Teamsters Central States, Southeast & Southwest Areas Pension Fund, Rosemont, Ill., won dismissal of a lawsuit filed by some current and former Kroger Co. participants who said the pension fund's rejection of an offer by the union and Kroger to withdraw Kroger participants from the plan was a breach of fiduciary duty.
The Teamsters union negotiated a proposal to remove Kroger participants from the Central States pension fund and create a new plan for Kroger employees, with the company agreeing to absorb the increased withdrawal liability, according to the complaint. Because Central States trustees "flatly refused to consider" after deliberating for just five days, the plaintiffs asked the court to order trustees to reconsider the proposal, to appoint an independent fiduciary to judge the idea and to negotiate an arrangement with Kroger, or otherwise "the Kroger participants will be trapped in a plan that is about to cut their benefits and still faces likely insolvency," the complaint said.
U.S. District Judge Edmond E. Chang of the U.S. District Court in Chicago granted the pension fund's motion for summary judgment on March 22. "Even viewing the evidence in their favor, the plaintiffs have failed to meet their burden of showing that the defendants acted arbitrarily and capriciously," Mr. Chang said in his order. Pension fund officials "prudently carried out their fiduciary duties in considering Kroger's various withdrawal proposals."