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

 


Jan. 28 Update - LMCI Solution Letter to FCA and IUPAT from Signatory Contractor Mid Michigan Pride Painting

FCA Members,

We recently received a request from Scott Misener, the president of Michigan-based Mid Michigan Pride Painting, to share a letter with contractors that he sent to FCA Chairman Clark Anderson and IUPAT President Ken Rigmaiden. See Scott's email below.

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From: Scott Misener [mailto: scottmisener@midmichiganpridepainting.com]

Sent: Thursday, January 17, 2019 4:55 PM

To: Anthony Darkangelo [mailto: tdarkangelo@finishingcontractors.org]

Subject: LMCI Letter for solutions

Tony,

I would assume this issue is important to other regions across the country & North America. Please let those know it is important in the Midwest as well.

I sent this email and [below] letter to the heads of both associations IUPAT and FCA. Please distribute to contractors across the country and anyone else you may feel there would be a benefit to. I want to know if anyone else agrees that it is a complete waste of time and energy the LMP is just mirroring what is already set up and working with LMCI except a new contractor board of trustees.

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January 9, 2019

International Union of Painters and Allied Trades

7234 Parkway Drive

Hanover, MD 21076

FCA International

1 Parkview Plaza

Oakbrook Terrace, IL 60181

 

IUPAT President and Association Chairman,

The industry as a whole (District Counsels & Contractors) has been informed over the past couple of months that the parties listed above are in the process of dissolving the LMCI. A lot of union representatives & contractors alike are in disbelief. We (Union DC's & Contractors) have finally started to get footing from the hellish recession of 2009, where we (DC's & Contractors) worked to just keep the doors open & men working for a better tomorrow we were hoping to come.

Remember a lot of experts say it was worse than the depression of the 1930's. We (DC's & Contractors) worked together we (DC's & Contractors) worked together, the reason I write it twice is to make the parties understand we wanted to survive & then work for a better tomorrow. We as in joint venture true partnering. A better tomorrow is here and the recent negotiations back up this result.

I am saying to both parties do not spend the money shutting down LMCI & starting another fund we will lose all the way around. The training LMCI provides in Safety, Project management, Train the trainer, & other educational training is priceless. The products and services provided by FCA with safety, quality assurance, legislation and many others continue to separate us from our non-signatory competition. Based on some estimates even with a smooth transfer 1 million dollars will be lost...this should be unacceptable to all of us. That money can be used to keep training & supporting the membership as well as contractors.

We are puzzled that with the brightest, most tested, & talented minds in our industry leading us that, both parties cannot come together find solutions that we can support & be able continue to grow LMCI. Funding a new fund will take time & money neither of which we have extra of, based on the condition of other items, the two organizations must collaborate on such, as the International pension fund which currently sits in the mid 60 percentile of funding. As stated in the previous sentence I know the pension fund money has nothing to do with the LMCI contribution but, I think the LMCI has been successful & needs to stay intact as it was.

Multiple contractors & local union representatives agree it is time to come together work together & build market share through strength of togetherness. We are nationally I believe around the 9 to 10 percentile market share, that alone should make parties want to collaborate together, the decline has been substantial over the past 40 years it isn’t getting any higher.

I am asking for both parties to stop the public spectacle of this issue & discontinue writing about how the other organization is the responsible party for the current state & get the current minds in the room on both sides that want a permanent solution with the current LMCI. Notice not at one time did I write I or me it is we, I still pay my union dues monthly from 1986 to the union, I am very proud to be a union member & I am also a proud FCA union contractor as well.

Respectfully,

Scott Misener
President
MMP Professional Companies

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Click here to download the letter


Jan. 21 Update - LMCI Arbitration and FCA Moving Forward

Under the advice of legal counsel, the LMCI Employer Trustees filed an Application for Interim Relief on Dec. 17, 2018, for the purposes of the LMCI’s expenditures. On Jan. 12, the Independent Arbitrator denied the LMCI Employer Trustees' request for Interim Relief. The Independent Arbitrator will now hear the merits of the deadlock motions considering the appropriate disposition of the LMCI’s assets on Jan. 23 and 24.

FCA International understands that the termination of the LMCI is a loss for the industry. Regardless of the decisions made by the Independent Arbitrator moving forward, FCA does not view any rulings as a “win” for our industry.

