AMERICAN ARBITRATION ASSOCIATION

Voluntary Labor Arbitration Tribunal

In the Matter of the Arbitration between AAA No. 54-621-0001-89

RICHARD BEIMERS, JOHN MAURICE, DONALD YOST, RONALD

GREENLAND, DENNIS CAPTAIN & MARTIN VAN DYKE,
Claimants,

and

MICHIGAN STATE BREWERS AND DISTRIBUTORS SEVERANCE

AND RETIREMENT FUND & DEAN HOLEFCA, Its Contract
Administrator,
Respondents.
________________________________________________________________

OPINION OF THE ARBITRATOR

December 9, 1989

After a Hearing Held October 19, 1989

At the offices of the American Arbitration Association in Southfield, Michigan

For the Claimants: For the Respondents:

Duane J. Beach, Esq. Fred A. Foley

Wheeler, Upham, Bryant & Uhl, P.C. Rupp, Ehrlich, Foley & Serwer, P.C.
Eleventh Floor, Trust Building 1111 W. Long Lake Road, Suite 201
Grand Rapids, Michigan 49503 Troy, Michigan 48098
 Introduction

Claimants, Richard Beimers ("Beimers"), John Maurice ("Maurice"),

Donald Yost ("Yost"), Ronald Greenland ("Greenland"), Dennis Captain

("Captain"), and Martin Van Dyke ("Van Dyke"), are former participants in and

claim benefits from the Michigan State Brewers and Distributors Severance and

Retirement Fund ("Fund"), multiemployer pension plan maintained by the

Teamsters Union1 and certain employers in Michigan's beer, wine and soft drink

distribution industry. A hearing on their claims was held October 19, 1989, at

the offices of the American Arbitration Association ("AAA") in Southfield,

Michigan, at which it was announced that claimant Greenland had withdrawn

from the arbitration. Thus, nothing herein affects his rights (whatever they may

be), and hereafter the term "claimants" excludes Greenland.

In June of 1987, claimants were employed by West Side Beer

Distributing Company ("West Side") in Grand Rapids, Michigan, an employer

participating in the Fund. On June 8, 1987, West Side's Union employees

(including claimants) went on strike. Shortly thereafter, West Side replaced

some of its striking employees with non-union workers, and an election was

held under the auspices of the National Labor Relations Board to decertify the

1
Local Unions Nos. 7, 1038, 339, 486 and 580 of the National Conference of Brewery and Soft Drink Workers of
the United States of America and Canada, affiliated with the International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America. Claimants were members of Local 7.

2
Union.2 The Union was decertified as collective bargaining representative of

West Side employees, and West Side was deemed to have withdrawn from the

Fund, as of the commencement of the strike. JX 383; IAM National Pension

Fund v Fraser Shipyards, Inc, 9 EBC 2484, 2489-2491 (D DC, 1988).

The Fund is administered by a joint labor-management Board of

Administration ("Board"), consisting of four employer representatives and four

Union representatives. 29 USC §186(c)(5)(B). Beginning in 1986, a

disagreement arose between the employer members of the Board and the Union

members, over the Fund's method of valuing vested benefits in the calculation

of withdrawal liability.4 The disagreement stemmed from the Fund's unorthodox

custom of paying participants their full, undiscounted "accrued benefit" when

they terminate covered employment.

The Fund document provides in pertinent part:

If the Plan Administrator, in his sole and absolute discretion, elects to

commence payment of benefits after a Participant has terminated covered
employment . . . , the amount of these payments shall be determined by
2
The testimony concerning events surrounding the strike/decertification vote was somewhat confusing. Compare
claimants' version, Post Hearing Brief at 2, with respondents', Post-Hearing Brief at 3. I rely upon the version of
events given by Ronald Pillow, Business Representative of Local 7, at a Board meeting held January 20, 1989, in
response to questioning by Fund counsel. JX 9 (Board Minutes 1/20/89) at 15-16. Fund counsel also was present
when the minutes of that January meeting were approved and raised no objection. JX 8 (Board Minutes 5/12/89) at
1. Mr. Pillow, as a Union representative of West Side's employees and a Board member, was in a position to know
what actually happened. He signed most of the benefit applications in evidence, on behalf of Local 7. See, for
example, JX 24. Mr. Pillow also was signatory to the Settlement Agreement. JX 29 at 22.
3
Apparently West Side is contesting the Fund's assessment of withdrawal liability. Claimant's Post Hearing Brief
at 5.
4
A discussion of the intricacies of withdrawal liability would render an already complicated opinion unintelligible
to all but pension technicians. An overview of the subject can be found in Pension Benefit Guaranty Corp v R.A.
Gray & Co, 467 US 717, 720-725; 5 EBC 1545 (1984).

3
 the vested Accrued Benefit of the Employee . . . , undiminished by the
discounted present value of said benefit . . . . JX 6 at 25, §5.6.

Following the decertification vote at West Side, claimants sought to apply for

benefits from the Fund, on the ground that they had "terminated covered

employment," within the meaning of §5.6, but were advised that, due to the

ongoing disagreement among Board members, the Fund was "frozen."

By the time Board members resolved their disagreement in October of

1988, claimants had been forced by economic circumstances to return to work

for West Side. Claimants then were told that their benefit claims were being

denied because they had returned to work in the industry. It is within this

context that the instant dispute arises.

Decision

Because I conclude that there was no lawful basis for the Fund's failure

and refusal to process claimants' benefit claims in a timely manner, decision is

for claimants.

Nature of the Arbitration

This arbitration is unusual in many respects. AAA has classified it as

arising under MPPAA, the Multiemployer Pension Plan Amendments Act of

1980, 29 USC §1381 et seq. Although the Board's internal dissension had its

genesis in the withdrawal liability imposed by MPPAA, this arbitration is over

plan benefits, not withdrawal liability. Nor is it a conventional labor arbitration,

4
because it is not brought pursuant to the terms of a collective bargaining

agreement calling for arbitration of disputes between a union and an employer.

Proper classification is important, because it determines which of AAA's several

sets of rules apply (MPPAA, Labor, Commercial, etc.), how, why, when and

where the arbitrator's decision may be enforced or contested, and even affects

the arbitrator's compensation. Perhaps most importantly, it determines the

arbitrator's very function.

If this were a MPPAA arbitration, then AAA's Multiemployer Pension

Plan Arbitration Rules for Withdrawal Liability Disputes "MPPAA Rules")

would govern. Under the MPPAA Rules, the arbitrator would possess the broad

powers granted by §38, to "grant any remedy or relief within the scope of

ERISA." The party contesting the Fund's determination would bear the heavy

burden of proof set by 29 USC §1401(a)(3). The arbitrator's decision could be

enforced or contested only in federal district court, as provided in 29 USC

§1401(b)(2) & (3). In any contest, the arbitrator's findings of fact would be

entitled to a strong presumption of correctness, 29 USC §1401(c), and his

conclusions of law would be reviewed by the court, de novo, Trustees of Iron

Workers Local 473 Pension Trust v Allied Products Corp, 872 F2d 208; 10

EBC 2576, 2579-2581 (CA 7, 1989).

If this were a conventional labor arbitration, then AAA's Voluntary Labor

5
Arbitration Rules (as amended and in effect January 1, 1988) ["Labor Rules"]

would apply. In such an arbitration, the burden of proof would be more flexible.

Elkouri & Elkouri, How Arbitration Works 3rd ed), at 277-279. The standard for

judicial review of the arbitrator's decision would be the same highly deferential

standard in either state or federal court. Port Huron Area Sch Dist v PHEA, 426

Mich 143, 150 (1986).

If this were a conventional commercial arbitration, AAA's Commercial

Arbitration Rules would apply. Typically, the claimants would have the burden

of proof under a more probable than not standard. The arbitrator's decision

could be enforced or challenged in state court under statutory arbitration

procedures. MCLA 600.5001 et seq.; MCR 3.602. Federal jurisdiction under the

U.S. Arbitration Act, 9 USC §1 et seq., would obtain only if there were

independent grounds for federal subject matter jurisdiction. General Atomic Co

v United Nuclear Corp, 655 F2d 968, 969, 970-971 (CA 9, 1981). As we shall

see, there is an underlying basis for federal jurisdiction. However, the standard

for judicial review of an arbitrator's decision in a commercial matter differs in

state and federal courts. DAIIE v Gavin, 416 Mich 407, 444 & n 11 (1982).

Strictly speaking, this is neither a conventional MPPAA, labor nor

commercial arbitration. Rather, it is a consensual arbitration to review a plan

administrator's denials of claimants' applications for pension benefits, in lieu of

6
litigation in either state or federal court under §502 of the Employee Retirement

Income Security Act of 1974 ("ERISA"), 29 USC §1132. As such, it is not even

a typical ERISA arbitration over benefits, in the sense that the statute does not

contain any express provision for the resolution of disputes at this level, through

arbitration. Compare 29 CFR §2560.503-1(b)(2) with 29 USC §1132. In a

typical ERISA matter, resort is made to arbitration at the administrative level.

Mahan v Reynolds Metals Co, 569 F Supp 482 (ED Ark, 1983). In this

particular matter, the arbitrator sits in the place of a judge to review the plan

administrator's denials. Complaint ¶12; Claimants' Post Hearing Brief at 4-5

("STANDARD OF REVIEW").

Regardless of the atypical nature of this proceeding, some rules must

apply. AAA's Commercial Rules simply are inadequate for the task at hand. In

an effort to obtain the parties' agreement, by letter dated November 8, 1989 and

filed with AAA, the arbitrator suggested adoption of the MPPAA Rules, as they

seemed the most suitable. However, he received no agreement on the point and

therefore indicated in a subsequent letter dated November 21, 1989 that he

would proceed under the Labor Rules, inasmuch as the parties had captioned

their pleadings and briefs "Labor Division." For this reason, the Labor Rules are

being applied.

