Building A Better Future for our Families

LMCI Fund Termination & IPAT Pension Fund Civil Dispute

Contractor Contributions

Overview
In recent months, the International Union of Painters and Allied Trades (IUPAT) has taken actions to be able to appoint signatory contractors to your jointly-managed funds. This page will provide you the latest information on what you need to know, what FCA is currently doing and what FCA's next steps are. Contact the FCA Office at (866) 322-3477 with any questions.

Quick Resources

LMCI Termination:

IPAT Pension Fund:

Overall

 

Dec. 5 Update - LMCI Fund Termination: Recommendations Regarding Contractors' LMCI Contributions
Click here to download this letter as a PDF

The LMCI’s termination date (Dec. 13) is quickly approaching, and I wanted to take a moment to provide important recommendations for your LMCI contributions moving forward.

Information About LMCI's Termination

The LMCI’s termination is a national issue and should have been resolved between FCA and the IUPAT. Unfortunately, that has not been the case. The Union Trustees have put pressure on local areas which has disrupted relationships between contractors and their local labor partners. FCA’s main objective is to continue providing our contractors with factual information on the LMCI termination and their contributions.

We encourage you to work with your District Councils and Local Unions to develop the best solution for your areas. FCA will continue our efforts to communicate with the IUPAT while doing our best to quickly eliminate the disruptions they caused through arbitration and legal actions.

Recommendations for the LMCI Contributions: What Should You Do Now?

As stated in previous communications regarding the LMCI contributions, the LMCI can no longer accept contractor contributions (for all hours worked) as of Dec. 14. Here are some suggestions of what you should do now regarding your LMCI contributions:

  • FCA recommends you notify the District Council or Local Union that you will cease making contributions for hours worked after Dec. 13, 2018.*
  • FCA recommends that you decline the execution of the Memorandum of Understanding from labor to move your LMCI contributions to the new "Labor Management Partnership."
  • FCA recommends you work in partnership with your local labor partner to escrow the LMCI contribution for all hours worked starting Dec. 14, 2018.* This will provide the time needed to work with your labor partner to identify the best solution for your area.
  • If collaborating with your local labor representatives is not a viable option, please refer to the FCA Legal Counsel's memorandum regarding the "Obligations of Contractors Upon Termination of the LMCI Trust Agreement"* or contact the FCA office for further information.
  • If you want to direct your LMCI contractor contribution to a local Industry Promotion Fund for hours worked after Dec. 13, send a letter to your district council or local union.*
  • If you’re a contractor in an area not represented by a local association and you have not heard from your local labor partner, FCA recommends you stop paying your LMCI contribution for all hours worked after Dec. 13. You have no obligation to pay that contribution and should wait until your local labor representatives contact you to discuss.

*Note - Legal Memorandum and Letter Templates Available in Quick Resources Above

Future Collaboration with the IUPAT

While we have a disagreement with the IUPAT on this issue, we believe labor and management working together is beneficial to our industry. As such, we will continue collaboration in several key areas:

  • FCA leadership remains committed to doing what is necessary to collaborate with the IUPAT on issues that are mutually beneficial to labor and management.
  • FCA will continue appointing Employer Trustees to the International Painters and Allied Trades (IPAT) Pension Fund. We remain committed to working professionally with the Union Trustees in the best interests of fund participants and beneficiaries. It is more important than ever for labor and management to have equal representation as we work on improving the fund’s health.
  • FCA will continue appointing Employer Trustees on the Finishing Trades Institute (FTI) International and working collectively with the Union Trustees in the best interests of that training fund.
  • FCA will continue connecting the industry’s top manufacturers and suppliers with local training centers so they can provide free products and training to our current and future workforce.
  • FCA will continue appointing contractors from all regions and trades to the IPAT Pension Fund and the FTI to ensure that all contractors’ interests are represented.

What's Next for Your FCA

For the past 21 years FCA has represented the interests of signatory contractors in the finishing trades throughout North America. During that time all signatory contractors (regardless of size, location or trade) have had the opportunity to be part of FCA’s decision-making process. As FCA goes forward into the future, providing all contractors a voice in FCA’s decision-making will continue as a top priority. The FCA Board of Directors are excited about all of the contractor groups that have already committed their financial support to FCA moving forward. If you haven’t committed yet, we’ll be touching base to discuss your support.

As always, please contact the FCA office with any questions; you can count on FCA to continue providing the latest, factual information you need to make the best decisions for your areas.


Nov. 30 Update - LMCI Fund Termination: What Contractors Need to Know and Do
Click here to download this summary as a PDF

With the upcoming termination of the LMCI Fund, you need to have all the right information to make the best decision for your local area. FCA International is committed to getting factual information to our contractors and Affiliates. Read on for a quick summary of what contractors need to know and do.

