USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 91-1542
RONALD W. CATERINO, ET AL.,
Plaintiffs, Appellants,
v.
J. LEO BARRY, ET AL.,
Defendants, Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
___________________
____________________
Before
Breyer, Chief Judge,
___________
Cyr and Stahl, Circuit Judges.
______________
____________________
Anthony M. Feeherry with whom Marie P. Buckley
_____________________
_________________
Procter & Hoar were on brief for appellants.

and

Goodw
_____

______________
Randall E. Nash with whom
_______________
on brief for appellees.

James T. Grady and Grady and Dwyer w

______________
_______________

____________________
November 12, 1993
____________________

-1-

BREYER,
New

Chief Judge.
___________

For more than thirty years,

England employees of United Parcel Service ("UPS") have

participated
Industry

in the

New

England

Pension Fund (the

1986,

a group

leave

the

of

Teamsters

Trucking

"Teamsters Pension Fund").

those employees

Teamsters

and

decided they

Pension Fund.

They

In

wanted to

hoped (through

collective bargaining) to secure their employer's assistance

in setting up a separate

pension fund covering only UPS New

England employees.
The employees failed to

bring about the

creation

of a separate

fund.

And, they blame

Fund trustees for that failure.

the Teamsters Pension

In particular, they believe

that the trustees have thwarted their efforts to negotiate a

plan

switch, not through direct opposition, but by refusing

to permit a transfer of any Teamsters Pension Fund assets to

any

new pension fund

create.
claiming,
transfer

They brought

that they,

together with

this lawsuit

in relevant part,
assets violates

against the

that the trustees'

various

UPS, might
trustees,
refusal to

laws, including

certain

provisions of the Employee Retirement Income Security Act of

1974 (ERISA).

See 29 U.S.C.
___

After a
trustees' favor.

essence

that

the

trial, the

1104(a)(1), 1414(a).
district court

The employees now appeal.

trustees, in

assets to a newly created

refusing

found in

the

They argue in

to

transfer any

fund, have violated the fiduciary

obligations that

ERISA imposes upon

such violation, however; and, we

them.

We can

find no

affirm the judgment in the

trustees' favor.
I
Background
__________
A
The Teamsters Pension Fund
__________________________
The

large, multiemployer

Teamsters Pension

pools

contributions from

nearly two

firms.

Eight trustees

(four Teamster

four

employer representatives)

the pooled money

employees

who

considerable care to

Pension

Fund

We

manage the

have

fund, investing

read

the

try to understand, from

as well
works.

as the
Based

briefs,
on our

England

representatives and

and paying guaranteed monthly

retire.

and documents,

thousand New

Fund

benefits to
record

with

the testimony

how the

Teamsters

understanding

of the

record, we describe its significant features as follows.

First,

employers contribute to the fund at a rate

that, in 1986, varied, among employers, between 36 cents and

$1.66 per employee

working hour.

upon

of local

the

results

The

collective
-33

precise rate depends

bargaining.

Each

employer pays the collective-bargained hourly rate for every

_____
hour

that

any
___

performs the

employee works,

whether

work is young or old,

the

employee who

part-time or full-time,

temporary or long-term.
Second,
benefit

in

benefits
service

a retiring

an amount

defined

receives a
schedule

pension

that varies

the employee's length of

and upon his, or her, employer's contribution rate.

have worked for

contribute
employee

schedule

same rate.

who worked for

receive a

same pension to two retirees who

the same number of years

at the

who contributed

In 1986,

any pension

$1.66 per hour

pension of

for example,

$900 per

benefits until

month.

in 1986)

The benefit

of service (ten years as

employee is entitled

he has worked

benefits have "vested."

appears to set a maximum

an

an employer

(UPS' actual rate

to five in 1990); no

i.e., until his Fund

for employers who

twenty-five years for

imposes a minimum length

of 1986, lowered
to

by a

depending primarily upon

The schedule thus pays the

would

employee

the minimum,
The schedule

length of service as well (twenty-

five or thirty years, depending on retirement age).

Once an

employee

works the maximum number of years, additional work

done does not entitle him to any additional benefit.

-44

It is
Pension
unlike

important to understand

Fund (like most "defined benefit" pension plans and

"defined contribution" plans

university employees)
he

that the Teamsters

will receive

contributions
over the years

does not guarantee any

___
pension that

made

such as those

on behalf

employee who works

As

employee that

exactly reflects
_______

associated with

we have just said, an

more than

the maximum

of some contributions made in

some of

hours.