7
 Standard of Review

The standard for judicial review of a plan administrator's denial of a

claim for benefits under ERISA was clarified recently by the Supreme Court in

Firestone Tire & Rubber Co v Bruch, 109 S Ct 948; 10 EBC 1873 (1989).

Under Firestone, review is de novo, unless the plan document grants the

administrator discretionary authority, in which case review is for abuse of

discretion under a reasonableness standard. De Nobel v Vitro Corp, 885 F2d

1180; 11 EBC 1569, 1576-1577 (CA 4, 1989). For the reasons just explained, I

follow Firestone.

Detail & Discussion

The Fund Document

In judging the appropriateness of a plan administrator's conduct, ERISA

makes the plan document the primary reference, at least to the extent that its

terms do not contravene ERISA itself:

[A] fiduciary shall discharge his duties with respect to a plan . . . in

accordance with the documents and instruments governing the plan
insofar as such documents and instruments are consistent with the
provisions of this title or Title IV. 29 USC §1104(a)(1).

See also 29 USC §1102. Thus, the first order of business is to analyze the

relevant provisions of the Fund document, JX 6. Unfortunately, that is not a

simple task.

The Fund dates back to 1954, and hence the governing document is a

8
collage of various amendments enacted over the intervening 35 years, in

response to collective bargaining and numerous changes in federal pension law.

Characteristically, such documents are difficult to interpret, because their

language has been pieced together from many different sources over the years.

The document governing this matter is as perplexing as any this arbitrator has

encountered.

The difficulty begins with deciphering "plan administrator." The problem

is apparent from the signature page of the Fund document:

IN WITNESS WHEREOF, the Board of Administration, . . . in its

capacity as Plan Administrator and Trustee, has caused this Agreement to
be executed on the day and year first above written acting through its
Plan Administrator.

/s/ Dean Holefca_________

DEAN HOLEFCA, Plan Administrator

JX 6 at 55.

See also JX 6 at 28, §7.1. At first glance, both the Board and Dean Holefca

appear to be Plan Administrator. The ambiguity can be resolved by resort to

ERISA and to Mr. Holefca's hearing testimony.

ERISA provides:

The term "administrator" means --

(i) the person specifically so designated by the terms of the

instrument under which the plan is operated;
(ii) if an administrator is not so designated, the plan sponsor; or

9
 (iii) in the case of a plan for which an administrator is not
designated and a plan sponsor cannot be identified, such other
person as the Secretary may by regulation prescribe.

29 USC §1002 (16)(A).

Standing alone, the statute would seem to provide little guidance, because

both the Board and Dean Holefca seem to be designated as plan administrator in

the document. At the hearing, Mr. Holefca testified that he is a contract

administrator who provides administrative services to the Fund, for a fee. 1

Pension Plan Guide (CCH) ¶¶1639, 1655. He himself does not have any

discretionary authority. The Board, he testified, is the "plan administrator"

within the meaning of ERISA, and his testimony is consistent with customary

practice. Id. at ¶¶1606, 1645. The Board is also the trustee of the Fund. JX 6 at

1; 29 USC §186(c)(5)(B); 29 USC §1103(a); 1 Pension Plan Guide (CCH)

¶¶1606, 1645.

From the foregoing, it appears that the Board is both Plan Administrator

and Trustee. In the Fund document, these terms are sometimes capitalized in

their entirety and sometimes appear with just initial capitals. In an effort to

avoid confusion, Mr. Holefca (and anyone from his office) is referred to as the

"Contract Administrator." Thus, the signature page is interpreted as though it

read "acting through its Contract Administrator. /s/ DEAN HOLEFCA,

Contract Administrator." With this understanding, we can begin to analyze the

10
relevant sections of the Fund document.

The principal provisions at issue are found in §§5.5 and 5.6:

Payment of benefits to a Participant . . . shall be in one of the following

forms: (a) in a lump sum of single payment. * * * JX 6 at 17, §5.5

Payments of benefits under this Plan shall commence at the time

determined by the Plan Administrator in its sole and absolute discretion.
Such determination shall be made in a nondiscriminatory manner. * * * If
the Plan Administrator, in its sole and absolute discretion, elects to
commence payment of benefits after a Participant has terminated covered
employment . . . , the amount of these payments shall be determined by
the vested Accrued Benefit of the Employee . . . , undiminished by the
discounted present value of said benefit. . . . JX 6 at 24-25, §5.6.

It is claimants' position that they have "terminated covered employment,"

because they no longer are covered by a collective bargaining agreement

between their employer and the Union, and that the Board abused its discretion

in denying them immediate benefits in a single lump sum. Under the plain

language of the Fund document, there can be no doubt that the Board has the

discretion to pay them benefits as requested, and hence its failure and refusal to

do so must be reviewed under Firestone's more deferential standard.

The Board purports to base its decision on an interpretation of

"terminated covered employment," which it adopted back in 1976 -- "leaves the

industry, dies, or is disabled." Respondents' Post-Hearing Brief at 9-10. In turn,

the Board purports to define "the industry" to mean "non-management

employment within the beer, wine and soft drink delivery business in the State

11
of Michigan." Id. at 10-11. Consistent with these interpretations, the Board

purportedly has adopted a policy of denying benefits to participants in claimants'

position. Id.

That the Board possesses the authority to interpret the Fund document is

beyond dispute:

The Plan Administration (sic) shall have the sole and absolute right to
interpret this instrument, including but not limited to any and all possible
ambiguities, and shall have no liability for any interpretation made in
good faith, and any such interpretation shall be at the sole and absolute
discretion of the Plan Administrator. All decisions made shall be applied
in a uniform and consistent manner. JX 6 at 38, §8.11.

The existence of this authority makes deferential review appropriate. Firestone,

10 EBC at 1879. Unfortunately for the Fund, I am unable to discern the

existence of any clear policy that has been adhered to consistently since 1976.

However, my decision does not turn upon the existence, vel non, of such

a consistent policy, or even on the application of that policy to claimants, but

rather on the Fund's failure to comply with ERISA's requirements for a

reasonable claims and review procedure. 29 USC §1133; 29 CFR §2560.503-1.

The Fund's claims and review procedure is set forth in Article XII, and the Fund

document grants the Board no discretion to disable that procedure. JX 6 at 46-

47. The Board's deliberate disabling of the procedure, in violation of ERISA,

while members engaged in their own dispute over withdrawal liability, was

inappropriate under any standard of review.

12
 The Withdrawal Liability Dispute

To understand the inappropriateness of the Board's actions, we need

additional background on the withdrawal liability dispute that paralyzed the

Board for months. When MPPAA first was enacted, the Fund's actuary valued

vested benefits under the assumption that most of them would not be paid until

participants reached age 65. However, as the beverage distribution industry

began to contract, questions arose over the effects of paying out benefits

immediately in undiscounted lump sums, instead of deferring them to age 65.

See, for example, JX 3 (Board Minutes 10/2/85).

The effects, if taken into account by the actuary in his valuation

assumptions, are dramatic. A few examples suffice to illustrate the point and to

explain why employer Board members became so upset about the payment of

benefits in undiscounted lump sums. Under the deferred method, the Fund's

liabilities would total only $1,600,000, whereas, under the immediate method,

they could total a whopping $7,000,000. JX 4 (Minutes 1/22/86) at 14. Under

the deferred method, Spadafore Distributing Company would have a withdrawal

liability of only $535, whereas, under the immediate method, its liability might

be as much as $200,000.5 JX 3 (Board Minutes 10/2/85) at 11-13.

From these examples, the source of the employer Board members'

5
The actuary made a wag that it might be as high as $200,000. He later revised his wag to $50-60,000. JX 5
(Board Minutes 5/9/86) at 9. In actuarial parlance, a “wag” is a wild ass guess.

13
concern is clear. Their concern, however well founded, provided no basis for

bringing the Fund's claims and review procedure to a halt. Their clear duty was

to Fund participants and beneficiaries, not to the employers. 29 USC

§1104(a)(1); NLRB v Amax Coal Co, 453 US 322, 2 EBC 1489 (1981).

The dissension among Board members is chronicled in the preamble to

the Settlement Agreement:

WHEREAS, on April 14, 1986, at a duly called, convened and held

meeting of the Trustees, the Trustees deadlocked on a motion duly made
and seconded by the Union Trustees dealing with actuarial assumptions
used by the Plan; and

WHEREAS, on November 24, 1986, at a duly called, convened and held

meeting of the Trustees, the Trustees deadlocked on a motion duly made
and seconded by the Employer Trustees dealing with a change in Plan
design and in the Plan document; and

WHEREAS, the Trustees thereafter initiated deadlock arbitration

proceedings in accordance with Section 302(c) of LMRA and the Plan
document; and

WHEREAS, the Trustees, mindful of their fiduciary obligations to the

Plan participants and their beneficiaries, have simultaneously pursued a
compromise settlement and resolution of the deadlock disputes and have
succeeded in doing so; and

WHEREAS, the Trustees desire to set forth the terms and conditions of
their said settlement and resolution as hereinafter more fully set forth. JX
29 at 3-4.