What You Need to Know

  • The IUPAT has provided 30-day notice to FCA that it is terminating the LMCI Trust Agreement. The Fund will officially be terminated on Dec. 13, 2018.
  • The IUPAT has stated it has terminated the LMCI and is creating a new labor management fund (the Labor Management Partnership Fund) because they feel FCA does not represent all finishing contractors. This is not true: FCA does represent all finishing contractors. In fact, on the IPAT Pension Fund, the FTI and the LMCI, FCA has appointed 14 contractors from varying trades and regions to represent the diverse interests of the contractors, whereas the IUPAT has appointed seven executive board members to represent their interests.
  • The new fund is clearly dominated and controlled by the IUPAT. The IUPAT’s General Executive Board has already selected the Employer Trustees on the new labor management fund, and under the terms of the Trust Agreement, the Union Trustees are able to remove and replace the Employer Trustees.
  • When the LMCI Trust Agreement is terminated on Dec. 13, your LMCI contributions can no longer be accepted by the fund – you cannot provide contributions through your CBA to a fund that does not exist. You have no obligation to send your LMCI contribution to another fund.

  • The LMCI's almost $12 million in reserves cannot be transferred to a new labor-management fund without the approval of the majority of the fund's employer and union trustees.
  • Moving forward, FCA will continue representing the interests of signatory contractors as we have done for over 21 years. We will still appoint employer trustees to the IPAT Pension Fund and the FTI.

What You Need to Do
Hold tight. Do not sign onto the Labor Management Partnership Fund. Stop your LMCI contribution after Dec. 13, and wait until you have all the information to decide what to do with those contributions. FCA is working with our contractor community to develop a plan and will send further guidance by Dec. 5. Do not hesitate to contact us at (866) 322-3477 with any questions.

Learn More

CLICK HERE to read a letter from FCA CEO Anthony Darkangelo providing more information on the events that led to the termination of the LMCI.


Nov. 27 Update - IPAT Pension Fund: Original Proposed Language to Amend the Declaration of Trust from the Union (Appointing Employer Trustees with Whom the Union May Agree)

It has come to our attention that the International Union of Painters and Allied Trades (IUPAT) has disseminated communication saying it never sought to gain the right to appoint Employer Trustees on the International Painters and Allied Trades (IPAT) Pension Fund. CLICK HERE for the original propsed language the Fund's Employer Trustees and FCA received in September 2018. Note the highlighted section on page one that gave Employer Trustees cause for concern.


Nov. 26 Update - Affiliate Executives' Council Conference Call on LMCI Fund Termination

FCA Affiliate Executives' Council Chairman Dan Wienstroer will be leading a conference call discussion that will cover the issues pertaining to the termination of LMCI as well as the path forward for your FCA International. All association representatives are encouraged to attend. Contact the FCA Office at (866) 322-3477 or by email at fca@finishingcontractors.org to get call-in information.


Nov. 21 Update - Status of LMCI Grants Following LMCI Fund Termination

We have received several questions regarding the status of LMCI grants once the Fund is officially terminated. With the official termination of LMCI on Dec. 13, 2018, the fund will no longer be able to accept employer contributions. However, at this time, it will continue to operate per the existing trust document utilizing its nearly $12 million in reserves.

Regardless of the continued operations of the LMCI, the fund is required by the current Agreement and Declaration of Trust to pay all obligations which would include all approved grants. At the LMCI Board of Trustees meeting on Wednesday, Nov. 14, the trustees agreed to approve all submitted grants that were in compliance with the requirements of the LMCI Grant Guidelines.

If you have an ongoing grant or you have submitted a grant prior to Nove. 13, 2018 that meets the grant guidelines, the LMCI will pay the grant as agreed.

As always, please let us know if you have any questions.


Nov. 20 Update - FCA Webinar on LMCI Fund Termination and Contractors' Obligations

CLICK HERE for video from FCA's Webinar regarding the LMCI Fund termination and contractors' obligations regarding contributions to that fund.


Nov. 16 Update - IUPAT Terminates the LMCI

On Tuesday, Nov. 13, FCA International (FCA) received an official 30-day termination notice from the International Union of Painters and Allied Trades (IUPAT) stating that it is terminating the Labor Management Cooperation Initiative (LMCI). Therefore, the LMCI Trust Agreement will be terminated on Dec. 13, 2018. FCA is preparing more detailed information about the LMCI termination to share soon.


In the meantime, we wanted to answer the question that contractors are asking - "What do I do with my LMCI contribution when the LMCI is terminated?"

