The Supreme Court yesterday broadened the powers of pension fund trustees to allow them to examine the employe records of companies contributing to multiemployer benefit plans.
In a 6-to-3 ruling, the court decided that trustees may examine the payroll, tax and personnel records of workers not covered by the plan to determine if they should be covered.
The case involved the Central States Pension and Health and Welfare funds of the International Brotherhood of Teamsters, two of the largest trust funds in the country, covering more than 500,000 workers. However, the ruling affects the powers of trustees to protect $50 billion in assets in multi-employer pension plans covering 8 million workers nationwide.
The two benefit plans in the case cover employes of 16 trucking companies, requiring the firms to make pension contributions for employes working under contracts negotiated by the International Brotherhood of Teamsters.
During a December 1979 audit, the fund trustees became suspicious of possible underreporting of employes who should be covered by the plans. The auditors requested access to records for employes not listed as pension plan participants and were turned down by the companies.
The court held that the two benefit plans may examine the records of employes whom the companies claim are not covered by plan.
Justice Thurgood Marshall, writing for the majority, said the proposed audit "is entirely reasonable" in light of the standards outlined in the 1974 Employee Retirement Income Security Act (ERISA).
Random audits of all employes' records are a "proper means of verifying that the employer has accurately determined the class of covered employes," Marshall wrote. "Moreover, an employer has an incentive to underreport the number of employes covered, because such underreporting would reduce his liability to the plans."
A Teamsters spokesman called the decision a "tremendous victory" that "upholds the right of funds to see that employers are properly contributing."
The Supreme Court action overturned a lower court ruling that had limited the scope of the trustees' audit authority. Last year, the 6th Circuit Court of Appeals had denied the trustees unlimited access to the trucking companies' employe records.
The high court rejected the appeals court argument that the pension fund trustees can rely on the union or the Labor Department to police employer contributions.
Marshall also wrote that the court majority rejected "the notion that the plan's ultimate ability to remedy an employer's breach of its obligations forecloses the plan from seeking to deter such breaches or to discover them early."
In a partial dissent, Justice John Paul Stevens said he agreed with the court majority that ERISA does not prohibit the type of audit in question. However, he said, the right to perform such an audit must by granted by the union contract. The Teamsters contracts did not expressly grant that authority, he wrote.
Stevens was joined by Chief Justice Warren E. Burger and Justice William H. Rehnquist.
In a separate case, the Supreme Court found a ski resort operating company guilty of monopolizing the market for downhill-skiing services in Aspen, Colo., in violation of federal antitrust laws.
The Supreme Court, in a 8-to-0 opinion, affirmed a lower court ruling that the Aspen Skiing Co. had illegally tried to harm its smaller competitor, Aspen Highlands Skiing Corp., by discontinuing the sale of a certain type of ski lift pass.
Aspen Skiing owns three of four major mountain facilities for downhill skiing at Aspen. Aspen Highlands owns the fourth.
In earlier years, when the two companies and a third operated only three resorts, the three offered their own daily lift tickets as well as an interchangeable 6-day, All-Aspen ticket, good for use at any facility.
Aspen Skiing later acquired its second of the original three facilities, and opened a fourth. The company then tried to make Aspen Highlands accept a smaller share of the All-Aspen sales revenue. When the small company refused, Aspen Skiing stopped selling All-Aspen tickets, and instead sold a 6-day pass good for only its three resorts. The large company also "took additional actions that made it extremely difficult" for the smaller company to compete.
Justice Stevens, writing for the court, said that the evidence showed Aspen Skiing "sought to reduce competition in the market over the long run by harming its smaller competitor."
Eliminating the All-Aspen pass also "adversely affected" skiers, Stevens wrote.
Justice Byron White did not participate in the case.