Disabling of the Fund's Claims and Review Procedure

On July 28, 1987, Robert J. Godfrey, a fellow Union employee at West

Side and also a participant in the Fund, then similarly situated with claimants,

14
applied for a lump sum benefit and received a check for $31,570.87, the very

next day. JX 25. Following payment of Mr. Godfrey's claim, the Board revoked

the Contract Administrator's authority to process benefit applications. When

claimants inquired about their benefits, they were told that the Fund was

"frozen" and that applications could not be processed. Under cross-examination,

the Contract Administrator admitted providing claimants with misinformation,

to discourage their applications. He further testified that employer Board

members threatened to sue him if he processed applications for lump sum

benefits.

That the Fund's claims and review procedure ground to a halt, at least

insofar as claimants are concerned, seems difficult to deny. Indeed, in a letter

dated February 3, 1988, to former West Side participant, Ronald Dressler, the

Contract Administrator wrote:

This letter is written in response to your request that I confirm our

telephone conversation last month with respect to the current status of
your benefit request.

As discussed with Mr. Holefca previously, the Management Trustees

presented a motion to the Board requiring that benefit payments no
longer be paid immediately without discount but rather be paid (1) at age
65 without discount OR (2) immediately WITH discount.

After discussing Management's motion, the matter was voted upon by

Trustee. Because the issue was deadlocked, an arbitration of
Management's motion has been scheduled for February 25th and 26th in
Chicago.

15
 As you and I discussed, the Management Trustees have presently
revoked their automatic approval for the immediate payment of
nondiscounted benefits until such time as the arbitrator renders his
decision.

Since our conversion and as a result of Management's revocation of our

authority to pay benefits on a nondiscounted basis, Mr. Holefca requested
a written opinion from Fred Foley, legal counsel for the Michigan State
Brewers Plan, as to whether or not this office has the authority to pay
benefits in view of the Management Trustees' current position. In
response so that request, Mr. Foley has provided a written opinion that
our office would be remiss if we paid benefits to any Plan participant in
view of the current circumstances.

As stated earlier, the arbitration proceedings are scheduled for the 25th
and 26th of this month. It is expected that the arbitrator's decision will be
known shortly thereafter at which time we will be able to advise you
when payment of your benefit will occur. JX 24.

The dispute among Board members was not resolved until the Settlement

Agreement was completed, October 31, 1988, by which time claimants had

been forced back to work by economic circumstances.

The Fund asserts that claimants never filed completed applications until

they returned to work for West Side, when they no longer were eligible for

benefits. Respondents' Post-Hearing Brief at 3-4. The easy answer to this

contention is that it would have been fruitless for claimants to have filed

applications any earlier, and the Contract Administrator told them so.

Concededly, a pension plan may make the filing of a formal application a

condition precedent to the payment of benefits, 26 CFR §1.401(a)-14; 29 CFR

§2560.503-1, but it cannot deliberately disable its claims and review procedure

16
and then set up the failure of that procedure as a defense. In particular, 29 CFR

§2560.503-1(b)(1) provides in pertinent part:

A claims procedure will be deemed to be reasonable only if it . . . is not

administered in a way which unduly inhibits or hampers the initiation or
processing of plan claims. . . .

Once the Fund's claims and review procedure was deliberately disabled, it

ceased to be reasonable, as a matter of law.

In the absence of a reasonable procedure, 29 CFR §2560.503-1(d)

provides:

If a reasonable procedure for filing claims has not been established by the
plan, a claim shall be deemed filed when a written or oral communication
is made by the claimant or the claimant's authorized representative which
is reasonably calculated to bring the claim to the attention of . . . the joint
board . . . administering the plan, or the person or organizational unit to
which claims for benefits under the plan customarily have been referred.

Thus, once the Fund's claims and review procedure was disabled, the Fund no

longer could insist upon formal applications, and claimants are deemed to have

applied for benefits when they first contacted the Contract Administrator.

Following that initial contact, the Fund, at minimum, was obligated to

process their claims within the time limits specified in 29 CFR §§2560.503-

1(e),(h). Because the claims and review procedure was disabled deliberately, the

Fund, at the very least, would be held to the minimum periods specified (no

extensions) -- 90 days for processing claims, 29 CFR §2560.503-1(e)(3), and 60

days for reviewing denials, 29 CFR §2560.503-1(h)(1)(i). Thus, a final decision

17
on claimants' claims was due no later than 150 days after claimants first

contacted the Contract Administrator. Section 2560.503-1(h)(1)(ii) is no help to

the Fund, because the Board did not meet between October 27, 1987 and

November 18, 1988, while members were preoccupied with their own

withdrawal liability dispute. JX 7 (Board Minutes 11/18/88) at 1.

The Board did not in fact begin processing claimants' claims until

November 18, 1988. JX 7 (Board Minutes 11/18/88) at 7. In a letter dated

October 26, 1988 and sent to all claimants, the Contract Administrator wrote:

Our office has previously received your Application for Payment of

Benefits along with the other forms necessary for withdrawal of you
accrued vested benefit from the Plan.

However, as previously indicated, we have been unable to process your

benefit because of a deadlocked issue between the Employer and Union
Trustees. It now appears that the Trustees have reached a compromise
settlement that effectively freezes the existing Plan and replaces this Plan
with a defined contribution plan with a 401(k) provision for current
participants.

The Settlement Agreement also allows our office to immediately process

benefit payments after submitting a participant's request to the Board of
Trustees for approval at their next meeting. We currently are attempting
to schedule a meeting for the week of November 7th.

It has come to our attention, however, that some employees of West Side
Beer, who previously were members of Local 580 (sic), may have elected
to return to West Side Beer as non-Union employees after submitting
their request for payment to our office. It is very important to note that,
pursuant to the Settlement Agreement and in accordance with the past
policy and practice of the Michigan State Brewers and Distributors
Severance and Retirement Fund, you MUST TERMINATE YOUR
EMPLOYMENT AND SEPARATE FROM THE BREWING

18
 INDUSTRY TO BE ELIGIBLE FOR RECEIPT OF YOUR BENEFIT
FROM THE PLAN. Therefore, if you currently are employed in the
brewing industry, in any capacity, you will not be entitled to receive your
vested benefit from this Plan until you actually leave the industry. JX 28,
emphasis in original.

Applicable Law

Not every procedural violation of ERISA gives rise to a substantive

remedy, Crocker v Southern Bell Telephone and Telegraph Co, 11 EBC 1707,

1713 (CA 4, 1989), and a plan's mere missing of an ERISA deadline does not,

in and of itself, entitle a participant to a windfall, Mass Mut Life Ins Co v

Russell, 473 US 134; 6 EBC 1733 (1985). Here, however, the disabling of the

Fund's claims and review procedure prevented claimants from effectively

applying for benefits, at a time when they qualified for them. Blau v Del Monte

Corp, 748 F2d 1348, 1353-1354; 6 EBC 1264 (CA 9, 1985). To see this, let us

examine their individual circumstances.

The Individual Claimants

All claimants testified at the hearing, except Beimers, who could not get

away from work. Fortunately, however, his application file, JX 33, was

introduced into evidence and provides useful information about his

circumstances. The essence of each claimant's testimony is set forth below, and

is accepted as true.

19
 Claimant John Maurice

Claimant Maurice went out on strike, June 8, 1987. He made many calls

to the Contract Administrator, inquiring about benefits, starting right after the

strike began. He was told repeatedly that the Fund was "frozen." Maurice's

contact with the Contract Administrator is documented by a letter dated

November 18, 1987, from the Contract Administrator, which states in pertinent

part:

In response to your request, I am enclosing a partially completed

Application for Payment of Benefits Form which you should date and
sign where indicated with the "x" if it is your intent to withdraw your
benefit from the Plan. We wish to remind you, however, that you may
ONLY withdraw your benefit from the Plan if you terminate employment
(which will result in a loss of seniority), transfer to a management
position with your employer, are permanently and totally disabled or die.
JX 32; emphasis supplied.

Maurice returned to work at West Side on May 11, 1988, due to financial need.

He completed and filed an application for benefits, with the Contract

Administrator, that same month.

Claimant Dennis Captain

Claimant Captain stopped working June 8, 1987, because of the strike.

He, too, received an application for benefits, in September of 1987. JX 35 (letter

9/18/87 from Contract Administrator). Captain claims that he filed an

application in October of 1987, but no documentation of the event was

produced. On March 29, 1988, he returned to work for West Side. He

20
completed and filed an application for benefits between April and September of

that year.

Claimant Donald Yost

Claimant Yost stopped working June 8, 1987. When the strike began, he

mentioned to his wife that he wanted severance benefits from the Fund. With

her assistance, he obtained a benefit application from the Contract Administrator

in October of 1987. He promptly completed and mailed the application to the

address on the form. In the meantime, however, the Contract Administrator

moved, and the application was returned to Yost, four weeks later by the Post

Office. Mrs. Yost telephoned the Contract Administrator during the first week

of November 1987, to get the new address, and resubmitted the application,

although no evidence of this application was produced. When Mrs. Yost

inquired as to why her husband's benefits were not forthcoming, she was told

that the Fund was "frozen."

Yost (DOB 5/16/40) attempted to find other work but was "too old to get

another job." He returned to work for West Side on January 8, 1988, because he

"needed money." Between June and September of 1988, Yost completed and

filed an application for benefits. He sustained a work related injury on

September 18, 1989, and his employment status is uncertain.

21
 Claimant Martin Van Dyke

The case of claimant Van Dyke, who has only partial use of his left arm,

is especially compelling. He, too, stopped working because of the strike, June 8,

1987. While off work, he sustained injury to his leg. Because of the strike, his

medical benefits were terminated, and he was forced to pay $15,000 for medical

treatment, out of his own pocket. In January of 1988, he learned that the Fund

was "frozen." He remained in a cast as late as February of 1988.

