United States District Court, E.D. Virginia, Richmond Division
MEMORANDUM OPINION (CROSS MOTIONS FOR SUMMARY
E, HUDSON SENIOR UNITED STATES DISTRICT JUDGE
an action seeking declaratory judgment filed by two of three
Trustees of the Postal Union Welfare Benefit Trust against
Local 305, National Postal Mail Handlers Union, and Felandria
Jackson, the Union President of that chapter. In addition to
seeking similar relief favorable to its interpretation of the
language at issue, the Postal Union has filed a
counterclaim for beach of the Welfare Benefit Trust
Agreement ("the Trust Agreement"). Distilled to its
essence, the underlying controversy turns on the validity of
an amendment (the "Amendment") to the Trust
Agreement allegedly adopted for the benefit of members of a
chapter of the National Postal Mail Handlers Union, Local 305
Amendment, adopted by the Union Executive Board, enlarged the
number of Trustees from three to five, eliminated the
provision allowing the Trustees to select successors, and
reduced the Trustees' terms from six years to three
years. It also enabled the Union to remove Trustees for any
reason. The Amendment, effective five days after its adoption
by the Executive Board, also provided that at least two of
the Trustees must be Union members and one Trustee who is
otherwise unaffiliated with the Union. (Joint Stipulation of
Undisputed Facts, hereafter "Stipulation," ECF No.
13; Amendment, ECF No. 13-B.)
Plaintiffs, both pre-Amendment Trustees, contend that the
Amendment at issue violates the restrictive language of the
Trust Agreement and ERISA. (Pis.' Mem. Supp. Mot. Summ.
J. 7-8, ECF No. 9.) Specifically, Article IV.E prohibits the
Executive Board from amending the Trust Agreement in a manner
that increases the duties or liabilities of incumbent
Trustees or deprives them of their powers to safeguard the
Trust without the consent of the Trustees. The Union
maintains that the Amendment was within the scope of its
powers under Article IV of the Trust Agreement. Article IV,
Paragraph A provides that: "[t]he Union has the right at
any time to amend this Trust Agreement in whole or in part,
subject to this Article." (Stipulation ¶ 18.)
case is presently before the Court on cross motions for
summary judgment under Federal Rule of Civil Procedure 56,
accompanied by the parties' Joint Stipulation of
Undisputed Facts. Both parties seek declaratory relief
supporting their respective interpretation of Article IV of
the Trust Agreement. Each side has thoroughly briefed their
position and the Court heard oral argument on November 13,
2018. The parties agree that there are no material facts in
dispute. The task at hand is narrow. Guided by the teachings
of ERISA, it is purely one of squaring the December 27, 2017
Amendment with the constraining language of Article IV,
paragraphs A and E of the Trust Agreement. Was the Amendment
permissible under the terms of the Trust Agreement?
reviewing cross motions for summary judgment, a district
court must review each motion separately on its own merits.
Norfolk S. Ry. Co. v. City of Alexandria, 608 F.3d
150, 154 (4th Cir. 2010). The Court's hand is also guided
by the fossilized principle that employee benefit plans are
governed by the clear language of their governing document.
White v. Provident Life & Accident Ins. Co.,
114F.3d26, 28 (4th Cir. 1997). Amendments to the Trust must
be in compliance with the terms of the Trust Agreement.
the Amendment in question was adopted by the Union Executive
Board on December 27, 2017, the pre-Amendment Trustees were
notified by communication dated December 29, 2017. The
Amendment was effective January 1, 2018. (Amendment, ECF No.
13-B.) The pre-Amendment Trustees, after consulting with
counsel, "determined by unanimous consent that the
purported amendment is invalid and of no effect for a number
of reasons, including the fact that it was put forward
'without the entire written consent of the Trustees'
under Article IV.E. of the Trust Agreement." (Meeting
Minutes, ECF No. 13-C.) The pre-Amendment Trustees also note
in their minutes the absence of any notification or
consultation by the Union prior to its adoption.
(Id.) This lawsuit followed.
Plaintiffs maintain that the Amendment, in effect, diluted
the pre-Amendment Trustees' voting strength and deprived
them of the power to safeguard the welfare plan by subjecting
them to removal without cause. They contend that reducing the
terms of service from six years to three years, and
eliminating staggered terms of service, deprives the Trustees
of their independence and affects the institutional
continuity of the Trustees. In Plaintiffs' view, its
effect is compounded by the Amendment's removal of the
pre-Amendment Trustees' power to name their successors.