Over the past 22 years, FCA has grown into the international voice of the signatory contractors. Contractors and contractor associations in Canada, New York, Illinois, Michigan, Indiana, Kentucky, Hawaii, Ohio, Pennsylvania, California, Iowa, New Jersey, Wisconsin, Washington, Oregon, Massachusetts, Minnesota and Missouri (to name a few), are committed to supporting FCA’s purpose.

We want to assure FCA contractors that, while we are focused on the best possible resolution of the LMCI's termination by the choice of the IUPAT, we are moving forward with the programs and services developed to increase signatory contractors’ opportunities and profitability. Here’s a quick look at just a few of the efforts your FCA contributions are being put to work on.

  • Pension Unfunded Liability – Multiemployer pension reform and elimination of unfunded liability continue to be a key priority for FCA’s legislative team. Our team is walking the halls of Congress educating members on multiemployer pensions and gaining support for the GROW (Give Retirement Options for Workers) Act.
  • Industry Representation – To ensure the voice of the signatory contractor is heard, FCA provides industry representation on ASTM, the Construction Labor Research Council, the U.S. Chamber of Commerce Multiemployer Group, ConsensusDocs, AIA, NACC Retirement Security Commission, Construction Employers of America, Helmets to Hardhats and the ASA to name a few.
  • Business Development – The Quality Assurance, Safety Program and ProfitPlan are examples of FCA programs with products and services developed to elevate yourself from your competition.
  • Silica Program – This program will feature a comprehensive database of objective data, a table identifying exposure levels of all silica-producing tasks, written silica exposure control plans and more. A national alliance is also being developed to work with OSHA.
  • Workforce – On Oct. 25, 2018, FCA signed on to the President's “Pledge to Americas Workforce.” We are developing a Workforce Development Program that will attract people to our industry and educate on the opportunities it provides.
  • Pension – It is more imperative than ever that the Trustees work collaboratively to improve the Fund’s health. The Fund Trustees are tasked with ensuring fund participants can retire with dignity and have the financial security they earned for their years in the trade.
  • Emerging Leaders Network – Investment into the future of the signatory industry is essential. FCA’s Emerging Leaders Network is a platform for young professionals and indivudals new to the industry that is aimed at increasing their knowledge, communication and education of the industry.
  • FCA International Leadership Council – Join us in Boston from May 15-18. Attendees will learn about the future of robotics in the construction industry, the latest on national labor relations, FCA’s mission, receive an international economic update on the construction industry, learn how signatory contractors are working together to solve workforce needs and more.

Take a look around the FCA website for more information on FCA's programs and services you can utilize for your business growth. We’re looking forward to continuing our work on behalf of signatory contractors and our industry to “Build a future for all our families."


Jan. 15 Update - FCA International's Position on LMCI Contributions, Contributions to the New LMP and LMCI Withdrawal Liability

We wanted to communicate FCA’s position concerning LMCI contributions for hours worked after Dec. 13, 2018, and provide some information regarding contributions to the new labor-management fund (LMP) and the withdrawal liability to be incurred by the LMCI.

  • LMCI contributions for hours worked after Dec. 13, 2018:
    -Based on contract law, the obligation of contractors to continue contributing to the LMCI following termination of the trust also terminates.
    -Since the LMCI no longer exists through no fault of the parties signatory to the collective bargaining agreements, but rather through the IUPAT’s action, the parties signatory to the agreements have no obligation to continue to make contributions to LMCI under the terms of the collective bargaining agreements.
  • Contributions to the new labor-management fund (LMP):
    -Parties signatory to collective bargaining agreements have no obligation to contribute to LMP.
    -Any effort by anyone to impose such an obligation may amount to a unilateral change to the terms of the contract, in violation of the National Labor Relations Act.
    -An affiliate or contractor may lawfully refuse to follow any changes claiming to require the LMCI contribution rate be allocated in a manner to which the affiliate or contractor has not agreed to.
    -Direction requiring you to contribute to this new entity is unlawful.
  • Withdrawal liability of the LMCI:
    -With the termination of the LMCI, it ceased to have an obligation to contribute to the pension fund, and in-turn affected a withdrawal from the pension fund.
    -Any withdrawal liability imposed on the LMCI will be paid with LMCI funds. Contractors are not responsible for any portion of the LMCI withdrawal liability.