Faced with the loss of all the material possessions he had accumulated

over 36 years, he was forced to seek work, but couldn't find any other, because

of his age (DOB 1/5/32). In May of 1988, out of desperation, he returned to

West Side, agreeing to work "in any capacity." Van Dyke testified that if he had

received benefits from the Fund, he would not have returned to work.

In Van Dyke's case, it is not perfectly clear that 150 days elapsed between

his initial attempts to obtain benefits and his return to work at West Side, but I

do not read 29 CFR §2650.503-1 as granting pension plans a 150-day grace

period during which they may toy with participants, with impunity. There is a

distinct difference between missing a deadline inadvertently and flouting the

law. As the case of Robert Godfrey vividly illustrates (JX 24), before it was

disabled, the Fund's application procedure operated with incredible efficiency,

with claims being processed and benefits paid in a matter of days. The Fund

22
document expressly requires equality of treatment, JX 6 at 24, §5.6

("nondiscriminatory"); id. at 38, §8.11 ("uniform and consistent"), and Van

Dyke was denied equality of treatment with Godfrey. The Fund's disparate

treatment of Van Dyke cannot be sustained, even under a deferential standard of

review. Dante v Lewis, 312 F2d 345 (CA DC, 1962);6 Ricciardi v Ricciardi

Profit Sharing Plan, 7 EBC 1470, 1474 (D NJ, 1986); Dennard v Richards

Group, Inc, 681 F2d 306, 315, 3 EBC 1769 (CA 5, 1982).

Claimant Richard Beimers

Beimers was the only claimant who did not attend the hearing. However,

from his file, we may infer that he did not return to work at West Side until

sometime after September 26, 1988, because his Application for Payment of

Benefits indicates "0" hours worked during 1988, through that date; moreover,

his Application shows that West Side verified the information he supplied. JX

33. Thus, Beimers seems to have suffered longest from the Fund's fabled

"freezing." He and the other claimants are entitled to benefits, as a result.

Interest on Lump Sums

Entitlement to interest on overdue benefits is not a clear-cut issue under

ERISA. Freedman v Wallace Steel, Inc Profit Sharing Trust, Pension Plan

6
Danti frequent is named as source of the arbitrary and capricious standard of review. Fraser Shipyards, Inc. and
IAM National Pension Fund, 7 EBC 2562, 2569-2570 (Arb, 1986); aff'd and enforced 9 EBC 2484 (D DC, 1988).
To the extent that cases decided under the arbitrary and capricious standard comport with Firestone's
reasonableness standard, they are still good law. Firestone, 10 EBC at 1876 ("unreasonably, or as it came to be
said, arbitrarily and capriciously"); De Nobel, 11 EBC at 1574-1575, 1576-1577.

23
Guide (CCH) ¶23,733K (ND NY, 1987). However, in settling their differences,

Board members recognized that many benefit applications had been

unjustifiably delayed and, in the Settlement Agreement, agreed to pay interest:

The Employer Trustees will immediately approve all outstanding benefit

applications and continue to do so on a timely basis as the process of
finalizing and implementing the settlement continues. Participants whose
applications for benefits were properly completed and filed during the
pendency of the deadlock arbitration but were not processed, approved
and paid until after the date of the execution of this Agreement shall be
paid interest for the time and in the amount described in Section 2(d) of
this Agreement. JX 29 at 15, ¶6.

Thus, claimants are entitled to interest on their lump sum benefits.

The parties did not present to the arbitrator any issues regarding the

specific amounts of claimants' lump sum benefits.7 The parties shall have thirty

(30) days following receipt of this opinion, within which to confer and to agree

upon the amount of each claimant's benefit due from the Fund and upon the

amount of interest due each claimant. If the parties need additional time, they

jointly may agree to an extension by filing a stipulation with the arbitrator and

with AAA. If the parties are unable to agree upon benefits and interest within

the time specified, they shall apply to the arbitrator for resolution of all

remaining issues, so that this matter may be brought to a final conclusion.

Expenses of the Arbitration

Labor Rules §44 provides in pertinent part:

7
Letter 9/29/89 to arbitrator from claimant's counsel, cc: respondents' counsel.

24
 Expenses of the arbitration . . . shall be borne equally by the parties,
unless they agree otherwise, or unless the arbitrator, in the award,
assesses such expenses or any part thereof against any specified party or
parties.

The Fund shall bear the expenses of this arbitration. Because authority to award

attorney's fees is sparingly granted, Alyeska Pipeline Service Co v Wilderness

Society, 421 US 240 (1975); G & D Co v Durand Milling Co, 67 Mich App 253

(1976), I decline to interpret "expenses" to encompass attorney's fees. Cf.

MPPAA Rules §38 (express authority to award attorney's fees).

The Contract Administrator

In the caption of their Complaint, claimants describe Dean Holefca as the

Fund's "Trustee." As was explained at the outset, Mr. Holefca is employed as a

contract administrator and does not serve as trustee. Moreover, nowhere in their

Complaint or briefs do claimants specifically seek any relief from Mr. Holefca

himself, either personally or in his representative capacity. 29 USC §1132(d)(2).

The Complaint is really against the Fund, which can sue and be sued in its own

name. 29 USC §1132(d)(1). Thus, the Complaint is dismissed with prejudice as

to Dean Holefca.

Claimants' Theories

In both their Post-Hearing Brief, dated November 13, 1989, at 13 and in

their Post-Hearing Rebuttal Brief, dated November 29, 1989, at 2-3,

respondents object to claimants' legal theory regarding the Fund's mishandling

25
of benefit claims, as being outside the scope of the Complaint. Respondents'

objections are not well taken, for several reasons. While the theory is not

articulated in the text of the Complaint proper, it is implicit in the exhibits (e.g.,

"B"-2, ¶¶-4; "C"-1 at 1-2), and, indeed, is readily apparent from EXHIBIT "B"-

1, a letter from the Contract Administrator himself, virtually identical to JX 28.

The law is settled that attachments to a complaint are part and parcel of the

complaint and even may be controlling. Mengel Co v Nashville Paper Products

and Specialty Workers Union No. 513, 221 F2d 644, 647 (CA 6, 1955); F R Civ

P 8(f).

Even if claimants' theory were not implicit in their Complaint, a large

part of the hearing was taken up with testimony about claimants' difficulties

traversing the Fund's claims and review procedure and about being misled into

thinking that the Fund was "frozen," when in truth it was not. All of this

testimony was received without objection. F R Civ P 15(b); MCR 2.118(C).

Objections, to be sustained, must be timely, Fraser Shipyards, 7 EBC at 2568,

and respondents' objections were not voiced until long after the hearing was

over. See also Wolf v National Shopmen Pension Fund, 728 F2d 182; 5 EBC

1257 (CA 3, 1984).

Finally, respondents hardly can claim surprise over claimants' theory or

even over its adoption as the basis for decision in this matter. The Settlement

26
Agreement is a veritable mea culpa for the inexcusable delays in processing

applications and paying benefits, caused by Board members' own withdrawal

liability dispute.

The Fund's Policy on Payment of Lump Sum Benefits

The Fund's policy regarding the immediate payment of undiscounted

lump sums has been revamped by the Settlement Agreement [JX 29 at 6, ¶(d)]

and may require further revamping, once the new regulations under IRC

§411(d)(6) take effect, January 1, 1990. Thus, little would be gained by an

extensive discussion of the policy, at this time. The confusion that arose in the

past may have stemmed from the difference between the language of the Fund

document (JX at 25, §5.6 -- "terminated covered employment") and the

language in which the Fund couched its policy (JX 3 at 12 -- "separation from

the industry"). See also JX 6 at 5, §3.1. In general, termination of covered

employment and separation from the industry have different connotations.

Compare 29 CFR §2530.210(c)(3)(ii) & (iii) with 29 USC §1053(a)(3)(B)(ii).

The disparity in language may account for the Contract Administrator's remarks

in letters dated December 13, 1988 and sent to claimants:

Please note, however, that because there appear to be ambiguities in the

Trust document, the Plan's attorney has been asked to provide the Board
with a written legal opinion as to whether the Board's practice as stated
above is in conflict with the terms of the Plan document. If the Board's
policy IS found to be in conflict with the Plan document and it is
determined that you ARE entitled to the immediate payment of your

27
 benefit, our office will immediately provide you with the balance of the
forms, if any, necessary for the withdrawal of you benefit. JX 32;
emphasis supplied.

A few examples suffice to illustrate why I am unable to discern any clear

policy regarding the payment of lump sum benefits. At a Board meeting held

January 22, 1986, the Contract Administrator explained:

[I]f an employee terminates from an employer who is currently making

contributions to the Plan, the non-discounted value of his accrued vested
benefit is paid immediately, even if the employee transfers employment
to another employer in the industry, not covered by the collective
bargaining agreement. However, if while an employer was participating
in the Plan his employer withdraws, the non-discounted value of his
accrued vested benefit is not paid until death, retirement or termination
from the industry. JX 4 at 24-25.

Despite this seemingly authoritative statement by the Contract Administrator, in

their Post-Hearing Rebuttal Brief at 6, respondents assert:

In fact, one employee who leaves employment with one covered

employer and secures new employment with another employer that is "in
the industry," but not a participant in the Michigan Brewers Plan, would
be denied benefits because he had not separated from the "industry." The
requirement that a person "separate from the industry" before receiving
benefits, was not designed to apply merely to group withdrawals, but to
individual situations as well.

At the hearing, the Contact Administrator testified that the Settlement

Agreement changed the prior policy and placed participants who move into

management positions on the same footing as those who move to other

noncovered employment, yet in respondents' Post-Hearing Brief at 12 they

write:

28
 [T]he rules for determining eligibility for payment of benefits is the same
both before and after the Settlement Agreement was adopted.

