605 F.Supp.3d 467
E.D.N.Y2022Background
- In August 2005 several asphalt plant workers (Named Plaintiffs) changed bargaining units from Local 1175 to Local 175 and redirected employer contributions to Local 175 pension and welfare funds.
- Plaintiffs requested in 2007–2008 that Local 1175 transfer the aliquot share of assets to the Local 175 funds; Defendants (trustees of Local 1175 funds) refused and litigation followed (filed 2009).
- Judge Ross’s 2012 order initially held transfers required under ERISA; she later withdrew the order and sent parties to discovery; some pension assets and partial prejudgment interest were transferred in 2013–2014, but disputes over correct amounts and interest remained.
- The court certified separate pension and welfare subclasses in 2019; defendants moved in 2021 to dismiss remaining claims for lack of Article III standing, relying on Thole v. U.S. Bank.
- The district court denied the motion to dismiss, holding Thole inapplicable to (a) benefits that are not fixed and guaranteed and (b) fund-to-fund transfer claims; the court found plaintiffs adequately alleged concrete injuries (reduced wages and reduced benefits) and satisfied traceability and redressability for both the welfare claim and the pension prejudgment-interest-adjustment claim, and lifted the stay on expert discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Thole bars Article III standing for the welfare claims | Thole is inapplicable because Local 175 welfare benefits are not fixed; defendants’ failure to transfer assets caused concrete harms (lower wages, reduced benefits). | Thole controls and precludes standing because plaintiffs were not denied promised benefits and thus lack a concrete stake. | Court: Thole does not apply; benefits here are not fixed, so plaintiffs plausibly allege concrete injury. |
| Whether Thole and recent Supreme Court cases implicitly overrule Trapani (Second Circuit precedent allowing fund-to-fund suits) | Trapani remains controlling in this circuit; silence on standing in Trapani reflects plaintiffs’ concrete stake when funds withheld. | Thole (and related cases) undermine Trapani and defeat standing for fund-transfer suits. | Court: Trapani not overruled; Thole does not create the requisite conflict to displace Second Circuit precedent. |
| Traceability/redressability of welfare injuries (lower wages, reduced benefits) | Plaintiffs show causal chain: no initial asset transfer → Local 175 started with $0 → employer contributions diverted to fund build-up → fewer funds available for wages/benefits; statutory and regulatory constraints make redress likely to benefit participants. | Alleged harms are too attenuated and depend on independent third‑party actors (fund administrators, CBA negotiations), so not traceable or redressable. | Court: Plaintiffs met the lower pleading-stage standard; causal chain and statutory constraints make redress by court-ordered transfer or award plausible. |
| Standing to seek adjustment of prejudgment interest on pension transfer | Plaintiffs retain standing to litigate correct prejudgment-interest calculation as part of full compensation for the transfer claim; earlier rulings already recognized standing to compel transfer. | Plaintiffs lack equitable/property interest in fund; speculative to recalc what investments Local 175 would have made, so no traceable/redressable injury. | Court: Plaintiffs have standing to pursue prejudgment-interest-adjustment; Thole and cited authorities do not defeat this claim. |
Key Cases Cited
- Thole v. U.S. Bank N.A., 140 S. Ct. 1615 (2020) (Supreme Court holding plaintiffs in defined‑benefit plan lacked standing where benefits were fixed and plaintiffs suffered no decrease in payments)
- Trapani v. Consolidated Edison Emps.’ Mut. Aid Soc., 891 F.2d 48 (2d Cir. 1989) (Second Circuit recognizing successor welfare fund’s right to aliquot share and underpinning fund‑to‑fund transfer claims)
- Spokeo, Inc. v. Robins, 578 U.S. 330 (2016) (procedural violations alone do not satisfy Article III’s concreteness requirement)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires concrete, particularized, and imminent injury)
- TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021) (Article III limits courts to plaintiffs who have suffered a concrete injury)
- Local 144 Nursing Home Pension Fund v. Demisay, 508 U.S. 581 (1993) (interpreting ERISA preemption and trust/plan distinctions affecting fund claims)
- Hughes Aircraft Co. v. Johnson, 525 U.S. 432 (1999) (ERISA beneficiaries are not entitled to surplus assets beyond accrued benefits)
- John Blair Communications Profit Sharing Plan v. Telemundo Group, 26 F.3d 360 (2d Cir. 1994) (discussing claims for transferred appreciation and surplus income)