settlor in a multiemployer plan

[Guest]

Who is the settlor in a multiemployer plan?

[KJohnson]

What is the issue?

Usually whoever creates the Trust is the settlor so look at your Trust agreement. Typically you have joint settlors (union and employer association).

However in many multis the settlor function of amending the plan is often delegated to the Trustees. The Trustees can then have both settlor functions (plan design and amendments) and fiduciary functions. Look at Walling v. Brady out of the 3rd Circuit for a good discussion. There are variations in some Cirucits and I am not sure that the DOL is in complete agreement that trustees of a multi can act in a "settlor" capacity. However, the case law seems to be going this way and the Supreme Court's langauge in the Spink decision and Jacobson decision indicates that it is the function being performed rather than the title of the person peforming the function which determines whether it is a "settlor" or "fiduciary" act.

[Guest]

If the Trustees want to amend the plan, and they have authority, and then someone wants to sue them and say you shouldn't have amended the plan that way (eg db to dc), are they not liable for fiduciary breaches because they were performing a settlor function?

[KJohnson]

That's the way the law is going.

I believe there was a case out of the 6th Circuit called "Pope" thay applied a hybrid test.

I believe that the 3rd in Walling v. Brady and the 7th in an apprenticeship fund case (Howell?) have said Trustees amending the Plan are not acting as fiduciaries.

If you are in the 2nd there is an older Masters Mates and Pilots case I believe called Chambless that you will have to deal with. However I doubt Chambless has much vitality after the Supreme's decisions in Spink and Hughes v. Jacobson.

I think the government dropped a footnote in its amicus brief in Spink questioning whether the fiduciary/settlor distinction would apply to trustees of a multi and I think the DOL is shying away from this issue.

However current case law seems to indicate that trustees of a multi can amend a plan for any reason as long as substantive provisions of ERISA and the Code are respected (411(d)(6) etc.

[Guest]

Thanks