I am unable to reconcile these and other inconsistencies in the Fund's purported

policy regarding the payment of lump sum benefits.

It suffices to say that claimants, when they first sought benefits from the

Fund, were in the same position as Robert Godfrey; they were unemployed8 and

hence had both terminated covered employment and separated from the

industry. If the Fund's claims and review procedure had not been deliberately

disabled, claimants would have been paid their benefits within a matter of days,

like Mr. Godfrey.

I am not unmindful of the difficulty a plan administrator may face in

determining when a strike represents only a temporary interruption of

employment and when it marks the termination of employment, but my decision

does not turn on this difficulty, which may be alleviated in the future for the

Board, by the Settlement Agreement. Nor am I unmindful of the Board's duty to

husband Fund assets.9 In this matter, however, the Fund concedes having paid at

least twelve (12) other former participants from West Side. Respondents' Post-

Hearing Brief at 5. Moreover, the Board paid out of the Fund at least

$145,927.86, to cover expenses generated by its members' own internal dispute

8
Claimants had been "discharged," according to Mr. Pillow. See footnote 2 supra.
9
Under certain circumstances, the payment of lump sum benefits is restricted by law. 29 USC §§1341a(c)(2),
(f)(1), 1421(c).

29
over withdrawal liability. JX 8 (Board Minutes 5/12/89) attachment.

Conclusion

For all the foregoing reasons, claimants are entitled to their benefits, with

interest.

Dated: December 9, 1989 ________________________

E. Frank Cornelius, Arbitrator

30
 AMERICAN ARBITRATION ASSOCIATION

Voluntary Labor Arbitration Tribunal

In the Matter of the Arbitration between AAA No. 54-621-0001-89

RICHARD BEIMERS, JOHN MAURICE, DONALD YOST, RONALD

GREENLAND, DENNIS CAPTAIN & MARTIN VAN DYKE,
Claimants,

and

MICHIGAN STATE BREWERS AND DISTRIBUTORS SEVERANCE

AND RETIREMENT FUND & DEAN HOLEFCA, Its Contract
Administrator,
Respondents.
________________________________________________________________

FINAL AWARD

March 17, 1990

For the Claimants: For the Respondents:

Duane J. Beach, Esq. Carol L. Vondale, Esq.

Wheeler, Upham, Bryant & Uhl, P.C. Mosher, Vondale, et al., P.C.
Eleventh Floor, Trust Building P.O. Box 647
Grand Rapids, Michigan 49503 Bloomfield Hills, Michigan 48013

31
 INTRODUCTION

Procedural Posture

On December 9, 1989, the arbitrator issued an opinion and interim

award in this matter (“Arb Op”), which has been published sub nom Beimers

and Michigan Brewers Severance and Retirement Fund, 11 EBC 2350 (Arb,

1989). In his opinion, the arbitrator granted claimants’ requests for

immediate pensions and directed the parties to attempt to agree upon the

amount due each claimant, with interest. Arb Op at 19-20; 11 EBC at 2360.

By Motion for Reconsideration dated December 18, 1989, the Fund, through

its counsel, Fred A. Foley, Esq. (“Mr. Foley”), moved for reconsideration,

based upon alleged “factual errors”; the Fund's motion is attached hereto as

Exhibit A (“First Motion”). The Voluntary Labor Arbitration Rules (“Labor

Rules”), under which the arbitration is being conducted, do not expressly

provide for such a motion, and counsel for claimants raised prompt

objections to the arbitrator's consideration of the motion.

In a Brief in Response to Arbitrator's Request for Proposed Benefits,

dated January 2, 1990 (“Claimants’ Brief”), claimants set forth the amounts

of their benefit claims and requested interest at the rate of 9%. On or about

January 5, 1990, Carol L. Vondale, Esq. (“Ms. Vondale”), replaced Mr.

Foley as counsel for respondents. AAA promptly notified the arbitrator of

32
the change and transmitted Ms. Vondale's request for an extension of time

within which to reply to Claimants’ Brief. By letter dated January 9, 1990, to

counsel for the parties, the arbitrator granted an extension.

The Fund responded with a Motion for Reconsideration Prior to

Rendering Award, dated February 2, 1990 and brought pursuant to Labor

Rule 32 (“Second Motion”), together with a Brief in Support of Motion for

Reconsideration Prior to Rendering Award in Response to Claimants’

Request for Interest, also dated February 2, 1990 (“Fund Brief”),

accompanied by the Affidavit of Fred A. Foley, dated February 1, 1990

(“Foley Affidavit”). Counsel for claimants indicated through AAA that he

would not be filing a formal response to the Fund's motion for

reconsideration. Thus, before the arbitrator for decision are claimants’

requests for immediate pensions with interest and the Fund's motion for

reconsideration.

Jurisdiction

The arbitration has jurisdiction by express retention in his original

opinion and award [Elkouri & Elkouri, How Arbitration Works (3rd Ed), at

215], under Labor Rule 32 (reopening of hearing), and/or under Labor Rule

34 (claimants have not objected to the Fund's Section Motion). Moreover,

under Labor Rule 46, “[t]he arbitrator shall interpret and apply these rules

33
insofar as they relate to the arbitrator's powers and duties.” Thus, I proceed

to decide all remaining issues in this matter and to render a final award.

Decision

The Fund's motion for reconsideration is denied, and claimants’

request for interest is granted in accordance with the terms of the Settlement

Agreement (JX 29).

DISCUSSION10

I. The Scope of the Parties’ Submission

At the outset, the Fund alleges that it agreed to submit to arbitration

only issues involving interpretation and application of the Fund document,

JX 6:

Claimants and the Fund agreed to consensual labor arbitration. The

scope of the submission was limited to a determination as to whether
or not the Plan language and past conduct of the Plan justified the
Plan's refusal to pay benefits. Nevertheless, the December 9, 1989
Opinion of the Arbitrator stated:

However, my decision does not turn upon the existence, vel

non, of such a consistent policy, or even on the application of
that policy to claimants, but rather on the Fund's failure to
comply with ERISA's requirements for a reasonable claims and
review procedure. Opinion at p 9.

The parties never agreed to expand the scope of the submission.

Therefore, it is the position of the Fund that such Opinion exceeds the
scope of the Arbitrator's authority because the Opinion is not based on
10
Under the heading, “DISCUSSION”, the six numbered subheadings correspond to those in the Fund's
Brief.

34
 the terms of the Plan document or the past practice. Instead, the
Opinion is based on an interpretation of federal law. Fund Brief at 1-
2.

The Fund arrives at its position by quoting only the prayer for relief

from claimants’ Complaint and blithely ignoring the first two pages of

substantive allegations in their entirety, as well as the twelve (12) pages of

exhibits attached thereto:

WHEREFORE, plaintiffs respectfully request that the arbiter

determine the plan language and past conduct of the Trust calls for
each plaintiff to receive his lump sum pension benefit. Complaint at p
3. Fund Brief at 2.

Dispositive of the Fund's motion are ¶12 of the Complaint and the Fund's

Answer thereto:

The Trustee's refusal to pay benefits is contrary to ERISA . . . .

Complaint, ¶12; emphasis supplied.

Denied; furthermore, nowhere in ERISA or the Internal Revenue

Code is there any requirement that participants in a qualified Plan be
paid their lump sum benefit prior to attaining normal retirement age.
Answer, ¶12; emphasis supplied.

A complaint, like any other document, must be read and interpreted as

a whole. When claimants’ Complaint is read in its entirety and given a

common sense interpretation, the prayer for relief means that the arbitrator is

to review the Fund document and the Fund's past conduct in light of

ERISA's requirements. This interpretation is buttressed by Exhibit “C”-1

from the Complaint, a letter dated December 21, 1988, to the Contract

35
Administrator from claimants’ counsel, in which counsel expressly

references ERISA and IRS regulations and concludes that “[y]our

interpretation of the plan language is somewhat dated and contrary to

present law” (emphasis supplied). That ERISA and the Internal Revenue

Code expressly were put at issue in claimants’ Complaint, and even in the

Fund's own Answer, cannot seriously be doubted.

The Fund relies heavily on the belated Foley Affidavit, but the Fund's

earlier briefs, drafted, signed and submitted by Mr. Foley himself, belie the

Fund's current contentions. On page 4 of Defendants’ Pre-Hearing Brief,

dated October 16, 1989, Mr. Foley referred to “qualified plans”, which are

those that satisfy §401(a) of the Internal Revenue Code. On that same page,

he referred to the “pre-ERISA” days of the Fund. Beginning on page 7 under

the hearing, “LEGAL AUTHORITY”, Mr. Foley wrote that “Defendants are

unable to find case law, statutes or regulations that deal with a situation

precisely like that contained in this case.” He then cited cases from 1-A

Pension and Profit Sharing (Prentice Hall), ¶20,153, a section dealing with

fiduciary duties under ERISA. He concluded with reference to the “fiduciary

obligation” of Board members, a duty imposed by ERISA.

In Defendants’ Post-Hearing Brief, dated November 13, 1989, Mr.

Foley repeated his previous references, both explicit and implicit, to ERISA

36
and the Internal Revenue Code. On page 8, he reiterated references to

“qualified plans” and the good ole “pre-ERISA” days. On page 13, he

referred to and paraphrased extensively from Exhibit “C”-1 of the

Complaint, in which claimants’ counsel argued both ERISA and the Internal

Revenue Code. On page 15, Mr. Foley referred to the Contract

Administrator's testimony regarding the Board's “fiduciary duty” under

ERISA. Beginning on page 18 under the hearing, “LEGAL AUTHORITY”,

Mr. Foley repeated his previous arguments regarding “qualified plans” and

“fiduciary duty” and even appended photocopies from the Prentice Hall

volume dealing with fiduciary duties under ERISA.