Subjecting them to removal without cause or reason,
Plaintiffs argue, would violate ERISA by depriving the
Trustees of the power to exercise independent judgment
without fear of retributive removal. Plaintiffs argue that in
effect the Amendment alters the composition of the Trustees
from an independent majority to a Union majority of members.
Plaintiffs characterize the Amendment as purely a power grab
on the part of the Union, intended to give the Union
"more control, participation and input into the
administration and oversight" of the Trust. (Pis.'
Mem. Supp. Mot. Summ. J. 12 (citing Union Answer to Interrog.
Union urges the Court to hew closely to the language of
Article VI.E and not confer powers to the pre-Amendment
Trustees not specifically delegated by the Trust Agreement.
That Article, entitled "Trustees Duties and
Liabilities," reads: "[n]o amendment shall be valid
which increases the duties or liabilities of the
Trustees, or which deprives the Trustees of the powers
under this Trust Agreement to safeguard the Trust Fund and
effect the purposes of the Trust, without the prior
consent of the Trustees." (Defs.' Mem. Supp. Mot.
Summ. J. 5, ECF No. 17 (emphasis added by Defendants).) The
Union also points out that neither Article IV.A nor E, prior
to the Amendment at issue, "provide[d] any express
limitation on the Union's ability to remove Trustees
prior to the end of their specified terms."
Article II.A.1. provides that "[w]henever a Trustee
resigns or is removed, if his term expires, or if he
otherwise ceases to serve, the two remaining Trustees must
appoint a successor Trustee." (Id. at 6
(emphasis added by Defendants); Joint Stipulation, ECF No.
13, Ex. A. at 4.) No. other provision of the Trust Agreement
specifically addresses the power to remove a Trustee. Since
all powers vested in the Trustees are conveyed by the Union
via the Trust Agreement, the Union suggests that by default,
the power to remove Trustees must be vested in the Union. In
other words, the Trustees have only those powers conveyed to
it by the Union under the Trust Agreement.
Union discounts the impact of the Amendments at issue on the
powers and duties of the Trustees. It argues that the
Amendments have no impact on the Trustees' core duties,
"to receive, hold, manage, increase, and distribute
assets to provide benefits under participating plans."
(Stipulation, Ex. A.) Shortening terms of service, increasing
membership, and eliminating staggered terms and the right to
select their successors have no apparent adverse effect on a
Trustees' power to safeguard the Trust fund or effect the
purpose of the Trust. Moreover, the Amendment requiring at
least two Trustees to be Union members and one to have no
Union affiliation would appear to neither dilute voting
strength nor violate the Trust Agreement.
closer question, however, is whether the unilateral Amendment
by the Union making the Trustees removable at will and
without cause dilutes their power to safeguard the assets
under the Trustees' control. The Union does not dispute
that one of the intended objectives of the Amendment was to
exert greater control over the Trust- arguably undermining
the purpose of an independent body guiding the stewardship of
the participating benefit plans. (Pis.' Mem. Supp. Mot.
Summ. J., Ex. 2.) Unquestionably, the prospect of summary
removal and replacement of a Trustee who failed to adhere to
the Union's wishes could arguably have a chilling effect
on a Trustee's execution of their fiduciary
duties. But would the replacement of one or more
individuals deprive the Trustees of the powers to safeguard
the integrity of the Trust and its assets? This Court thinks
not. Removal and replacement may affect the identity of the
individuals exercising that power, but not the ability of a
trustee to do so.
the apparent tension between the provisions at issue, and the
finite well of guiding authority, the Court ordered
supplemental briefing on the removal without cause issue.
Unfortunately, aside from non-binding opinions of
administrative agencies, relevant jurisprudence appears to be
sparse and unilluminating. In large part this is attributed
to the unique elements of trust agreements undermining the
task of uniform interpretation and application.
both parties filed memoranda focusing primarily on the
authority of trusts to discharge trustees without
cause. The preponderance of authority seems to
generally support the Union's right to do so, subject to
the language of the Trust Agreement. The Fourth Circuit has
afforded employee benefit plans wide latitude in adopting
their governing principles. Gayle v. UPS, 401 F.3d
222, 228 (4th Cir. 2005) (quoting Curtiss-Wright Corp. v.
Schoonejongen,514 U.S. 73, 78 (1995) ("Plan
sponsors, not federal courts, are empowered by ERISA to
adopt, modify or terminate welfare plans.")). Although
the union has entrusted stewardship of the employee benefit
plans to the Trustees, the Union has a continuing ...