Despite what you may hear from the IUPAT, you and your local Iabor partners get to decide what to do with your LMCI contributions. CLICK HERE to read a memo from FCA's legal counsel that provides information on the obligation of contractors upon the termination of the LMCI Trust Agreement. 

Webinar - Tuesday, Nov. 20 at 11 AM CT

FCA's legal counsel is hosting a webinar on Tuesday, Nov. 20 at 11 AM CT to provide additional information and answer any questions you may have. CLICK HERE to access the webinar video.

IUPAT Memorandum of Understanding

CLICK HERE to access a Memorandum of Understanding (MOU) that the IUPAT is wanting you and/or your association to sign. We caution against signing the MOU until after you've had discussions with those the MOU would affect, as contractors will no longer be obligated to make the LMCI contributions after Dec. 13, 2018.


Nov. 13 Update - International Pension and Allied Trades Pension Fund Civil Lawsuit

Dear Signatory Contractor,

I write today on behalf of the FCA International (FCA) Board of Directors and the FCA appointed Employer Trustees of the International and Allied Trades Pension Fund to update you on events relating to the Fund that have given rise to a lawsuit.

By way of background, the Fund is comprised of an equal number of Employer and Union Trustees. Under the Agreement and Declaration of Trust, FCA has the right to appoint all of the Employer Trustees, and the International Union of Painters and Allied Trades (IUPAT) has the right to appoint all of  the Union Trustees. All of the Trustees have a legal obligation to act in the best interests of the Fund's partcipants and beneficiaries.

As you may be aware, there has been a steady decline of the Fund's funded percentage in recent years. As of Jan. 1, 2018, that percentage was 62.2 percent. Considering this decline, it is more imperative than ever that the Trustees work collaboratively to improve the Fund's health. The Fund Trustees are essentially tasked with ensuring fund participants can retire with dignity and have the financial security they earned for their years in the trade. However, they must also balance this with the reality that continued contribution rate increases will only further reduce signatory contractors' ability to compete with non-signatory contractors, resulting in fewer work opportunities and less man-hours contributed to the fund.

This backdrop is important in order to put the recent serieis of events into context.

In mid-September, the IUPAT proposed an Amendment to the Trust that allows "...other Employers, Associations of Employer or Employer organizations with whom the Union may agree..." to appoint half of the Employer Trustees to the Fund. FCA and Employer Trustees had three simple questions - How is this in the best interests of the Fund's participants and beneficiaries? What will these trustees do that we aren't? How will they help the health of the fund? These questions remain unanswered.

The Employer Trustees were advised that the legality of granting Union involvement in appointing Employer Trustees was doubtful. FCA and the Employer Trustees believe this Amendment would provide the IUPAT and Union Trustees control of the fund, which would not be in the best interests of the participants and beneficiaries.

The Amendment was voted on during the Oct. 9, 2018 IPAT Pension Fund Trustees meeting. All of the Employer Trustees voted against, and all of the Union Trustees voted in favor. Accordingly, the Amendment should have deadlocked and failed. However, the Union Appointed Trustees and Fund Counsel then engaged in a series of violations of the Agreement and Declaration of Trust, and, as a result, wrongly determined that the motion on the Proposed Amendment carried.

Our understanding is that the IUPAT intends to appoint Employer Trustees according to the right granted to them under the terms of their Amendment. In order to address this, the Employer Trustees recommended FCA file a lawsuit against the Union and Union Trustees. The FCA Board of Directors filed a lawsuit on behalf of the Employer Trustees on Oct. 25, 2018. The lawsuit asks the Federal District Court for the District of Columbia to rule that the Amendment did not pass, is invalid and to restrain the IUPAT from exercising any rights whatsoever with respect to the Amendment.

The Fund is jointly-trusted, and the Labor-Management Relations Act requires there be an equal representation of labor and management. The Amendment proposed by the Union Trustees to allow "other Employers, Associations of Employers or Employer Organizations with whom the Union may agree" denies equal representation under the Act.

In a United States Court of Appeal for the Third Circuit decision in Associated Contractors of Essex County, Inc. v. Laborers International Union, the court found that equal representation was needed by any arrangement that created the possibility of union domination, and the essence of equal representation was that each side had veto power on any proposed action.

The court concluded that "both interests of employer and labor union had to be equally represented on the board of trustees for a labor union trust fund to prevent abuse or domination. "The creation of new board positions had resulted in possible domination of the trust fund by the labor union and was void as to appelant employer trustees."

Further details on this issue can be found in the Complaint, Memorandum of Law and Declaration of Employer Trustee documents, which can be obtained by contacting your local association or FCA. As you read through the documents, it is important to understand the Employer Trustees' position is not to exclude any contributing employers from serving as Employer Trustees, but rather to be sure the Fund is operated lawfully, and that there is equal representation of both labor and management. Anything that deviates from this is not in the best interests of the Fund's participants and beneficiaries, which is of paramount importance.