Mr. Foley continued his references, explicit and implicit, to ERISA

and the Internal Revenue Code in Defendants’ Post-Hearing Rebuttal Brief,

dated November 29, 1989. He began that brief with the heading,

“PLAINTIFFS HAVE NO VALID LEGAL THEORY TO SUPPORT

THEIR CLAIM”, under which he argued that claimants’ theories were

“unjustified by law”. Under the heading, “LEGAL ANALYSIS”, he again

referred to “a qualified pension plan” and cited ERISA cases discussing the

standard for judicial review of a fiduciary's determination of benefit claims.

For what is now the coup de grace, Mr. Foley wrote:

Defendants have no objection to the application of such standards in

evaluating the reasonableness of the decision it (sic) made not to pay

37
 retirement benefits to the Plaintiffs. Id. at 9; emphasis supplied.

The Fund document itself is replete with references to ERISA and the

Internal Revenue Code, beginning with the recitals on page 1 and including

the following provision directly on point:

Notwithstanding anything herein to the contrary, any person,

organization, or committee hereunder who is deemed to be a fiduciary
under the provisions of the Employee Retirement Income Security Act
of 1974, as amended, shall be governed by the rules of Fiduciary
Responsibility set forth therein, including Sections 401 and through
411 of said Act. JX 6 at 36, §8.8; emphasis supplied.

It would not be reasonably possible to interpret and apply the Fund

document without reference to ERISA and the Internal Revenue Code.

The Fund cites USS and Carnegie Pension Fund v McSkimming, 759

F2d 269 (CA 3, 1985), as delimiting a labor arbitrator's authority to

interpreting the plan document before him. McSkimming is inapposite

because, as the arbitrator has explained in great detail, this is not, repeat --

not, a conventional labor arbitration. Arb Op at 3-5; 11 EBC at 2352-2353.

There is no collective bargaining agreement,11 no union,12 and no grievance.

Cf. Labor Rules 1, 7 & 9. Instead, we have a document conspicuously

11
The Fund document is not the product of collective bargaining between union and management but rather is
published by a joint labor-management board, pursuant to 29 USC §186(c)(5).UMWA Health and Retirement
Funds v Robinson, 455 US 562 (1982).
12
Recall that the Teamsters Union was decertified as collective bargaining representative of West Side's
employees, shortly after the strike began in June of 1987. Arb Op at 2; 11 EBC at 2351. Throughout this
arbitration, claimants have been represented by their own privately retained attorney, and no union officials
have appeared or even testified on their behalf.

38
labeled, “Complaint”, and another document conspicuously labeled,

“Answer”. Revealingly, throughout all three briefs Mr. Foley filed on behalf

of the Fund, he consistently referred to claimants as “Plaintiffs” and

respondents as “Defendants”.

The arbitrator submits that the Fund would not really want this to be

handled as a conventional labor arbitration, in which an arbitrator interprets

documents de novo, without giving any deference to the employer's

interpretation. Here, if the arbitrator were called upon to interpret the Fund

document de novo, he most assuredly would not give “terminated covered

employment” and “separation from the industry” the interpretation urged by

the Fund. Arb Op at 22; 11 EBC at 2361. If this were a conventional labor

arbitration, the Fund would have fared less well than it did.

There are even more compelling reasons why the Fund would not

want this to be a conventional labor arbitration. It is settled law that statutory

claims are not merged in a labor award. Amaro v Continental Can Co, 724

F2d 747 (CA 9, 1984); Alexander v Gardner-Denver Co, 415 US 36 (1974).

A conventional labor award would leave claimants free, regardless of the

outcome of the arbitration, to sue under ERISA for violations of federal

statutory rights. Surely the Fund does not urge, much less desire, such a

result.

39
 There cannot be any reasonable doubt that the parties agreed to

engage in arbitration in lieu of litigation under §502 of ERISA. Arb Op at 5-

6; 11 EBC at 2353. Indeed, Mr. Foley noted so himself during the

preliminaries on October 19, 1989 and commented that he could have forced

claimants to bring their case in court. Moreover, Mr. Foley concluded his

opening remarks by stating that the issue before the arbitrator was whether

the Board had abused its discretion in denying claimants their benefits, the

very issue before a court when it reviews a plan administrator's

determination under ERISA. Arb Op at 6; 11 EBC at 2353 [citing Firestone

Tire & Rubber Co v Bruch, 109 S Ct 948 (1989)] As previously

documented, Mr. Foley, on behalf of the Fund, wrote that “Defendants have

no objection to the application of such standards in evaluating the

reasonableness of the decision it made not to pay retirement benefits to the

Plaintiffs.” For these reasons, statements in the Fund's Brief, such as the one

made on page 4, “The Arbitrator has not been given the authority to act as a

reviewing court,” must be discounted as contrary to fact.

Although it would have been easy enough to have written an opinion

without mentioning ERISA, it was unnecessary to do so. On page 9 of Arb

Op; 11 EBC at 2355, the arbitrator observed that the Fund document grants

the Board no discretion to disable the Fund's claims and review procedure.

40
The arbitrator further observed that claimants, when they first sought

benefits from the Fund, had both terminated covered employment and

separated from the industry and hence, but for the Board's disabling of the

Fund's claims and review procedure in violation of the Fund document,

would have been paid lump sum benefits shortly after the strike began. Arb

Op at 23 & n 8; 11 EBC at 2362 & n 8. These few findings, alone, suffice to

support an award in favor of claimants, without any mention of ERISA.

The Fund's basic difficulty stems from confusion between procedure

and substance. The Labor Rules are procedural, not substantive, and no more

define the scope of an arbitral submission than court rules circumscribe a

court's jurisdiction. See subheading VI infra, especially the discussion of

Exhibit D. The jurisdictional restraints imposed upon a labor arbitrator are

contained in the collective bargaining agreement under which he operates,

not in AAA's Labor Rules. Even in a true labor context, an arbitrator

exceeds the scope of a submission only when his decision is based solely

upon his view of enacted legislation. Fund Brief at 3 (quoting McSkimming,

759 F2d at 271, in turn quoting Alexander v Gardner-Denver, supra, 415 US

at 53). As was just pointed out, the essence of this arbitrator's award was

drawn from the Fund document itself. JX 6 §§5.5, 5.6, 8.11; Article XII. The

Fund's suggestion, that the Labor Rules prohibit the arbitrator from

41
interpreting ERISA, is not well taken. Fund Brief at 5. Labor Rule 38 places

no limit on the issues an arbitrator may discuss in an opinion.

The Fund's complaint that it was caught off guard by claimants’

theory regarding mishandling of claimants’ benefit applications has been

rejected previously in Arb. Op. at 21; 11 EBC at 2361, and the Fund offers

no new evidence or arguments in support of its Second Motion. In his own

First Motion, Mr. Foley abandoned any contention that he was surprised

over testimony at the hearing. Indeed, the most dramatic testimony was

given by the Fund's one and only witness, the Contract Administrator

himself, who, under cross-examination, adopted a discernibly defensive

posture during the course of admitting that he had told claimants that the

Fund was “frozen,“ when in truth it was not.13

Similarly, the Fund's contention, that its counsel was not obliged to

make timely objection to claimants’ proffered evidence, “because

conformity to the legal rules of evidence is not required” (Fund Brief at 5), is

not well taken. Labor Rule 28 hardly implies that no rules of evidence or

13
The term, “frozen”, initially was used as an undefined buzz word to convey negative connotations to
claimants that their benefit applications could not be processed for some vague, unspecified reasons. In the
Settlement Agreement, dated October 31, 1988, the term was given a rather technical definition, not
relevant here. Claimants and other participants were notified after the Settlement Agreement had been
finalized that the technical “freezing” of the Fund would be effective November 30, 1988. JX 7 at 2. The
crucial point of this arbitration is that claimants were told that the Fund was “frozen” long before it actually
was, and they were deliberately misled for well over a year as a stalling tactic, while the Board was
paralyzed by a deadlock over withdrawal liability. The Fund's Board-induced paralysis violated both
ERISA and the Fund document.

42
procedure apply in arbitration, only that strict adherence need not be

required. See generally Hill & Sinicropi, Evidence in Arbitration (BNA),

especially at 3-8. Voluminous testimony about the Fund's mishandling of

claimants’ applications, including that of the Fund's own witness, was

offered and received without objection. It is too late to rewrite the record.14

In conclusion, the arbitrator in no way exceeded his authority under

the terms of the parties’ submission. It is settled law that parties may submit

to arbitration virtually any dispute they please, upon terms of their own

choosing. Rodriguez de Quijas v Shearson/American Express, Inc, 109 S Ct

1917 (1989); Ludington News Co and Michigan UFCW/Drug Employers

Pension Fund, 9 EBC 1913, 1921 (Arb, 1988). Here, the parties submitted

an ERISA matter, in lieu of litigation. Fund counsel, Mr. Foley, had

absolutely no quarrel with the scope of the submission, until after he had

been replaced. His own spontaneous analysis in the First Motion, where he

complained only of “factual errors”, is far more persuasive of his true

position than is his affidavit drafted by new counsel, long after the fact.

II. The Board's Discretion

The Fund's contention that language in the Fund document,

14
In deference to Mr. Foley, it should be said that timely objection most probably would have proved
unavailing, on the ground that the issue of the mishandling of claimants’ applications was at least implicit
in their Complaint and the evidence proffered was relevant to that issue. Arb Op at 21; 11 EBC at 2361.

