BNA Daily Labor Report: UPS Tries to Shortchange New Jersey Health and Welfare Fund

October 5, 2007: From the BNA Daily Labor Report: Officers and members of a local Teamsters union must arbitrate with United Parcel Service of America Inc. (UPS) on the issue of whether UPS must contribute on union members' behalf to two UPS-sponsored and administered health and welfare plans at rates set out in bargaining agreements, the U.S. District Court for the District of New Jersey ruled Oct. 2 in an unpublished decision (Palumbo v. United Parcel Service of America Inc., D.N.J., No. 06-CV-5331 (DMC), unpublished 10/2/07).


According to the court, UPS employs approximately 235,000 workers in the United States who are represented by the Teamsters. Most Teamsters-represented UPS employees also are members of a Teamsters local. UPS has a collective bargaining agreement with the national Teamsters union as well as local supplemental bargaining agreements which apply to employees in particular geographic areas and/or local unions.


Unlike most full-time Teamsters-represented employees at UPS who receive health and welfare benefits under jointly-trusteed plans, full-time employees of UPS who are represented by Teamsters Local 177 are provided health and welfare benefits from two plans that are funded, administered, and controlled solely by UPS. These two UPS-sponsored plans are funded through a voluntary employees' beneficiary association, according to the court.

Victor Palumbo, as the President and Secretary Treasury of Teamsters Local 177, along with seven Local 177 members filed a lawsuit against UPS in November 2006 contending that UPS had breached its fiduciary duties under the Employee Retirement Income Security Act by failing to make contributions to the UPS plans at rates specified in UPS's master labor agreement with the national Teamsters union. According to the court, the plaintiffs based their claim on a provision in the master agreement that dealt with UPS's obligation to make contributions to jointly-trusteed benefit plans.

Judge Dennis M. Cavanaugh granted UPS's motion to stay the plaintiffs' lawsuit for their failure to first initiate arbitration, as required under the master labor agreement. According to the court, although the plaintiffs framed their arguments as ERISA claims, their claims could not be resolved under ERISA but instead required resolution under Section 301 of the Labor Management Relations Act.

"Although the Complaint does not expressly reference the LMRA, Plaintiffs' claims--whether for breach of fiduciary duty or violation of ERISA's prohibited transaction provisions--turn on a threshold contractual determination, namely whether UPS owes contributions at a specified rate under the CBA. The LMRA requires that this threshold determination be resolved pursuant to the grievance and arbitration procedures contained in the CBA," the court said.

The plaintiffs were represented by Robert A. Fagella of Zazzali, Fagella, Nowak, Kleinbaum & Friedman, Newark, N.J. Jody S. Riger of Proskauer Rose, Newark, N.J., represented UPS.

The full text of the opinion is at

Get Advice Join TDU Donate

Recent News

Yellow Terminals Sold for $1.9 Billion – XPO and Estes are Big Buyers

Most of Yellow’s terminal properties closed at auction on December 4, with XPO the biggest buyer, paying $870 million or nearly half of the $1.9 billion that the 128 properties yielded. XPO bought 28 properties and Estes bought 24.

Online Workshop: From Contract Campaign to Contract Enforcement

Hundreds of UPS Teamsters joined us to hear about moving from contract campaign to contract enforcement this Sunday. See a recording of our UPS Teamsters United webinar with guest speaker General President Sean O'Brien below. 

View More News Posts