Below is a recap and timeline of the essential points surrounding this issue.

Critical Points and Timeline

  • FCA has the exclusive right to appoint all Employer Trustees to the International Painters and Allied Trades Pension Fund, and to remove any Employer Trustees for any (or no) reason at any time.
  • The FCA appointed Employer Trustees on the Fund are focused on improving the Fund's health and acting in the best interests of its participants and beneficiaries.
  • In mid-September, the IUPAT and IUPAT appointed Union Trustees proposed an amendment to amend the Trust in order to remove FCA as the sole appointing entity of Employer Trustees, and to share that right with "...other Employers, Associations of Employers or Employer organizations with whom the Union may agree..."
  • The FCA Board of Directors determined the Proposed Amendment was not in the best interests of the participants and beneficiaries, and FCA Legal Counsel advised they were doubtful of the Amendment's legality.
  • Based upon that, the FCA Board of Directors directed that any Employer Trustee intending upon suppporting the Amendment be given the opportunity to resign or be removed.
  • At the same time, the FCA appointed Employer Trustees requested that the IUPAT appointed Union Trustees withdraw the Proposed Amendment and asked that the two sides discuss the issues at the upcoming meeting. The IUPAT appointed Union Trustees refused.
  • Four FCA appointed Employer Trustees advised that they would vote against the proposed Amendment, one said he was unsure, and one said he would vote in favor. These two Employer Trustees were advised that the FCA Board of Directors had directed they be removed as Employer Trustees. In case necessary, letters were prepared on FCA's letterhead to the Fund Administrator and the two Employer Trustees stating their immediate termination.
  • On Oct. 9, at approximately 9 AM CT, the Fund's Board of Trustees meeting began.
  • The Union Trustees convened an Executive Session immediately upon calling the meeting to order, and a motion was made by a Union Trustee to amend the Agreement and Declaration of Trust in the manner set forth by the Proposed Amendment.
  • An FCA appointed Employer Trustee immediately placed the letters removing the two Employer Trustees at the chair occupied by the Fund Administrator, and handed letters to the two Trustees.
  • This completed the removal of the Employer Trustees based on the requirements of the Trust Agreement. This action left the remaining four (4) Employer Trustees to take on all trustee actions going forward.
  • However, the Union Trustees, based upon the advice and direction of Fund Counsel, moved that the very clear language of Article III, Section 7 of the Trust Agreement, which states that an Employer Trustee can be removed "at any time," be interpreted to only allow for removal of a trustee before or after a meeting.
  • A motion was made by a Union Trustee to adopt the interpretation of Article III, Section 7 of the Agreement and Declaration of Trust put forth that no Trustee could be removed once a meeting had begun, and that such an amendment would have retroactive application to before the current meeting began ("Retroactive Trust Interpretation Motion").
  • On the Retroactive Trust Interpretation Motion, the remaining four (4) of the FCA appointed Employer Trustees voted against, and all of the Union Trustees voted in favor. Based on Article VIII, Section 4 of the Trust provides that when the number of appointed Employer and Union Trustees is unequal, the remaining Union or Employer Trustees shall nontheless have equal voting rights, the Retroactive Trust Interpretation should have deadlocked and failed. The Union Trustees proceeded to count the votes of the removed Employer Trustees. The Union Trustees and Fund Counsel then wrongly determined that the motion of the Proposed Amendment carried.
  • On the motion pertaining to the Proposed Amendment, the remaining four (4) FCA appointed Employer Trustees voted against, and the Union Trustees voted in favor. The motion should have also deadlocked and failed. However, the Union Trustees continued to count the votes of the removed Employer Trustees . The Union Trustees Fund Counsel then wrongly determined that the motion on the Proposed Amendment carried.
  • On Oct. 26, 2018, FCA International and the FCA appointed Employer Trustees filed a lawsuit in the Federal District Court for the District of Columbia against the IUPAT, IUPAT appointed Union Trustees and Fund Administrator, alleging that the Defendants had violated the terms of the Trust Agreement and breached their fiduciary duties.
  • The Plaintiffs also asked the Court to enter a preliminary injunction, restraining the IUPAT from exercising any of the rights under their Amendment.
  • Oct Oct. 31, 2018, the IUPAT agreed it would refrain from exercising any rights under the Amendment while the Plaintiffs' lawsuit proceeds, and accordingly, the Plaintiffs withdrew their pending motion for a preliminary injunction.
 
Please do not hestiate to call if you have any questions or would like further clarification.
 
Anthony D. Darkangelo
Chief Executive Officer
FCA International
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