Appeal from the decision and orders of the United States District Court for the Eastern District of New York, George C. Pratt, District Judge (reported at 430 F. Supp. 1224), enjoining the defendants from effecting any payments by four employee benefit plans to certain of the defendants, and appointing a receiver of the four employee benefit plans; the relief was granted under the Employee Retirement Income Security Act of 1974 (29 U.S.C. §§ 1001 et seq.). Remanded with direction to add the employee benefit plans as parties defendant, and in all other respects affirmed.
Before: MANSFIELD and TIMBERS, Circuit Judges, and DOOLING, District Judge.*fn*
The Secretary of Labor commenced the present action on January 20, 1977, under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001, et seq., against certain present and former trustees of three employee benefit plans of General Teamsters Industrial Employees Local 806, against Local 806, and against 806 Record Processors, Inc., a corporation all of the outstanding stock of which is owned by one of the three employee benefit plans, Local 806 Teamsters Health and Welfare Fund. The charge of the complaint is that the present and former employee benefit plan trustees have permitted and are permitting the expenditure of unwarranted sums of money from the plan assets, including (a) making payments totalling about $1,000,000 to defendant trustee George Snyder (allegedly an amount far in excess of reasonable compensation for any services he actually rendered; (b) expending about $380,000 to refurbish office quarters for the Union and for the Welfare, Annuity and Pension Plans, in violation of the fiduciary duties imposed by 29 U.S.C. § 1104(a)(1)(A) and (B); and (c) by transferring $300,000 of Welfare Plan assets to defendant 806 Record Processors, Inc., ("RPI") in exchange for all of its stock, and then causing RPI to lend $290,000 to Local 806. The complaint prayed for an order removing from fiduciary office each defendant presently serving as a trustee and enjoining each individual defendant from further serving as a fiduciary of any of the employee benefit plans or of any other employee benefit plan for at least five years; the court was asked to supervise the installation of successor trustees independent of the present defendants for each of the three plans, meanwhile appointing an interim receiver to assume the duties of the defendant trustees pendente lite; the complaint further prayed for the rescission of the transactions by which assets of the Welfare Plan were transferred to RPI, for the dissolution of RPI, and an accounting of its assets, and for a judgment against defendants for restitution, including lost profits, of all amounts paid in connection with the matters alleged on and after January 1, 1975 from the Welfare or Pension Plan assets to the extent that they exceeded the reasonable expense of administering the plans.
On February 4, 1977, the defendants consented, by stipulation with the Secretary, but without admitting any allegations of the complaint, to an order, effective during the pendency of the action and until further order of court that the defendant trustees of the Welfare Fund, Pension Fund, and Annuity Fund should neither make nor permit to be made any direct or indirect payments for any purpose from the assets of the funds to defendant George Snyder or to any other individual defendant, to Local 806, or for the benefit of any of said defendants; the order further provided that defendant RPI should not make nor permit to be made any direct or indirect payments for any purpose from its assets to defendant George Snyder, to any other individual defendant, to defendant Local 806 or for the benefit of any of the named defendants
"with the only exception that 806 Record Processors, Inc. may continue to make salary payments for services actually rendered to defendants Clarence Clarke, Anthony Calagna, James Isola and William Snyder in amounts not exceeding the following:
The order further provided that the books of the funds and of RPI should be made available for inspection and copying to the Secretary's attorneys or agents during ...