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Rossman v. Iniguez

United States District Court, N.D. California

July 22, 2019

LINDA G. ROSSMAN, Plaintiff,
v.
MIGUEL INIGUEZ, et al., Defendants.

          ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION

          RICHARD SEEBORG, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This ERISA action arises from an alleged breach of fiduciary duty by Defendants Miguel Iniguez and Felipe Hernandez while acting as Trustees of the UA Local 355 Health and Welfare Trust Fund (“Health and Welfare Trust Fund”) and the Northern California/Northern Nevada Landscape and Underground Utility Journeyman and Apprenticeship Trust Fund (“JATC Trust Fund”) (collectively, the “Trust Funds”). Plaintiff Linda Rossman, who is also a trustee of these same funds, moves for preliminary injunction. For the reasons set forth below, this motion is denied.

         II. BACKGROUND

         A. Procedural Background

         In May 2017, Iniguez and Hernandez, along with several other individuals and entities, filed United Association of Journeyman & Apprentices of the Plumbing and Pipe Fitting Industry, Underground Utility/Landscape Local Union No. 355 v. Maniglia Landscape, Inc., No. 17-cv-3037-RS. The operative complaint in Maniglia comprises six claims for relief. Two of these claims are advanced by Iniguez and Hernandez, namely the Fourth and Fifth Claims. The Fourth Claim alleges the defendant employers failed to pay fringe benefits as required under Section 301 of the Labor Management Relations Act (“LMRA”) and Sections 502 and 515 of ERISA. The Fifth Claim seeks an audit of these employers pursuant to the same statutes.

         Rossman, in her capacity as a co-trustee of the Trust Funds, filed the present action in January 2019 alleging, inter alia, that Iniguez and Hernandez acted without authority and in violation of ERISA in bringing the Maniglia lawsuit. Rossman's case was subsequently related to Maniglia. She now moves for a preliminary injunction prohibiting Iniguez and Hernandez from prosecuting their claims in Maniglia, retaining legal counsel to pursue legal actions, or acting as ERISA trustees in any way other than as part of the Board of Trustees.

         B. Factual Background

         Both the Health and Welfare Trust Fund and the JATC Trust Fund are governed by written trust documents which set forth the powers, duties, and responsibilities of the governing Board of Trustees, as well as the process by which trustees can exercise powers.

         1. The Health and Welfare Trust Fund

         The Health and Welfare Trust Fund is established and governed by a written trust agreement, the UA Local No. 355 Health and Welfare Trust Agreement (“Health and Welfare Trust Agreement”). The fund itself provides health and welfare benefits, including medical benefits, to eligible employees and their families. Contributions to the fund are paid by participating employers and depend upon the number of hours worked by the employees. The Health and Welfare Trust Agreement also describes the powers of the Board and individual trustees.

         First, it states: “Neither the Board of Trustees nor any individual Trustee shall have powers, duties or liabilities with respect to the Trust Fund except as specified in this Agreement.” Rossman Decl., Ex. D § 2.04. The Board of Trustees is made up of two Employer Trustees and two Employee Trustees. Iniguez and Hernandez are the Employee Trustees and Rossman is one of the two Employer Trustees. Furthermore, the Board may “act only as a body at regular or special meetings, or by the written assent of all Trustees.” Id., Ex. D § 4.2.01. If the Board is unable to reach an agreement regarding a “matter within their power” a Trustee may demand arbitration of the issue. Id., Ex. D. § 4.4.02; see also id., Ex. D § 4.3.01.

         The powers of the Board include (1) collecting, receiving, holding, and disbursing “all sums of money which are payable to or by the Trust Fund” and establishing reserve funds; (2) employing any person or entity necessary to administer the trust, including legal counsel, and (3) pursuing legal action on behalf of the fund. Id., Ex. D § 4.4.08. The Health and Welfare Trust Agreement specifically confers the authority to take legal action against an employer who is delinquent in paying the required contributions on the Board as a whole: “If any Employer is delinquent in the making of Employer Contributions or the payment of any other obligations to the Trust, the Board of Trustees may take such legal or other action as they see fit to enforce collection.” Id., Ex. D § 3.07.

         2. JA ...


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