Reuben McDaniel Joe P. Martin Eileen Herrala Joseph Guenther Henry Moser v. The National Shopmen Pension Fund

Beginning in 1971, Fentron Industries, (“Fentron”) made contributions on behalf of its employees to the National Shopmen Pension Fund (“the Fund”), a multiemployer pension plan, until it withdrew from the Fund in 1978. In 1982, the Fund’s trustees voted to cancel certain pension credits previously earned by the Fentron employees, justifying the action on the ground that Fentron’s departure left the Fund with $500,000 in unfunded liabilities. The Fentron employees brought this suit to set aside the Fund’s action. The district court granted summary judgment to the employees, holding that the Fund’s cancellation of pension credits was arbitrary and capricious in violation of section 302(c) of the Taft-Hartley Act, 29 U.S.C. § 186 (c)(5), and section 404 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1104 . We affirm because we believe this case is controlled by our decision in Elser v. I.A.M. Nat’l Pension Fund, 684 F.2d 648 (9th Cir.1982).

In Elser, we held that a multiemployer pension fund could not cancel pension credits to cover an unfunded liability. Id. at 657. Although the fund in Elser argued that the pension forfeiture provision was necessary to protect…