASSN. OF AMERICA v. INTERNATIONAL CO

May 26, 1994

MASON CONTRACTORS ASSOCIATION OF AMERICA, et al., Plaintiffs,
v.
INTERNATIONAL COUNCIL OF EMPLOYERS OF BRICKLAYERS & ALLIED CRAFTSMEN, et al., Defendants.



The opinion of the court was delivered by: JOYCE HENS GREEN

 This case involves a dispute over who is properly a trustee of the Bricklayers and Trowel Trades International Pension Fund ("the Pension Fund"). The Pension Fund is a multiemployer pension fund, jointly administered by trustees, an equal number of whom are appointed by labor and an equal number of whom are appointed by management as is required by the Labor Management Relations Act of 1947 ("the LMRA"), codified at 29 U.S.C. §§ 141 et seq. Plaintiffs allege that actions taken by some of the defendants to replace the Mason Contractors Association of America ("MCAA") with the International Council of Employers of Bricklayers and Allied Craftsmen ("ICEBAC") as the body responsible for nominating U.S. Employer Trustees to the Pension Fund constitutes a "structural defect" in violation of the LMRA. In addition, plaintiffs contend that these actions, allegedly violative of the LMRA's requirement of "equal representation," constitute breaches of fiduciary duties owed under both the Employment Retirement Income Security Act of 1974 ("ERISA"), codified at 29 U.S.C. §§ 1001 et seq., and under the common-law.

 MCAA, an international trade association, Joseph F. Szabo ("Szabo"), Robert C. Tubesing ("Tubesing"), and George Miller ("Miller"), three trustees of the Pension Fund, initiated this case. *fn1" The defendants are: ICEBAC, the International Union of Bricklayers and Allied Craftsmen ("the Union"), the Pension Fund, John T. Joyce ("Joyce"), L. Gerard Carlisle ("Carlisle"), Brian Strickland ("Strickland"), Thomas Uzzalino ("Uzzalino"), and Louis Weir ("Weir"), all trustees of the Pension Fund, and Eugene George ("George"), Walter Kardy ("Kardy"), and John Flynn ("Flynn"), three disputed trustees of the Pension Fund. Presently pending are the Parties' dispositive cross-briefs. *fn2"

 BACKGROUND *fn3"

 A. The Pension Fund

 The Pension Fund is an employee benefit plan, commonly referred to as a jointly administered multiemployer pension fund. The Pension Fund is administered pursuant to an Agreement and Declaration of Trust ("the Trust Agreement"). The Trust Agreement, inter alia, controls the number of trustees that can be appointed, *fn4" describes the composition of the Board of Trustees, specifies how trustees are appointed *fn5" and removed, *fn6" and describes the procedure that can be used to amend the Trust Agreement.

 At the present time, the Pension Fund is administered by a Board of Trustees, comprised of six U.S. Employee Trustees, appointed by the Union; six U.S. Employer Trustees, four of whom used to be appointed by MCAA, *fn7" and one appointed by TCAA; three Canadian Employee Trustees appointed by the Union; and three Canadian Employer Trustees appointed by the U.S. Employer Trustees. From the 1970's until the present dispute, with the exception of the one TCAA-appointed U.S. Management Trustee, MCAA *fn8" has appointed all of the U.S. Employer Trustees to the Board of Trustees. At this time, ICEBAC has the authority (with the exception of the one TCAA-appointed U.S. Employer Trustee) to appoint U.S. Employer Trustees.

 Plaintiffs Szabo, Tubesing and Miller are all U.S. Employer Trustees of the Pension Fund, appointed to their positions by MCAA. Szabo is Chairman of the Board of Trustees of the Pension Fund.

 B. MCAA

 Plaintiff MCAA is an international trade association that, inter alia, acts as a negotiating representative and collective bargaining agent for its members with the defendant Union and other labor organizations. In 1986, MCAA amended its Constitution and By-laws to allow non-union contractors to become members. In 1987, a second amendment created two classes of membership. The first are called "regular members" -- corporations or individuals engaged in business as mason contractors who are signatories to collective bargaining agreements. The second, "independent members," are corporations or individuals not signatories to any collective bargaining agreements. *fn9" The non-union, independent members, are entitled to full participation in the election of MCAA executive board members and officers.

