Contact: Richard J. Birmingham, Davis Wright Tremaine, 206.757.8145 or richbirmingham@dwt.com
Travelers are union workers who pursue work outside their home state. They often travel to work on large projects such as the Trans-Alaska Pipeline; nuclear construction projects or large hotels and casinos in Las Vegas or Atlantic City. When the traveler works in another jurisdiction, the pension contributions can either be made directly to the plan maintained by the foreign jurisdiction or the contributions can be sent back, "reciprocated," to the pension plan in the travelers’ home state. The traveler is generally better off if the contributions are reciprocated back to his or her home state so that all service is counted for a single pension from the home state local union pension plan.
Rich Birmingham is a corporate management pension attorney with the law firm of Davis Wright Tremaine in Seattle. Over three decades ago, he became involved in this area when he noticed that the local unions often ignored the pension rights of traveling union members and that the traditional union pension attorneys did not protect the travelers’ rights because such rights may be in conflict with the rights and desires of non-traveling union members. This month, in a case that Rich argued before the 9th Circuit Court of Appeals, Lehman v. Nelson, the 9th Circuit held that PPA (Pension Protection Act) contributions made to a pension plan in rehabilitation status cannot be kept by the foreign pension fund and must be reciprocated to the Travelers’ Home Fund. The effect of this decision is to increase the pension of these traveling workers. This, however, was not Rich’s first victory for traveling union workers.
During the period 1974-1977, traveling union members, in virtually every trade left the lower 48 and traveled to Alaska to work on the construction of the Trans-Alaska Pipeline. During this construction period, union workers had $1-$3 for each hour worked withheld from their paycheck and contributed to the local Alaska union pension funds. The local pension funds had no reciprocity agreements and the plans required 10 years to be vested. Since the pipeline construction only lasted four years, none of the travelers had the service necessary to be vested. As a result, the local pension funds forfeited the travelers’ service and used the funds to increase pensions to local union members under the pension plans. The first lawsuit that questioned this practice was filed by the Hotel and Restaurant Workers. The union workers argued and won at the district court level that the union pension plan was structurally defective in design under the LMRA because less than three percent of the participants ever received a benefit from the plan. The 9th Circuit in Phillips v. Alaska Hotel and Restaurant Workers, 944 2d 509 ( 9th Cir. 1991), reversed, holding that the plan design was a permissible design authorized by ERISA. After the Phillips decision, the plaintiffs’ bar generally abandoned the travelers, but one traveler, Dan Duncan, a carpenter for Oregon, sought pension assistance from Rich Birmingham at Davis Wright Tremaine. Rich recognized that Phillips had been filed under the wrong legal theory. There is a provision of pension law that requires vesting of workers when a significant number of workers, more than 20%, are terminated in connection with a significant event, the completion of the pipeline. Rich argued that the doctrine of partial termination required the vesting of all the contributions made on behalf of travelers. After Rich filed the lawsuit, Senator Ted Stevens of Alaska passed federal legislation that amended the Internal Revenue Code to state that the doctrine of partial termination would not apply to any workers in Alaska who worked on the Trans-Alaska pipeline during the period 1974-1980. In a case of first impression, Rich successfully argued that Senator Stevens amended the wrong statute, as the travelers’ lawsuit was brought under ERISA and not the Internal Revenue Code. Karen Ferguson of the Pension Rights Center helped to deflect a second legislative "correction" by Senator Stevens. The Pension Rights Center argued that the courts and not special interest legislation should resolve the dispute. After the District Court ruled in favor of the Carpenters, Rich received favorable settlements on behalf of the traveling carpenters, teamsters, operating engineers, laborers, and electricians. His settlement in these cases led to both the adoption of reciprocity agreements for work performed on the pipeline and to payment of damages to the travelers.
Because travelers perform work on a temporary basis in a foreign jurisdiction, the travelers are often the first workers to be laid off when work on the project is nearing completion. When the Washington Nuclear Power Supply System was shut down, traveling electricians John Flanagan and Joseph Missett were laid off from the nuclear power facilities that were being built at Hanford, Washington. Two years later, after the remaining workers were laid off, the plan was terminated. Union workers that lost employment in the year the plan was terminated were fully vested, as ERISA requires full vesting on termination of the plan. However, because the travelers were the first to be laid off, they were not active participants at the time of the plan termination and the plan held that they were not entitled to full vesting. Rich filed suit on behalf of the travelers arguing that ERISA, as applied to the unique language of this particular plan, did not permit the travelers’ rights to be forfeited during their "parity" period, a period equal to the length of time that they had previously been employed. Because the travelers had been employed for four years, they were still participants with a right of service reinstatement as of the date of the plan termination. In a case of first impression, Flanagan v Inland Empire Electrical Workers Pension plan, 3 F 3d 1246 ( 9th Cir 1993), the 9th Circuit Court of Appeals held that travelers who were within their parity period at the date of the plan termination were participants in the plan and were entitled to full vesting on plan termination. The appeal was argued by Davis Wright Tremaine attorney, Steve Rummage.
Rich’s recent lawsuit involved two electricians, Richard Lehman and Michael Puterbaugh, who traveled to California and worked under the Pacific Coast Pension Fund. Under the union reciprocity agreement, contributions to the Pacific Coast Pension Fund were to be reciprocated, without deduction, to the Travelers’ Home Fund. The contributions under the Pacific Coast Plan were originally $4.62 an hour, but those contributions were increased by as much as an additional $9 an hour because the plan was in rehabilitation status under the Pension Protection Act. The Pacific Coast Plan reciprocated the $4.62 but kept the additional $9 per hour to help with the funding status of the plan, even though these travelers would never receive a pension from the plan. Rich with assistance from Christine Hawkins and Joseph Hoag, associates at Davis Wright Tremaine, argued that the Pacific Coast plan gave up any right to keep any portion of the contributions when it signed the reciprocity agreement. The reciprocity agreement required that all contributions be transferred to the Travelers’ Home fund without deduction. This month, in a case of first impression, the 9th Circuit Court of Appeals agreed, finding that the additional $9 in PPA contributions must also be forwarded to the Travelers’ Home Fund, as those contributions became the property of the Home Fund when the reciprocity agreement was executed. The transfer of these additional contributions will result in increased pensions for the travelers in their Home Funds. See, Lehman v Nelson, 2019 WL 2451090 (9th Cir. 2019). It is also likely that other traveling union members in other trades are also entitled to similar relief.
Although Rich’s representation of union travelers may seem like a strange travel companion for a corporate pension attorney, Rich states that his management clients operate their plans for the exclusive benefits of participants and, therefore, see no conflict in helping the union travelers secure the benefits that they are entitled to under the terms of the union pension plan.