Demopoulos v. Barrett

Background

Demos P. Demopoulos and Ralph Blasi, acting as Union Trustees and fiduciaries of the Local 854 Pension Fund, brought the action under Section 502(a)(3) of the Employee Retirement Income Security Act. They sought an order requiring the Employer Trustees—Kenneth Barrett, William Cassese, and John A. Curcio—to arbitrate a dispute concerning contributions from Cousins Metal and to authorize payment of the arbitration filing fee and other arbitration costs from the Pension Fund.

The Pension Fund is administered by a board containing both Employer Trustees and Union Trustees. The Trust Agreement provides that matters are decided by a majority vote, but that the majority must result from an equal number of Employer and Union Trustees voting. The agreement also contains a deadlock provision requiring arbitration when the trustees cannot agree on matters arising during the Fund’s administration. It states that arbitration costs are to be paid from the Trust.

After the Union disclaimed its interest as the collective bargaining representative of Cousins Metal employees, the Pension Fund attempted to refund contributions Cousins Metal made after the disclaimer. Cousins Metal demanded that the Fund continue accepting its contributions. At a later board meeting, Demopoulos moved to authorize continued refusal of the contributions. Demopoulos and Blasi voted for the motion, while Barrett and Curcio abstained. The Union Trustees then sent notice of their intent to arbitrate and filed a trustee deadlock request with the American Arbitration Association. The Employer Trustees refused to authorize the initial filing fee and stated that they did not agree that a dispute requiring arbitration existed.

Arguments and analysis

The Employer Trustees moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. They argued that the deadlock provision had not been triggered because there was no genuine dispute among the trustees. They also argued that their abstentions were permitted by their fiduciary duties under the Employee Retirement Income Security Act and that the Board’s prior interpretation of what counted as a majority under the Trust Agreement deserved deference.

The Union Trustees argued that the trustees disagreed about how to interpret the Trust Agreement’s voting provision and whether the August 30, 2023 motion had validly passed. In their view, the Employer Trustees’ refusal to vote left the question unresolved and required arbitration.

The court concluded that the complaint plausibly alleged a dispute about whether the August 30 vote was valid. It rejected the Employer Trustees’ argument that no dispute existed merely because the parties purportedly agreed about the likely outcome concerning the contributions. The court also relied on an earlier related proceeding involving the Pension Fund, which it said established that whether there was a valid trustee vote is a matter covered by the arbitration clause. The court stated that the deadlock provision had been triggered and that a genuine dispute existed.

Ruling and next steps

Judge Jennifer E. Willis denied the Employer Trustees’ motion to dismiss at Docket Number 7. The court did not decide the ultimate dispute about whether the Pension Fund should continue refusing Cousins Metal’s contributions. The Union Trustees also asked the court to convert the motion to dismiss into a motion for summary judgment. The court stated that it was inclined to do so, but because the Employer Trustees had not addressed that request in their reply, it directed the parties to meet and confer and file a joint letter by September 24, 2024. If the Employer Trustees opposed conversion, the joint letter was to include a proposed briefing schedule.