United States District Court, D. Minnesota
Midwest Construction & Distribution Industry Benefit Trust, Plaintiff,
Ferguson Enterprises, Inc., Defendant.
Mychal A. Bruggeman, Esq., Manty & Associates, P.A., Minneapolis, MN, on behalf of Plaintiff.
Noah Lipschultz, Esq., Littler Mendelson, PC, Minneapolis, MN, on behalf of Defendant.
MEMORANDUM OPINION AND ORDER
ANN D. MONTGOMERY, District Judge.
On April 14, 2015, the undersigned United States District Judge heard oral argument on Plaintiff Midwest Construction & Distribution Industry Benefit Trust (the "Fund") and Defendant Ferguson Enterprises, Inc.'s ("Ferguson" or the "Company") cross-motions for summary judgment [Docket Nos. 20, 29]. The parties dispute whether certain Ferguson employees were eligible to waive or opt out of health insurance benefit coverage under the Fund and, as a result, whether Ferguson was required to make contributions to the Fund on behalf of these individuals. For the reasons set forth below, each motion is granted in part and denied in part.
A. The Parties
Ferguson, a Virginia Corporation, operates as a wholesale distributor of piping and plumbing supplies in Minnesota. Draper Decl. [Docket No. 32] ¶ 1. The Fund (formerly known as the "Minneapolis and Suburban Lumber Dealers Trust Medical, Dental, Life & AD&D Benefit Plan") is a multi-employer welfare benefit trust fund that provides coverage for the union employees of less than ten local employers in the construction industry. Compl. [Docket No. 1] ¶ 1.
B. The Governing Documents
1. Collective Bargaining Agreement
On October 5, 2007, Ferguson and the union representing shipping/receiving and drivers at Ferguson's Plymouth, Minnesota location (Teamsters Local No. 120) ("Union"), entered into a collective bargaining agreement entitled "Agreement Between Teamsters Local No. 120 and Ferguson Enterprises, Inc." (the "CBA"). Draper Decl. ¶ 2; Compl. ¶ 3. The CBA governs the benefits, rights, and conditions of Ferguson's union employees. Bruggeman Aff. [Docket No. 27] Ex. 3 (the "CBA").
Paragraph 15 of the CBA sets forth the health and welfare benefits provided for union employees:
The Company agrees to continue to participate in the Minneapolis and Suburban Lumber Dealers Trust Medical, Dental, Life & AD&D Benefit Plan at its current benefit levels...
A. All benefits set forth in this section shall fall under the Minneapolis and Suburban Lumber Dealers Trust Medical, Dental, Life & AD&D Benefit Plan, hereinafter referred to as the "Trust." The Employer shall provide group insurance benefits for each regular employee who has worked for the Company seventy-five (75) calendar days or longer. Such coverage to start the first of the month closest to the seventy-five (75) day period.... Such coverage shall be as set forth in the Trust.
C. The Employer will pay a portion of the premium for the Trust identified in section A above as follows:
(1) Effective June 1, 2007: $683 per month per employee
(2) Effective August 1, 2008: $704 per month per employee
(3) Effective August 1, 2009: $725 per month per employee
(4) Effective August 1, 2010: $747 per month per employee
(5) Effective August 1, 2011: $769 per month per employee
2. Trust Agreement
The Minneapolis & Suburban Lumber Dealers Trust Agreement (the "Trust Agreement") sets forth the duties of the Fund trustees, who manage the Fund with the plan administrator. Bruggeman Aff., Ex. 5 (the "Trust Agreement") §§ 1.3, 5.1. Gerard Melgaard, Greg Skagerberg, and William Weber serve as trustees for the Fund. See generally Melgaard Aff., Skagerberg Aff., Weber Aff. [Docket Nos. 24-26]. Article 3.8 of the Trust Agreement specifies the authority of the Trustees to manage the Fund:
Trustees are hereby authorized to specify the date on which contributions to the Trust are due. The Trustees shall have the power to demand, collect, and receive Employer contributions and all other money and property to which the Trustees may be entitled, and shall hold the same until applied to the purposes provided in this Trust Agreement and the Plan.
Trust Agreement § 3.8. The Trust Agreement also sets forth the operational aspects of the Fund and addresses the composition of the Board of Trustees. Finally, the Trust Agreement specifies that "[e]ach Employer shall be responsible only for the contributions it is obligated to make under the Plan on behalf of its respective Covered Individuals." Id . § 3.6. The Trust Agreement defines "Covered Individuals" as "a person covered under or otherwise entitled to benefits under the Plan" and "Plan" as "the Minneapolis & Suburban Lumber Dealers Welfare Benefit Plan." Id . §§ 2.2, 2.7.
3. The Summary Plan Document ("SPD")
The "coverage, eligibility, and limitations" of health and welfare benefits referenced in the CBA are found in the Summary Plan Description and Plan Document for the Minneapolis & Suburban Lumber Dealers Welfare Benefit Plan. Bruggeman Aff. Ex. 12 ("SPD"). The SPD provides the details of the medical coverage offered and the rules of eligibility, enrollment, and participation in the Fund. Relevant here are several SPD provisions that reference a right to waive coverage under the Fund. Section 1.1. (a)(1) of Section II states:
Unless you waive coverage as provided in Section II (1.2) of this Part Two, enrollment in the Plan (all portions) is automatic as of the date the eligibility requirements set forth in Part II: Eligibility, Enrollment & Participation, Section 1: Eligibility, are satisfied.... Caution: if you waive coverage at your initial ...