More

individual

number of

loses the benefit

his work

all the

of that particular employee

_________________________

(plus the investment income

those contributions).

of many

important, an

years

respect to
employee who

leaves

covered employment

before

his

Fund benefits

contributions made in

vest

loses the

benefit of all
___

his work.

Less obviously, employees who are young also lose

the benefit of some contributions.

who

works a certain

the ages of forty

no more upon his
who works the

For example, an employee

number of years,

say fifteen, between

and fifty-five (and then quits)

retirement at sixty-five than

same fifteen years between the

and sixty-five; yet the contributions

first employee

respect to

receives

an employee
ages of fifty

made on behalf of the

are likely more valuable, for

they have had

more time to accrue investment income before retirement age.

-55

This
contributions

lack of
and

perfect fit

individual

administrative considerations.

between

benefits

may

individual
reflect

It may, for example, reflect

a judgment

not to
___

create discrepancies

in benefit

levels

that turn solely upon the relation between investment market

performance and the time that
are made.
fit,

But, the

as the

"excess"

most important reason for the imperfect

Ninth Circuit

has

pointed out,

is that

the

contributions made in respect to some workers help

to assure that all workers

___
years)

an individual's contributions

will

have a

(who work a reasonable number of

decent

pension.

"A

modern

defined

benefit pension plan pools contributions for all workers . .

. to

provide reasonable

reasonable eligibility
assumes
number

[inter alia]
__________

pensions for
standards.

that the

of employees may

workers who

The

pensions

never vest."

satisfy

formula necessarily
of a

significant

Phillips
________

v. Alaska
______

Hotel and Restaurant Employees Pension Fund, 944

____________________________________________

F.2d 509,

517 (9th Cir. 1991) (citation omitted), cert. denied, 112 S.

_____ ______
Ct. 1942

(1992); see also Local 144 Nursing Home Pension

_________ ________________________________

Fund v. Demisay, 113 S.

____
_______
concurring) ("That
plan employees']
employees

some

Ct. 2252, 2260 (1993) (Stevens, J.,

portion of

[some defined

contributions will go
.

is,

of

course,
-66

in

to benefit
the

nature

benefit
[other]
of

multiemployer

plan.

contributions for

Such

plans

the joint

benefit

. pool[]

of all

employer

participating

employees.").
At

the same time,

connection between

an individual's

individual's benefits.
service and

the plan retains

an important

contributions and

that

By tying benefit levels to years of

employer

contribution rates,

the

Fund

still

ensures that those employees who do not get the full benefit
of

contributions

made on

their

behalf get

much
____

of that

benefit (at least if their pension rights have vested).

Third,

the

multiemployer plan.
means

the fund

Teamsters
The

Pension

fact that

is large,

thereby

it is

Fund

per

"reciprocity"

pension

dollar.

permits

participating employers,
contributions.

worker

permitting trustees

Moreover,
to

"multiemployer"

diversify investment risks and also lowering

costs

is

change

to

administrative
multiemployer
jobs,

among

without losing the benefit of past

Finally,
special feature

the Teamsters

-- a "no asset

UPS employees now challenge.

Pension

Fund contains

transfer" rule -- which the

That rule says:

If any employee or group of employees .

. . shall cease to be covered by the
Fund for any reason whatsoever, they
shall not be entitled to receive any
-77

assets of the Fund or portion thereof

nor shall the Trustees be authorized to
make any transfer of assets on behalf of
such employees.
New

England Teamsters and

Agreement and Declaration

(1958).

Pension Fund,

of Trust, Article XII,

section 9

According to the trustees, this seemingly absolute

prohibition
section.

Trucking Industry

is

modified

That section

by

the

Trust

Agreement's

requires the trustees

next

to interpret

and apply the Agreement

so as to be in full compliance with all
applicable provisions of law, including
the Employee Retirement Income Security

Act of 1974, as amended.

New England

Teamsters and

Restated Agreement and

Trucking Industry

Declaration of

Pension Fund,

Trust, Article

XII,

employees learned

that

section 10 (1982).
B
This Case
_________
In 1986,

a group

of UPS

they

could dramatically improve the level of their pensions

were

they, with UPS, to withdraw from the Teamsters Pension

Fund and

create their

own single-employer

plan.

