Experience Notable Cases Courts foil Carpenter’s attempt to claim benefits under Labourers’ benefit plan

Courts foil Carpenter’s attempt to claim benefits under Labourers’ benefit plan

April 08, 2015

Former member could not continue to claim benefits under the Labourers’ benefit plan

The Court of Appeal has confirmed the Superior Court of Justice’s decision that an expelled union member could not continue to claim benefits from the union’s benefit plan.

Background

When David Garcia refused to resign his membership in a rival trade union, he was lawfully expelled from the Labourers International Union of North America Local 1059. Like every other person who loses or quits membership in Local 1059, Garcia was no longer eligible to claim benefits from the Local 1059 Benefit Trust. He knew that would be the result. However, he maintained that, even though he maintained membership in the rival union – the United Brotherhood of Carpenters and Joiners of North America, Local 1946 – and was covered by the Carpenters’ benefit plan, he should be able to continue to claim benefits under his Local 1059 “dollar bank” plan until the credits he had earned had been depleted.

Months before he was expelled from Local 1059, the Carpenters’ union took up Garcia’s cause. It challenged Local 1059’s policy against dual union membership in two complaints brought on Garcia’s behalf before the Ontario Labour Relations Board. Similarly, when charges were brought against Garcia under Local 1059 constitution, the Carpenters’ legal counsel represented Garcia in the internal union trial and appeal proceedings.

When these efforts did not succeed, Garcia, again represented by the Carpenters’ legal counsel, filed an application in the Superior Court of Justice. The application claimed that the Labourers’ policy against dual union membership was a mere pretext, passed in order to give the trustees of the Local 1059 Benefit Trust the ability to “confiscate” Garcia’s “dollar bank” credits and divert them to the benefit of other beneficiaries. Garcia also claimed that, notwithstanding his loss of membership in Local 1059 or that he was a member of the Carpenters’ benefit plan, he was entitled to continue to claim benefits from the Local 1059 Benefit Trust until the credits in his dollar bank had been depleted or be compensated in an amount equivalent to those credits.

The Superior Court of Justice rejected these claims in a decision released on July 23, 2014. Garcia appealed to the Ontario Court of Appeal. He argued that the application judge erred in finding that he was not a beneficiary of the Local 1059 Benefit Trust and in failing to hold that the trustees breached fiduciary duties owed to him.

The Court of Appeal’s decision

The Court of Appeal dismissed the appeal. It rejected all of Garcia’s arguments:

• The application judge did not err in reading the Trust Agreement and the Benefit Plan Text together to determine the beneficiaries of the Local 1059 Benefit Trust. Those terms made it clear that persons who are no longer members of Local 1059 are no longer beneficiaries of the Trust and cannot continue to claim benefits.
• There was no merit to Garcia’s argument that he did not have adequate notice that he would lose access to the Benefit Plan if he was expelled from Local 1059; to the contrary, he knew all along that his expulsion would lead to that result.
• Union officials did not breach any of their fiduciary duties as trustees of the Local 1059  Benefits Trust in adopting and enforcing the dual union policy. No conflict of interest arose by virtue of the fact that two union officials were also trustees of the Benefit Trust.

In the result, the Court of Appeal dismissed Garcia’s appeal and ordered him to pay $32,000 in legal costs.