43
committing decisions to the Board's “sole and absolute discretion”, shields

Board action from review, deserves short shrift. Section 410 of ERISA

outlaws such exculpatory provisions in the strongest terms:

[A]ny provision in an agreement or instrument which purports to

relieve a fiduciary from responsibility or liability for any
responsibility, obligation, or duty under this part shall be void as
against public policy. 29 U.S.C. §1110(a); emphasis supplied.

As already observed, this statutory provision is incorporated into the Fund

document by reference. JX 6 at 36, §8.8.

If exculpatory provisions like those now offered by the Fund served

insulate the Board's actions from judicial review, then the central role of

courts in ERISA's carefully crafted remedial and enforcement scheme would

be undermined completely. Firestone, supra, 10 EBC at 1878; Mass Mut

Life Ins Co v Russell, 473 US 134, 6 EBC 1733 (1985). For this additional

reason,15 the Fund's current contention, that “[t]he Fund never agreed to give

the Arbitrator authority to review the exercise of the Board's discretion”

(Fund Brief at 8), must be rejected.

III. The Board's Abuse of Discretion

The Fund's current contention, that the Board did not abuse its

discretion when it “uniformly stopped automatic pre-age 65 benefit

15
Over and above Mr. Foley's candid concession that “Defendants have no objection to the application of
such standards in evaluating the reasonableness of the decision it made not to pay retirement benefits to the
Plaintiffs.” See supra at 5.

44
payments from approximately July, 1987 until November, 1988 because the

Board's prior discretionary practice of paying pre-age 65 non-discounted

benefits threatened the financial integrity of the Plan” (Fund Brief at 10),

reflects a perspective of events viewed with 20/20 hindsight through rose-

colored glasses. On the very next page of the Fund's Brief, the Fund admits

what really happened:

[M]anagement-appointed trustees stopped the discretionary practice

of automatic pre-retirement age payments because of the concern that
employer withdrawal liability contributions based on immediate
payment actuarial assumptions . . . could result in employer
contributions not required by the original collective bargaining
contract.16 Fund Brief at 11; emphasis supplied.

Emphatically, between July of 1987 and November of 1988, the

Board did NOT exercise its “discretion” to revoke its prior policy regarding

payment of lump sum benefits or to institute a new policy. By the clear

terms of the Fund document, any exercise of the Board's “discretion”

requires the consent of a majority of its members. JX 6 at 29, §7.5 (“All acts

and decisions of the Board shall be by a majority vote.”). What happened in

this matter is that the Board became hopelessly deadlocked over a

16
The Fund's reliance on NLRB v Amax Coal Co, 435 US 322; 2 EBC 1489 (1981), is misplaced. Fund
Brief at 10-11. Withdrawal liability payments are statutory obligations, not contractual ones. That ERISA
and MPPAA drastically upset employers’ settled expectations regarding pension costs was one of the most
bitter objections raised against their enactment. See, for example, the statements of Rep. Erlenborn (R-Ill),
made during the House debate, August 25, 1980, reproduced in 310 Pension Rptr (BNA), Special
Supplement (9/29/80), at 45. Constitutional objections to the increased costs imposed by this federal
legislation have been rejected by the courts consistently. Connolly v PBGC, 475 US 211 (1986); PBGC v
R.A. Gray & Co, 467 US 717, 5 EBC 1545 (1984).

45
withdrawal liability dispute among its members and, as a result, the Fund's

claims and review procedure ground to a halt. Arb Op 9-13; 11 EBC at

2355-2357. The deadlock was not resolved until claimants had been forced

back to work by financial circumstances. Arb Op at 3; 11 EBC at 2352.

Under the facts of this case, the Board's deadlock with resultant disabling of

the Funds claims and review procedure, partook more of the nature of

indiscretion.

IV. Claimants’ Entitlement to Immediate Benefits

Having unjustifiably denied claimants access to the Fund's claims and

review procedure, the Fund is in no position to complain because the

arbitrator has placed claimants in the same position they would have enjoyed

had they not been denied their rights. At the time claimants first sought

benefits from the Fund, they had been fired and their union had been

decertified, and hence claimants had both “terminated covered employment”

and “separated from the industry”, thereby qualifying for lump sum

distributions. Arb Op at 23 & n 8; 11 EBC at 2362 & n 8. It was unnecessary

for the arbitrator to quibble over the meaning of these phrases or to plumb

the Fund's past practice in depth, because, at that time, claimants qualified

for benefits under the plain language of the Fund document. Arb Op at 22-

23; 11 EBC at 2361-2362.

46
 The Fund document contemplates a situation close to that which

actually has arisen, namely, that participants might receive lump sum

distributions and afterwards return to covered employment:

In the event a Participant terminates employment before attaining

Normal Retirement Age and receives his Accrued Benefit or the
present value of his Accrued Benefit at that time because of such
termination, if the Participant recommences participation and attains
Normal Retirement Age, all of the Participant's Years of Service shall
be credited in computing his Normal Retirement Benefit; however, his
Normal Retirement Benefit shall be offset by the Accrued Benefit of
the prior distribution of the present value of such Accrued Benefit
depending upon the election of the form of the benefit pursuant to
Section 5.6 of this Plan. JX 6 at 26, §5.8

In essence, the situation before the arbitrator is one in which participants

have received lump sum distributions and returned to non-covered

employment. That the result should be comparable in both situations is

hardly surprising. The arbitrator has done nothing other than grant claimants

the rights to which they are entitled under the Fund document.17

V. Claimant's Entitlement to Interest

The Fund's assertion, that “the arbitrator has no authority to determine

the amount of the benefits or to award interest in this matter” (Fund Brief at

14; footnote omitted, is perplexing. Paragraph 12 of claimants’ Complaint

17
If the Board does not like the result dictated by the terms of the Fund document, the Board is free (within
the restraints imposed by ERISA and the Internal Revenue Code) to amend the document. In fact, it seems
that the Board has acted to impose a waiting period on eligibility for lump sum distributions, in an apparent
effort to avoid a recurrence of the current situation. JX 29 at 6, ¶(d); Arb Op at 22, 11 EBC at 2361.

47
provides in pertinent part:

[E]ach plaintiff is entitled to be paid his lump sum benefit, together

with interest on that benefit at the rate of 10.05%, from the date this
benefit was due to each plaintiff.

In a letter to the arbitrator, dated September 29, 1989 (copy attached

as Exhibit B), claimants’ counsel wrote:

I have already sent a request for certain minutes from the meetings of
the Board of Directors. I have also asked for admissions regarding
these documents so that they may be admitted at the hearing without
objection and without the need for a custodian being present. Mr.
Foley and I have discussed this matter and I do not believe there will
be a problem regarding the admission of these documents other than
Mr. Foley's questioning their relevance. I also understand that this is
not going to be a matter of determination of the amount of the benefit
by each of my claimants. Rather, it is going to be a determination of
the interpretation and enforceability of the plan language and whether
or not my claimants are entitled to receive a lump sum benefit even
though they are sill working in the brewing and beer and wine
distribution industry. For that reason, I do not plan to have all of my
claimants present at the hearings. If either you or Mr. Foley object to
each of the claimants not being present, please let me know and I will
inform them to arrange their schedules so that they can be present at
the hearings. I expect the group will be represented by one or two
individuals at the present time. (Emphasis supplied).

Against the background of ¶12 of the Complaint and within the

context of the upcoming hearing, the arbitrator interpreted counsel's letter to

mean that there was to be some form of bifurcated proceeding, through

which there would be an initial determination as to liability and a later

determination (if necessary) as to damages. See Elkouri & Elkouri, supra, at

214. The arbitrator interpreted the phrases highlighted in counsel's letter to

48
refer only to the upcoming hearing, not to the entire arbitration. There was a

commonality as to liability issues, that made it unnecessary for all claimants

to testify on the subject, which is why counsel expected the entire group to

be represented by only one or two individuals at the hearing.

As it happened, all claimants except Beimers attended the hearing and

testified, as did Yost's wife. Arb Op at 15-17; 11 EBC at 2358-2359.

Consistent with the arbitrator's understanding of the proceedings, the parties

jointly introduced dozens of exhibits, several of which pertained to the

specific amounts of claimants’ benefits (e.g., JX 8, 32-36). The arbitrator

reviewed all of the exhibits, including those setting forth the amounts of

claimants’ benefits. In his opinion, the arbitrator wrote:

The parties did not present to the arbitrator any issues regarding the
specific amounts of claimants’ lump sum benefits. Arb Op at 19 & n
7, 11 EBC at 2360; footnote omitted.

By this the arbitrator meant only that, at the hearing and in their briefs on

liability, the parties did not specifically address such issues, which was

hardly surprising, because the arbitrator understood the proceedings to be

bifurcated.

Mr. Foley, in his First Motion, made no objection whatsoever to the

bifurcated nature of the proceedings. In Claimants’ Brief, they state that

“plaintiffs seek interest on their accrued vested benefit,” a position perfectly

49
consistent with the request originally made in ¶12 of their Complaint and

with their shared perception of these proceedings as bifurcated. It is only

now, after the Fund has lost the first round as to liability and changed horses

in midstream, that the Fund seeks to disavow that specific benefits and

interest are part and parcel of this arbitration, even though they were express

in claimants’ Complaint.

It would be anomalous for claimants’ to have placed the overriding

issue of liability before the arbitrator, but to have chosen to resort to

litigation to collect interest on their winnings. After all, the whole purpose of

arbitrating was to avoid the time and expense of litigating. Until the Fund

obtained new counsel, everything about this arbitration, including Mr.

