Federal court dismisses employees' claim of fiduciary fraud against union, employer and ERISA plan administrator
Dominic Cataldo was the lead plaintiff in a case filed against the United States Steel Corporation, the United Steelworkers Union, their pension fund, and the USX Corporation. The plaintiff workers claimed that the defendants mis-led them about how pension benefits would be calculated and the effect of early retirement. The plaintiffs were employees of the Lorain, Ohio, Works, which were sold by US Steel ,passed through several hands, and then re-purchased years later.
In essence, the sale at one point resulted in a reduction of workers' pension rights by limiting their "best five years" income, upon which pensions were calculated, to the years prior to 1999. The Lorain workers sought--and believed they were promised --treatment similar to other USS retirees, but this promise or expectation was never fulfilled. They also argued that some employees had retired with an expectation of equal treatment, and that the Union and the other defendants had failed to provide them with accurate information and advice.
The lower court dismissed the workers' claims, holding that they were barred by the passage of time. The court applied the three-year limitations period applicable to ERISA claims. The workers appealed, arguing that the six-year fraud statute of limitations should be applied. The Court of Appeals affirmed the lower court, holding that the workers did not adequately plead a fraud complaint with particularity. The Court also held that the Union was not a fiduciary of the retirement plan, as the employer had delegated to the Pension Fund and not to the union, the duty to manage retirement arrangements and benefit payments.