That is

because, as confirmed in the findings of the district court,

UPS

employs a relatively large number of temporary workers,

for whom the company contributes for every hour

worked, but

-88

who leave
pensions

the New
vest.

England trucking
The UPS

industry before

workforce also

includes a

their
large

percentage
made

on

of younger
behalf

workers.

of its

average

amount of

Pension

Fund,

Thus,

employees

UPS' contributions

contain

a higher-than-

"excess" contributions.

being

The

multi-employer fund,

Teamsters

spreads

the

benefits of such excess contributions among all participants

in the Fund.

In a single-employer plan,

realized, they would not

others.

have to share their

"excess" with

And unshared, UPS' $1.66 per hour contribution, as

________

of 1986, could
$900

the UPS employees

per

buy pensions of $2600 per

month) for

UPS

service after twenty-five

single-employer

employees who
years.

month (instead of
retired

from UPS

Alternatively, UPS,

in a

plan, could fund the $900 per month pension

for employees retiring after 25 years with a contribution of

less

than 70 cents

(rather than $1.66)

for every employee

hour worked.
The UPS
after

employees' brief

they learned of

employer plan:
treatment
repeatedly
[through

"In an

the potential benefits

effort to remedy

within the Teamsters

petitioned

explains what

their

collective bargaining
-99

Fund, the
union

happened

of a single-

their inequitable
UPS Participants

leaders

to

negotiate

with UPS management]

for a

separate pension plan on their behalf" -- a plan, the record

indicates,
transfer

that

the

of some portion

and liabilities to
add,

employees

assumed

would

of Teamsters Pension

the new fund.

involve

Fund assets

"However," the employees

"the UPS Participants' efforts to negotiate a separate

UPS pension

plan [were]

Teamster

Fund's

prohibits

any

thwarted by

governing

the provision in

documents

transfer of

assets

which
. .

."

the

absolutely
Brief

for

Plaintiffs-Appellants at 10.
"Thwarted" in
the

Teamsters Pension

their efforts
Fund, and

to take assets

thereby,

in their

from
view,

"thwarted" in their efforts to bring about the creation of a

new fund, the UPS employees filed suit against the trustees.
They asked

the court

create special

either (1) to

benefit levels within

Fund for UPS participants (to

their

favorable actuarial

prohibition

on asset

trustees to

the Teamsters Pension

reflect, in whole or in part,

status), or

transfers,

making it possible for them

UPS management.

order the

(2)

thereby,

to loosen
in their

the
view,

to negotiate a plan switch with

They argued that the

trustees' failure to

do one or the other violated various provisions of the Labor

Management Relations
and of ERISA.

Act (LMRA), 29

U.S.C.

141

et seq.,
__ ____

As we have said, after a trial, the district

-1010

court

entered judgment for the trustees.

The employees now

appeal that judgment.

The UPS employees have

appeal.
create

simplified their claims on

They have abandoned their demand that

a special

Pension Fund.

level of

They focus

benefits

the trustees

within the

Teamsters

instead upon the trustees'

rule-

based refusal to permit any transfer of assets to a new UPSonly fund.

The
appeal.

time

has

also

simplified

this

The Supreme Court has recently decided a case which

we awaited
Nursing

passage of

before deciding

Home

Pension Fund

this appeal,

namely Local 144

__________

v.

113 S.

Demisay,

Ct.

2252

________________________________________
(1993).
to

Demisay involved
_______

LMRA- and ERISA-based challenges

a refusal, by trustees

of a multiemployer pension plan,

to transfer
Court

assets to another

barred

the

LMRA-based

grounds, but it remanded

claims.

As a

plan.
claims

on

decision, the
jurisdictional

(without deciding) the ERISA-based

result of that

concede that they

In its

decision, the

"can no longer pursue a

UPS employees

claim for relief

under [the applicable section of] the LMRA."

-1111

The
claim, namely

UPS
that

employees
the

now

trustees'

transfer assets violates ERISA.

pursue

their

rule-based

remaining
refusal

to

-1212

II
Standing
________
We
employees
may

begin with

lack standing.

bring an

ERISA

affected by the
respect to
They

act or

"adversely

omission of

that
by

principally

because,

participants

could

with or

added).

the
the

in

have been

asset

. .