Moving forward, we also encourage any contractor interested in participating in the LMP to have a clear understanding of the language in the trust document concerning equal representation. It is essential that the interest of both management and labor are equally represented to eliminate the possibility of abuse or domination on either side. The following are some examples of items in the LMP to consider:

  • The IUPAT selected the Initial Employer Trustees and approves successor Employer Trustees.
  • The Union Trustees vote for removal of Employer Trustees.
  • The Union can terminate the LMP at any time, for no reason, but requires two-thirds of the "Founding" Employer Trustees to terminate, not the existing trustees.

We encourage you to reach out if you are having any problems regarding this or any other issues. FCA is here to help and can be reached at (866) 322-3477. You can review this page for all the information regarding the LMCI Fund termination.

Sincerely,

The LMCI Employer Trustees
The FCA Board of Directors


Jan. 3  Update - LMCI Contribution FAQs - Grievances and Obligations

FCA's legal counsel has issued a memo on the contributions to the LMCI after December 13, 2018 and the threat of grievances, alleging a violation of the CBA for failing to do so.

CLICK HERE for for the memo answering some of of the most frequently asked questions.


Jan. 2  Update - LMCI Withdrawal Liability Calculation

The IPAT Pension Fund calculated the withdrawal liability triggered by the IUPAT's termination of the LMCI. Unfortunately, the LMCI's $749,531.00 withdrawal liability will be paid with LMCI contributions as opposed to their intended purposes outlined in the LMCI Declaration of Trust. 

CLICK HERE to download the document prepared by the IPAT Pension fund detailing the LMCI's withdrawal liability.


 
2018


Dec. 21 Update -  FCA on New Labor-Management Trust Information

Dear Affiliates,

The communication to the industry from the IUPAT dated December 19, 2018 indicates that “many areas, large and small, have modified their CBAs to contribute to the new fund.” The FCA has communicated with many of the associations that represent an overwhelming amount of hours in these areas and verified that a majority of the associations have not modified their CBAs as the communication indicates. 

Because the information provided in the IUPAT communication is misleading, the FCA leadership is asking that you consider providing a communication to your members on your area’s status. We believe this information is crucial to those that are looking for your leadership during these critical times. 

Below you will find a copy of a communication that the Association of Master Painters and Decorators of New York sent to their members on this issue.

We look forward to the resolution of these issues that have unfairly affected your local area so we can get back to working on industry initiatives that will help us all move forward. Please let me know if there is any additional information you need at this time.

Win The Day - Tony

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Subject: Email from LMCI General President Ken Rigmaiden

 To: All Association members:

 Yesterday afternoon, an email was sent to signatory contractors including Association members from IUPAT General President, Ken Rigmaiden titled “IUPAT Labor-Management Update: LMCI”.

 The email you received includes information that is not accurate.

 The email in part stated:

 Fortunately, FILMP already has received remarkable backing, and it is increasing on a daily basis. Many areas, large and small, have modified their CBAs to contribute to the new fund. These include New York, Chicago, Pittsburgh, West Virginia, Minnesota, California, Las Vegas, Philadelphia, DC Metro, Georgia, Connecticut, Florida, New Jersey, Missouri, Ohio, Iowa, and portions of Canada – to name a few

 The Association of Master Painters, The Window and Plate Glass Dealers Association and the Drywall Taping Contactors Association have not agreed to contribute to the new fund created by the IUPAT.

 My understanding is that the only Association in New York that has agreed to contribute to the new fund is the New York Structural Steel Painters Contactors Association.

Bruce

 Bruce Ruinsky

Executive Director

Association of Master Painters and Decorators of New York, Inc.

370 7th Avenue, room 418,

New York, New York 10001


Dec. 19 Update IUPAT "Labor-Management Update on Arbitration Hearing and Support"

On Dec. 19, the IUPAT distributed the following email to contractors regarding arbitration hearing and support.

"By now you know that IUPAT has terminated the trust agreement for LMCI.  That fund is now in the wind up phase. During this time, it can still receive contributions and we will insist that employers with CBAs that have not been modified continue to contribute. The question of whether the LMCI funds go to the Finishing Industries Labor-Management Partnership (FILMP) or remain with LMCI to be spent on industry initiatives will be heard by an Arbitrator at a hearing to be held January 23 and 24. 

