Narrative Opinion Summary
This case concerns an appeal by two employers contesting the authority of a multiemployer pension fund, established under ERISA and the Labor Management Relations Act, to audit payroll records for all employees—not just those covered by collective bargaining agreements (CBAs). The Fund, acting as fiduciary for pension benefits, sought to audit employer records to verify compliance with contribution obligations. The employers argued that their obligations were limited to CBA-covered employees and that they were not bound by ancillary agreements referenced by the Fund. The district court consolidated the actions, granted summary judgment in favor of the Fund, and issued a permanent injunction compelling compliance with the audit request, while denying the Fund’s motion for attorney fees due to lack of bad faith and the unsettled nature of the law. On appeal, the court affirmed that the trustees’ audit authority derives from the Trust Agreement and is supported by ERISA and applicable trust law, even where the employer is not party to all related agreements, provided contributions are made to the Fund. The audit scope is limited to that necessary to fulfill fiduciary duties, and employers may seek protective orders against overbroad requests. The court also affirmed the discretionary denial of attorney fees under 29 U.S.C. § 1132(g), finding the statutory provision for mandatory fees inapplicable absent a finding of unpaid contributions. The judgment in favor of the Fund was affirmed in all respects.
Legal Issues Addressed
Audit Rights of Multiemployer Pension Fund Trustees under ERISA and Trust Agreementssubscribe to see similar legal issues
Application: The court held that trustees of a multiemployer pension fund governed by ERISA and the Trust Agreement possess the authority to audit payroll records of all employees of contributing employers, not just those covered by the relevant collective bargaining agreements, as necessary to fulfill their fiduciary duties.
Reasoning: The court ruled that both Boening and Snyder, by making contributions to the Fund in accordance with applicable Collective Bargaining Agreements (CBAs), were bound by the Fund’s governing documents and required to provide payroll records for all employees for audit, not limited to regular employees.
Denial of Attorney Fees under 29 U.S.C. § 1132(g) in the Absence of Unpaid Contributionssubscribe to see similar legal issues
Application: Attorney fees and costs were not awarded to the Fund because the litigation did not involve collection of unpaid contributions, making § 1132(g)(2) inapplicable and leaving the award of fees to the court’s discretion under § 1132(g)(1).
Reasoning: However, the court determines that this is not an enforcement action since there has been no finding of unpaid contributions owed by Boening or Snyder to the Fund. Precedents indicate that without such unpaid contributions, enforcement under § 1132(g)(2) cannot proceed, and similar cases have led to the conclusion that attorney fees in this context fall under the discretionary provisions of § 1132(g)(1).
Effect of Participation and Settlement Agreements on Audit Obligationssubscribe to see similar legal issues
Application: The court found that, despite the employer not being a party to the Merger or Participation Agreements and the Settlement Agreement being neutral on audit rights, audit obligations stemmed from the Trust Agreement and the employer’s status as a contributing employer.
Reasoning: Boening appealed the audit requirement, arguing it was not bound by the Trust Agreement, Merger Agreement, or Participation Agreement, and that its CBA did not incorporate these agreements. Moreover, the Settlement Agreement Boening signed was neutral on the audit issue. Despite this, the court concluded that the Fund trustees could conduct the audit under their fiduciary duties as defined by the Trust Agreement and ERISA.
Interpretation of Trust Agreements and ERISA in Defining Fiduciary Powerssubscribe to see similar legal issues
Application: The court relied on Supreme Court and circuit precedent to find that the authority to audit is inherent in the trustees’ fiduciary duties under ERISA and trust law, and that contributing employers are bound by the terms of the trust even if the trust agreement is not expressly incorporated into the collective bargaining agreement.
Reasoning: Both cases recognized that the authority to audit is inherent in the trustees’ fiduciary duties.
Scope and Limitations of Trustees' Fiduciary Authority to Audit Employer Recordssubscribe to see similar legal issues
Application: The trustees’ audit authority is not unlimited; the audit must be confined to what is necessary to fulfill fiduciary duties, and courts may intervene to prevent overly broad or intrusive audits that could harm employers’ privacy or interfere with their operations.
Reasoning: However, the court noted the audit should not be excessively invasive and allowed Boening and Snyder to file motions for protective orders addressing privacy concerns.