U.S.C.

employees

the

"adversely

any party .
29

that the

the employees

have

transfer

trustees'

with

1451(a).
not

been

prohibition
view,

receive

the same

level

without a
_______

transfer

of assets

single-employer fund."
(emphasis

they

multiemployer plan."

affected"

assertion

They concede that

action if

claim, however,

benefits

the trustees'

of

"UPS

[pension]
to a

new

Brief for Defendants-Appellees at 34

Insofar

as we understand

this somewhat

counter-intuitive argument, we cannot agree with it.

In
separately

evaluating
in mind two

the

argument,

different groups of

we

have

kept

UPS employees.

In the first group are those employees who, were a switch to

occur,

would not yet have any vested Teamsters Pension Fund

______

rights but who will keep working for several years after the
switch (e.g., a UPS employee
the time of the

who worked, say, four years at

switch, and continues to work for more than

an additional year).

Both

sides agree that a new, UPS-only

-1313

pension plan

would need

to give these

employees (whom

we

shall call "not-yet-vested employees") full credit for their

past years of
the plan
vested,
work).

Teamsters-Pension-Fund-related service (e.g.,

would need

to give

the four-year

employee fully

five-year, rights after one more additional year of

Everyone

also agrees, however,

that the "no

asset

transfer" rule means that the new fund would be left without
any
___

assets to

employees'

counsel

Participants'
cost

of these

million.

pay for

Brief

past service

estimates

the

"loss

credits.
of

the

The
UPS

unvested benefits" (which we take to mean the

past service

credits)

at approximately

for Plaintiffs-Appellants at

trustees' figures, if
higher.

these

10 n.1.

anything, appear to place

$5
The

the figure

a switch
shall

In

the second group are those employees who, were

to

occur, would

call

agrees

them

that a

pensions

remain the

"already-vested

new, UPS-only

reflecting

already-vested

already have
_______

the

legal

employees").

fund

would not
___

past years

employees, for

of

those
_____

responsibility of

Fund. (In practice,

vested rights

Everyone
have to

service

the Teamsters

pay

of these

pension rights

the old fund pays

(we

would
Pension

supplemental pension

benefits directly to the employee after retiring.)

Since a

-1414

new fund

would not

years of service, it
any

such

somewhat

payments.

have to pay

employees' past

would not need assets to

And,

indifferent to the

asset transfer" rule.

for these

thus,

the

help it make

new fund

presence of the

The employees recognize

would

be

trustees' "no
this point,

which is why they suggest they would ultimately ask only for
the approximately $5 million -they claim it

or some portion thereof

--

would cost to pay the past service credits of

the not-yet-vested employees.

______________
With this distinction
the

trustees' "no standing" argument.

upon a table

show

that,

if

following would

asset

would

obtain assets

transfers

to do with

Pension Fund as
the

the new

permissible,

the

fund would assume

all

from the

old

fund to

liability; but,

the inadequate funding

a whole, these assets would

amount

employees; (4) the

vested

were

the already-vested employees;

______________

(already-vested employee)
having

and Liabilities

Numbers") that seems designed to

occur: (1)

pension liability for

turned to

The argument depends

(entitled "Transfer of Assets

Vs. No Transfer -- Hancock

of

in mind, we have

needed

to

pay

for

the

help pay
(3) for

reasons

fall far short

already-vested

than outweigh any

-1515

that

of the Teamsters

asset shortfall (in respect

employees) would more

(2) it

to alreadybenefit to

the new fund through its

$5

million of

employees'

assets

obtaining a share of the (roughly)

in

pensions;

respect

(5)

"withdrawal liability" (a
that employers

the

to

the

rules

not-yet-vested
______________

related

to

UPS'

complicated statutory requirement

who leave a

multiemployer plan

pay a

fair

share of the fund's overall deficit) would then somehow even

things out,

so that UPS

would be neither better

nor worse

off with a transfer of assets than without one.

The

problem

understand the

with

of

simply

assets
not

liabilities,
the

of any

that

related to

bother

with

we cannot

The trustees

fund could not request a transfer

not-yet-vested
a

transfer

related to vested benefits).

employees limit their request

way, it

is

reasoning that underlies it.

nowhere explain why a new

only
____

the table

of

benefits

(and

assets,

and

And, so long as

in this, or some similar

seems plain to us that a rule blocking the transfer

assets means a

that the employees

poorer fund.

have standing,

We
and we

assume, therefore,
proceed on

that

basis.
III
Fiduciary Obligations Under ERISA
_________________________________
The UPS employees' basic argument is that the trustees,

in maintaining a "no asset transfer" rule, have violated the

-1616

fiduciary obligations that

ERISA imposes upon them.

obligations are "strict."