Once again, the FCA appointed trustees are trying to throw up road blocks. They are insisting that all LMCI operations cease and all staff be fired. We prefer that the programs continue pending arbitration so that they may then be picked up by FILMP or continued by LMCI as determined by the Arbitrator. The FCA trustees have actually filed a motion with the Arbitrator seeking an order that requires that all LMCI employees be fired pending arbitration. Given that they will be rehired, whether by the new trust or by LMCI to effectuate the business of the fund during the wind-down, once the arbitrator rules, one must ask, why is Mike Cassidy and the FCA insisting on tearing down rather than building up? Are they simply being vindictive? We think the answer is clear. 

Fortunately, FILMP already has received remarkable backing, and it is increasing on a daily basis. Many areas, large and small, have modified their CBAs to contribute to the new fund. These include New York, Chicago, Pittsburgh, West Virginia, Minnesota, California, Las Vegas, Philadelphia, DC Metro, Georgia, Connecticut, Florida, New Jersey, Missouri, Ohio, Iowa, and portions of Canada – to name a few. We commend your forward thinking and commitment to a “real” partnership.  The thousands of collective bargaining agreements that these areas represent is a testament to the true partnership that we have with our signatory employers. 

To those still deciding where the funds should go, I reiterate that we, the Union trustees are committed to: 

·       Growing your businesses through increased market opportunity 

·       Collaborating on industry advancement 

·       Providing forums for best practices to be shared 

·       Securing our member’s futures 

·       Increasing work opportunities for our current and future members 

·       Highlighting our efforts through modern media strategies 

·       Working together to solve real problems like substance abuse and the skills gap 

The FCA is in the past. You and your local District Council are the future. FCA can try to throw up road blocks. There is so much more we can accomplish to reach these goals together. As on the job site, the answer is to ignore the distractions and keep working. With true partnership, we will prevail."


Dec. 18 Update - LMCI Termination Update

During yesterday’s LMCI conference call, trustees were unable to come to a resolution on how to proceed with LMCI operations following its termination (effective Dec. 13, 2018). As you may recall, the fund was terminated by the LMCI union trustees, not the employer trustees. The employer trustees made a motion to continue operations until all the reserves were utilized, but the LMCI union trustees did not support this motion.

Because there was no resolution, the LMCI employer trustees filed a Notice of Application for Interim Relief yesterday. The employer trustees ask this Arbitrator to find that limiting the expenditures of the Trust’s assets, following termination of the Trust Agreement and during the pendency of the arbitration, is a prudent and necessary exercise of the Trustees’ authorities and responsibilities. In the alternative, the employer trustees ask this Arbitrator to find that it is a prudent and necessary exercise of the trustees’ authorities and responsibilities to cease all operations of the Trust and all spending of the Trust’s assets.

It is important to remember that all liabilities are required to be paid by the Trust, so this action is not intended for the liabilities not to be paid, it is intended to preserve the Trust’s property, and to prevent it from being used in a manner inconsistent with the termination and wind down of the Trust. Interim relief is necessary to preserve the Arbitrator’s ability to provide effective relief and prevent the dissipation of a substantial portion of the Trust’s property before the Arbitrator has an opportunity to decide the issue of how those assets may properly be spent. Without interim relief, approximately $2 million of the Trust’s assets will, as a practical matter, escape the effect of the Arbitrator’s ultimate decision on the merits.

The LMCI employer trustees and the FCA leadership will continue to do everything possible to resolve this issue, and we continue to regret that this issue has disrupted local area relations.


Dec. 13 Update - LMCI Officially Terminated

A reminder that, as of today, the LMCI has been terminated by the IUPAT. LMCI contributions for all hours worked on and after today should cease. Read through the rest of the updates on this page to learn more on what your options are regarding those contributions.


Dec. 7 Update - IUPAT "Labor-Management Update" on Why the IUPAT Chose to Terminate the LMCI

The IUPAT sent a "Labor-Management Update" email on Dec. 7 discussing why the IUPAT chose to terminate the LMCI. While we disagree with the IUPAT's reasons, we intend for this page to be a one-stop resource for all information from both sides regarding the LMCI termination. CLICK HERE to read the IUPAT's update. 


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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