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Pruter v. Local 210ʹS Pension Trust Fund

United States Court of Appeals, Second Circuit

June 6, 2017

JANET PRUTER, RAYMOND MARQUES, JOHN ARTATES, ELIZABETH AYALA, URSULA BILOSCHAETZKE, DIANE BLAKE, MIREILLE BOYD, MARGO BRADY, IRENE BULLARD, CHERYLE CANNON, RHONDA CHANG-SCHOKNECHT, LISA MARIE COMALLI, VERNEDIA CRAWLEY, SUSAN DEARING, GUDRUN DEVITO, TAMMY DURANT, PAMELA ECCLES, CHRISTINE ERDODI, MARGARUITE EVERLY, SUZANNE K. FLEISHER, MARGARET FOGG, DONNA FRITZ, PATRICIA GEORGE, MARTHA JANE GIBSON, CLAUDIA GODDARD, PAUL GRAHAM, BOBBI S. GRIFFEY, KIMBERLY GRIFFITH, LINDA GRIFFITHS, EDWARD T. HARTNACK, III, ELIZABETH HEFFERNAN, PATRICIA HERRON, TROEN HULETT, VANESSA HYNES, CHARLES I. IRBY, MAUREEN JEPSON-ZAR, BENEDICT JOHNSON, DONNA KORMAN, LONISE LARBIG, KELLY LAVIK, ARTHUR LEE, BARBARA LEKICH, ANN LLYOD, KAREN L. LOWE, HASSINE MANAI, DALE MARTIN MCNULTY, BERNARD MCPHAIL, JEROME MEADOWS, BEVERLY MONTE, MARY STEPHANIE MOORE, PENELOPE MOORE, MIRIAM DENORIS MOULTRIE, GERDA MUELLER, RAMIRO A. MURILLO, IRMGARD NEUKAMM, STEPHEN OUELLET, DENISE D. PARKER, ALAIN POULENARD, SHARON PRATT, GREGORY RAMIREZ, DAVID RATHERT, MARY YUEN RATHERT, LINDA CHANEY RICE, GARY J. RODRIGUES, VIRGINIA SAXTON, OLAF SCHOKNECHT, SHERRY SEVERN, ARLENE SHAW, WENCKE A. SHISHIDO, BYRON SHUFORD, KEVIN S. SMITH, SUSAN SPACKMAN, RHONDA SPENCER-SAMS, JULIE E. STONE, STEPHANIE SUGANUMA, CHRISTINE A. TITTIGER, KENNETH F. TOMLINSON, MICHAEL TOUZARD, PATRICIA B. TUNNEY, DOUGLAS TURICH, OLIVIA L. VADEN, YVONNE FLORENCE VERLICCHI, BONITA SHAW WELLS, KATER WESTERMAN-SCHMID, HERMINE WHALON, PAMELA WITBRO, NICHOLAS WRIGHT, Plaintiffs-Appellants,
v.
LOCAL 210'S PENSION TRUST FUND, LOCAL 210, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, Defendants-Appellees.

          Argued: November 8, 2016

         Plaintiffs, former employees of World Airways, Inc., appeal from the February 8, 2016 memorandum and order of the United States District Court for the Southern District of New York (Torres, J.) dismissing their complaint seeking damages for fraud, breach of contract and violation of an employee benefit plan. Pruter v. Local 210's Pension Tr. Fund, No. 15 Civ. 1153, 2016 WL 908303 (S.D.N.Y. Feb. 8, 2016). We agree with the district court that plaintiffs' state law claims arise under the Railway Labor Act ("RLA") and are thus preempted. As those claims bear a close resemblance to claims brought pursuant to the Employee Retirement Income Securities Act ("ERISA"), however, we find it appropriate to borrow and apply ERISA's three-year statute of limitations rather than the six-month limitations period the district court borrowed from Section 10(b) of the National Labor Relations Act ("NLRA"). We therefore VACATE the district court's dismissal of the RLA claims brought against Local 210 and REMAND for further consideration of that claim consistent with this opinion. We AFFIRM the district court's opinion in all other respects.

         Affirmed in part; vacated and remanded in part.

          ARTHUR Z. SCHWARTZ, Advocates for Justice, Chartered Attorneys, New York, NY, for Plaintiffs- Appellants.

          MYRON D. RUMELD, Proskauer Rose LLP (Anthony S. Cacace, on the brief), New York, NY, for Defendant- Appellee Local 210's Pension Trust Fund.

          ANDREW S. HOFFMAN, Hoffman & Associates, New York, NY, for Appellee Local 210, International Brotherhood of Teamsters.