NLRB v. Amax Coal Co., 453 U.S.

____
______________

322, 332
"with

(1981).

respect to

The trustees must

a

Those

discharge their duties

[multiemployer]

plan

solely

in

the

interest of the participants and beneficiaries and . . . for

the exclusive purpose of providing
and beneficiaries,"
skill,

prudence, and

1104(a)(1);
duties

and

they must

diligence."

see also id.

___ ____ ___

of trustees).

At

benefits to participants
do

so "with

[]

See ERISA, 29
___

care,

U.S.C.

1106 (describing other fiduciary

the same

time, where,

as here,

there is no claim of trustee self-dealing or the like, we do

not simply substitute our judgment for that of the trustees.
We review the trustees' decision at a distance.

See Mahoney
___ _______

v. Board of Trustees, 973 F.2d 968, 970-73

__________________
(refusing to apply
decision even

(1st Cir. 1992)

close scrutiny to a pension fund trustee

where mild

self-dealing

was involved);

cf.
___

Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946, 958 (Del.
_____________
___________________
1985)

("[U]nless

evidence
based

it is

that the

on perpetuating themselves

good

substitute

faith,

by a

preponderance

[fiduciaries'] decisions

breach of fiduciary
of

shown

or

being uninformed,

its judgment

were primarily

in office, or

duty such as fraud,

for that of

of the

some other

overreaching, lack
a

Court

will

not

the [fiduciaries].").

-1717

The decision to maintain a "no asset transfer" rule requires

the

trustees

employees who

to

balance

obligations

may wish to leave

that

run

the fund and to

___

both
____

to

those who

wish to stay.

As is well-established, courts set aside this

type of trustee management decision only if it is "arbitrary

and capricious in
all

light of the trustees'

potential

beneficiaries."

responsibility to

Clearly
_______

v.

Graphic
_______

Communications Int'l Union

Supplemental Retirement and
____________________________________________________________
Disability Fund, 841 F.2d
_______________

444, 449 (1st Cir.

1988) (citing

other First Circuit cases on point).

We
arbitrary.

cannot say that the trustees' decision here is

In reaching this conclusion, we have considered

two possible arguments.

the UPS

The first (implicit in much of what

employees say) is

has treated them

unfairly while they

Fund by not giving them

employee

groups

characteristics.
earning (as

that the Teamsters

Pension Fund

have remained in

higher pension benefits than

with

less

favorable

other

actuarial

On this view, the sole fact that they were

of 1986)

a $900 pension

been earning a $2600 pension had the

when they

could have
_____

Fund treated them as a

separate actuarial group demonstrates this unfairness.

arguably,

this

the

"unfair"

treatment warrants

transfer of assets should they leave the Fund.

-1818

some

And,

special

The
discrepancy
indicate

problem

with

between $900

that

the

argument

is

and $2600

does

not, by
___

Teamsters

employees unfairly (and

other evidence of

this

cluster

of

above, such

most

the

offered any
Fund).

participants a

notably,

longtime workers.

funds do

itself,

As

6-7, multiemployer, defined-

provide their

benefits,

the

treated

unfair treatment while in the

funds

pension for all

Fund

nor have the employees

discussed above, see supra pp.

___ _____
benefit pension

Pension

that

And

this largely

whole

guaranteed decent
as also

discussed

by collecting

"excess"

contributions in respect
to

certain kinds

(whose

benefits

longterm

the

vest),
and

such

a
if

disproportionate

basic

of

by

sharing

employers
objective of

every employee
share of

as temporary

young workers,

with all the employees

___

employees

Accordingly,
undermined

never

employees,

contributions
with

of employees

and

these

workers
superexcess

in the fund, not just

who

paid

these

group (such

the

funds

would be

as UPS)

excess contributions

excess.

with a

(and there

may be many others) wanted special pension levels to reflect

that fact.

It is thus no coincidence that, according to the

findings of the
pension

fund

district court, no other

provides

special

regional Teamster

benefits

for

actuarially

-1919

favorable employee groups, and only one non-Teamster fund in

the entire country does so.
In

short, UPS and

its employees could

the Teamsters Pension Fund at any time, but so

stayed

--

benefits

and

enjoyed

the

guaranteed,

have quit

long as they

mobile

pension

the Fund provides -- there seems nothing obviously

unfair in denying them special (e.g., $2600)

benefits.