Foley's own spontaneous reaction when he was still Fund counsel, has been

consistent with bifurcated proceedings. Just as it is too late for the Fund to

rewrite the record, it is too late for the Fund to rewrite the arbitration

agreement.

There is some dispute over the benefit due one of the claimants,

Captain. The parties’ respective positions are as follows:

Claimant Claimant's Brief Fund Brief

Beimers $19,935.23 No dispute

Captain 29,223.00 $28,203.26
Maurice 17,218.04 No dispute

50
 Van Dyke 48,481.60 No dispute
Yost 20,141.48 No dispute

I adopt the Fund's computation with respect to Captain, both because it

appears to me, a mathematician, to be correct and because the Fund has

superior expertise in performing benefit calculations.

In their Complaint, claimants requested interest at the rate of 10.05%,

which they reduced to 9% in Claimants’ Brief. Since interest in this case is a

matter of contract, it will be applied at the rate set in the Settlement

Agreement.18 Arb Op at 19, 11 EBC at 2360; JX 29 at 15, ¶6. The applicable

rate of interest is determined as follows:

The term “interest,” as used herein, shall mean that rate of interest
published in the Pension Benefit Guaranty Corporation Single
Employer Immediate Annuity Rate for termination of single employer
plans determined as of the first day of each Plan year. JX 29 at 6,
§2(d).

The plan year is the calendar year. JX 6 at 2, §1.6 PBGC rates for the

relevant years are as follows:

Year Beginning PBGC Rate19

1/1/87 7.50%
1/1/88 8.25%
1/1/89 7.75%
1/1/90 7.25%
18
Cases on the award of interest cited by the Fund, such as Gavie v Stroh Brewery Co, No. 86-70019 (ED Mich,
1987), are inapposite because the plan documents under review did not specifically call for the payment of interest,
as does the Settlement Agreement in this matter.
19
Source: 4 Pension Plan Guide (CCH), at 18,643-17-3.

51
 Claimants seek interest from August 7, 1987, a date sixty days after

the commencement of the strike. The Settlement Agreement calls for interest

to be added with reference to the date “the participant has submitted all

necessary information.” JX 29 at 6, §2(d). It would be unfair to hold

claimants to such a date, because the Fund actively discouraged their

applications, which otherwise would have been completed and filed much

sooner. Arb Op at 15-19; 11 EBC at 2358-2360. I choose the date of

September 18, 1987, as the date for the commencement of interest, because

there is documentary evidence in the Fund's own records that, by September

18, 1987, participants in claimants’ shoes were desirous of receiving their

benefits from the Fund. JX 35; Arb Op at 16, 11 EBC at 2358-2359.

Interest, then, is determined as follows:

Period Interest

9/18/87-12/31/87 2.16% (prorated)

1/1/88-12/31/88 8.25% (full year)
1/1/89-12/31/89 7.75% (full year)
1/1/90- 3/16/90 1.49% (prorated)
3/17/90 until paid 0.0199% /day

Because the rates are taken from annuity tables, interest will be

compounded.

Through March 16, 1990, claimants are entitled to the following

amounts:

52
 Claimant Lump Sum Interest Total

Beimers $19,935.23 $4,166.46 $24,101.69

Captain 28,203.26 5,894.48 34,097.74
Maurice 17,218.04 3,598.57 20,816.61
Van Dyke 48,481.60 10,132.65 58,614.25
Yost 20,141.48 4,209.57 24,351.05
Total $133,979.61 $28,001.73 $161,981.34

These totals shall bear interest at the rate of 0.0199% per day, until paid.20

VI. Expenses of Arbitration

By letter dated November 8, 1989 (copy attached as Exhibit C), the

arbitrator wrote counsel for the parties, in pertinent part:

Strictly speaking, this is neither a typical MPPAA nor labor

arbitration: it really is an ERISA arbitration. I suggest that the parties
adopt AAA's MPPAA rules, as they would seem to be most applicable
(there are no separate ERISA rules).

If the parties agree that AAA's MPPAA rules govern, then those rules
provide for the award of fees and expenses. Otherwise, the parties
need to agree to the allocation of these items. * * *

If any of the foregoing information is incorrect, please correct it as

soon as possible. (Emphasis supplied).

Mr. Foley responded with a letter dated November 14, 1989 (copy

attached as Exhibit D), in which he wrote:

I am satisfied to have the AAA's MPPA ( sic) rules apply for

procedural purposes and the awarding of costs and expenses, but Mr.

20
Of course, if claimants are forced to sue to enforce this award, the court well may wish to adjust the
interest rate appropriately.

53
 Beach and I need to discuss this, particularly as it relates to attorney's
fees. (Emphasis supplied).

Three points about Mr. Foley's letter are salient. First, he in no way

challenged the arbitrator's observation that this is not a typical labor

arbitration. Second, he concedes that AAA's rules govern procedure, not

substance. Third, by limiting his objections regarding the MPPAA Rules to

the award of attorney's fees, he otherwise was assenting to the arbitrator's

authority to “grant any remedy or relief within the scope of ERISA.” Arb Op

at 3-4; 11 EBC at 2352. Exhibit D provides further convincing evidence that

Mr. Foley in truth took a rather broad view of the scope of this arbitration.

See subheading I supra.

Apparently Mr. Foley declined the arbitrator's invitation to enter into

an expense-sharing agreement with claimants, and the arbitrator, having

heard nothing further regarding the subject, on November 21, 1989, wrote

counsel as follows (Exhibit E attached):

With respect to my letter of November 8, 1989, inasmuch as both

parties have labeled their brief “Labor Division”, I will proceed under
AAA's Voluntary Labor Arbitration Rules (as amended and in effect
January l, 1988), unless the parties agree otherwise.

The parties never agreed otherwise, and so the arbitrator applied the Labor

Rules, as to procedure only, inasmuch as that is all they govern. Arb Op at 5;

11 EBC at 2353.

54
 In view of Mr. Foley's failure to obtain an expense-sharing agreement

and in view of his assent to application of AAA rules (at least Labor, if not

MPPAA, except as to attorney's fees), it strains credulity for the Fund to

suggest that “the Arbitrator's assessment of the full expense against the Fund

is without basis or merit.” Fund Brief at 16. It is all the more incredible in

light of the Fund's present insistence that the Labor Rules not only apply but

circumscribe the arbitrator's authority. Fund Brief at 4.

Labor Rule 44, specifically quoted in Arb Op at 20; 11 EBC at 2360,

unmistakably provides:

Expenses of the arbitration . . . shall be borne equally by the parties,

unless they agree otherwise, or unless the arbitrator, in the award,
assesses such expenses or any part thereof against any specified party
or parties. (Emphasis supplied).

Beyond peradventure, the Labor Rules explicitly grant the arbitrator the

authority to assess the expenses of arbitration against a specified party, in

this case, the Fund. The Fund's arguments to the contrary are patently

disingenuous, to the point that the Fund's motion, supporting brief, and

accompanying affidavit might not pass muster under either FR Civ P 11 or

MCR 2.114.

The Fund not only has engaged in specious argument, but in

contumacy to the extent of refusing to pay the arbitrator's bill as originally

assessed by the arbitrator and approved by AAA. Piqued by its loss on the

55
liability issue, the Fund sought to sabotage the arbitration and hold the

arbitrator's fees hostage, presumably in exchange for a more favorable result.

The Fund's tactics have caused significant delays in the completion of these

proceedings, needlessly have involved AAA's staff, have caused claimants

and their counsel unnecessary additional expense, and wasted the arbitrator's

time. The Fund's instigation of a fee dispute in the middle of the arbitration

was entirely improper and wholly without justification in fact or in law.

As a general rule, unless the arbitrator agrees otherwise, the parties’

liability for the arbitrator's fees and expenses is joint and several. See 5 Am

Jur 2d, Arbitration and Award, §105, at 599; see also Ann, Liability of

parties to arbitration for costs, fees, and expenses, 57 ALR3d 633. An

allocation of the arbitrator's fees and expenses in an award serves only to

give the parties a right of contribution from one another, not to relieve them

from their joint and several liability to the arbitrator for the full amount of

his fees and expenses. In the instant matter, there are five claimants and two

respondents that are jointly and severally liable for all of the arbitrator's fees

and expenses.

In his opinion of December 9, 1989, the arbitrator, acting pursuant to

authority granted under Labor Rule 44, assessed all of the initial costs and

expenses, totaling $4,451.73, against the Fund. To date, the Fund has paid

56
only $2,225.86; following the Fund's display of pique, claimants chipped in

$2,250, so that the arbitrator's original statement has been paid in full.

However, the Fund owes claimants the $2,250 which they were coerced into

paying by the Fund's contumacy, together with any interest costs or interest

losses claimants may have incurred.

It goes without saying that the Fund must bear the ultimate incidence

of the costs and expenses for this Final Award. Indeed, if I were empowered

to do so, I would not hesitate to award claimants attorney's fees. The

arbitrator's statement for the Final Award is submitted with the

understanding that it will be paid promptly and in full. If not, then the bill

will be recalculated, based upon a rate of $150 for each hour actually

expended. See Romeyn v Campau, 17 Mich 326 (1868). In Quick & Reilly,

Inc v Jacobson, No. 88-8783 (SD NY, 1988), the federal district court

awarded $25,000 in Rule 11 sanctions against a party, for filing a

“meritless” motion to vacate an arbitration award.

Dated: March 17, 1990 ________________________

E. Frank Cornelius, Arbitrator

57
58