Judge: Sysco must face Teamsters suit over retirement benefits

A local division of foodservice-supply giant Sysco Systems must face a lawsuit from its Teamsters workers who say the company reneged on retirement benefits negotiated through collective bargaining.

U.S. District Judge William T. Lawrence on Tuesday denied Sysco Indianapolis LLC’s motion to dismiss a lawsuit brought by Teamsters Union Local 135.  

Union members sued Sysco over an early-retirement incentive negotiated in a contract that took effect in March 2013. The inducement allowed Sysco Indianapolis to end its participation in the Teamsters’ Central States, Southeast, and Southwest Area Pension Fund, and instead enroll workers in its corporate retirement plan.

Under the contract, bargaining unit employees would receive base retirement benefits under the Sysco plan, plus a $500 monthly supplemental early retirement benefit for workers who retired between ages of 55 and 65 and who had at least 20 years of overall service with Sysco and at least 10 in delivery or warehouse positions.

The suit alleges that after the collective bargaining agreement was ratified, Sysco added additional requirements for retiring employees to obtain the $500 monthly perk, “which would effectively make (it) an illusory benefit.” The suit says some bargaining unit members who retired early with the expectation of receiving the benefit were deemed ineligible for it.

Teamsters members filed a grievance and prevailed through that administrative process. Neither side referred the grievance committee’s decision for arbitration, leading to this lawsuit. Sysco asked Lawrence to dismiss the suit on the grounds that the union didn’t exhaust its administrative remedies under the Employee Retirement Income Security Act and that the suit was untimely filed.

The union argued that the collective bargaining agreement, not ERISA, governs this dispute, and that the suit was filed within the applicable two-year statute of limitations rather than the 90-day limit Sysco argued applied to the dispute. Lawrence ruled against Sysco on both counts.

“Even assuming the Sysco is correct that ERISA is somehow relevant to this case — an issue the Court need not resolve at this point — Sysco’s argument is not well-taken,” he wrote in Teamsters Local Union No. 135 v. Sysco Indianapolis, LLC, 1:16-cv-176. The union was not required to plead exhaustion of administrative remedies as an affirmative defense at this stage of the litigation, Lawrence wrote.

Lawrence wrote that under Indiana law, the union had two years to file this suit alleging breach of contract following the grievance committee’s decision and did so.   

The Teamsters seek an injunction from the court enforcing the decision of the grievance committee directing Sysco to provide the benefit to all eligible members in the bargaining unit along with fees, costs and other relief the court may deem union members are entitled to receive.