September 2013

By: James B. Sherman Esq.

As any employer that has had the misfortune of being sued by a union trust fund over fringe benefit contributions will tell you, the law appears to be stacked against employers. In fact, they are right. The Employee Retirement and Income Security Act, or ERISA, was designed to protect the interests of employees and their beneficiaries. Therefore, when in doubt, courts typically resolve disputed agreements in favor of employees and not employers. This holds true especially in the case of union sponsored fringe benefit funds, or jointly trusteed Taft-Hartly funds, as they are referred to in legalese. Whenever an employer raises a successful defense to a union trust fund collection action in federal court, it is cause for celebration. Such was the case in a recent Minnesota federal district court decision.

The Trustees of the Plasters and Cabinet Makers Health Fund v. Goebel Fixture Co., serves as a reminder to employers that it is possible to overcome or stall a trustee’s record when the trust fund agreement’s language is too ambiguous. In this case, the Trustees sought to collect unpaid fringe benefit contributions of approximately $500,000.00 from Goebel for non-union employees that were doing similar work in similar job classifications as union employees. The Judge, however, in looking carefully at the language of the Trust Fund Agreement and the Collective Bargaining Agreement, found it unclear whether such contributions were actually owed and found in favor of the employer. Dismissing the case for lack of jurisdiction, Judge Joan Erickson held that the determination of whether a union contract covered certain individuals was within the province of the National Labor Relations Board and not the court.

As this case points out, one way to defend against such cases is to attack the language of the agreement itself and to look for ambiguities that fall in the employer’s favor. Also, the manner in which the agreement was executed can, in certain circumstances, similarly defeat such claims. Although this is rare, Wessels Sherman prevailed on behalf of its client in a landmark case that gained national attention where the manner in which the agreement was signed was successfully challenged as fraudulent. See Trustees of Twin Cities Bricklayers Fringe Benefit Funds, et. al. v. McArthur Tile Co., 351 F. Supp. 2d 921 (D.C. Minn. 2005.).

If you are being threatened with a lawsuit or being sued by a union sponsored fringe benefit fund, in some cases there are viable defenses that can be identified and raised by legal counsel experienced in defending such cases in court. Wessels Sherman attorneys James Sherman can review your collective bargaining agreement and any correspondences or audit demands from fund trustees, as well as any court pleadings to help determine whether there might be some viable defense available to your company.

To contact Mr. Sherman, please call (952) 746-1700 or email jasherman@wesselssherman.com.