The

UPS employees, by abandoning on appeal their demand for such

benefits, seem,

in effect, to

concede the point.

(We add

that, on appeal, the UPS employees also seem to suggest that

a new

fund would

not be

entitled to

an amount of

assets

anywhere near as large as

the amount that would reflect the

UPS employees' "excess" contribution.)

The

second basic argument

acted arbitrarily focuses

on the "no

that the trustees have

transfer" rule.

The

employees argue that if they quit the Teamsters Pension Fund

(because they no longer, in
excess

contributions),

explained

in

the

the future, want to share their

the

rule would

standing section,

getting any assets to help

___

fund

from getting

supra
_____

Part

them,

as

II, from

pay for the past service credits

of the not-yet-vested employees.

new

prevent

such

And, it would prevent

assets

even though

dutifully made contributions into the old fund on

UPS

the
has

behalf of

-2020

these same employees.

employees

concede,

This,
again

they say, is unfair.

as

section, that the "no transfer

mentioned

in

the

The

UPS

standing

rule" is a wash with respect

to already-vested employees and, to that extent, the rule is

______________
not
___

unfair.

Teamsters

They

also

Pension Fund

recognize that,
has liabilities

as
in

long as

the

excess of

its

assets, they might not be entitled to get funds to cover all

___
of the past service credits of not-yet-vested employees; yet
they say they are entitled to funds

Can the

to cover at least some.

____

trustees' decision

not to

transfer even

one dime of the Fund's assets attributable to not-yet-vested

pension
other

rights (keeping
non-UPS

participants)

Although we find
the

answer is

those assets
be

the question a
"yes" --

at least

special circumstance that

blanket

the benefit

considered

in

refusal

of

reasonable?

difficult one, we
the absence

the record here does

In arriving at this conclusion, we

trustees'

for

believe
of some

not reveal.

fully recognize that the

operates

in

practice

like

penalty for withdrawing from the

Fund -- a penalty somewhat

similar

customers

to the

withdrawals
nonetheless.

penalties

from

CDs

and

bank
the

like,

pay
but

for
a

early
penalty

Whether such a penalty is reasonable depends,

-2121

in our view,

upon whether it serves a

purpose,

upon whether

the participants

about it

in advance, and upon

legitimate deterrent
in

the fund

its size in relation

know
to its

function.
The
legitimate.

penalty's

deterrent

Multiemployer,

function

here

defined-benefit pension

is
plans

almost inevitably produce some actuarially-favored, and some

actuarially-disfavored, groups.

Such plans

have a

strong

interest in discouraging actuarially-favored employee groups

from withdrawing.
means,

For the employees left behind, withdrawal

among other

greater

the

smaller fund,

consequently

investment costs and risks, and fewer employers for

whom those employees

years of

things,

service.

benefit of

contributions,

can work without losing

Those

their accrued

left behind, moreover,

also lose

sharing

the departing

employer's "excess"

say, those

related to

temporary employees.

Some departing employees, we should remind them, would be in

the same
them to
departing

situation had

personal circumstances

earlier led

switch to actuarially-disfavored employers.

employees, up until

the time of

Also,

departure, have

enjoyed

the benefits

of

the

large

fund

that

departure

disincentives have helped to maintain.

-2222

Moving
employees

to

the

next

inquiry,

we

think

that

leaving the Fund might reasonably expect to incur

some such departure penalty (not to be confused, by the way,

with

"withdrawal liability,"

The governing

document of

contained

the "no asset

creation.

More

of

a special

mentioned

the Teamsters

of

asset, namely

the

pension funds

normally lose

when they

leave fund-covered

Departing

employees

loss of

the loss
assets

And, participants

such assets

employment prior

leave Teamsters

has

the Fund's

importantly, the penalty concerns

kind

14-15).

Pension Fund

transfer" clause since

related to not-yet-vested contributions.

in many

supra pp.
_____

Pension

entirely

to vesting.
Fund-covered

employment whether
switching

they quit

the industry

by

plans, they and their employer leave the Teamster

Pension Fund.

Of course, the two activities

job and switching plans -- are not the same.

closely

or whether,

enough

related

to

make

the

-- quitting a
But,

they are

penalty

of

an

unsurprising kind (and, of course, from the point of view of

the remaining participants,

the effect of departure

is the

same).
It
withdrawal
suggests

also

seems

penalty

is

that the

to

us

that

relatively

employees can

the

modest.
take

size

of

The

advantage of

the
record
their

-2323

actuarially favorable position by leaving the Teamster

Fund

even without an asset transfer, albeit not quite to the same

______________________________
degree.

In absolute terms, we have

the employees

appear to

value the

already mentioned that

not-yet-vested employee

liability

at roughly

mentioned

that the employees

entitled,

the Teamsters Pension

amount

of assets

to

liability -- i.e., an
much

less.