          Before: CABRANES, POOLER, and PARKER, Circuit Judges.

          POOLER, Circuit Judge:

         Plaintiffs, former employees of World Airways, Inc., appeal from the February 8, 2016 memorandum and order of the United States District Court for the Southern District of New York (Torres, J.) dismissing their complaint seeking damages for fraud, breach of contract and violation of an employee benefit plan. Pruter v. Local 210's Pension Tr., No. 15 Civ. 1153 (AT), 2016 WL 908303 (S.D.N.Y. Feb. 8, 2016). We agree with the district court that plaintiffs' state law claims arise under the Railway Labor Act ("RLA"), 45 U.S.C. § 151, et seq., and are thus preempted. As those claims bear a close resemblance to claims brought pursuant to the Employee Retirement Income Securities Act ("ERISA"), however, we find it appropriate to borrow and apply the three-year statute of limitations set forth in Section 1113 of ERISA rather than the six-month limitations period the district court borrowed from Section 10(b) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 160(b). Our holding is consistent with our precedents "reject[ing] the argument that uniformity among borrowing limitations is needed among all labor cases" since suits against unions "encompass[] many varieties of actions." Phelan v. Local 305 of United Ass'n of Journeymen, 973 F.2d 1050, 1059 (2d Cir. 1992). We therefore VACATE the district court's dismissal of the RLA claims brought against Local 210 and REMAND for further consideration of that claim consistent with this opinion. We AFFIRM the district court's opinion in all other respects.

         BACKGROUND

         Plaintiffs are former employees of World Airways, Inc. and participants in Local 210's Pension Trust Fund (the "Fund"). The Fund provides pension benefits to participants and beneficiaries pursuant to an employee benefit plan (the "Plan"). The Plan is a multiemployer plan within the meaning of section 3(1) of ERISA, 29 U.S.C. § 1002. Pension benefits are paid based on service credits. Service credits are generally earned based on an employee's years of covered service, that is, service for a contributing employer while an employee is a participant in the Plan. Service credits may also be awarded based on past credited service, which is a credit for an employee's periods of covered service with an employer that predate the employer joining the Plan. The Plan also allows for the cancellation of past service credits if (1) the participant's employer is no longer a participating employer in the Plan and (2) cancelling the past service credits is in the interest of preserving the Fund's actuarial soundness. The Plan grants the Fund's trustees (the "Trustees") "the exclusive right, power, and authority, in their sole and absolute discretion, to administer, apply[, ] and interpret the Plan, " and "to decide all matters arising in connection with the operation or administration of the Plan." App'x at 83 § 10.1.

         Until 1996, World Airways employees were represented for collective bargaining purposes by the International Brotherhood of Teamsters Local 732. The collective bargaining agreement between the World Airways and Local 732 provided that Plaintiffs were to be enrolled in World Airway's retirement plan (the "Target Benefit Plan"). World Airways was obligated to pay 1.8 percent of each employee's gross annual salary into the Target Benefit Plan.

         In 1996, Local 732 merged with the International Brotherhood of Teamsters Local 210, after which Plaintiffs were represented by Local 210. In the spring of 1996, Local 210 took over negotiations with World Airways for a new collective bargaining agreement. Plaintiffs allege that, as part of those negotiations, Local 210 offered to replace the Target Benefit Plan with the Plan. Plaintiffs allege that Local 210 promised them that (1) World Airways would be required to make a monthly contribution for post-1996 service and for past service time after participants completed a five-year vesting period; and (2) Local 201 would assume all pension liability for past service credit if World Airways could not or would not fund the Plaintiffs' past service credits.

         A June 17, 1996 letter sent from the Local 210 negotiating team to Local 210 members, including Plaintiffs, stated in relevant part:

PENSION AND PENSION VESTING GUARANTEE
[International Brotherhood of Teamsters] Demand:
The [T]arget [B]enefit [P]lan provided by [World Airways] is woefully inadequate and must be replaced. It operates on the assumption that the money contributed by [World Airways] will earn 8% interest and it has consistently failed to do so. [World Airways] refused to take on the financial burden that would provide each of us with a decent retirement.
We are very pleased to advise that Local 210 offers retirement plans for its members where the employer does not have sufficient funds or is unwilling to commit the necessary cash to provide a viable retirement. Local 210 has designed a federally insured, 100% funded, "defined benefit plan" to which [World Airways] will provide monthly contribution with a 100% past service credit after a 5 year vesting period. This will provide an extraordinary improvement in our benefit from today's level.
This is possible because, while [World Airways] will never contribute enough money to have purchased the benefit for us, our Union (and the members of our local who will vote to accept us into their plan) are willing to accept the liability ...

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