Central States Pension Fund v. Central Transp., 472 U.S. 559 (1985)

Central States, Southeast & Southwest Areas Pension Fund

v. Central Transport, Inc.
No. 82-2157

Argued November 27, 1984
Decided June 19, 1985
472 U.S. 559

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE

SIXTH CIRCUIT

Syllabus

Petitioners are multiemployer benefit plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). The plans operate under trust agreements for the purpose of providing health, welfare, and pension benefits to employees performing work that is covered by collective bargaining agreements negotiated between a labor union and respondent trucking companies. Under these collective bargaining agreements, each employer must make weekly contributions to petitioners for each such employee, and each employer agrees to be bound by the trust agreements. Because they are so large, petitioners rely on employer self-reporting to determine the extent of an employer’s contribution liability, and police this self-reporting system by conducting random audits of the participating employers’ records. When respondents refused to allow petitioners’ requested audit of respondents’ payroll, tax, and personnel records, including records of employees who respondents claimed were not plan participants, petitioners filed an action in Federal District Court seeking an order permitting the audit. The District Court granted summary judgment in favor of petitioners. The Court of Appeals reversed, holding that petitioners had to show "reasonable cause" to believe that a specific employee was covered by the plans before gaining a right of access to that employee’s records.

Held: Respondents must allow petitioners to conduct the requested audit. Pp. 565-581.

(a) Various provisions of the trust agreements granting the trustees power to enable them to administer the trusts properly, including a provision granting power to demand and examine pertinent employer records, support the right to audit claimed by petitioners. Moreover, petitioners’ assertion that the requested audit is highly relevant to the trust agreements’ legitimate interests fully conforms to generally accepted auditing standards. Pp. 565-568.

(b) Petitioners’ trustees’ interpretation of the trust agreements as authorizing the requested audit is not inconsistent with ERISA, and indeed, is entirely reasonable in light of ERISA’s policies. Rather than explicitly enumerating all of the powers and duties of trustees, Congress invoked the common law of trusts to define the scope of their authority and responsibility. Under the common law, trustees have all such powers as are necessary or appropriate for the carrying out of the trust purposes, and an examination of ERISA’s structure in light of the common law leaves no doubt as to the validity and weight of the audit goals on which petitioners rely. Both the concerns for fully informing participants of their rights and status under a plan and for assuring the financial integrity of the plans by determining the class of potential benefit claimants and by holding employers to the full and prompt fulfillment of their contribution obligations are proper and weighty within ERISA’s framework. Pp. 568-574.

(c) A benefit plan should not have to rely on union monitoring of an employer’s compliance with its trust obligations as an alternative to audits by the plans themselves. Cf. Schneider Moving & Storage Co. v. Robbins, 466 U.S. 364. A trustee’s duty extends to all participants and beneficiaries of a multiemployer plan, whereas a union’s duty is confined to current employees employed in the bargaining unit in which it has representational rights. Nor would the Department of Labor’s policing of employer compliance be an acceptable alternative. That Department has insufficient resources for such policing, and neither ERISA’s structure nor its legislative history shows any congressional intent that benefit plans should rely primarily on centralized federal monitoring of employer contributions requirements. Pp. 575-579.

(d) To rely on covered employees themselves to come forward to assure that employers make the required contributions would not be feasible. While ERISA’s reporting requirements are designed to assure that participants receive information about their status and rights, they do so by placing a reporting duty on the plans. Thus, to give participants initial notice of their status, the plans would need to know the participants’ identities, the very information that the requested audit here sought to verify. P. 579.

(e) The fact that a benefit plan could bring an action against a delinquent employer as the employer’s breaches of its obligations are discovered does not foreclose the plan from seeking to deter such breaches or discover them early. To suggest that a plan should be so foreclosed ignores the trustees’ various fiduciary duties under ERISA and conflicts with ERISA’s concern that plans should assure themselves of adequate funding by promptly collecting employer contributions. Pp. 580-581.

698 F.2d 802, reversed.

MARSHALL, J., delivered the opinion of the Court, in which BRENNAN WHITE, BLACKMUN, POWELL and O’CONNOR, JJ., joined. STEVENS, J., filed an opinion concurring in part and dissenting in part, in which BURGER, C.J., and REHNQUIST, J., joined, post, p. 582.