Oregon Cases Show ERISA’s Power in Collecting Assets for Union Trust Beneficiaries

You gotta get up pretty early to have a warrant for your arrest in an ERISA case but here we are.

• ERISA is a multi-headed beast intended to comprehensively govern employee benefit plans.

  • The bulk of reported ERISA cases are benefits disputes between beneficiaries and plans.

  • But plans also sometimes initiate litigation to meet their fiduciary duties. A steady area of litigation is the collection of contributions owed by employers to union trusts formed to provide pension and welfare benefits to union members.

  • Employers who fail to make contracted contributions to trusts can find themselves on the wrong end of federal remedies. Two District of Oregon cases show the work that goes into securing assets for union beneficiaries.

• Default Judgment for Locals 302 & 612 Trusts

  • Locals 302 and 612 of the International Union of Operating Engineers represents heavy construction workers in Alaska, Idaho, and Washington and has formed trusts to provide welfare benefits to its members. Ross Island Sand and Gravel Company signed contracts obligating it to contribute funds to the trusts as union members worked on its project.

  • After Ross Island failed to pay the benefits the trusts reported due, the trusts sued. And when Ross Island failed to appear, the trusts moved for default and default judgment.

  • In the Ninth Circuit seven factors govern whether default judgment is appropriate, including prejudice to the plaintiff, whether the sum of money at stake is reasonably awarded by default, the quality of pleading, and the merits of the claim on the facts alleged. The court found all seven factors favored granting default judgment.

  • Looking to damages, the court explained that under Section 1132(g)(2) ERISA required a mandatory an award of (1) the unpaid contributions; (2) interest on the unpaid contributions; (3) the greater of interest on the unpaid contributions or liquidated damages, not to exceed twenty percent of the unpaid contributions; and (4) reasonable attorney's fees and costs. It ordered more than $187,000 in delinquent contributions and more than $12,000 in attorney fees and costs.

• Warrant of Arrest for Employer in Contempt

  • Locals 846 and 847 of the Reinforcing Iron Workers represent workers across the swathe of states.

  • Their members worked for Lone Star Rebar Installers (LSRI). After LSRI failed to provide the trust with information necessary to calculation contributions, they sued and obtained a default order requiring LSRI to produce its books.

  • When LSRI failed to comply, the court found it in contempt and imposed a $200-per-day fine until LSRI complied with its order.

  • And when that didn’t get its attention, the court ordered the arrest of LSRI’s President and CEO.

  • That finally seems to have done the trick, as the Trusts moved for a stay of the arrest warrant a few weeks later and it was rescinded.