 It is undisputed that MCAA's decision to give non-union contractors membership in the MCAA created considerable concern on the part of the Union. *fn10" The Union was troubled about the potential impact of MCAA's non-union membership on its appointment of trustees to the Pension Fund and the financial stability of the Pension Fund. According to the Union, the change in the MCAA Constitution and By-Laws focused that concern because the Union believes that: (1) non-union contractors exploit their workers and destroy wage and working standards; (2) non-union contractors are strengthened by being permitted membership in groups like the MCAA; (3) the increase in the market share of non-union contractors poses a threat to the Pension Fund and its beneficiaries; and, (4) decisions made by U.S. Employer Trustees may be influenced by their commitment to the Union because Trustees decide, inter alia, withdrawal liability formulas which make it either more difficult or easier for a contractor to become non-union and withdraw as a contributing employer. *fn11"

 In early 1993, plaintiff Miller, then the Executive Director of MCAA, resigned from that position. MCAA then named Michael Adelizzi ("Adelizzi"), the former director of a organization consisting mostly of non-union contractors, as Miller's successor. Because U.S. Employer Trustees are appointed by MCAA officials, not by the membership at large, this move generated further uneasiness to both the Union and the Pension Fund's U.S. Employee Trustees. *fn12"

 C. The Union

 The Union is a labor union representing bricklayers, masons, plasterers, and other workers in the trowel trades. It negotiates labor agreements with employers, requiring the employer to make regular contributions to the Pension Fund for each employee. Joyce is the President of the Union, Carlisle its Secretary-Treasurer, and Strickland, Uzzalino, and Weir are officers of the Union. Each of these individuals is a U.S. Employee Trustee of the Pension Fund, appointed by the Union.

 D. IMI13

 The International Masonry Institute ("IMI") is an organization established in 1970 by MCAA and the Union for the purpose of promoting the masonry industry. In 1981, IMI became a jointly administered labor/management trust with an equal number of management and labor trustees. Until early 1987, all of the management trustees of IMI were appointed by MCAA, except for one appointed by TCAA. Following the change at MCAA allowing non-union membership, the IMI trustees amended the IMI trust agreement to eliminate MCAA as a trustee-appointing body. *fn14" After ICEBAC was formed, the trust agreement was amended a second time to name ICEBAC as the employer trustee nominating body (in addition to TCAA, who continues to name one trustee). After these changes, all but two of the MCAA-appointed management trustees resigned from IMI.

 IMI's current management trustees include all of the officers of ICEBAC: George, Charles Velardo, DeLazzero and Paul Songer. The labor trustees include Joyce, Carlisle, Strickland, Uzzalino, Weir, and Flynn, all of whom are also U.S. Employee Trustees of the Pension Fund.

 E. ICEBAC

 In early 1987, after MCAA was removed as the appointing body for management trustees of IMI, ICEBAC was formed. ICEBAC, a trade association for Union contractors in the masonry industry, was organized to provide management trustees for jointly administered trust funds in the masonry industry, including IMI. *fn15" The Union readily concedes that ICEBAC was established as a response to MCAA's decision to allow non-union contractors membership in MCAA since ICEBAC's founders anticipated that MCAA could not represent and advance the interests of union and non-union contractors at the same time.

 Membership in ICEBAC is restricted to masonry contractors who have entered into collective bargaining agreements requiring the contractor to contribute to IMI a specified amount of money for each hour worked by any of the contractor's employees covered by the collective bargaining agreement. *fn16" Membership is automatic for eligible employers and there is no application process. To date, ICEBAC has never held a membership meeting. Board of Director meetings are held, but the director participants are not elected by the membership. They are elected by other directors. *fn17" George has no recollection of how ICEBAC's first directors *fn18" were chosen. The By-Laws of ICEBAC specifically preclude members from voting on the election of officers and directors. In turn, the Directors of ICEBAC appoint management trustees to IMI. When ICEBAC'S directors meet, they meet at the same locations at which the IMI Board meetings are held. Joyce and Carlisle, both union officials and IMI ...


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