(Our

$5

million;

we

have

also

already

recognize that they

cover

Fund being in

only some,
____

not

would be

debt, to an
all, of

this

amount less than $5

million, perhaps

own crude calculations,

based on figures

from the trustees' table, puts

exact figure,

the amount at $3.7 million.)

Whatever

the

it

is a

fairly

small amount

compared

to other amounts such as UPS' annual contributions

($18 million dollars as of 1986, according to the employees'

actuaries) or
have

to pay

the "withdrawal liability"

upon departure

(in

UPS would

the tens

likely

of millions

of

dollars, again as of 1986).

Finally, if the "no asset transfer" rule costs the
new fund too much, there is
can

automatically entitle

assets should the

a safety valve.
themselves to

matter become so critically

them that they take the

The

employees

share of

fund

important to

drastic step of changing collective

-2424

bargaining representatives (i.e., of leaving the Teamsters).

See ERISA, 29 U.S.C
___

1415(a).

Ultimately,
interests here at

the

weighing

of

issue -- those of

the

conflicting

departing employees in

obtaining the nonvested share of assets versus those of most

fund participants in discouraging departures -- is up to the
trustees
the

(who reflect the

employees,

through

representatives).
our view,

of the

rule arbitrary.

We do

transfers is

transfer"
simply
that it
us.

rule

reasonable, nor

is

reasonable in

say that the

up to

the courts.

(that they

not so unfair

not say that

bargaining

enough so that, in

departing employees

rights) is

employers and

collective

weighing is not

forfeit unvested

asset

their

The question is close

the ultimate

The treatment

interests both of

as to

any rule that

___
that

all
___

record before us

must

make the
blocks

the present

"no

circumstances.

We

does not demonstrate

is arbitrary as applied to the circumstances before

Thus, we do not find a violation of the basic fiduciary

obligations that ERISA imposes upon trustees.

IV
ERISA Section 4234(a)
_____________________

-2525

The

UPS employees also

transfer" rule violates

claim that the

ERISA section 4234(a),

"no asset
which says,

in relevant part, that

[a]
transfer
of
assets
from
a
multiemployer plan to another plan shall
comply with asset-transfer rules which
shall be adopted by the multiemployer
plan and which . . . do not unreasonably
restrict the transfer of plan assets in
connection with the transfer of plan
liabilities.
29 U.S.C.
applicable

1414(a).

They argue (1) that

to the instant case, (2)

the provision is

that the trustees have

failed to "adopt[]" any "asset-transfer rules," and (3) that

any such

rules they

might have

adopted are

"unreasonably

restrict[ive]."
The

trustees do

not

agree

that

the

provision

applies

to this

case.

Specifically,

they argue

that it

applies only where a fund's trustees intend to transfer some

of

its liabilities

question is

-- not

the situation

whether, or to

here --

what extent, the

and the

trustees must

allow assets to accompany the transferred liabilities.

is the interpretation

This

of the statute that the Third Circuit

has endorsed, and with which, for the reasons stated in that
opinion, we

agree.

See Vornado, Inc.

___ _____________

v. Trustees of The
________________

Retail Store Employees' Union Local 1262, 829 F.2d

_________________________________________

416 (3d

Cir. 1987).
-2626

Even assuming that the provision applies, however,

we cannot accept the employees' claim that the trustees have
failed to
asset

"adopt[]" any

transfer" is

Moreover, that rule

"asset-transfer rules."

itself a
______

rule

about asset

is not quite as absolute

The

"no

transfers.

as it sounds,

for the trustees acknowledge that, if ERISA's fiduciary duty

rules require them to transfer assets, the rule permits them
to comply.

The

section 10, says

Further, the

Trust Agreement
that they

itself,

must do

so.

in Article
See
___

supra p.
_____

XII,
8.

asset transfer prohibition, as so interpreted,

is not "unreasonably restrict[ive]," for the very reasons we

have set forth in Part III, supra.
_____
For

the

district court is

reasons

stated,

Affirmed.
Affirmed
________

-2727

the

judgment

of

the